Soon The Banks Will Be Between a Rock and a Hard Place

The White House is concerned that their loan modification program is floundering and so they're about to put more pressure on the banks.

The Obama administration will crack down on mortgage companies that are failing to do enough to help borrowers at risk of foreclosure, as part of a broad effort to boost participation in its mortgage assistance program.

The Treasury Department said Monday it will withhold payments from mortgage companies that aren't doing enough to make the changes permanent. Officials will monitor the largest of the 71 participating mortgage companies via daily progress reports.

The goal is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments. At the end of October, more than 650,000 borrowers, or 20 percent of those eligible, had signed up for trials lasting up to five months.

To understand just how dangerous this and how much unnecessary pressure this will put on banks first you should understand the process by which banks approve loan modifications. Loan modifications require most of the same paperwork as a regular loan: pay stubs, bank statements, w2's, etc. It also requires a full budget filled out by the borrower and it requires a letter explaining why the current mortgage payment is too high. (I often refer to this as the sob story) This may not seem like a lot but a file that is appoved is often the size of one section of an encyclopedia by the time it's done.



Second, you must all understand that the approval for a loan modification is nearly the exact opposite of the approval for a regular loan. Whereas on a regular loan, you want everything from income to credit to assets to be maximized, you want that to be minimized in a loan modification. At the same time, you don't want a totally hopeless situation since that's a sign of someone totally irresponsible and unfit for a loan modification. At the same time, the government has created its own rules. For instance, the modified loan can't go below 2% and still has a front end ratio of 31%. (by this I mean the housing payment, mortgage taxes and insurance) So, for a bank, figuring out if a loan should be approved is a delicate process.



Finally, loan modifications, on this scale, are totally new. Banks have no bureaucracies for them. They are creating them as they try to approve these loans. At the same time, they are working closely with the federal government and Fannie/Freddie for the first time on this issue. As such, you are asking multiple bureaucracies to work together. We can all imagine the bureaucratic nightmare that creates.



I'm not here to defend the banks. I have no use for banks. I don't care how difficult it is when it takes six months and more, as it often does, there's no excuse. Still, these banks are dealing with a brand new process, that's very complicated, and involves multiple new bureaucracies. Most importantly, it goes against every business instinct for banks to approve a loan modification. After all, you're approving someone entirely based on their current inability to pay.



Now, the White House will try and embarrass all those banks that aren't approving enough. Those banks will be put on some list for all to see. It's sort of like being put in the middle of the town square during the Middle Ages. Banks will want to do everything to avoid being on this list. Doing this means approving more loan modifications.



Now, think about the difficult, confusing, and new process I just described. Add to this directives from banks to the people in charge of processing these loan modifications to get more of them done. What you'll have carelessness and speed into a process that complicated and chaotic. That will mean a lot of people that shouldn't be approved will be approved. This will expose the process to a great deal of fraud. If banks are fixated on approving as many as possible, they will be extremely susceptible to being taken advantage of.



It remains to be seen if the White House will be effective in intimidating the banks. If they are, however, you can bet that will be a decision that we will all regret. That will unleash a terror in the loan modification market that we will all regret. I was always against the proliferation of loan modifications. They have an inherent moral hazard. They are wraught with potential fraud. Now, the administration is determined to make sure that all my worst loan modification nightmares come true.

Crashergate, the Secret Service and the White House Social Secretary's Office

Some conservatives are working themselves into a lather over a report from Newsweek.

The White House staff member whose job was to supervise the guest list for state dinners and clear invitees into the events says she was stripped of most of her responsibilities earlier this year, prompting her to resign last June.

The account of Cathy Hargraves, who formerly served as White House "assistant for arrangements," raises new questions about whether changes that she says were made by President Obama's social secretary, Desiree Rogers, may have contributed to the security lapses that permitted Virginia socialites Michaele and Tareq Salahi to crash the state dinner for India's prime minister last week and get themselves photographed with the president.

Hargraves tells Declassified in an exclusive interview that although she had originally been hired as a White House political appointee in 2001, she landed a new position on the White House residence staff in 2006 and was specifically detailed to the social office to work on state dinners.

Let's break this down. Hargraves worked on the Social Secretary's office in the White House. Her job was to look at a list for state dinners and make sure everyone that enters a state dinner is on the list. Hargraves was ushered out of her position, and apparently not replaced, during a reorganization of the new administration.

So, some conservatives are suggesting that the removal of this position was a contributing factor. I don't want to argue a hypothetical. That said, to try and focus this on the Social Secretary's office is absurd. The Secret Service has one responsibility, to protect the president. They are ultimately in charge of all lists for any White House State Dinner. They are ultimately responsible for letting anyone in to any State Dinner. Making the issue the Social Secretary's Office only turns the issue to the margins.

If the safety of the president revolves around a low level staffer in the White House, we're all really in trouble. If the Secret Service relies on a low level staffer in the White House to make sure those in the dinner are supposed to be there.

Let's also point out that the Secret Service always gets it right. What happened at the last state dinner has never happened before. It should be investigated. Those responsible should be fired and we should move on.

The ACORN "Name Change"

There's an old story that's been given new life with the discovery, recently, of new documents.

ACORN, the troubled community service organization, recently considered changing its name in a bid to rehabilitate its image, according to an internal memo obtained by POLITICO.

The document, which will be released Tuesday as part of a Republican congressional forum on ACORN, illustrates the internal deliberation the group has undergone after a year of embarrassing scandals.

The document was found in Dumpster outside of an ACORN office in San Diego, a House Republican aide said. Derrick Roach, an unsuccessful Republican candidate for statehouse in California, took thousands of documents last week from the trash outside the office. An ACORN spokesman confirmed the veracity of the document.

In fact, more than one person with "insider" connections told me this. They were told by their own contacts within ACORN that management was considering a name change. This all was happening in the summer time and I would bet anything that these documents are from that time.

This should surprise no one. Even in the summer time, the name was becoming toxic. Of course, this was an option as part of a rebranding. This document only confirms months of speculation from insiders.

What is important is this. In July, ACORN International changed its name internally here in America to Community Organizations International. According to Wade Rathke, its head and former head of ACORN itself, he didn't want confusion between the two groups here in the States. Internationally, COI is still called ACORN International. That story broke at about the time that insiders were telling a lot of media that they were hearing that ACORN was about to change its name. As such, Kevin Mooney of the Washington Examiner first reported it wrong. He wrote a story that suggested that ACORN wasn't changing its name. The rest of the conservative media picked up on the story and spent the next couple days bashing ACORN for changing its name. Then, with egg on its face much of the conservative media began to back track.

Meanwhile, ACORN played coy and released this press release at the time.

Here are the facts: ACORN is not changing its name. ACORN International, a five-year old organization of overseas former ACORN affiliates, did. ACORN withdrew from ACORN International a year ago as part of an overall restructuring process and requested that they stop using the ACORN name, which they have now done. Wade Rathke was fired as Chief Organizer in June 2008 and has had no further involvement with ACORN since then. He will not be taking on any responsibilities with ACORN.

This press release was technically accurate though it never did mention the internal debates now revealed in the current memos. (though I suppose there wouldn't be a reason to do so either) These documents are in fact the documented evidence of the rumors that insiders were hearing. Now, we know that the internal debate was occurring at the same time that ACORN Intl. changed its own name here in the states.

Meanwhile, these documents are part of a plethora of documents discovered in a dumpster in San Diego. I would hope the rest are more interesting than these. If all there is are some memos about the discussion of a name change, there isn't much there.

I'm Sick and Tired of the Health Care Debate

I recently come to a realization over the last couple weeks. Since sometime in the summer, the entire media establishment, and that includes all media including non traditional (web, talk radio, blogs, etc.), has been retelling the same story over and over.

The root of news is new. There's been almost nothing new since the summer. We had some new news to report in August when the townhalls occurred because that was an entirely different dynamic.

Here's what the story has been since the summer. The Democrats are struggling to get a majority surrounding the public option, abortion, illegal immigration, and other contentious issues. The conservatives think this is a government takeover that will lead to rationing, government bureaucracy, and another failed government entitlement program. The liberals think the current system is corrupt and want to create more competition. The Democrats think the Republicans are obstructing. The Republicans think the Democrats refuse to listen to them. Meanwhile, the poll numbers for this plan, the president and the Democrats have fallen precipitously and steadily since the summer.

I defy anyone to find a story since July that says anything different than something I just mentioned. Believe you me, I am as guilty as everyone else. I've struggled to create posts that are in fact really rehashes of other posts. No one has said anything new or different about this in months. If I read one more story about how this is a government takeover and that will lead to rationing, my head may explode. Don't get me wrong. I believe it is and I agree but how many times can you read the same thing over and over. If someone really wanted to say something new they'd do a detailed analysis of either or both the Senate and House bills. Rather than talking about things theoretically, that would be real and practical analysis. It would also require two thousand pages of dull reading and so that's unlikely.

It's in fact a sad indictment not only of our media but ourselves. It's true. The media hasn't said anything new about this in months but it's also true that we can't get enough of it. Answer this honestly. How many people reading this have read an editorial about the health care debate that called the bill a "government takeover" and that will "lead to rationing". I bet almost everyone has and most of you probably recommended said piece to others as though you'd read something groundbreaking. You haven't. The idea that this is a government takeover is not new, it's not earth shattering, and anyone writing such a thought at this late stage is merely parrotting thoughts established long ago.

The reason you enjoyed said piece is because you want your view reinforced ad nauseum. Most of us don't want to be challenged or shown something new. Instead, we want our positions reinforced over and over. That's what's happened in the health care debate. Each side has staked its position and each continues to reinforce said position over and over. We all digest it breathlessly as though everyone is saying something illuminating and not parrotting the same position ad nauseum.

I'm through with it. Wake me up if and/or when there's a Senate agreement. Then, let's see what it is. Then, there might be something new to talk about. Until then, spare me another article on how this is a government takeover.

Morning Market Report

The debt crisis in Dubai has changed the dynamics in the markets. Now, the question is how. Over the weekend, here's the latest details. First, the UAE rushed to back the debt. Second, the markets internally in Dubai had a sort of Black Monday.

Dubai's stock market saw its biggest one-day decline since Oct 2008, and Abu Dhabi's bourse saw its biggest ever fall when they reopened on Monday after a four-day Muslim holiday.

"The falls were expected. We were hoping for a government statement that would alleviate concerns," said Haissam Arabi, chief executive at Gulfmena Alternative Investments.

One internal Dubai indix fell 8.3% and another broader index fell 7.2%. Meanwhile, markets in the rest of the world were much more mixed. (more on that later) Dubai is a small country far away from here but for the time being it is the center of the financial world.

The second story to watch continues to be the dollar's relationship against the equity markets. There continues to be a troubling trend there. The dollar strengthened on the Dubai news just as the three indices shed north of 1.5% on Friday. Meanwhile, bonds are taking a small breather this morning. The ten year U.S. Treasury is at 3.23%. That's off 3 basis points but still near three month lows. That showed massive strength following the Dubai news. The three month t bill is now trading at .03%. That's at least positive and hasn't tested a negative rate since reaching there the week prior. It's still in the vicinity and so that's another security to watch. The yield spread between the two and ten year has tightened to 2.52%. Oil is up slightly to $76.20 a barrel. Gold continues to trade near all time highs at $1172 an ounce.

Markets in the Far East were up on a good day while they're currently down marginally in Europe. The Hang Seng was up 3.25%, the NIKKEI from Japan was up 2.91%, the Straits Time Index in Singapore was down 1.09%, while the broader Chinese index was up 3.20%. In Europe, the FTSE was down .6%, and the DAX in Germany was down .85%.

Currencies are almost unchanged. The Euro is up .38% against the Dollar, the British Pound is up .08% and the Japanese Yen is .03%.

Finally, the administration plans on announcing an expansion to their loan modification program this week. Details are still scarce however the program has failed on every level thus far.

The White House Threatens the Banks

The president's loan modification program is an utter failure. That's without a doubt. The president pronounced that up to 7 million people would have their loans modified and saved from foreclosure. So far, only 500,000 have been done and almost 90% are in their probationary period. Meanwhile, the loan modification process has turned into a bureaucratic nightmare that has made the normal loan process appear streamlined. If you've ever applied and been approved for a mortgage you can appreciate that comparison.

The reasons are pretty straightforward. First, the approval parameters for a loan modification are much more complicated than they are for a regular loan. (again if you've ever applied for a regular loan, you can appreciate that comparison) Loan usually take at least two months to be approved and it's not that uncommon to wait six months. (this I know through experience) To approve a loan modification, the bank needs to figure out an entire budget for a borrower including gas, food, electricity, etc. It's not entirely clear what is and is not allowed for each of twenty different boxes.

Second, banks don't necessarily want to approve a loan modification. There's an inherent moral hazard in approving them. A borrower can get a rate of as little as 2%. Keep in mind that you only qualify for a loan modification if you can't afford to make the payment on your current mortgage. While it's not mandatory, banks are much more apt to approve a loan modification if you're already behind on your current mortgage. If too many people get a loan modification everyone will want one and everyone will scheme, including missing mortgage payments, to get qualified for one.

Finally, prior to 2008, there were a handful of loan modifications done. Even in 2008, the number was in the tens of thousand for all banks. Now, the president wanted to expand that to 7 million. He literally created a new industry, the treasury also created all the rules for said industry, and so no one should be surprised that said industry is going through growing pains.

This is all entirely due to a complete lack of planning by the White House. The administration wants the banks to them en masse. Yet, the banks are very weary of doing too many. They are confused by the rules. Their bureaucracies are still being set up to handle the influx of applications. Most of all, banks do in fact realize the potential disaster looming if they create another moral hazard in mortgages to their own bottom line.

The administration's strategy throughout vis a vis the banks has been to guilt them into approving more of them. The administration constantly harps on the fact that many of these banks received a bailout. It's true. They did. Yet, they received a bailout following reckless behavior. Wouldn't we want to now encourage banks not to continue reckless behavior. I'd say that approving, en masse, loans as low as 2% to borrowers currently behind on their mortgages is reckless.

The failure of the loan modification program adds to a growing list of administration programs that are turning into an embarrassment. Now, it appears that the administration will amp up the pressure on the banks.

The banks are not doing a good enough job," the Times quoted Barr saying in a Friday interview. "Some of the firms ought to be embarrassed, and they will be."

Treasury spokeswoman Meg Reilly said Saturday the department was "taking additional steps to enhance (mortgage) servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications."

That could include new resources for borrowers, Reilly said without offering details. The department will announce new measures Monday, Reilly added.

Put yourself into the position of the banks. Loan modifications were always supposed to be a case by case basis. They were always meant to be done very infrequently for truly extraordinary circumstances. Then the administration makes them a key cog in their overall economic recovery plan. The administration even gives the banks incentive to do them. (banks get a $1000 fee for each closed plus yearly and monthly fees) Yet, the program is totally confusing and it goes against every business instinct. By refusing to approve them briskly, you then earn the ire of the administration. So, you're effectively stuck between the proverbial rock and hard place.

Now, imagine if the administration does in fact follow through, effectively, and embarrasses all those banks that aren't closing enough modifications. Now, banks will suffer through a miserable period of public relations being put in the cross hairs of the administration's media machine. Just ask the insurance companies how that feels. The only alternative is to begin to make hasty decisions in a confusing process that you really want no part of to begin with. Talk about a recipe for disaster.

Iran Thumbs Its Nose at the World

A few days back the IAEA approved a strongly worded censure of Iran over its nuclear program. The Politico had a story that called this censure a "vindication", at least according to the White House.

The resolution was hailed by the White House and won praise from the Israeli government, which has previously expressed skepticism that much can be gained from trying to engage Iran.

"Today's overwhelming vote at the IAEA's Board of Governors demonstrates the resolve and unity of the international community with regard to Iran's nuclear program," White House spokesman Robert Gibbs said in a statement. "Indeed, the fact that 25 countries from all parts of the world cast their votes in favor shows the urgent need for Iran to address the growing international deficit of confidence in its intentions."

Not two days later, the same Politico, along with most media, is reporting that Iran is thumbing its nose at the censure by no longer working with the same IAEA.

Iran will no longer voluntarily cooperate with the International Atomic Energy Agency after its vote last week to rebuke the nation, the Tehran Times is reporting.

As Laura noted, the IAEA vote was a big win for Obama in that China and Russia, the two powers that have been most resistant to taking a harder line, both signed on to the resolution.

Thus, we continue this diplomatic dance that has played out in front of the world and it's a dance that Iran has manipulated perfectly to their benefit. So far the world community is patting itself on the back over a strongly worded letter that was rebuked publicly by Iran two days later. That's sum total of the diplomatic accomplishments of the Obama administration.



Listening to politicians from all parties and from all countries, none have a clue what to do. Everyone must understand that if nothing happens Israel will bomb Iran's nuclear sites. Even Israel itself wants to avoid this outcome. In fact, even Iran's chief defenders, China and Russia, have no clue.



No one wants Israel to bomb Iran, not even China and Russia. The price of oil would go to some unheard of level if that happened. That's not what China wants. That's what Russia wants but they also want a situation they can manage. A nuclear strike would very likely create a regional if not an all out war. Plenty of terrorist groups near Russia would take advantage of said situation.



Yet, both insist on stopping any significant sanctions giving Iran carte blanche to create a nuclear weapon. Meanwhile, the U.S. and our allies are acting like high school kids with a major research paper due. They'd all rather procrastinate with a series of meaningless diplomatic gestures and actions rather than making the difficult decisions necessary to actually stop Iran from getting a nuclear weapon diplomatically.



If you ever listen to any politician from either side of the aisle talk about what we should do to stop Iran from getting the bomb all you get is a series of platitudes designed to make a nice sounding sound bite not to have any meaningful practical plan. It will be things like working with our allies, getting Russia on board, and show strength. No politicians really have a clue.



There's only a limited number of options short of war. We can encourage all our allies to pull their ambassadors. All internal investment funds can make it clear to all companies that do business in Iran: they'll divest if the business continues. Most meaningful sanctions are unlikely because of Russia and Iran. Finally, we can engage in a Naval blockade, an act of war. That's it.

Yet, every politician from both sides offers nothing but platitudes. Platitudes won't get it done. Soon, we'll have to have real solutions and so far no one has shown they have any.

Voyeurism, Celebrity and Tiger Woods

When is a minor traffic accident not merely a minor traffic accident? It's when that accident involves a celebrity. Since Friday, the media has bordered on near obsession with the traffic accident involving Tiger Woods, a fire hydrant, and a tree. It's not merely a sports story. It's not merely a celebrity story. It's a news story. It's now the story that a Fox News is leading with.

As most people know sometime around 2 in the morning on Friday morning, Tiger Woods got into his SUV, backed out of the driveway, and nailed a fire hydrant and then a tree. That's all we know. We don't know why? Only Woods himself knows why and so far he's not talking. Because he's not, the endless speculation has begun.

There's a rumor that Woods was having an affair, the subject of a National Inquirer story a couple days prior. There were rumors that Woods wife had assaulted him prior to the accident or vice versa. Because Woods has been quiet thus far, the media has been given full license to speculate endlessly.

As far as mysteries go, this one is among the most boring. How interesting could a traffic accident be? If this was merely a boneheaded move by Woods, I'm sure he can afford the fine. If this was the result of a domestic dispute that's a problem for Woods and his wife. If there was a crime committed, we'll know soon enough.

What's a lot more interesting is how fascinated our society has become in this story. My rule of thumb for any celebrity story is would I care if the same thing were happening to an average person. On that level, this story fails miserably. There's absolutely no to care. Yet, most of us do because it's happening to Tiger Woods.

If ever there was proof of the coarsening nature of our celebrity culture, it this story. A minor traffic accident turns into a major story and a story that involves endless speculation. Worse yet, it's a story that runs the gammet of media: sports, gossip and straight news. All our media isn't only giving attention but endless attention to a traffic accident. We've all become voyeurs. We've all become so fascinated with Tiger Woods that we need to know every detail of his life including the state of his marriage, his driving skills, and by extension we need to know every detail of his life.

The world moves forward. Iran is building a nuclear weapon. Health care moves forward. Dubai is about to default on nearly a hundred BILLION dollars worth of debt and our media is speculating endlessly on a traffic accident. Welcome to our endless obsession with celebrity in all its ugliness.

Bernanke Pleads for More Fed Power

Fed Chairman Ben Bernanke took his case for expanded Fed power to the people with an Op Ed.

The chairman of the Federal Reserve is concerned that congressional efforts at financial reform could weaken the central bank's ability to handle future crises and may politicize monetary policy.

Fed Chairman Ben S. Bernanke made the comments in an Op-Ed piece to appear in Sunday's Washington Post, five days before the Senate Banking committee holds a hearing on his nomination for a second term. His current four-year term expires Jan. 31.

Bernanke wrote the nation is challenged to design a financial oversight system that will "embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause."

It's now a standard M.O. for the Fed, and/or its backers, to scream "politicizing monetary policy" whenever anyone dares to question it, it's power, or worse tries to lessen its power. It's become the monetary policy version of the race card. That's what they did when confronted with the Ron Paul challenge of auditing the Fed.

The Congress, however, purposefully--and for good reason--excluded from the scope of potential GAO reviews some highly sensitive areas, notably monetary policy deliberations and operations, including open market and discount window operations. In doing so, the Congress carefully balanced the need for public accountability with the strong public policy benefits that flow from maintaining an appropriate degree of independence for the central bank in the making and execution of monetary policy. Financial markets, in particular, likely would see a grant of review authority in these areas to the GAO as a serious weakening of monetary policy independence. Because GAO reviews may be initiated at the request of members of Congress, reviews or the threat of reviews in these areas could be seen as efforts to try to influence monetary policy decisions. A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability. We will continue to work with the Congress to provide the information it needs to oversee our activities effectively, yet in a way that does not compromise monetary policy independence.

This is becoming a mantra for the Fed. Any time, anyone challenges it on anything, they are "politicizing monetary policy". No one really understands monetary policy and so they surely don't want to be accused of "politicizing" it. What some, like me for instance, call scrutiny and checks on near absolute power, the fed calls "politicizing monetary policy".

I say beware of anyone that makes political cliches. Trotting out the race cad is a political cliche and so too is the cliche of "politicizing monetary policy".

Russian Train Crash an Act of Terror

The crash of the train that was headed from Moscow to St. Petersburg has been ruled an act of terror.

A homemade chemical bomb planted on the tracks in an apparent act of terrorism derailed a high-speed train in Russia carrying hundreds of people Saturday, killing at least 26 and injuring scores more.

The head of the Russian Federal Security Service told the country's news agency Interfax that traces of explosives were found at the train crash site, including chemical residue from a homemade bomb.

Alexander Borotnikov was quoted by the Interfax and RIA Novosti news as saying that an improvised explosive device equivalent to 15 pounds of TNT had detonated when the express train traveling from Moscow to St. Petersburg passed over it Friday night about 9:30 p.m.

No group has been suggested as the perpetrator. Also, bodies continue to be found in the rubble and so we should expect the number of dead and injured to go up.

The Future of ACORN

If you want to know what will happen to ACORN as a result of all the scandals and controversies, this story from Connecticut is a microcosm.

Its political allies fled. And with its national organization fighting for its life and unable to give any money, ACORN of Bridgeport is doing what other chapters have been doing across the nation, going independent, sort of.

This month, the group began a campaign to raise money and create two local nonprofits, one to concentrate on social issues, the other on political action. To be clear, the plan is to continue to work with other chapters on national issues through a federation, according to Emeline Bravo-Blackwood, a small business owner who is leading the effort to transform the group in Bridgeport.

So, more and more ACORN chapters are moving away from their current structure which is one organization where all the local chapters answer to a national board to a federation. Where have I heard that term federation in relation to ACORN? Oh yeah, it was in my interview with Wade Rathke. He explained that ACORN is one organization whereas COI, what Rathke now runs, is a federation. Here's how Rathke described the difference.

a federation is a combination of autonomous organizations, like the AFL-CIO as an example, as opposed to being a single operating entity as ACORN is/was and an individual union, like SEIU for example is.

As we speak, more and more local ACORN chapters are becoming autonomous creating their own funding streams, boards, etc. They would only work with the national organization on national issues but be totally autonomous.

That's how COI (Community Organizations International) is structured as well. There are currently 7 different units within COI. Each is autonomous from each other. Now, ACORN itself is moving to structure itself in the same manner.

Now, let's not start any rumors. I am not saying, and certainly Wade Rathke isn't, that the hundred plus local ACORN affiliates are about to orchestrate a coup and suddenly move their newly formed FEDERATION to COI and move under his umbrella. That's not happening. Instead, the locals have realized that the national organization has let them down, tarnished their name, and is no longer a source for creating revenue anyways.

Local chapters like the one in Bridgeport, Ct. are themselves not struggling. There are many like this. They've now realized that answering to the national organization is a growing liability. So, they are moving themselves to structuring themselves as a federation so that they would only need to partner themselves with the national organization when its convenient. Otherwise, they cut ties with them entirely. More than that, the name ACORN will be kept locally if it's still perceived positively.

Now, many conservatives will wonder where the name ACORN can still be positive. Remember, this group is a very effective grassroots organizations. In this local areas where ACORN has maintained a strong local presence for years, like in Bridgeport, Ct., the locals view ACORN very positively. At the same time, if the ACORN name becomes to toxic, all the locals in the new federation will be able to change their own name to whatever they want. That's one of the benefits of being a federation.

What's important to the current debate is that the locals see that the national org's jig is up and they are now jumping ship. By moving to cut ties from their unified structure and move to a federation structure, it also means the locals are cutting away from the stain that the national org has spilled on the group as a whole. The national organization's power over ACORN will be next to nothing. They'll no longer have any operational control over any chapter. They'll work together on "national issues" but the national group can't maintain their own funding, has a toxic brand, and facing a plethora of bad press and lawsuits. How many national campaigns can they fund that way? So, if ever there was proof that the national ACORN is through, it's the growing movement of local chapters to turn themselves into a federation.

Video, Quote and Word of the Day

disport

to frolic

The best way to succeed in life is to act on the advice we give to others.

Anonymous

Sarah Palin Conservative Populist

Andrew Jackson was this country's first President that didn't represent the elite in our society. When he won, the party in the White House was attended by all sorts of folks that we'd now call lower middle class. He was America's first populist leader. He won by consolidating his vote around all sorts that had never participated in the process before him.

Every politician would like to be considered a populist because such a moniker spans ideologies. It simply means a politician of the people. William Jennings Bryan rode a populist wave to nearly two White House elections.

Over the last century, however, populism has almost always been associated with liberals. That may all change. Sarah Palin will almost certainly attempt to ride a conservative populist wave to future political fortunes.

Last night, I attended a Thanksgiving dinner with relatives. Both are professors at a major university. Their friends are also professors at the same university. We spoke of politics throughout the evening. While their political persuasion differs from mine greatly (for instance one friend was in favor of single payer health care), the conversations were always lively and cordial.

That was except when the subject of Palin came up. Everyone had a disgust for the woman that's difficult to describe unless you're there to hear the contempt and condescension in their voice. One person couldn't believe that I belong to a Sarah Palin Facebook page. One individual even acknowledged the good work she did in Alaska, including negotiating a good deal for the citizens of her state with the oil companies.

To folks like that, it isn't about accomplishment. One individual said that in this "day and age our Presidents must come from an ELITE university". Keep in mind, Andrew Jackson could barely read. Ronald Reagan went to the "elite" university of Euraka College. Sarah Palin will never win over folks like this and we all know many like them.

In fact, not only will she never win them over but they will be her best campaigning friend. Every single person at this party, and certainly everyone that holds her in contempt (as opposed to simply being uncomfortable, against her, or unsure of her), would be considered an elite by most.

In fact, if Sarah Palin were to become President it would be uniquely American story that most of us would be proud of. She rose from nothing with no connections and only through the force of her own will. She didn't go to an elite school. She doesn't run in elite circles. That makes her like most people as opposed to the elites.

It also makes her the perfect person to run a populist campaign. Of course, the elites have no use for her, that's what makes them elites. Bryan and Jackson weren't trying to appeal to the big wigs and power brokers. They were trying to appeal to the every man. That's what Palin would appeal to as well.

Let's face it those in fly over country, so to speak, already believe, with good reason, that the elites hold them in contempt. If the elites hold Palin in contempt, that only makes her that much more appealing to them. She has a simple anti government message that can easily appeal to the masses. The best part, for Palin, is that her enemies will help sell that message.

Council Winners

The Council Winners are up.

Council Submissions
First placewith 2 1/3 points! – The Razor - Obama The Weak Horse
Second place with 2 points – Mere Rhetoric - Obama: We’re Giving Iran More Time Because Of Their “Unsettled Political Situation”
Third place with 2/3 point – (Tie*) – Joshuapundit - Navy SEALS Face Court martial – For Capturing Wanted Terrorist
Third place with 2/3 point – (Tie*) – Soccer Dad - Clinton’s faulty memory, part ii
Third place with 2/3 point – (Tie*) – Bookworm Room - Being a contrarian and NOT buying (or being) green
Third place with 2/3 point – (Tie*) – The Glittering Eye - The Green And The Black
Non-Council Submissions
First place with 2 1/3 points! – The Strata-Sphere - Alarmist hide truth about (lack of ) global warming
Second place with 1 2/3 points – Daled Amos - State Department: Obama Administration has accomplished more than 8 years of Bush
Third place with 1 1/3 points – Robin of Berkeley/American Thinker - The Wilding of Sarah Palin
Fourth place with 2/3 points – (Tie*) – The Chessler Chronicles - Why Is America Still Allied To Saudi Arabia?
Fourth place with 2/3 points(Tie*) – Sultan Knish - Obama Goes Mao
Fourth place with 2/3 points(Tie*) – New Atlanticist - Obama and Afghanistan: No Good Choices
Fifth place with 1/3 point(Tie*) – Ken Blackwell/The American Spectator Blog - Welcome Back, Carter
Fifth place with 1/3 point(Tie*) – Edge - 36 Arguments For The Existence Of God
Fifth place with 1/3 point(Tie*) – Freakonomics - Shovel ready or ready to shovel?

IAEA Censures Iran

The IAEA has handed down its "punishment" on Iran.

The U.N. nuclear agency's board censured Iran on Friday, with 25 nations backing a resolution that demands Tehran immediately mothball its newly revealed nuclear facility and heed U.N. Security Council resolutions calling on it to stop uranium enrichment.

Iran remained defiant, with its chief representative to the International Atomic Energy Agency declaring that his country would resist "pressure, resolutions, sanction(s) and threat of military attack."

The article goes on to say that this censure was "significant" for two reasons: 1) it received unanimous approval from Security Council including Russia and China and that this 2) signals a purpose to act more aggressively including sanctions.

The first point is accurate. Russia and China rarely back any action against Iran. The second point remains to be seen. According to the Washington Post, the U.S. told the Chinese that if they didn't act, Israel would soon bomb Iran leading to much higher oil prices. This is all also true. China also must recognize this themselves. Yet, they've never once moved for any significant action against Iran. This latest move was nothing more than a strongly worded letter. Real action has yet to materialize.

Obama Aides Met With Health Care Lobbyists

That should surprise no one. Lobbyists wield all sorts of power in D.C.

President Obama's top aides met frequently with lobbyists and health care industry heavyweights as his administration pieced together a national health care overhaul, according to White House visitor records obtained Wednesday by The Associated Press.

The records disclose visits by a broad cross-section of the people most involved in the health care debate, weighted heavily toward those who want to overhaul the system.

The list includes George Halvorson, chairman and CEO of Kaiser Health Plans; Scott Serota, president and CEO of the Blue Cross and Blue Shield Association; Kenneth Kies, a Washington lobbyist who represents Blue Cross/Blue Shield, among other clients; Billy Tauzin, head of PhRMA, the drug industry lobby; Richard Umbdenstock, chief of the American Hospital Association, and numerous lobbyists.

In fact, this story is only important because Obama promised to end such practices in his
White House. He made a point of telling the country that the influence of lobbyists would be ended in his administration. Clearly, that's not happening.

Morning Market Report

It will be a short trading day today. It may not however be a quiet one. The futures are being rocked by news that the country of Dubai is asking creditors for a six month moratorium for its two biggest companies, Dubai World and Nakheel.

Dubai, which became a trading and tourism hub and enjoyed a construction boom before the crisis, said it would ask creditors of Dubai World and Nakheel to agree a 6-month standstill on billions of dollars of debt which it is seeking
to restructure.

Dubai World has $59 billion of liabilities, most of Dubai's total debt of $80 billion. Nakheel is the builder of three palm shaped islands off Dubai.

Dubai is asking for six months while the two attempt to restructure the debt. Shares in Europe were off about 3% yesterday on the news. While equities are responding unfavorably to the news, bonds are responding quite favorably. The ten year U.S. Treasury bond is currently trading at 3.21%, the lowest it's been in months. The yield spread has also tightened between the 2 and 10 year bond and is now at 2.52%. The 3 month t bills are better this morning but still above 0%. They're currently at .02% after dropping into negative rate territory for parts of last week. Oil is down over $3 a barrel to $74.02 a barrel. Gold is also taking a major breather this morning. It's off by over $25 an ounce is currently trading at $1161.50 an ounce.

Meanwhile, the dollar is performing better for the most part this morning. It's up by .85% against the Euro, up by .84% against the British Pound but down slightly by .12% against Japanese Yen. It still maintains the inverse relationship with equities and thus the troubling trend that causes.

In the Far East, the Hang Seng was down 4.84%, the NIKKEI was down 3.21%, and the Straits Time Index was unchanged. The broad Chinese index was off 2.36%. In Europe, they had taken their beatings yesterday. Most indices were up slightly this morning. The FTSE in London was up .1%, the DAX in Germany was up .21% and the Spanish index was up .13%.

The three major U.S. indices are each down more than 2% this morning. According to Bloomberg, the biggest creditors for Dubai are HSBC, Chase and the Royal Bank of Scotland.

Royal Bank of Scotland Group Plc was the biggest underwriter of loans to Dubai World, the state company seeking to reschedule debt, while HSBC Holdings Plc has
the most at risk in the United Arab Emirates, according to JPMorgan Chase & Co.

RBS, the largest U.K. government-controlled bank, arranged $2.3 billion, or 17 percent, of Dubai World loans since January 2007, JPMorgan said in a report
today, citing Dealogic data. HSBC, Europe’s biggest bank, has the “largest absolute exposure” in the U.A.E. with $17 billion of loans in 2008, JPMorgan said, citing the Emirates Banks Association. Abu Dhabi Commercial Bank PJSC may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate, said two people familiar with the companies.

Investment analyst Mohammed El-Erian told CNBC that this fallout is a "correction not a crisis"

Dubai's debt woes may serve as a catalyst for a correction in stock markets but it does not signal a new crisis, investment manager Mohammed El-Erian told
CNBC Friday.

Investors dumped stocks Thursday and Friday and took refuge in the dollar
after Dubai announced it had asked for a 6-month standstill on debt of around $59 billion. Some analysts said the fears will be short-lived and the situation creates buying opportunities.

Only time will tell on that. It's not often that countries ask for their debt to be restructured and Dubai's economy was booming only a couple years back. Most importantly, the news continued to trend of the inverse relationship between the dollar and equities.

The Obama Ape Controversy

A couple days back, a web site propped up a photo of Michelle Obama as an ape. The photo is obscene and offensive and that's all that should be said about it.

The backstory, however, is of interest. The website, which I can't track down, put up this photo and figured out how to get recognized at the top of several word searches from Google. The folks at Google didn't notice that they were creating traffic for this obscene photo. By the time they did, the photo had travelled to several other sites.

Eventually, Google did take down links to this site but not because of the obscene nature of the site. Instead, the site had collected several viruses. That's an often side effect to creating obscene material. Hackers try and punish you by creating viruses on your site. I found that out when doing a series on racist web sites which also are under the constant threat of virus.

The only story I've found so far on this is one on a Russian language site.

Имидж, демонстрирующий Мишель в виде примата, появляется в поиске картинок на Google, на одной из первых страниц. Призывы заблокировать доступ к оскорбительному изображению были отвергнуты. Пресс-представитель Google заявил, что доступ к сайту, где впервые появилась картинка, был заблокирован из-за того, что сайт содержал вирусы. Изображение, однако, вскоре было продублировано десятком других сайтов и вновь появилось в топе поисковика.

Essentially, the story says everything I've said and also says that according to Google, they don't censor based on content. As such, such offensive material wouldn't necessarily be censored from Google searches. In fact, that's true. You can find porn, hate sites, bomb making sites, on such search engines as Google. Google took down the site after the virus was discovered. Google represetatives said that they will take down a site from their searches if a virus is discovered but they won't take down a site based on content, because that's a free speech issue.

That's a specious argument. No one has the right to appear on a Google search. As such, Google can take any site down from their searches for any reason. They can, as a matter of policy, allow all content on their search engines because Google doesn't want to self censor based on content. That said, that wouldn't be a matter of law but an internal policy.

In fact, I would agree with such a policy because offensive is a subjective idea. Once any search engine begins to censor based on content anything can become offensive and free speech would be infringed. That said, that free speech would be infringed by a private company on their own internet sphere which they would have every right to do.

Copenhagen and Sovereignty

Several months ago, Dick Morris was furious over an obscure agreement that President Obama made with the IMF.

The result of this conclave, which France’s President Nicolas Sarkozy hailed as “revolutionary,” was that all the nations agreed to coordinate their economic policies and programs and to submit them to the International Monetary Fund (IMF) for comment and approval. While the G-20 nations and the IMF are, for now, only going to use “moral suasion” on those nations found not to be in compliance, talk of sanctions looms on the horizon.

While the specific policies to which the U.S. committed itself (reducing the deficit and strengthening regulatory oversight of financial institutions) are laudable in themselves, the process and the precedent are frightening. We are to subject our most basic national economic policies to the review of a group of nations that includes autocratic Russia, China and Saudi Arabia. Even though our GDP is three times bigger than the second largest economy (Japan) and equal to that of 13 of the G-20 nations combined, we are to sit politely by with our one vote and submit to the global consensus. Europe has five votes (U.K., France, Germany, Italy and the EU) while we have but one.

Morris was furious that Obama had made an agreement that allowed the IMF and the G20 to make binding financial regulations that would govern all companies in any of the G20 nations. As such, by Morris' estimation, that means that European diplomats and bureaucrats would be in charge of setting banking laws for our domestic banks. Never, in Morris' estimation, had our own sovereignty been challenged.

The global climate change conference could have had a similar ramifications. Currently, all expectations are that the conference will lead to limited agreements.

President Barack Obama's decision to drop in on the international climate conference in Copenhagen next month lends some star power to an event that's lost much of its luster — but at considerable risk for Obama himself.

“This could be one hell of a global game changer with big reverberations here at home,” said Sen. John Kerry (D-Mass.), the lead sponsor of climate change legislation in the Senate. “The fact that the president will attend the Copenhagen talks underscores that the administration is putting its money where its mouth is, putting the president's prestige on the line.”

And therein lies the problem for Obama. The upside potential for his visit is limited; expectations for the conference have dropped dramatically over the past few weeks, with nearly universal acknowledgment that the talks are very likely to result in a only limited political agreement, rather than in a legally binding treaty on global warming.

That's largely because the countries involved can't agree on how to tackle the problem and also because during worldwide economic crisis, there's no appetite for this sort of regulation. Still, if there were sweeping agreements, they would alsobe yet another move toward limiting our own sovereignty and giving Europeans the power to regulate domestic industry. For this reason, there was always a great deal of objection to the summit.

With less than 40 days remaining before the governments of the world convene to
hammer out a save-our-species style of agreement on Climate Change, there is a lot of bustling going on in Ottawa. For one thing this is an especially busy time for the staffers behind our politicians. I’m talking about those brave unheralded souls running around Ottawa buying plane tickets, planning dinners, and ensuring the business-attire economy remains recession-proof. Oh yes, the assistant armies of Ottawa are working all hours to ensure that our Government’s representatives are going to look good, eat-well, and rest comfortably while discussing the future of the planet in Copenhagen (COP15).

During the campaign, while speaking to a massive crowd in Germany, candidate Barack Obama announced himself a "citizen of the world". This was met with skepticism in many quarters. The President of the United States should represent the interests of the U.S. first, second, third, and always. They are part of the U.S. and our interests are all that matter. What has happened so far is NOT Earth shattering. Don't believe that some European bureaucrat is about to tell some Chase banker in Chicago what kind of checking account they can offer. They aren't and they can't. What should be concerning is just how apt President Obama is to sign onto an agreement that allows just that.

President Bush dismissed the Kyoto Treaty out of hand for exactly this reason. The Europeans screamed and moaned and his perception there was cemented with this move very early in his presidency. Yet, he represented the interests of the U.S. no matter how unpopular that made him abroad. President Obama had better understand his own job description soon.

The Young the Old All Against Obamacare

I normally don't give too much attention to polls but sometimes they're revealing. Dick Morris has the latest.

Previously, we reported to you that our national polling showed that the under-30 voters were the strongest supporters of the Obama healthcare initiative.

While seniors opposed it by almost 2-to-1 and voters ages 30-64 opposed it by five- to 10-point margins, the under-30 voters backed his program by 58-30.

This poll is important because old people, 65 and older, are already overwhelmingly against Obamacare. Now, young people are against it. You can see that there aren't too many ages left.

The old are against Obamacare because cuts in Medicare will affect them. Young are against it because it will force everyone to carry insurance which winds up being a tax on them.

The Democrats are trying to convince themselves that as long as they pass sweeping health care reform all will be well in the end. In fact, that's exactly what Bill Clinton told the caucus earlier this month. I expect a short term bump for Obama and Democrats if they do pass reform, but it will be short term.

The public is strongly against this reform. Polls now put support in the low 40's and even high 30's in some polls. The Democrats will do this with no more than 2 Republicans in both caucus voting with them. As such, they will shove a deeply unpopular bill onto the public. That's a recipe for political suicide.

Just so we're clear, according to Zogby, it doesn't matter what age you are, you're against Obamacare.


Age
Percentage Support/Oppose Obama Plan
Under 30 25/65
30-49 28/60
50-64 41/50
Over 65 32/55

Books will be written about how poorly this was mismanaged. The public is concerned about the economy, jobs, and the deficit. The democrats are shoving a health care package that will raise taxes cost a $trillion down the throat of the public. They continue to move forward long after it's clear that no one wants it.

The Party Crashers

There's a growing controversy over two party crashers at this week's state dinner at the White House.

White House apparently takes a security breakdown as well as some kind of nerve. The Secret Service is investigating its own security procedures after determining that a Virginia couple, Michaele and Tareq Salahi, managed to slip into Tuesday night's state dinner at the

White House even though they were not on the guest list, agency spokesman Ed Donovan said. President Obama was never in any danger because the party crashers went through the same security screening for weapons as the 300-plus people actually invited to the dinner honoring Indian Prime Minister Manmohan Singh, Donovan said.

The couple even snagged a photo with the Vice President. This isn't merely embarrasing but dangerous. If party crashers can slip into the White House, then anyone can, and our president is at risk.

After a full investigation, we should all expect those responsible for the breach to no longer have their jobs.

The E2 Night Club Disaster Verdict

On February 17, 2003, there was commotion and confusion at the popular Chicago Southside nightclub E2. That commotion caused a stampede and the stampeded left 21 people dead. On September 23rd of this year, a Chicago area jury found guilt and yesterday punishment was handed down. The two owners, Calvin Hollins and Dwain Kyles, each face up to two years in prison.

Cook County judge handed down prison sentences Tuesday to the former owners of a Chicago nightspot where 21 clubgoers were killed in a stampede, but some families of the dead aren’t calling it justice.

“The spotlight has been put on the owners so it can deflect away from what actually happened that night,” said Cheryl A. Rainey, whose 25-year-old niece Nicole Rainey, died in the Feb. 17, 2003, tragedy at the E2 nightclub.

The sentence stems from the owner's failure to fix an upstairs area that was flagged by inspectors the year prior.

Besides some family members decrying the verdict, the usual suspect of politicians and activists did the same, including Bobby Rush and Jesse Jackson. Both of them suggested that if this were a predominantly white club, E2 was in a posh African American area, that everything would have been different.

More than one power broker has suggested that police and first responders were at fault.

There was no justice in the sentencing today, because many of us feel no death had to occur had the first responders responded differently, had they come out in rescue mode, rather than coming out for a ‘riot’ considering the number of police vs. the number of ambulances,

Police and first responders are almost always immune from prosecution in such a scenario.

The comparison to a white nightclub is difficult to make since such tragedies are rare. Still, in that same year, the Station nightclub had a massive fire caused by pyrotechnics during the course of a performance by the band Great White. That nightclub's owners, Michael and Jeffrey Derderian, later plead no contest to 100 counts of involuntary manslaughter and Great White's manager, Daniel Biechele, plead guilty to similar charges. All received years in prison though all three have since been released from prison for good behavior with the blessing of the victim's families.

Navy Seals to be Indicted

Navy Seals involved in the capture of a wanted terrorist in Iraq may face assault charges.

Navy SEALs have secretly captured one of the most wanted terrorists in Iraq — the alleged mastermind of the murder and mutilation of four Blackwater USA security guards in Fallujah in 2004. And three of the SEALs who captured him are now facing criminal charges, sources told FoxNews.com.

The three, all members of the Navy's elite commando unit, have refused non-judicial punishment — called an admiral's mast — and have requested a trial by court-martial.

The "key" piece of evidence if you will is a bloody lip on the suspect, Ahmed Hashim Abed. Abed is the alleged ringleader in the infamous burning of four contractors in Fallujah that served as the bloody symbol of how out of control things had gotten in Iraq and especially Fallujah.

Video, Quote and Word of the Day

legerdemain

sleight of hand

Sometimes I give myself admirable advice, but I am incapable of taking it.

Mary Wortley Montagu

Council Nominations

The Council Submissions are up.

Council Submissions
Mere Rhetoric - Obama: We’re Giving Iran More Time Because Of Their “Unsettled Political Situation”
Joshuapundit - Navy SEALS Face Court martial – For Capturing Wanted Terrorist
Right Truth- Bible verse attributed to Barack Obama
Bookworm Room - Being a contrarian and NOT buying (or being) green
The Provocateur - The Put Back Amendment
The Colossus of Rhodey - Hard to argue? Not really
The Razor - The Weak Horse Named Obama
Rhymes With Right - A question I’ve been raising
The Glittering Eye - The Green and the Black
Soccer Dad - Clinton’s faulty memory, part ii
Non-Council Submissions
Submitted By: The Watcher – Ken Blackwell/American Spectator Blog- Welcome Back Carter
Submitted By: Soccer Dad – Daled Amos - State Department: Obama Administration has accomplished more than 8 years of Bush
Submitted By: Joshuapundit – Robin of Berkeley/American Thinker - The Wilding of Sarah Palin
Submitted By: Right Truth – the Chessler Chronicles - Why is America still allied with Saudi Arabia?
Submitted By: Bookworm Room – The Strata-Sphere - Alarmist hide truth about (lack of ) global warming
Submitted By: The Provocateur – HSA Scoop - The only real solution to health care reform
Submitted By: The Colossus of Rhodey – Edge - 36 Arguments for the existence of God
Submitted By: The Razor – Sultan Knish - Obama goes Mao
Submitted By: Rhymes With Right – Quin Hilyer/ the American Spectator Blog - Justice Depart ment Recusal List
Submitted By: The Glittering Eye – New Atlanticist - Obama and Afghanistan: No good choices
Submitted By: Mere Rhetoric – Freaknomics - Shovel ready or ready to shovel?

Morning Market Report

We had a somewhat monumental piece of economic data today. The weekly first time jobless claims fell below 500,000 for the first time since last September. The most recent number is 466,000. On the other hand, durable good orders fell in October, and last week, mortgage applications fell yet again despite having near all time lows. Oil is trading at $76.08. Gold is at an all time high of $1180 an ounce after India announced it may buy a great deal of Gold. The ten year U.S. Treasury is currently at 3.31%. The yield spread between the two and ten year is steady at 2.58% and the three month t bill is back to paying zero interest after paying a negative rate for a couple days.

The Dow along with the other two indices are about even so far this morning after about a half hour of trading. Markets in the Far East were generally up. The Hang Seng was up .84%, the NIKKEI in Japan was up .43%, and the broader Chinese index was up 2.06%. In Europe, the FTSE in London was up .3% and the DAX in Germany was up .03%.

In currencies, the dollar is mixed. It's up by .57% against the Euro, up .56% against the British Pound but down 1.16% against the Japanese Yen.

Wade Rathke Sets the Record Straight

This article had a rather startling observation by former Chief Organizer Wade Rathke about ACORN, the organization he lead for nearly four decades.

The scandal-plagued grassroots group ACORN may not survive another year,
its longtime leader said Monday.

Wade Rathke, who began the Association of Community Organizations for
Reform Now in 1970 and stepped down last year, spoke at the University of
Memphis.

ACORN became a punching bag for conservatives after allegations of voter
registration irregularities surfaced last year, spawning investigations in
several states.

Then came a video recording showing ACORN workers in Baltimore giving
advice to a couple posing as a prostitute and her pimp.

I was surprised by this statement because when I spoke with Rathke he made a point not to second guess or make too many statements that disparaged his former group. (he was however critical in regards to the firing of his common law wife Beth Butler but in general stayed away from criticism)

I emailed Rathke and he told me that he was essentially quoted out of context. Rathke said that he was simply quoting from

ACORN's lawsuit 10 days ago on defunding. Nothing more.

In fact, ACORN did file a lawsuit challenging the constitutionality of the Congress' cutting off funds to them. In that lawsuit, according to Rathke, it was ACORN's position that the organization wouldn't survive for another year. Rathke didn't mean to suggest that he believed this.

In fact, he also told me that he told the reporter that he hoped that this wouldn't happen, something the reporter, Chris Conley, didn't include in the piece. This is a small point however Rathke has been careful in his statements toward his former organization and this one was taken completely out of context.

I finished the piece late and haven't had a chance to speak with the reporter. I'll update if we connect.

The Republicans Purity Test

The Republicans want to go back to their roots, and they want to do it in writing. So, they've created what has been dubbed a "purity test".

1) Smaller government, smaller national debt, lower deficits and lower taxes by opposing bills like Obama’s “stimulus” bill
(2) Market-based health care reform and oppose Obama-style government run healthcare;
(3) Market-based energy reforms by opposing cap and trade legislation;
(4) Workers’ right to secret ballot by opposing card check
(5) Legal immigration and assimilation into American society by opposing amnesty for illegal immigrants;
(6) Victory in Iraq and Afghanistan by supporting military-recommended troop surges;
(7) Containment of Iran and North Korea, particularly effective action to eliminate their nuclear weapons threat
(8) Retention of the Defense of Marriage Act;
(9) Protecting the lives of vulnerable persons by opposing health care rationing and denial of health care and government funding of abortion; and
(10) The right to keep and bear arms by opposing government restrictions on gun ownership

Now, I like most of these and I've long called for something like this in writing. I called for the Republicans to get a contract with America style policy platform for the 2008 elections.

The only thing I don't like is the terminology. The idea of purists means that the party wants to rid itself of all non believers if you will. Newt Gingrich could have called his contract with America the Republican's purity test and it wouldn't have been nearly as effective. If the Republicans keep the principles in place but change the title of this to something like a contract with America, it will be more effective.

How Many Ways to Soak the Rich

The Democrats seem to think that everyone of their spending programs should be paid for by the rich. The next in line will be the war in Afghanistan.

Michigan Sen. Carl Levin (right), a Democrat and the chair of the Senate Armed Services Committee, is arguing that wealthy taxpayers should perhaps shoulder
the cost of sending additional troops in Afghanistan.

In an interview for Bloomberg Television's "Political Capital With Al Hunt," the senator suggests funding additional troops with an "additional income tax to the upper brackets, folks earning more than $200,000 or $250,000."

The problem, of course, is that President Obama already wants to let the Bush tax cuts expire on the wealthiest. That would put them at 39.6%. Then, Harry Reid wants to add a sur tax on the really wealthy to pay for health care reform. President Obama wants to remove tax credits for the rich only. Now, the Democrats want to pay for the war by taxing the rich.

The rich aren't stupid and their pockets aren't endless. You can't continue to tax them for every spending program you come up with. The problem here is that the Democrats have a lot of spending programs they want to implement. Those cost money. They don't want to tax anyone but the rich. You can go to that well once, maybe twice, but after that the well is dry.

In the real world, the so called rich have options. They usually figure out a way to avoid paying taxes. That's especially true when the taxes are punishing. After the Democrats are done, the so called rich will have 60% of their income taken away in some states, like Cali and New York where the income tax approaches 10%. No one will pay that willingly. They will avoid it at all costs.

This latest scheme will wind up being as effective as all tax the rich schemes, not very. In fact, it isn't really all that effective politically either. People aren't stupid. They can see that when politicians get addicted to spending, it's their own taxes that are next. Democrats can't hide from what they are, tax and spend. They're coming for your taxes soon.

Somewhere Between the Left and Right Lies the Truth

About a month ago, I wrote a piece that was itself a response by Huffington Post to criticism of Fox News. (I know say that five times really fast) The Huffington Post put up ten Fox News distortions and I challenged all ten. For the most part, the piece I wrote was accurate except for one of the ten. That was number 6. In number 6, there was a segment between Trace Gallagher and Bill Sammon in which they claimed that three portions, vital in their view, of the Patriot Act were about to be removed by the Obama administration. Huffington Post challenged that notion and linked to a piece written by Julian Sanchez of the Cato Institute. I challenged Huffington and Sanchez and said that this was a matter of gray.

In fact, it isn't. After speaking to Mr. Sanchez, I wrote a follow up. In fact, only one of the three provisions was being removed and that provision had never actually been used yet. Why did I get it wrong so badly the first time? It's because I initially came in with the mindset that Fox News wasn't distorting and Huffington Post was trying to demonize them. I like Fox News and I find most criticism to be patisan in nature. I had a perspective and I tried to make the facts fit my perspective. I was in fact corrupt in my reporting. Fortunately, I was able to speak with Mr. Sanchez and get the real story and write a follow up.

Unfortunately, the nature of our media today is such that everyone starts with a perspective and then make the facts fit that perspective. On top of this, it's just as pervasive on the right as it's famously been pointed out on the left in the so called MSM. My own example is just one.

In fact, media is by nature corrupt when their agenda is anything but trying to reach the truth. If you are writing from the perspective of the right, then your entire perspective is perverted. You immediately see the left as your enemies. The best example of this is how the conservative media treated the SEIU protests of the banks. The SEIU protesters were referred to as "thugs". They were demonized, marginalized, and ridiculed. At the same time, the same conservative media treated the tea party protesters as heroes. One set of protesters are thugs and the other are heroes. Of course, that's a perverted perspective.

I saw this on display in full force on both sides during the aftermath of the mortgage crisis. The New York Times et al immediately perpetuated the narrative that unscrupulous mortgage brokers took advantage of unsuspecting borrowers and that's what caused the crisis. Meanwhile, the conservatives immediately latched onto the Community Reinvestment Act. Other liberal media immediately latched onto the concept of "deregulation".

In other words, the entire financial crisis, the most important story since September 11, 2001, became nothing more than a fantasy land for the media to apply their biases and create a narrative to fit those biases. It was all just too much for me who spent my time in mortgages through the boom and the crisis.

Back in 2005, I was in the middle of doing a loan for a borrower. I suggested that they not buy a property more than $125,000 because I didn't think they could afford it. That borrower nearly didn't work with me because they wanted to buy a property that was $150,000 and they didn't think I would do such a loan for them. I did convince them to work with me on the $150,000 property. I refinanced the same loan a third time earlier this year, plus several of their friends. It was also the last time I ever suggested a limit to a potential borrower. That may only be one story but I could spend three full blog posts recounting stories of borrowers getting themselves in trouble through no fault of their mortgage professional. The idea that the crisis was caused entirely because mortgage brokers took advantage of those that didn't know any better is an obscene distortion.

It's only slightly less of a distortion, however, than the idea that the CRA caused the crisis. If it did, it was the most Orwellian law of all time. I didn't hear about it until after the crisis when commentators, who closed exactly zero loans themselves, started blaming it for the crisis. I learned about the CRA from Wikipedia. That's because the CRA didn't apply to mortgage brokers. It only applied to retail banks. Yet, retail banks didn't get involved in sub prime. So, how does the CRA create the sub prime crisis even though it doesn't apply to sub prime? That's a fancy trick and an Orwellian one. That's because the CRA is 99th right after the lint on my shirt in responsibility for this crisis. It's a creation of this crisis in the minds of Sean Hannity, Thomas Sowell, and Thomas Woods, all three have combined to close exactly ZERO loans in their lives.

As for deregulation, well first, you have to have a specific deregulation to blame. Deregulation is a concept. In reality, there must be specific laws that were deregulated. Yet, there's never been anyone, short of Paul Krugman, that have identified a specific set of deregulations for the crisis. Krugman went all the way back to the beginning of the 1980's for his specific set of deregulations. That was yet another Orwellian trick. Some law no one had heard of that was repealed in the 1980's caused a crisis 25 years later.

(for my perspective on the crisis check out my white paper)

It's not just the financial crisis. That's just what convinced me that the conservative media was no better than the MSM, just more sanctimonious in their criticism. For eight yeas, the liberal media blamed Bush for everything from snowfall, to clouds, to the fact that the New York Yankees didn't win a World Series in a given year. Now that Obama is president, the conservative media is giving him the exact same treatment and they don't even notice. Is it really true that in nearly a year on the job, everything that Obama has done is wrong? Is it really possible? It's just as likely as the same being true of Bush.

I noticed that when the conservative media began to attack Obama mercilessly for his trip to Copenhagen for the Olympics. The conservatives set up a tails you lose heads we win scenario. Because he went, he was suddenly taking his eye off the ball. He was doing something extraordinary and unnecessary. Never mind the fact that every head of state for each of the four finalist cities was going. Never mind that he wouldn't even be there for a day. In fact, the whole affair was a non story that was turned into a story. We can even go back further. You all remember the Alabama Maersk. You remember how one of our snipers on orders from the Commander in Chief, shot three of them dead and we took the other prisoner and they're awaiting trial. Well, some on the conservative media still managed to criticize Obama on this point.

After four days of floating at sea on a raft shared with four Somali gunmen, Richard Philips took matters into his own hands for a second time. With the small inflatable lifeboat in which he was being held captive being towed by the American missile destroyer USS Bainbridge, and Navy Special Warfare (NSWC) snipers on the fantail in position to take their shots at his captors as soon as the command was given, the captive Captain of the M.V. Maersk-Alabama took his second leap in three days into the shark-infested waters of the Indian Ocean.

This diversion gave the Navy Special Warfare operators all the opening they needed. Snipers immediately took down the three Somali pirates still on board the life raft, SEAL operators hustled down the tow line connecting the two craft to confirm the kills, and a Navy RIB plucked Philips from the water and sped him to safety aboard the Bainbridge, thus ending the four-day-and-counting hostage situation

....Instead of taking direct, decisive action against the rag-tag group of gunmen, the Obama administration dilly-dallied, dawdled, and eschewed any decisiveness whatsoever, even in the face of enemy fire, in hopes that the situation would somehow resolve itself without violence — thus sending a clear message to all who would threaten U.S. interests abroad that the current occupant of 1600 Pennsylvania Avenue has no idea how to respond to such situations, and no real willingness to use military force to resolve them.

Let's think about this for a minute. All good guys are safe. All bad guys are dead or captured. That sounds like a good outcome. It sounds as though the Commander in Chief handled things just fine. Yet, there were conservatives that still criticized.

Of course, the liberal media is not immune from this sort of nonsense. Last week, Chris Mathews opined that there were no black people at Sarah Palin's book signing. There were, however, thousands of white people of all sexes and ages. Think about this. We have the first black president and Palin opposes everything he stands for and Mathews thinks its illuminating that no black people showed up.

The week prior he actually asked, in the context of Nidal Hasan, if it was a crime to contact Al Qaeda. Yeah, it's a crime especially if you're a member of the military. For two months in 2005, New York Times became nothing more than story after story about the scandal at Abu Ghraib. The MSM dedicated more than 100 stories to the launch of Air America. They've dedicated exactly two stories to the meteoric rise of Glenn Beck, and one was disparaging. You could count on dozens of Iraqi stories weekly from the MSM during the years of 2003-2006. Then, 2007 hit, the surge worked and suddenly that story didn't matter any more.

Did you know that the years 2003-2007 were booming for our economy? You didn't if you only got your news from the MSM. Did you know that President Bush opposed federal funding for embryonic stem cell research? You wouldn't if you only paid attention to the MSM. If that's where you got your news, you'd think he was against stem cell research. Not against funding it mind you, just against it.

The right isn't any better. The folks at Hot Air spent the last four years complaining about how the MSM selectively chose their headlines for economic news during the Bush administration. What does Hot Air do now? They pick and choose which financial data they report. Ed Morrissey has a nasty habit of reporting the WEEKLY first time jobless claims every three or four weeks. Once every four months or so he'll talk about the MONTHLY home sales numbers. That's right. What Ed will do is pick and choose which piece of economic data he chooses. How does he pick it? He waits for a bad one and talks about that. Sounds like exactly what he's been complaining about for four years.

Of course, Michelle Malkin is the poster child for this sort of journalism. The nexus of my beef with her comes from this attitude. (the story is quite long and so please read the link if you need the story) Michelle Malkin hates President Obama. She hates ACORN. She's convinced the two are inseparable entities. That's why Anita Moncrief was perfect. Anita Moncrief linked the two in a way that Michelle Malkin knew was true all along. That's why Malkin could care less that Moncrief committed theft, stole and was fired. It's why she could care less that it was only after Moncrief was fired that she "discovered" all this wrong doing. Michelle Malkin has a view of the world and she's determined to let the facts fit that view.

The right way to report is to get the facts first and then draw conclusions. Unfortunately, our media draws conclusions and then finds the facts to back up those conclusions. It happens because journalists have created agendas that they feel are more important than the truth. That's why newspapers bury stories. They don't want the truth out because the truth doesn't fit into their other agenda. The minute that journalists stop seeking the truth, they are, by nature, corrupt. Instead, they seek to reinforce their view of the world. Make no mistake, this happens on the left and on the right. Somewhere in the middle of it all lies the truth. Hopefully, there will be someone that seeks that.