Please check out my new books, "Prosecutors Gone Wild: The Inside Story of the Trial of Chuck Panici, John Gliottoni, and Louise Marshall" and also, "The Definitive Dossier of PTSD in Whistleblowers"
Wednesday, December 31, 2008
Joshuapundit - Gaza:A Tale Of Selective Morality and Tribal Warfare
Cheat-Seeking Missiles - The Most Ridiculous Story of the Year - Part 7
The Glittering Eye - Trust
Bookworm Room - Hamas’ “Heroes” — and the need for total victory over evil
Right Truth - WANTED: Politician to Represent Me
The Colossus of Rhodey - The bar has been lowered SOOO far …
Soccer Dad - Talkin’ turki
The Razor - Walking In Israel’s Shoes
Mere Rhetoric - Anti-Israel Partisans Set New Record For Decades-Old Trick Of Brazenly Rewriting History, Blaming Israel
Rhymes With Right - What It’s All About
Submitted By: The Provocateur - Forbes - A Nation of Wussies
Submitted By: Joshuapundit - David Keyes/Commentary - Sderot under Seige
Submitted By: Cheat-Seeking Missiles - Belmont Club - The People of the Shadows
Submitted By: The Glittering Eye - Sippican Cottage - The Greater Fool Theory of Housing
Submitted By: Bookworm Room - Melanie Phillips - Groundhog day for the fifth column of malice
Submitted By: Right Truth - Front Page Magazine - A Caliphate ‘From the Red Sea to the Caspian’?
Submitted By: The Colossus of Rhodey - Daled Amos - Notes on Today’s Conference Call on Gaza
Submitted By: Soccer Dad - Yourish - Talkin’ Turki Part two
Submitted By: The Razor - Weasel Zippers - Assorted Articles on Gaza Attacks
Submitted By: Mere Rhetoric - Counterterrorism Blog - Jihad by the Shoe: Who Was Behind it and why?
Submitted By: Rhymes With Right - The Anchoress - Workouts: Bush creepy; Obama a godling
But something went wrong on the road to privatopia. If everything is for sale, why shouldn't the guardians put themselves on the block as well? Now we find that the profit motive, unleashed to work its magic within the credit-rating agencies, apparently exposed them to pressure from debt issuers and led them to give high ratings to the mortgage-backed securities that eventually blew the economy to pieces.
And so it has gone with many other shibboleths of the free-market consensus in this tragic year.For example, it was only a short while ago that simply everyone knew deregulation to be the path to prosperity as well as the distilled essence of human freedom. Today, though, it seems this folly permitted a 100-year flood of fraud. Consider the Office of Thrift Supervision (OTS), the subject of a withering examination in the Washington Post last month. As part of what the Post called the "aggressively deregulatory stance" the OTS adopted toward the savings and loan industry in the years of George W. Bush, it slashed staff, rolled back enforcement, and came to regard the industry it was supposed to oversee as its "customers." Maybe it's only a coincidence that some of the biggest banks -- Washington Mutual and IndyMac -- ever to fail were regulated by that agency, but I doubt it.
Or consider the theory, once possible to proffer with a straight face, that lavishing princely bonuses and stock options on top management was a good idea since they drew executives' interests into happy alignment with those of the shareholders. Instead, CEOs were only too happy to gorge themselves and turn shareholders into bag holders. In the subprime mortgage industry, bankers handed out iffy loans like candy at a parade because such loans meant revenue and, hence, bonuses for executives in the here-and-now. The consequences would be borne down the line by the suckers who bought mortgage-backed securities. And, of course, by the shareholders.
Blaming free markets for the crisis is as simplistic as blaming deregulation, George Bush, Barney Frank, Fannie Mae, the Community Reinvestment Act, or any other of a number of villains that partisans on all sides have isolated and demonized for this crisis. This crisis didn't happen merely because the markets were too free. That is patently ridiculous. Beyond the scope of the unfettered greed that economic liberals like to look at, there was also a great deal of intervention in the free markets that perpetuated the problem. In fact, one could make the case that the pysczophrenic policy of the Federal Reserve over the last ten years has by far played the biggest role in setting up the crisis. All those bashing free markets seem to totally dismiss that the Federal Reserve has manipulated interests rates up and down no less than four times in nine years. Maybe just maybe, had the Federal Reserve not been so eager to interfere with the free market, then maybe just maybe, the free market wouldn't have responded so absurdly.
All those bashing free markets dismiss several other things as well. First, mortgages are one of the most hyper regulated industries we have. Every time a loan is closed no less than one hundred documents are signed. Those are signed in response to one regulation or another. Second, this crisis largely occurred in response to massive fraud on the part of borrowers, mortgage brokers, appraisers, and banks which all lied regarding income, assets, occupancy, and value. No market, free or otherwise, can withstand wholesale fraud. Finally, free market bashers dismiss the role of such regulations as FASB 157 in perpetuating this crisis.
Finally, what is the alternative? Should we have government control like in Cuba and Venezuela? Maybe we should have the quasi socialist systems of Europe where the economies have been largely stagnant for the better part of two decades. All those now clammoring for a plethora of new regulations to reign in this greed seem to dismiss the utter disaster of prior regulations like Sarbanes Oxley. Furthermore, those that demonize the free markets dismiss how the free market responded to this crisis. While pols all over the place debated what sort of new regulations we should have in mortgages, it was the free market itself that immediately eliminated all the trouble loans: stated, no money down, etc.
So, they can demonize the free market if they like. All it will really show is that they are partisan economic liberals with absolutely nothing more than a rudimentary understanding of how all of this came about. No one is saying that free markets are perfect. Some of us just realize that given any alternative, free markets are the best, and frankly, it isn't even close.
Rod Blagojevich's decision to appoint Roland Burris to Illinois' vacant Senate seat, even as the governor faces intense criminal scrutiny, is being treated as a crazy political power grab. It also seems very likely to be permanent.
A legal scholar writes in to say that precedent surrounding the Senate's right to not seat certain members seems very likely to fall in Burris' favor.
"My reading of Powell v. McCormack, 395 U.S. 486, is that the Senate probably can NOT constitutionally block Burris from being seated," writes the constitutional law professor. "Art. I, sec. 5 gives each House the power to judge the qualifications of its own members. Powell holds (inter alia) that the qualifications to be judged are those stated in the Constitution (see Art. I, sec. 3, cl. 3 and the 17th Amendment)."
"Burris has met all of those qualifications: he's over 30, been a US citizen for 9 years, he's an Illinois resident; he was appointed by the executive authority of the state to fill a vacancy, pursuant to Illinois law."
If either someone in Springfield or in D.C. tries to stop Burris from being appointed, it will be challenged and likely heard by the Supreme Court. Legally, it appears the Supreme Court would have to side with Blagojevich. Blagojevich is Constitutionally mandated to choose the next Senator. That's what he's done. There is no evidence that the choice of Burris was untoward and so, there appears to be no legal reason to block Burris. Such a showdown would play right into the Governor's hands and hand him much needed political capital. He's already endeared himself to some elements within the Illinois African American community just by picking Burris.
Now, imagine if his choice was rejected either by the Secretary of State or by the U.S. Senate and then it was litigated in the Supreme Court which decided in his favor. Which side would look as though they are doing their Constitutional mandated duty and which side would look as though they are stepping outside of the Constitution?
Furthermore, how far is the Democratic Party willing to take this given how insulting it would be to the African American community. The reality is that the Governor needs nothing more than a political showdown he can win, and he just found it. The farther his opponents take this the bigger a victory it will be once he wins. Frankly, he has nothing to lose anyway.
We've all heard that his potential impeachment hearing is a political not criminal process. What does this mean? On one level, it means that the Illinois House and Senate merely need to find a reason that everyone will accept to remove him. They need not find any act of criminality. The most obvious reason is that the scandal has made him unfit to Govern. Yet, he has just chosen a U.S. Senate pick and that person accepted. What a political gift Burris handed to Blagojevich. Is there any better proof that he is fit to govern than doing his Constitutionally mandated duty of choosing a replacement for Barack Obama? In fact, by having every other political force near him try and take this duty away, it is they, not him, that look as though they are unfit.
Just think about it. He will make this pick. The entire political world will attempt to stop it and likely the U.S. Supreme Court will side with him. Then, Illinois legislators will say he is unfit to govern. Nothing will sound more absurd if this episode plays out as I just described.
Then, impeachment will hinge on something relating to the idea that what he is alleged to have done is so extraordinary that he can't be allowed to continue. Here, again, if Blagojevich is crazy like a fox, he will still have an angle. I have said over and over that Blagojevich knows where all the proverbial bodies are buried. In such a case, all he needs to do is turn the impeachment into a kangaroo court. What Blagojevich did maybe the most brazen act of corruption, but it certainly is not out of the ordinary. Most of the folks about to accuse him of corruption are no less corrupt, just less brazen. If he turns the tables on everyone and throws accusations back at his accusers, what we'll have is a bunch of crooks proclaiming the Governor is not fit to lead because he's a crook.
As John Kerry once said that's like having Tony Soprano lecturing us on violence. Blagojevich can argue that if he isn't fit to lead, then most of the legislature will need to go with him. If he plays it right, he could even be portrayed as the crusader finally exposing the reality of the system in Illinois. If he did some sort of a vague mea culpa in which he acknowledged "mistakes", he could say that he is ready to use this opportunity to overhaul the system, but that he will not be "lectured on honesty and integrity by the likes of Emil Jones and Michael Madigan". In fact, he will have a point. The audacious irony is that the Illinois legislature is in no position to lecture him on corruption. They are no better. An impeachment in which his alleged crimes are on display would be nothing more than that. If it came down to trying to remove him from office for his alleged crimes, you can bet that every piece of dirty laundry would be aired before he was removed. If he's crazy like a fox, that's exactly what he should do.
Tuesday, December 30, 2008
I think he's doing a helluva job
Since then, Burris has appeared at rallies and campaign events for Blagojevich as recently as June of this year long after it was common knowledge that he was being seriously investigated for corruption. In April of 2006, he was one of the hosts for a campaign fundraiser for Blagojevich.
Yet, it is some of the business dealings that Burris has had with the state that maybe of most interest. A consulting company he lobbied for received a $150,000 contract from IDOT (the Illinois Department of Traffic) to advised disadvantaged businesses on turning their operations around. (this the Illinois GOP seems to think is an indication of pay to play though that appears to be a bit of a stretch to me) He lobbied on behalf of Ho Chunk casinos when they applied to get a license in the suburb of Hoffman Estates. A company that he lobbied for was investigated for fraud in Nevada, and this investigation caused said company, ACS, to have their contract withdrawn at the last minute by Cook County Board President Todd Stroger.
All of this is not necessarily a mountain of evidence of fraud and corruption, but given the circumstances, it should give all political opponents a field day for making the case that Burris can't be the next U.S. Senator from Illinois.
Illinois Gov. Rod Blagojevich reportedly is planning to name a replacement to fill Barack Obama's vacant U.S. Senate seat Tuesday, even though his attorney said just two weeks ago that the governor would not exercise his appointment powers in the face of Senate objections.
Blagojevich is facing federal charges and impeachment proceedings after being accused of trying to sell Obama's empty U.S. Senate seat. He plans to name former Illinois Attorney General Roland Burris to fill the vacancy, according to the Chicago Tribune and The Wall Street Journal.
If his only goal is self preservation, then this move is a brilliant piece of brazen political jujitsu. Blagojevich is fiercely maintaining his innocence and so he intends to govern. The seat needs a replacement, it's his role to replace the seat, and so he is doing it.
This simple act just made it that much more difficult to impeach him. That's because it affirms his authority. Just by finding someone to accept the nomination, he implicitly shows that he has the capability of Governing. The United States Senate still has the ability to override the pick. I can only assume that Blagojevich thinks that Reid et al don't have the stomach for that or he sees no other alternative to try and maintain his power.
Burris is the former Attorney General, Comptroller, and a product of the same political machine that produced Blagojevich himself. On that level, it shouldn't necessarily be a surprise that he accepted. He has been lobbying for the job since Blagojevich's arrest. Still, I thought that even in the swamp of Springfield no one would ever accept the job from Blagojevich himself. Burris showed that there really is no brazen, corrupt, back room deal too low for the political swamp in Springfield.
Blagojevich continues to be a gift to the Republican Party. If the Senate actually allows Burris to take the seat, that will be used by each and every Republican running for national office in 2010. If they deny Burris, it will set up a Democrat on Democrat food fight in which no one can tell just how much dirty laundry will be aired. Meanwhile, Blagojevich is acting like the political equivalent of a wounded fighter. He is desperately swinging with any political punch he can find. First, he defiantly refused to step down. Then, he demanded that multiple members of Obama's administration be subpeonad. Now, he is announcing a replacement for Obama as though nothing has happened. You can bet that his political gun is nowhere near out of ammo, and the more desperate he gets the more extreme his political moves will become.
The only winners of any of this are the Republican Party both statewide and nationally as well as political junkies like me, who will be treated to great political theater. The Democratic Party is the big loser, but the citizens of both Illinois and the nation will be treated to spectacle that no one really needs.
I believe this story has much relation to the situation in Gaza. That's because, much like own fraternity, Israel has now made bold proclamations. Here is what Israel's Defense Minister said in describing the current conflict with Hamas.
Israel obliterated symbols of Hamas power on the third day of what the defense minister described Monday as a "war to the bitter end," striking next to the Hamas premier's home, and devastating a security compound and a university building.
Here is how their U.S. Ambassador described the conflict.
Israel's ambassador to the United Nations says the goal of the current offensive in the Gaza Strip is much broader than ending Palestinian rocket attacks. She says Israel wants to destroy Gaza's ruling Hamas movement.
In an interview Tuesday, Ambassador Gabriela Shalev said Israel's main goal is to "destroy completely" what she called a "terrorist gang."
Here is how a Senior Defense official characterized the military action.
A senior Israeli military officer says Israel is striking at the entire Hamas Government in the Gaza Strip, not just terrorists and people who launch rockets into Israel.
Israeli military's deputy chief of staff Brigadier General Dan Harel says there will not be a single Hamas building left standing in Gaza when the attack is over.
"After this operation there will not be a single Hamas building left standing in Gaza, and we plan to change the rules of the game," he told the YNet News website.
"We are hitting not only terrorists and launchers, but also the whole Hamas Government and all its wings."
Make no mistake, the message from Israel is clear and unmistakable. This is no limited military incursion. This no tit for tat operation. The top officials of the Israeli government see this offensive as one final all out war in which they intend to destroy and eliminate Hamas.
Our fraternity made similar bold proclamations in our own confrontation and we were humiliated when we didn't back those proclamations up. In the case of Israel, the stakes are exponentially higher. If Hamas retains any capability whatsoever after this confrontation, this will undeniably be seen as a loss for Israel. Following a similar loss against Hezbollah two years ago, Israel's military might will be seen as weakening. Her enemies will be emboldened, and so, anything short of a total annihilation of Hamas now will have disastrous results for Israel.
Israel has just performed the war version of going all in, and so they had better be ready to back it up. If Israel doesn't back up its rhetoric with serious military might, they will invite each and every one of their enemies to attack at will. The only thing that Israel cannot afford at all costs is to look weak. Now that they have made very bold proclamations, they must back those up with military action that accomplishes their bold rhetoric. Anything less, and they will suffer a humiliation much worse than my fraternity and with much more serious consequences.
Monday, December 29, 2008
Back in July -- when there was much [groundless] Democratic worry about Obama's supposed problem with Jewish voters -- the presidential candidate visited Israel. He met with Prime Minister Ehud Olmert, President Shimon Peres and a boy who lost a leg to a Palestinian rocket attack.
In Sderot, a city near Gaza hit by many Palestinian rockets, Obama was asked whether he would negotiate with Hamas.
"I don't think any country would find it acceptable to have missiles raining down on the heads of their citizens," he said. "The first job of any nation state is to protect its citizens. And so I can assure you that if -- I don't even care if I was a politician -- if somebody was sending rockets into my house where my two daughters sleep at night, I'm going to do everything in my power to stop that. And I would expect Israelis to do the same thing."
Obama had sounded the same theme four months earlier. In March, Obama said, "The violence in Gaza is the result of Hamas' decision to launch rocket attacks on Israeli civilians, and Israel has a right to defend itself."
In fact, Obama also said something that sounds nearly identical to what Bush spokesperson Johndroe said Saturday about civilian casualties. Said Obama, "I remain very concerned about the fate of civilians and urge Israel to do all it can to avoid civilian deaths and to keep its focus on Hamas, which bears responsibility for these events."
The column is remarkable for two reasons. First, in the view of Shone, the reason we need not worry about Obama's Middle East policy is because it is basically the same as the current President's. Not only is this simply not accurate, but it is totally disingenuous. Here, the MSM has spent the last eight years telling the world that the current administration's foreign policy is nothing short of an unmitigated disaster. Now, when there really is a foreign policy crisis, it is the Bush model that is held up as the one we should follow. That's nothing short of hypocritical.
Second, in the entire column, the eight hundred pound gorilla is not mentioned once. That gorilla is of course Iran. Shone tells the reader not to worry because Obama has stated clearly he won't negotiate with Hamas. Yet, he says nothing about Obama's stated intention of negotiating with their sponsors, Iran.
Shone points out that Obama was clear that Hamas is no partner in peace because they shoot rockets at Israel. Yet, Shone says nothing about Iran's slow move toward gaining a nuclear weapon which of course they have every intention of using against Israel.
In fact, Obama's policy is so ludicrous that it would be funny, if things weren't so serious. Now more than ever, everyone should be concerned about President Designate Obama's outreach to Iran program. Given that their proxy, Hamas, is now engaged in a full out war with Israel, is now really the time to reach out to Iran?
The whole thing is totally absurd. Obama won't negotiate with Hamas because they are no partner in peace. Yet, he'll negotiate with Iran even though they supply Hamas with weapons, money and training. Now more than ever, the country needs to know if Obama still plans on reaching out to Iran. What will he try to accomplish with this outreach? Will his outreach program be a detriment to our ally, Israel? In fact, President Designate Obama has a very suspicious Middle East policy. No one seemed to pay attention because the economy overwhelmed all. Yet, now we are on the brink of war and his policy will be that much more important. Now, more than every, we must all examine whether or not negotiating with state sponsor of terror, Iran, is a good idea.
So why even think about it? Because the virtues of a gas tax remain what they have always been. A tax that suppresses U.S. gas consumption can have a major effect on reducing world oil prices. And the benefits of low world oil prices are obvious: They put tremendous pressure on OPEC, as evidenced by its disarray during the current collapse; they deal serious economic damage to energy-exporting geopolitical adversaries such as Russia, Venezuela, and Iran; and they reduce the enormous U.S. imbalance of oil trade which last year alone diverted a quarter of $1 trillion abroad. Furthermore, a reduction in U.S. demand alters the balance of power between producer and consumer, making us less dependent on oil exporters. It begins weaning us off foreign oil, and, if combined with nuclear power and renewed U.S. oil and gas drilling, puts us on the road to energy independence.
High gas prices, whether achieved by market forces or by government imposition, encourage fuel economy. In the short term, they simply reduce the amount of driving. In the longer term, they lead to the increased (voluntary) shift to more fuel-efficient cars. They render redundant and unnecessary the absurd CAFE standards--the ever-changing Corporate Average Fuel Economy regulations that mandate the fuel efficiency of various car and truck fleets--which introduce terrible distortions into the market. As the consumer market adjusts itself to more fuel-efficient autos, the green car culture of the future that environmentalists are attempting to impose by decree begins to shape itself unmandated. This shift has the collateral environmental effect of reducing pollution and CO2 emissions, an important benefit for those who believe in man-made global warming and a painless bonus for agnostics (like me) who nonetheless believe that the endless pumping of CO2 into the atmosphere cannot be a good thing.
Now, within the body of the piece itself, Krauthammer makes the case that his idea is purely theoretical. That's because he knows that no politician would ever support it because its support would mean the death knell of their political career. Americans simply won't stand for a politician making their gas bill higher.
Still, a gas tax is an excellent tool in trying to make this country less dependent on foreign oil. All taxes provide incentive or lack thereof. If there was a higher tax on gasoline, consumers would use less of it. Car manufacturers would be more motivated to make cars that run on alternative. An increased gas tax is an excellent way to make our country more energy independent.
Yet, right now is the worst time for such an idea. First, Krauthammer is among many Conservative pundits that has spent the better part of the last year blasting Obama for suggesting a tax increase on the wealthiest Americans. Like most Conservatives, Krauthammer points out how foolish it is to raise taxes in the middle of a recession. Well, a tax increase is a tax increase. It's hard to measure what impact such an increase would have on our economy, but it goes without saying, that the impact will be contractionary. During a recession, the last thing anyone should do is raise taxes on anything. As such, this is a totally counter productive idea at the time. Right now, the main priority for everyone is navigating this economy out of the recession. Noble goals like energy independence must take a lower priority now. We have no room for energy independence if the current price is weakening our economy even further.
Furthermore, oil and subsequently gas are both selling at a relatively low price right now. Unless this tax is extremely punitive, its effect will be marginal. Gas is about $1.65 a gallon. Adding another 20 or 25 cents will do little to change our behavior given its current price. What it will do is put less money into the pockets of struggling Americans that could certainly use those 20 cents per gallon in other ways. One of the few bright spots in this recession is that gasoline prices have plummetted. This at least provides Americans with relief when they fill up their tank. If they don't have relief there either, American's budgets will become even tighter and all this will do is prolong the recession even more unnecessarily.
A punitive tax of say a Dollar or more would be devastating. Can you imagine if Americans had to pay $3 a gallon and more for gasoline right now. No one would have any money for anything. Such a tax would all but guarantee that this recession turns into a depression. That's why a gasoline tax is a good idea at the worst time right now. It should be revisited when this economy recovers but not before.
Johnson came to Houston via the 2001 Miami Hurricane National Championship team, one of the greatest in College Football history. He is in many ways the prototypical wide receiver. He is big, 6'3", strong, 225 pounds, and he's one of the fastest players in the NFL along with a vertical near 40 inches. Physically, he is everything one would ask for in a receiver. Beyond his physical capabilities, Johnson is also an intense competitor and generally quiet and humble. Unlike most receivers, you are very unlikely to see Johnson take any plays off or see him go through the motions on any given play. This is no small feat. This year the Texans finished 8-8 and that's the best team Johnson's ever been on in the NFL. Yet, long after the Texans playoff hopes are through, Johnson continues to be a fierce competitor on each and every play.
In fact, Johnson's relative anonymity comes from the fact that he adds anywhere from two to four wins to teams that end up with no more than six wins total. No one appreciates his immense talent because he makes really bad teams less bad. So, for six years now, he has played in isolation for really bad Houston Texan teams. Yet, not once have you heard Johnson complain, demand a trade, or call out teammates, coaches or fans. In fact, Johnson is in every way the model football player, athlete and competitor. He is of immense talent, with a work ethic and team first me second philosophy to match it. For this, he has been rewarded with being totally under appreciated. In fact, unless you are a serious fan of football, it is unlikely you've heard of Andre Johnson. He has, since arriving in the NFL, played on nothing but losing teams (though that appears to be changing), with a relatively low salary, and scant endorsements to speak of. Yet, he never complains about this, draws attention to himself, or in any other way acts like the typical spoiled brat that wide receivers are known for. Johnson is old school, and for this, the sports universe gives him significantly less attention than if he were the attention hound of Terrell Owens.
Owens, on the other hand, is in most ways the exact opposite of Johnson. While there's no doubt that Owens has talent and work ethic to match Johnson's, he is also an attention hound and has absolutely no sense of team. He has thrown not one, not two, but three of his quarterbacks under the proverbial bus. He has blown up two teams. He once took out a Sharpie in a choreographed touchdown celebration that eventually landed him a lucrative endorsement deal with Sharpie. Owens touchdown celebrations are so infamous that it seems that they are more important to Owens than the touchdown itself. Coach's as well respected as Bill Parcells and Andy Reid have all been unable to reign him in, and yet, each and every time, there is another team more than willing to give him another opportunity and usually more money.
Furthermore, Owens is among the most exposed athletes on such stations as ESPN. Furthermore, his brash attention getting theatrics have landed him a plethora of endorsement deals. He is not without controversy but in fact, he has been able to use that controversy as a form of self promotion to get himself more endorsements, even though his self promotion is often at the expense of his team. In fact, Owens is in many ways the epitome of everything that is wrong with sports. He pouts. He demands the ball more and more regardless of how that will work in his team's offensive scheme. If he doesn't get the ball enough, he is liable to explode, blow up his team, and create a sports drama. (just ask anyone from Donovan McNabb to Jeff Garcia to Tony Romo and Jason Witten) Yet, it is Terrell Owens that is the subject of endless media attention and fascination.
So, what is the lesson that we are teaching our youth. If you do everything right like Andre Johnson, you can expect to be mired in anonymity, no one will notice your talents, and you'll be on a constant stream of losing teams. If you draw attention to yoursel at the expense of your team, whine, cry, and use any opportunity to make a flamboyant statement, then you can expect constant media attention, many endorsements, and no matter how many times you screw things up, someone will be there to give you another chance. Everything that Andre Johnson is and does should be celebrated and yet it is downplayed by our media and culture. Everything that Terrell Owens is and does should be shunned and condemned and yet that's what we celebrate.
Sunday, December 28, 2008
Throughout her tenure as Assistant Secretary, HUD credits Ms.Kendrick with streamlining the complaint intake process, reducing the complaint process time, and obtaining significant relief in discrimination cases settled by HUD. Moreover, Ms. Kendrick has charged more Secretary-initiated investigations in
2007 than those launched in the past 10 years.
Sen. Arlen Specter turned up the heat under Housing and Urban Development Secretary Alphonso Jackson yesterday. He peppered him with questions about HUD's January 2007 decision to freeze more than $40 million for Philadelphia public
housing. "Take away all his federal dollars," replied Kim Kendrick, an assistant secretary for fair housing and equal opportunity, ending her message with a smiley icon.
"Let me look into that possibility," Cabrera typed back.
Later that day, the funding was suspended, a twist of timing that Specter said seemed "an extraordinary coincidence, if not causally connected."
Jackson said the language in the e-mails reflected the writers' general frustrations. Specter wasn't buying it.
"That's just too much of a coincidence," he said. "It all happens on the same day. These aren't collateral frustrations of something else. This is simultaneous. That kind of timing is very, very forceful evidence."
Jackson yesterday had been scheduled to present prepared remarks about his agency's general performance and priorities. His statement said he would take written questions. A grim-faced Specter, however, let him know there would
be more on the agenda.
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When there is no discrimination to find, they simply create it out of whole cloth, just ask Dan Bader.
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A mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. Payments
are typically made monthly over the lifetime of the underlying loans.
To understand why securitization is so important we need only to look at the current market. Right now, it's possible for an individual borrower to get rates as low as 5% and have those rates be fixed for 30 years.
Now, a layman might ask how a bank could afford to guarantee such a low rate for such a long period of time. After all, while money is cheap now it won't necessarily be cheap forever. As such, what happens when money is more expensive to get for the bank. If it starts to cost the bank, 3, 4, and 5% to get the money, how could they possibly afford to continue to only receive a rate of 5%?
What the process of mortgage securitization does is removes all of this risk from the bank. What these banks do is bundle millions of loans together and sell them to Fannie/Freddie. Then, Fannie/Freddie bundle these same loans together and turn those loans into bonds at the current market rate. Then, those loans are sold to investors.
Those that invest in bonds are essentially making a bet that current interest rates will be more than future rates. Let's look at an example to illustrate. Let's say I receive a Fannie Mae bond at 5%. Then, six months later Fannie Mae bonds only pay 4%. Of course, my bond is then more valuable because my bond receives a higher rate than the current market rate. What's important to understand is that those that invest in bonds can afford to take a risk on interest rate. Banks, on the other hand, are not in the business of taking interest rate risks. At their core, all banks ever want to do is loan money at a higher rate than they get it at. The process of mortgage securitization takes this risk away from the bank and moves it to bond investors, where it is more appropriate.
The other thing that mortgage securitization does is it creates liquidity in mortgages. While over the long term, a bank would make more money by collecting the monthly mortgage payment for the full 30 year term, it would also leave banks with less money in the short term to lend to new borrowers. By relieving banks of the loans immediately, banks have money to lend to a new person immediately. As such, the process of mortgage securitization allows banks to lend to far more people than without it.
The travails of Fannie/Freddie should not minimize their vital role in the process. In fact, quite the opposite should be seen. Because mortgage securitization is so vital, it is that much more vital that this process not be corrupted. These two companies are a virtual monopoly and they are fully funded by the government making their profits private while their losses are covered by the tax payers. This has perverted this very important process. The failure of both make it that much more vital that the process of mortgage securitization be done in a free market and private system.
It is a depressingly familiar scenario, a cycle of provocation and reprisal that periodically escalates into full-blown war. There is no simple account of events leading up to the current confrontation that does justice to the amassed sense of grievance on both sides. But two specific events have played a decisive role: the decision earlier this month by Hamas to end a six-month ceasefire and elections in Israel due in February.
In reality, the "ceasefire" was a tempering of aggression on both sides rather than a cessation of hostilities. Israeli foreign minister Tzipi Livni has declared the rocket attacks "unbearable" and asserted that the Hamas administration in Gaza must be
Ms Livni's hawkish stance is conditioned in part by the aspiration to become prime minister. Her Kadima party is trailing in opinion polls, behind Likud, led by Binyamin Netanyahu, a determined hardliner.
Even those Israeli and Palestinian politicians who are minded to negotiate are boxed into uncompromising stances, and for both the main reason is Hamas. But attempting to remove the problem with military power will not work. Hamas craves confrontation because its support increases when ordinary Palestinians are collectively punished, as has happened under the blockade. There are compelling reasons why Israeli politicians do not try to talk Hamas out of its militancy. But the near certainty of failure is also a more compelling reason not to try force instead.
Now, I agree that tit for tat attacks don't work. Yet, this column presents a false choice. The choice is between a never ending cycle of violence and dialogue. The piece doesn't say what this dialogue will be or how it will accomplish anything. Hamas' charter calls for the destruction of Israel. Hamas' doesn't want a two state solution but rather a solution in which there is no Israeli state. How exactly do you carry on a dialogue when the goal of one side is your own destruction?
Then again, the piece makes it seem as though the only alternative is never ending violence. That is just nonsense. The other alternative is overwhelming force that doesn't merely degrade but destroys Hamas. The problem with military force from the perspective of Israel is, in my opinion, that it doesn't go far enough. Israel has been fighting a never ending war with Hamas. What Israel should do is use overwhelming force and destroy Hamas once and for all.
Dialogue is not an option because there is frankly nothing to discuss. Simply degrading Hamas's capabilitiy through mostly air assaults also does little. While it may degrade their capabilities for the time being, it will leave Hamas to rise again. The only option is to once and for all totally destroy Hamas.
Saturday, December 27, 2008
Mr. Gorbachev tear down this wall
is just absolutely brilliant.
From my perch inside the industry, here is how I see his role in this crisis. I think all of us remember that one of the themes of Bush's first term was the so called Ownership Society. In fact, for years Bush touted that under his administration there was record home ownership. For about three years, this became an integral mantra of Bush's domestic policy.
Those within the industry knew the dirty little secret of the "record home ownership". It was being created by marginal loans and many of these loans were fraudulent. The reason there was record home ownership was because fraud was being created on a scale not seen before in the industry's history. In other words, on an unprecedented scale there was fraud on mortgage loan applications that lead to an unprecedented level of fraudulent loans. These fraudulent loans became a part of mortgage bonds and filtered their way through many different investment vehicles.
Now, we'll never know why the Bush administration turned a blind eye to the wholesale fraud committed on their watch, and ultimately it doesn't matter. Whether they simply didn't recognize it, or they simply didn't want to know it was going on, doesn't actually matter. The results speak for themselves. Personally, I don't think it is merely a coincidence that Bush touted the ownership society as it was being created by fraud. I think that the Bush administration didn't want to know how this was happening. I think that because there has always been a certain level of fraud in the industry they simply assumed this was a natural part of the business.
Either way, Bush is responsible for not aggressively confronting the fraud. Routinely loans had lies regarding income, assets, and occupancy. It became an epidemic and that epidemic is now biting everyone. This epidemic could have easily been confronted if Bush had the will and the motivation. Either Justice, HUD, the SEC, or any number of other agencies, could have made any one loan an example. At any time, anyone could have found fraud anywhere and made a grandstanding gesture against that loan. Everyone involved could have been prosecuted and the administration would have had the bully pulpit of the media to make the case that the Bush administration would no longer accept wholesale fraud in the industry.
That loans were being done largely through wholesale fraud became an open secret. If the Bush administration didn't know it, that is unacceptable. If they did know it and did nothing that is no less acceptable. That they didn't do anything about it is their responsibility for the mortgage crisis that is now eating away at our economy. That is their role in this crisis.
Israeli warplanes retaliating for rocket fire from the Gaza Strip pounded dozens of security compounds across the Hamas-ruled territory in unprecedented waves of airstrikes Saturday, killing at least 200 people and wounding 270 others in the single bloodiest day of fighting in decades.Here is one Israel supporter that hopes that this time Israel holds nothing back. In my opinion, the worst strategy is the sort of tit for tat strategy that appeared to be their staple for many years in the earlier part of this decade. In such a strategy, every terrorist attack, rocket fire, or missile launch was met with an equally aggressive action by Israel. Such a strategy, in my opinion, is the long road to a cycle of violence.
Most of those killed were security men, but civilians were also among the dead. Hamas said all of its security installations were hit and responded with several medium-range Grad rockets at Israel, reaching deeper than in the past. One Israeli was killed and at least four people were wounded in the rocket attacks. With so many wounded, the Palestinian death toll was likely to rise.
The air offensive followed weeks of intense Palestinian rocket and mortar fire on southern Israel, and Israeli leaders had issued increasingly tough warnings in recent days that they would not tolerate continued attacks.
I remember seeing Gene Simmons, of KISS, interviewed by Bill O'Reilly. O'Reilly asked Simmons why he was so confrontational. Simmons said that he was of Israeli descent and so if you attack him he hits you back three times harder.
This seems to be a much more effective strategy. There is no doubt that Israel will be viewed in the Middle East as in the wrong and the aggressors. Soon, there will likely be a United Nations condemnation that will need to be vetoed by the United States. Soon, it's likely that the world community will stand in unison in condemnation of "Israel's aggressive action". It's likely that Vladimir Putin, in the irony of geopolitical ironies, will once again call for a measured response.
This will all happen no matter how aggressive Israel is in taking on Hamas. Israel has one of two options now. They can either strike back and pull back, or they can take on Hamas in one final bloody war and end this once and for all. The first option is a lot less bloody for both sides and it will end quickly. For the time being, Hamas will be battered, bruised, and weakened. Make no mistake, if this is merely an aggressive air offensive, Hamas will regroup and they will strike again.
The other option is for Israel to call for an all out war. They can augment the air offensive with an equally tough ground offensive. There is no doubt that such a strategy will produce a lot of deaths on both sides. Many Israeli soldiers will die in what will wind up being a street to street hand to hand combat. This will be tough, brutal and deadly, but it also has the real chance of finishing off Hamas once and for all. If that's what Israel wants, can stomach, and has the will to do. When Israel engaged in a bloody battle with terrorists in Jenin, the world condemned her actions. Yet, that action left many high value terrorists dead, and in the years following this confrontation, deadly terrorist attacks went down dramatically in Israel. In fact, each and everytime Israel follows Simmons' view and strikes back three times as hard, terrorist attacks slow down within her own borders dramatically. Now is the time not merely to strike back three times as hard, but so hard that Hamas is finished off once and for all.
The worst thing that came out of its war with Hezbollah was that Israel stopped before the war was over. Now, Hezbollah is stronger. Hezbollah won because it took Israel's shots and still ended up standing. That only happened because Israel stopped punching before Hezbollah was knocked out. The leadership of Israel didn't have the stomach to finish Hezbollah off. Once public opinion became too strong it cut off its military operation. If Israel does this again with Hamas, that would be the worst thing that could happen.
Israel has two choices. They can make this war the last war against Hamas or they can make this military operation yet another in a long line of tit for tat operations. The first option will be blood, brutal and very deadly, but it will also be final. The second will be relatively painless and easy, but it will lead to another round of relatively painless and easy military operations. I hope this time Israel says that once and for all Hamas will be confronted until each and every one of them is dead.
our family is living the American dream. Look, at me I'm the damn mayor
Not very statesmanlike in my opinion, but then again, you get the government you vote for. In Fort Stockton, it's a lot more complicated than that. Like in most small towns, the mayor, along with most of the city council, is a part time position. In fact, each pays only a few hundred Dollars monthly. In fact, the mayor has little if any power.
The only real power for the mayor and the city council lies in choosing the City Manager, currently held by Rafael Castillo Jr.
The day to day decisions of the town are made by the City Manager. The manager also gets a salary that allows him to make this job his only job. For the elected officials, being a part of government is something they do for prestige, civic duty, or even some sense of power, but they must do something else to earn a living. Because all the elected officials have positions that are largely ceremonial, the town has ceded most of its power to unelected bureaucracies. There only real role is selecting the City Manager and that's it.
In this way, Fort Stockton becomes corrupted much like Chicago, Cook County and Springfield. The real decisions are made in bureaucracies beyond the eyes of the public. The real decisions are made by those that aren't answerable to the people. In Chicago, Cook County, and Springfield, this happens because those with money use it to influence those in office, and then gain power in the bureaucracies and use it to corrupt. In Fort Stockton, that process doesn't even need to occur because those in office never had any power to begin with. As such, the town is run to the benefit of those with influence. Those with business interests use their power so that the bureaucracies run the government in their favor. Much like in Chicago, Cook County, and Springfield, often this means they control the bureaucracies themselves. Even in corrupt Chicago, the citizens would never stand for Richard M. Daley ceding day to day operation of the city to an unelected City Manager. Yet, in Fort Stockton, that's exactly what's happened. Furthermore, the town's only newspaper the Fort Stockton Pioneer only comes out once weekly and so doesn't have nearly enough resources to be the proper watchdog over its city government.
There is a sort of unique political irony and opportunity here. Because Fort Stockton has a sort of shadow government, much again like in Chicago, Cook County, and Springfield, anyone with the vision has the platform to run on and turn the government over to those that are elected. With it, that individual would also consolidate more power into their own hands. There is no reason why an unelected bureaucrat would make near $100k while the mayor would barely make $2k. There is also no reason why the day to day decisions would be made by someone unelected, as it is by the City Manager, while the elected mayor is largely ceremonial.
An open government, a transparent government, and a government answerable to the people, would be run in the exact opposite way. In Fort Stockton, the government has finally made the City Council meetings accessible to all online. So what? Nothing of substance ever gets done there. There meetings are largely ceremonial and almost entirely nothing more than a debating society. If the city government were really transparent and open, the meetings held by the City Manager would be the ones open to the public. Of course, if the government were really open, the City Manager wouldn't be the one with all the real power.
Small towns like Fort Stockton don't necessarily have the money to pay for all sorts folks to run their government. Yet, it appears the town is perfectly happy having the one running it be an unelected bureaucrat like the City Manager. The platform is there for someone to point out that this is ludicrous, and move the power away from the unelected bureaucrat and into the hands of its elected Mayor. With it, that individual would also pull off some political jujitsu because with it, they would consolidate power in their own hands.
The thing about hate, bigotry, and racism is that it comes from a position of ignorance. In other words, White racists rarely new any Blacks. Racists of all shapes and sorts come to their racism because they know very few people toward which their hate is directed. In my own experience, that's exactly what happened. Up through high school, I experienced a lot of bigotry because of my Russian birth. I was often the first person that anyone met from Russia. In college, I experienced similar bigotry because of my Judaism. Everyone that made a Jewish remark had made me the first Jewish person they met. Had all these folks been exposed to Jewish children when they were growing up, I think their racist remarks would have been much more limited.
The hate in the Middle East takes on a similar dynamic only in a much more intense and deadly form. Most Palestinians have never known any Israelis in any substantive way and the same can likely be said the other way. Unfortunately, adults filled with hate are likely beyond hope. In order to achieve any lasting peace we all must get to the children before they are corrupted by hate.
That's why I think that an exchange of school children as young as six, Israelis and Palestinians, would be a productive way to bring the two people together. Six year olds have an innocence that allows to get past the hate that their parents can no longer. If Israeli children are brough together with Palestinian children in an exchange in which they all simply act like children, that is the best way for both sides to get past the hate. If children simply interact as children, they will find that they really aren't very different from each other at all.
This is one of those plans that is easier said than done. It's likely many of these children would never allow such an exchange. Furthermore, in the Middle East, there is always the concern of security, especially in such an endeavor. That's why it would make sense for some of this to be created right here in America. Many reporters have mentioned that in private Palestinians dream of one day coming to America. As such, a joint tour of America sponsored and attended by both Palestinians and Israelis is a good place to start.
It's the sort of idea that would need support of leaders of both the Israeli and Palestinian community. It's best place to start is here in America where there is moderates on both sides. It's the sort of idea that for instance AIPAC, the Jewish United Fund, as well as all sorts of pro Palestinian groups in America would all need to get behind.
It couldn't merely be a small token statement to make a difference, but it wouldn't need to involve the exchange of entire populations. Kids talk and they will share their experiences with their friends back home. When they come back with great stories, other kids will also want to share in the same good time. This is the sort of idea that can start with a modest exchange and it could grow. Bringing children of both cultures together is in my opinion a great way for both sides to get past the hate.
Friday, December 26, 2008
Without risk, our economy doesn't grow. Nearly a hundred years ago, my friend's grandfather was offered a business proposal. With a $5,000 investment, he could in on the ground floor of a company with a then revolutionary idea: the car radio. My friend's grandfather declined and that's too bad because the company is Motorola. While now hindsight is certainly 20/20, at the time this investment was a risk. It is exactly this sort of risk taking that creates economic growth.
Now, there is very little room for risk taking. Banks are cutting back on those they lend to. Businesses are cutting back on their investment. Consumers are cutting back on their purchases. Even the ultimately risk takers, the hedge fund managers, are hoarding cash and cutting back on their risk taking. Without risk takers, the next Motorola never happens.
Risk, much like anything, is a numbers game. The more of it we have the more of it turns out good. In this economy though, does anyone really see a business taking a chance on expansion? Does anyone really see an entrepeneurs investing in start up? Does anyone really see any wealthy person invest in anything but Treasury bonds? Even consumers won't take many risks on purchasing products, services, or anything else.
Our economy has become far too leveraged. As such, it is a good thing in the long run that people become savers, and the same is true for companies. Of course, if all everyone ever does is save, then no one will take a chance on risk. Without risk taking, the next Motorola is not created, and all the economic expansion that goes with it. We have turned into a nation of savers, or as Forbes calls us, wussies. This may eventually be a good thing, but in the meantime, it will stunt our economic recovery.
This is essentially the position that Stein takes. Conservatives are so patriotic, in the view of Stein, that it makes us stupid. Whereas liberals, according to him, aren't blinded by their patriotism, and so they are able to see that which dumb Conservatives like me are blind to. What's most amazing about Stein's piece is that it is so short on any detail about why he is right. He starts his explanation as such.
Conservatives feel personally blessed to have been born in the only country worth living in. I, on the other hand, just feel lucky to have grown up in a wealthy democracy. If it had been Australia, Britain, Ireland, Canada, Italy, Spain, France, Luxembourg, Belgium, the Netherlands, Switzerland, Japan, Israel or one of those Scandinavian countries with more relaxed attitudes toward sex, that would have been fine with me too.
Now, there's no doubt that our freedom and democracy account for much of our greatness. It's also true that the U.S. is not the only country in the world that has these things. Yet, is Stein really saying that there is no difference between the U.S. and Luxembourg? Is Stein really dismissing the idea that it was the U.S. most centrally responsible for bringing peace to hundreds of millions of people throughout the world including in many of the countries that he lists? When was the last time Luxembourg confronted an evil tyrant and freed millions from their grip? In fact, it is the U.S. itself that is most responsible for protecting Luxembourg from invasion. Stein can go live there but he will still be afforded the protection of the greatest military in the history of the world when he does. It seems that Stein is just oblivious to the fact that Europe has nothing more than a token military to speak of and that's because they rely on the U.S. for protection. I guess protecting most of the world from evil and tyranny is something to be marginalized and disregarded in the mind of such an elite intellectual as Stein.
Then, Stein lays out his "laundry list" of problems with America.
This doesn't mean I'm not fascinated by American history, impressed by our Constitution or don't appreciate our optimism and entrepreneurial spirit. In fact, I love everything Hannity listed on his TV special other than Madonna. But there are plenty of things I don't like about America: our foreign policy, our religious fundamentalism, our provincialism, our intellectual laziness, our acceptance of sweat suits in public.
I suppose that Stein would like the neutral foreign policy of a country like Luxembourg, however there is something that Stein misses. When your country is only a few hundred thousand people, you can afford to stay neutral. Being the one and only super power, we are not afforded the luxury of inaction. I would be curious to know what specifically he doesn't like about our foreign policy but that he doesn't mention. No one is saying that America is perfect, however I would say that America is still the greatest country in the world even if we allow sweat suits in public. What's more, he considers America a country of "religious fundamentalism". It's hard to know what he means by those, but I assume by this he means we don't totally shun religion into some back corner. I suppose because we allow those of genuine and deep faith to have a platform, this makes us religious fundamentalists because to secularists like Stein the only religion that is good is one he knows nothing about.
Here is how he finishes his supposition.
When I ran the idea that liberals don't love America as much as conservatives by talk-show host Glenn Beck, who will move from CNN Headline News to Fox News next month, he totally agreed with me, which is precisely why I called him. "It's absolutely true, deep love. As a parent loves a child," he said. "But I think liberals laugh that off, the way the rest of the country laughs off the love Texans have for their state. Texans don't think, 'Oklahoma, you suck.' Well, yes they do -- but they don't think other states suck. They just have a love for the republic of Texas. I don't have disdain for other countries. Well, except for France."
I asked Beck why Democrats rarely share his overwhelming sense of American exceptionalism and Francophobia. "I think it's because in the late 1800s up until the 1930s, the progressive movement started to think the European ideals are pretty good, that it's one big world," he said. "Well, it's not. If you look at all the countries like people, there are differences between people. And I happen to like this person the best." When I look at the countries like people, I love Sweden the best.
I would remind Stein that the so called European model has produced a continent in which the population doesn't have enough children to survive. It has a stagnating economy and frankly what we are seeing is that country after country is looking to get away from its nanny state and go toward the free market ideals that we have here. In France, that's how Nicholas Sarkozy won and in Ireland they cut their corporate tax dramatically and spurred economic growth. I would remind Stein that the U.S. economy has a larger GDP than the next four combined. I would remind Stein that the European model has created stagnating GDP growth and a population that is rapidly deteriorating.
In effect, Stein is right. Generally, Conservatives are more patriotic than Liberals. That's because we are able to appreciate that which makes this country great and the greatest in the world. I will let Liberals espouse the ideas of European ism, moral relativism, and secularism. I will stick to all the traditions that have made America great.
Second place with 1 2/3 points - (T*) - Joshuapundit - Cheney Slaps Biden Upside The Head
Second place with 1 2/3 points - (T*) - Mere Rhetoric - Smug Liberal Sophistication Undisturbed By Decades Of Disastrously Wrong Domestic And International Predictions
Third place with 1 points - Bookworm Room - Destruction of Property
Fourth place with 2/3 points - (T*) - Soccer Dad - Don’t get too chummy with that flaming dummy
Fourth place with 2/3 points - (T*) - Rhymes With Right - Impeach Jerry Brown
Fourth place with 2/3 points - (T*) - The Glittering Eye - How to Give a Bonus
Fifth place with 1/3 point - Cheat-Seeking Missiles - Gay Anger At Warren Unwarranted
Winning Non-Council Submissions
First place with 2 1/3 points! - John Stossel - Arrogance and Conceit Won’t Fix the Economy
Second place with 1 2/3 points - (T*) - Larrey Anderson/American Thinker - Climate Crisis = Logic Crisis
Second place with 1 2/3 points - (T*) - Dhimmi Watch - Fitzgerald: If we cut off the jizya, could things become even worse?
Third place with 1 1/3 points - (T*) - Pajamas Media - The Op-Ed the New York Times Wouldn’t Run
Third place with 1 1/3 points - (T*) - Counterterrorism blog - Jihad by the Shoe: Who Was Behind it and why?
Third place with 1 1/3 points - (T*) - Simon Deng - Hudson New York - Bishop Tutu and “Israeli Apartheid”
Fourth place with 2/3 points - The American Spectator - Coffee and Closure
Fifth place with 1/3 point - Jewcy - Madoff the Jew: The Media’s Hypocritical Obsession With the Fraudster’s Faith
1) Government intervention is dangerous and should always be implemented with care.
The left is screaming about deregulation (something I will address in a bit), but it was in fact too much government intervention that played a far larger role in creating this crisis. When Alan Greenspan lowered the Fed Funds Rate to 1% and kept it there for about two years, he opened the door to allow banks to perform exactly the sort of risky behavior that caused this crisis. The Fed Funds Rate is an overnight borrowing rate. By making it so low, he literally invited banks to take risks they shouldn't have taken. Banks need to borrow overnight for one of two reasons 1) to make up for a mistake or 2) to take an unnecessary risk. Such borrowing should come with a price. Instead, Greenspan made it nearly free. As such, banks began to borrow short term and flush with cash, they put a lot more money into mortgages. The ball started to roll.
On a smaller scale, the Community Reinvestment Act and Congress' pressure on Fannie/Freddie to lend in low income areas also gave those entities even more license to create and support exactly the sort of loans that are causing trouble now.
In both cases, what we had was government intervention and manipulation into free markets. The free market would never have called for interest rates so low or to have these low income borrowers get loans, and yet the government insisted that all of these things are a good idea. All of this is very important for several reasons. For instance, Arianna Huffington proclaims that this crisis is proof positive that free market capitalism is a failure as a system. Given what I have shown about the role of government intervention in this crisis, that is a far too simplistic idea. Yet, we should expect folks like Huffington to continue this drumbeat. We can also expect the Obama administration to try and move this country dangerously far away free markets.
It's most important because currently the government is intervening in free markets in a much more active way than they ever did to create the crisis. The Federal Reserve has lowered the Fed Funds Rate to .25% and that's only the beginning. They are buying up Fannie bonds in order to manipulate mortgage rates lower. The Federal government is about to embark on trillions of Dollars worth of spending. Finally, the Obama administration has promised a new "regulatory framework". All of this amounts to significantly more government intervention than anything we had to get us here. We are in danger of allowing the government to manipulate the market into something much worse than it is now. We may allow it because we don't recognize one of the lessons of this crisis.
2) Government oversight and enforcement is key not regulations.
Anyone that claims that this crisis was caused by deregulation is 1) naive and 2) a partisan. This crisis wasn't caused by a lack of regulation. It was caused rather by a lack of oversight and enforcement of basic and common regulations. The financial industry is one of the most corrupt we have. Yet, the regulators in charge of watching the industry stood by while fraudulent loans were created en masse. The amount of fraud in mortgages increased exponentially in the last half a decade, and yet, the enforcement of this fraud was nearly non existent. From time to time, we would hear about Federal prosecutors busting up a ring of fraudulent mortgage schemers. In reality, it wasn't the sophisticated plot that caused this crisis. What caused this crisis was that it became common place to lie about income, assets, and occupancy. The bulk of the problem loans were done fraudulently. Yet, nothing was done even though it became nothing less than an open secret.
Business can't function unless there is an atmosphere of fairness. That can only happen if the regulators are aggressive in investigating and prosecuting fraud, theft, and other crimes. What happened in the mortgage industry for about three years was nothing less than a wholesale fraud and that fraud was looked the other way by those responsible for prosecuting it.
3) Speculative markets are always obvious and they always end badly
There is that gold rush mentality during any speculative market. What I mean is that everyone wants to get their piece because there is so much money to be made. This sort of behavior is born of greed and laziness. It is much easier to try and make the quick buck than to work hard for it. That's in part what creates a speculative market in the first place.
There was never any doubt by the end of 2004 that real estate was speculative. Yet, its speculative nature only only fueled more buying. Often people were buying properties to "flip" out of their own home state before they owned their own property. Does this really sound like a good idea? Yet, this sort of behavior was often encouraged. Real estate investment became the topic of water cooler and dinner conversation. In other words, novice real estate investors were sharing their non professional ideas in how to make money in a speculative market. Like all speculative markets, this one crashed and it crashed hard. Like all speculative markets, this one could easily be understood for its speculative nature throughout the speculative portion of the market. If your property suddenly became forty percent more expensive in a year, that is the hallmark of a speculative market. Instead, folks watched real estate prices go up literally with no end and saw this as a buying opportunity.
This will not be the last speculative market. The next one will be just as obvious and it will end just as badly. Hopefully, some will heed the lesson of this one and not join the gold rush of the next one.
4) Moral hazards are real, dangerous, and corrosive to our economy
For years, borrowers bought properties they couldn't afford. Banks took on risky loans. Both were rewarded with good properties, and a basket of loans that they then sold at massive profits. Furthermore, borrowers were often able to refinance out of loans that were affordable into brand new loans only slightly less afordable. While these borrowers held onto unaffordable mortgages, they were also given access to an endless stream of credit to buy a new car, television, or to fix up their place. Meanwhile banks made so much money on these risky loans that the more risk they presented the more money they made. All of this is known as a moral hazard in which risky behavior that should have been punished was in fact rewarded. All this did was create even more risky behavior.
Today, our government continues to engage in even more risky behavior. Companies that suffered, finally, because of all this risk were rewarded with $700 billion bailout. The automakers, suffering from years of mismanagement, were also given a bailout. Now, borrowers are being given a bailout in the form of loan modifications in which borrowers struggling to make their mortgage payments are given brand new loans that are more affordable. All of this presents a moral hazard even more expansive than the ones that we had in place during the run up to the crisis. Given what the last set of moral hazards created, is there any doubt what is happening now will make a crisis even worse down the road.
5) Fannie Mae/Freddie Mac need a serious overhaul
Our entire mortgage market is perverted and most people don't know it because 1)it's always been this way and 2) because it happens behind the scene out of the view of the consumer. Much of the problem was created because Fannie/Freddie have a monopoly on mortgage securitization. By securitizing loans, these two make all the rules. As such, these two control the entire mortgage market. Such a dynamic is open to manipulation and corruption. Unless there is a major overhaul of both Fannie/Freddie, the mortgage market will be in constant threat to the kind of dynamic we saw over the last few years. In my opinion, these two must be broken up and fully privatized as soon as possible. Without such wholesale changes, they will continue to wreck havoc on the mortgage market indefinitely.
6) Major financial revolution must be performed carefully.
I don't believe that the bank deregulation bill of 1999 was in and of itself a bad idea. It was however, very revolutionary. Furthermore, those that created and oversaw its implementation had no idea its effect. The bill essentially broke down the figurative wall between banks, brokerage firms, and other financial services companies and allowed most of them to cross sell each other's products. One of the by products was that more financial services companies became involved in mortgages. Limits on capital and diversification were disregarded by regulators and so the end result was that far too many financial services companies got far too heavy into sub prime and all of them busted when it did.
There is something called the law of unintended consequences. It was on display with the bank deregulation bill of 1999. No one involved with its passage thought it would be used to get far too aggressively in one area of finance. More likely, its backers thought the exact opposite. This happened because those entrusted with overseeing the industry after its passage were totally blind to the monster it helped create. Had regulators taken more care to limit leverage, capitalization, and a lack of diversification, a lot of this wouldn't have happened. Instead, regulators looked on while nearly every single financial services company not only got far too heavy in sub prime, but many of them did it with an obscene amount of leverage. Such a lack of oversight cannot happen the next time any law revolutionizes any industry.