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Wednesday, March 31, 2010

More Special Election Dates

Besides the special election in Florida's 17th district coming up on the 13th of April, there's a special election for Pennsylvania's 12th district to replace John Murtha on the 18th of May. That pits Republican Tim Burns against Democrat Mark Critz. On the 22nd of May, Hawaii's first district will hold it special election. Two Democrats, state Sen. Colleen Hanabusa and former Rep. Ed Case, will face off with Republican Charles Djou. New York's 29th District hasn't set a date yet to replace Eric Massa.

The Pennsylvania special election is complicated by the fact that it is on the same day as their primary and so candidates are running in more than one election at a time. Meanwhile, the Hawaii election is complicated by the fact that the general election is open and so two Democrats are vying against one Republican.

Kevin Long Document Drop




That is a letter from Kevin Long to then District Judge Ann Burke. This letter is dated August 31, 2000. The same Kevin Long has become notorious in the city of Chicago in the last couple weeks. First, he was arrested with four specialty knives at the Richard J. Daley Center.

Northwest Side man listed as a potential threat to judges tried to enter the Daley Center with four hunting knives he had just purchased, according to the Cook County sheriff's office.

Kevin J. Long, 48, of the 4500 block of North Milwaukee Avenue, walked into the building Tuesday afternoon and passed through a metal detector while his bag was sent through an X-ray machine.

Long had eighteen arrests and ten convictions since 2000, including all sorts of police problems by the time he wrote Judge Burke that letter. As such, U.S. Marshalls raided his home and found things that were absolutely frightening.

A man who was arrested last week after attempting to bring knives into the Daley Center faces further charges after the Cook County sheriff's officers and agents from the U.S. Marshal's office found 1,600 knives and five guns in his Northwest Side home.

Kevin J. Long, 48, of the 4500 block of North Milwaukee Avenue, allegedly attempted to bring four knives into the Daley Center on March 16, according to the Chicago Tribune.

Long is on a judicial threat watch list, and is a convicted felon who has been arrested 18 times since 2000, according to a release from the Cook County Sheriff's office.

In fact, the knives that Long was carrying are designed strictly to avoid detection. As a result, this lead Sun Times gossip columnist Michael Sneed to speculate that Alderman Ed Burke would be introducing an ordinance in response.

Pinch 'em: Sneed has learned Aldermen Willie Cochran and Ed Burke, both former Chicago cops, plan to introduce a city ordinance outlawing the knives -- following a police raid that netted 1,600 weapons, including plastic knives designed to foil detection.

Arrest 'em: The proposed ordinance stems from the recent arrest of felon Kevin J. Long, 48, who attempted to bring four knives into the Daley Center last week. It prefaced a raid on Long's Northwest Side home by Cook County sheriff's police and U.S. marshals, where the knife cache was found.

• Evade 'em: "These knives are marketed with a specific intent to evade metal detection -- which begs the question why anyone would want one unless they wanted to evade metal detection," said a Sneed source.

Alderman Ed Burke is not merely chair of the Finance Committee and generally considered one of the most powerful Aldermen in the city, he's also the husband of Justice Ann Burke. That's the same Justice Burke that received the correspondence that opened the piece. Now, Burke's office had no comment about the item. As for the letter, the office only wanted questions submitted in writing and none have been answered yet. It's unclear if Burke knows about his wife's previous involvement in the case.

That letter summarizes a conversation that Long had with Burke. In that conversation, Long accuses a third party, Emery Joe Yost, of trying to recruit Long to help Yost cheat on a Master's Thesis paper. At the time, Justice Burke was Yost's mentor at Depaul University for said master's class. In fact, the President of Depaul and the Dean of the college (Yost was getting his master's at the school of new learning) were carbon copied on this letter. About two weeks prior to that, it was Yost that had Long arrested after Long flashed a bunch of kids on a playground. Soon after this letter, Justice Burke dropped Yost as a mentor over "unrelated" issues. Yost soon graduated with another mentor and the charges by Long were, according to a source familiar with the situation,...

thoroughly vetted and found to be untrue

Justice Burke has yet to respond for comment. Alderman Burke's office asked for written questions and haven't responded yet. Meanwhile, then President of DePaul Father Joe Minogue has since retired. Representatives of DePaul said that the letter was almost a decade old and had no further comment.

What's going on? There's more much more. The whole entire story is coming. Everyone stay tuned.

Kevin Long will be arraigned on April 7th.

Private Payrolls Portend Problems

This months' BLS number will be especially exciting. The consensus is a solid growth of 190,000 jobs. Meanwhile, the projections range from negative 40,000 to positive 300,000. To top it all off, the private payroll just came in.

U.S. private employers cut 23,000 jobs in March, missing expectations for an increase in jobs although fewer than the adjusted 24,000 jobs lost in February, a report by a private employment service said on Wednesday.

"It throws a little cold water on the idea we were going to be adding jobs in March, which is a little disappointing, people thought finally this might be the month," said John Canally, investment strategist and economist for LPL Financial in Boston.

That should scale back most predictions. There's only six months of employment data left after this.

Tuesday, March 30, 2010

It's Too Late To Marginalize the Tea Parties

The reaction of some to the protest before, during and after the passage of health care reform is obvious, tired and boring. We all know it. The protests prove that the opposition to Obamacare is entirely rooted in racism. Here's a sampling.

But the laughs evaporated soon enough. There’s nothing entertaining about watching goons hurl venomous slurs at congressmen like the civil rights hero John Lewis and the openly gay Barney Frank. And as the week dragged on, and reports of death threats and vandalism stretched from Arizona to Kansas to upstate New York, the F.B.I. and the local police had to get into the act to protect members of Congress and their families.

How curious that a mob fond of likening President Obama to Hitler knows so little about history that it doesn’t recognize its own small-scale mimicry of Kristallnacht. The weapon of choice for vigilante violence at Congressional offices has been a brick hurled through a window. So far.


Just how crazy are the Obama haters?

An irresistible set of numbers began rocketing around the Web last week suggesting that foes of President Barack Obama had not just gone around the bend, they'd spun out of control, smashed through the guardrail of reason and plunged into the depths of derangement.

Perhaps you saw:

A recent Harris Interactive poll found that 57 percent of Republicans think Obama is a Muslim, 45 percent think he's foreign-born, 51 percent think he wants to cede control of the U.S. to a one-world government, 24 percent think he may be the Antichrist and 22 percent believe he wants the terrorists to win.

Opponents of the Tea Party movement only treat them in one of three ways: ignore them, mock them, or marginalize them. Usually they ignore them. After all, there's no such thing as bad publicity.

Yet, both in the run up to the vote and after it was unmistakable that the protests against were larger and more intense than the ones in support. So, suddenly, the protesters were a combination of racists, lunatics, and psychopaths.

It was to be expected and obvious. The first national Tea Party happened last February. About 20000 people protested nationwide and almost no one took notice. President Obama was overwhelmingly popular and the numbers weren't that large.

By April 15th, there were about one million people protesting. Suddenly, the same people that ignored the Tea Parties before that day were openly mocking them using a derogatory sexual phrase to describe them and also suggesting they were racist.

Let's dispense with the obvious. Out of the millions of people that consider themselves a part of the Tea Party movement there are those that are racists. I know this since I took a few statistics classes in my life. It's virtually impossible to put a group of a million plus and not include some that are racists. That doesn't, however, mean that the general tenor of the group is racist. All those that claim it is use as the basis of this argument the equivalent of "because I said so".

Their evidence currently is a few unverified reports of racial slurs. All should condemn racial slurs except 1) it's unclear they actually happened and 2) and much more importantly, if they did, it means those saying them are racists and not the entire group.

The tactic is obvious. The Tea Parties are a growing force. If they aren't marginalized, they begin to speak for millions. If they aren't racists, then millions simply disagree with Obama on policy. That's why they must be racists, because if they weren't then the president they worship and the policy they adore was in fact pushed down everyone's throat despite open and intense opposition of people that represent the masses.

Health Care Battle Moves to Florida

While we continue to debate the health care bill, we are about to face the first tangible effect of the bill. That will come on April 13th. That's when Florida's special election will be held in the 19th district. Republican Ed Lynch will face off against Democrat Ted Deutsch. They're running to replace Robert Wexler, who resigned late last year.

This is a relatively liberal district and normally it wouldn't receive much attention. The Democrat should win in a cakewalk. These aren't normal times. With the results in Massachusetts anything is possible. This race will the first tangible test of health care's popularity, or lack thereof. If Lynch wins, it will be yet another sign that 2010 will be very bloody for Democrats. If Deutsch wins, it will be a sign that Democrats are getting their mojo after passing health care.

Make no mistake, this special election will be about the health care bill. Just ask Lynch.

The deed has been done. In one of the most shameful episodes in American History, the Obama Administration has signed into law a not-so-gradual government takeover of the health insurance system- a takeover that simultaneously subverts our Constitution and governs against the will of the American people. The near total disconnect between the political rhetoric employed by the Obama Administration to promote and pass this legislation with how it will actually affect your most private health care decisions is an offense against freedom loving Americans who want no part of government run health care.

Prior to last weekend’s disgraceful scene within the House Democratic Caucus, I had stated that our forthcoming Special Election on April 13th could potentially have implications for the Obamacare vote if the Democrats failed to come up with the necessary votes before our special election. In light the law’s signing by President Obama, our special election now becomes the first referendum on this egregious power play. The Obama administration and the Democratic Congress may have had the power to accomplish what they did with our healthcare system, but they assuredly did not have either the constitutional right or the public’s consent to pass such a law. The good news is that we don’t have to wait until November to make the Democrats feel the blowback for such a naked sellout of our country.

Deutsch, meanwhile, is taking aim at the Tea Parties.

As the April 13 special election approaches to replace former Democratic Rep. Robert Wexler in Palm Beach-Broward congressional District 19, Democrat Ted Deutch’s campaign has sent a mailer to voters in the heavily Democratic district warning that “Republicans & The Tea Party Want To Capture YOUR Congressional Seat!”

The four-page glossy brochure features unflattering pictures of former Vice President Dick Cheney, 2008 Republican veep nominee Sarah Palin and a tea bag with a large red X through them. Inside, the mailer features a statement from Wexler lamenting the Dems’ “heartbreaking” loss to Brown in Massachusetts and says “We cannot let the Republicans take our district as well.”

The South Florida Tea Party has said it plans to make a national statement in the special election. But the group recently decided not to endorse any candidate in the race between Deutch, Republican Ed Lynch and no-party candidate Jim McCormick.

So, the battle lines have been drawn. While the Massachusetts race was now the center of media attention, this race continues to fly under the radar. Yet, this is the first race post the passage of health care reform. It will be the first tangible result.

Monday, March 29, 2010

The Outfit in Chicago

This Sun Times article is a window into how the Outfit (Chicago's Mafiosa) continues to have influence.

He's also the father-in-law of trucking magnate Fred Barbara -- a longtime Daley friend and nephew of the late Ald. Fred Roti, whom the FBI identified as a "made member" of the Chicago mob.

Barbara's companies have been paid a fortune through city deals under four Chicago mayors, and Barbara's wife, Lisa Humbert, was president of Karen's Kartage, a company that was paid more than $2.5 million from the city's scandal-plagued Hired Truck Program.

Barbara himself participated in a 1980s bombing of Horwath's Restaurant in Elmwood Park, according to testimony in the landmark "Operation Family Secrets" mob trial in 2007, though Barbara -- who didn't respond to a request for comment -- wasn't charged.

The article is about several employees that received cushy deals while working at McCormick Place. One of them is the father in law of Joseph Barbara. Barbara was implicated in a mafia investigation, though never indicted or convicted. Barbara's father, former Alderman Roti, was identified by the FBI as part of the outfit. In fact, Barbara's grandfather Bruno Roti Sr once ran with Al Capone himself.

Barbara is a trucking magnet that is also tied to the Hired Truck Scandal. He's identified as a long time friend of Mayor Daley. In fact, they went to high school together. There are just enough Outfit members that know Daley from the "old neighborhood" and from all their high school days. They've used those ties to help maintain influence.

Health Care Follies

Henry Waxman is demanding that the CEO's of AT&T and other companies that claimed that health care reform will cost them millions, or in the case of AT&T $1 billion, to Capitol Hill.

Last week, Rep. Henry Waxman demanded that AT&T, Verizon, Caterpillar, and
Deere & Co. justify their claims about the “costs the companies plan to book related to the new health-care law.” According to Business Week, “Dallas-based AT&T said in a regulatory filing yesterday it would record $1 billion of costs, the most of any U.S. company so far. AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees. Under the new bill, AT&T will no longer be able to deduct that subsidy.”

The Democrats are confused about the philosophy of the bill they themselves just passed. This is an income redistributive bill. Just ask Max Baucus.

Even according to their own estimates, this bill will cost about $1 trillion over the next year. The money is going to come from somewhere. Corporations and the wealthy are the easiest targets. AT&T et al are simply reflecting that reality.

Republicans Winning the PR Healthcare Battle

Repeal and replace

As soon as I heard that slogan, I knew the Republicans had a winner. That's because live in a soundbite world. You need to explain yourself in ten seconds or less. That fits the bill. It's short, sweet, and to the point. That's perfect on our sound bite age.

When he was running for president, candidate Obama had exactly that kind of a slogan.

Tax cuts for 95% of Americans

Again, it was short, sweet, and to the point.

Now, the Democrats are struggling to try and explain the benefits of health care reform in the world of the ten second sound bite. We hear something about how now insurance companies won't be able to deny coverage to someone with a pre existing condition, kids will be on their parents insurance until they're 26, and we'll be closer to the dream of health care for all. That's not a sound bite but a long and confusing explanation. It's even more confusing since none can explain why 2700 pages were necessary to accomplish these goals.

In fact, not everyone is all that excited about keeping kids on their parents insurance that long. It creates more dependency when much of the population wants an environment of independence. So, until Democrats can sell health care reform in the soundbite age "repeal and replace" will win out.

As an aside, I've noticed that whenever defenders defend this bill they say, "there are parts of this bill Americans like". That's an interesting admission. None will say people like the bill itself but simply parts.

Obamacare Null and Void

While the push by more than a dozen state Attorney Generals to bring a case in front of the U.S. Supreme Court to have Obamacare ruled unconstitutional has garnered plenty of media attention, I have discovered another movement that has flown under the radar. This movement would have state legislatures declare Obamacare null and void since it assumes powers not granted to the federal government in the Constitution. As Thomas Jefferson once said,

whenever the federal government assumed powers not delegated to it, those acts are unauthoritative, void, and of no force" and that a nullification of the act is the rightful remedy.

The principles of the state AGs and this idea are cousins of each other. They both believe Obamacare uses powers it doesn't have. The difference is that the first relies on federal judges to declare said law unconstitutional. The second relies on the states themselves to rule it null and void and dare the feds to declare their act after unconstitutional.

To find more go here.

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Saturday, March 27, 2010

Simon to Be Lt. Governor

Illinois Democrats have chosen their new Lietenant Governor following the debacle of Scott Lee Cohen.

State Democratic Party leaders today selected Sheila Simon, the daughter of the late Sen. Paul Simon, to be Gov. Pat Quinn's running mate in the general election.
State Rep. Art Turner of Chicago came in second for the nomination.
Simon won in the first round of balloting by the 38-member Democratic State Central Committee, after she and about a dozen other finalists presented their credentials.

The vote was decided by 38 members of the Democratic Party. Each represented a district in the state.

The Neverending Health Care Debate

If you thought the health care debate amounted to something akin to medieval torture, get ready for another go of it in the Iron Maiden. The health care debate isn't going away. Instead, it will evolve. Instead of debating hypothetical, we'll debate reality. That may be the best thing for the debate. Instead of talking about what may happen, we'll talk about what has happened. For instance everyone from Caterpillar to AT&T has come out to say that the new health care bill will cost them from $100 million next year to $1 billion.

AT&T Inc. will book $1 billion in first-quarter costs related to the health care law signed this week by President Obama, the most of any US company so far.

A change in the tax treatment of Medicare subsidies triggered the noncash expense, and the company will consider changes to the benefits it offers current and retired workers, AT&T said yesterday in a regulatory filing.

Meanwhile, Democrats appear confused by what is in and isn't in the bill. They claimed that children with a pre existing condition will now be covered but it turns out that isn't the case.

As we move forward, the side that wins the debate will be the one that shows the most important tangible effects of the bill. The health care debate will evolve to the tangible effects of the bill.

Catching Up with Chad Harris of No Insurance Club

I recently had a chance to catch up with Chad Harris of No Insurance Club. Harris runs a service in which basic medical services are provided without getting insurance. Instead the doctor and patient enter into an agreement in which the doctor agrees to provide basic health care for a year and the patient pays for each year up front. So, for $499 a single person gets up to 12 basic visits as well as all related medical tests for an entire year as well. There are no forms, no insurance approvals, no waiting, because it's not insurance. Instead, it's an agreement between the patient and doctor. It's a $799 for the same set of services for a family of four.

I wanted to catch up with Chad Harris because when we spoke last summer he told me that Obamacare would likely put him out of business. Harris was feeling a lot more confident these days. He's now become Obamacare's biggest fan. That's not necessarily a personal belief but rather a business decision.

With the passage of Obamacare, everyone involved in health care must adapt and that include Harris' No Insurance Club. In fact, Harris was very confident that No Insurance Club would thrive within Obamacare. For starters, he believes that the niche of so called concierge medicince would expand. Concierge medicine is when you the patient have all your needs catered to you.

That view is borne out of the conservative belief that adding thirty some million new patients without adding more doctors will increase waits and decrease. With No Insurance Club, that won't happen. For the annual fee, you are guaranteed a minimum number of visits with no waiting.

In other words, when invariably medical service goes down under Obamacare, you'll want to move outside the system and that's the niche that No Insurance Club will explore. Second, so far at least, so called strict catastrophic coverage won't be outlawed. Harris sees an opportunity. He believes that it will be much cheaper for most to pay the fine, get his service and then catastrophic coverage and it will be much cheaper than getting the necessary insurance.

That's not only ironic but a sign of just how rudimentary our health care debate is. Such services were never a part of any debate. If the combination of No Insurance Club, a fine, and catastrophic is cheaper than full insurance service, wouldn't it mean that it's exactly these types of services that could bring down health care costs? Yet, the debate centered around universal coverage. Worse yet, this sort of idea would cost the government absolutely nothing. Yet, health care reform had to pass because we're at a crisis.

Furthermore, Harris is making contingencies to attach No Insurance Club to larger insurance platforms. Why? It's because Harris understands that Obamacare greatly expands government control and power and the feds can at anytime outlaw anything that isn't health insurance. So, No Insurance Club will be prepared for that day.

Finally, Harris is even prepared for Armageddon. In the event that Obamacare makes our health care system a complete disaster, No Insurance Club is building a hospital center in a resort town in Mexico 45 miles from the Arizona border. It's concierge medical care on steroids. The patient would be able to get all sorts of elective medical procedures and they'd stay at a resort. So, they could play several rounds of golf, spend the day at the pool, and then go to the doctor. All these doctors would be Americans. It's an idea that has a market under any health care scenario. In other words, there's plenty of people that would want to be catered to like this in any health care environment. Yet, if Obamacare totally destroys our health care system, this resort town would be a beacon for Americans to still receive top notch service from American doctors without dealing with the Obamacare disaster.

24 to End

All Jack Bauer fans are in mourning this morning. 24 announced yesterday that this will be the last season.

Although there have been rumors and debate about the future of Fox’s hit series “24,” the official word came down today that the series will be coming to an end. reports that Kiefer Sutherland said that “24″ will not be moving to NBC, despite earlier talks. Sutherland and executive producer Howard Gordon decided it was time to end the TV run.

Have no fear, while the series will end on the May 24th, there is a film already in the works. The series finale will lead directly into the film.

Friday, March 26, 2010

ACORN Closing?

There is some irony in ACORN stating they will close on April 1st.

Republicans say they know an ACORN when they see it, and just because the community activist organization says it's disbanding, that doesn't mean it's gone.

"Just as criminals change their aliases, ACORN is changing its name," California Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, said in a written statement. "But make no mistake about it, just because they change their name, doesn't mean anything has really changed at all."

Issa led an investigation into the group, which announced on Monday that it is closing after a series of undercover videos last year showed its employees offering tax advice to a couple posing as a pimp and prostitute, tarnishing the group's reputation and crippling its source of funding.

When I asked Matt Vadum, of the Capital Research Center, if ACORN really is closing, he sent me this picture.

Soros on Fannie/Freddie

This particular article is so wonky even I had trouble following but here is Soros' plan for removing Fannie/Freddie from mortgage financing.

Loan Modification Plus

The Obama administration has taken the lead from Bank of America and Citigroup and expanded its loan modification program to include writing down some mortgage balances.

The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. But it could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom. In addition, their existing mortgage companies will be able to receive incentives to lower their principal balances.

The program also includes assistance to help unemployed homeowners keep paying their mortgages.

Last summer, Deutsche Bank came out with a startling study about so called underwater mortgages.

A report put out by Deutsche Bank is creating all sorts of business buzz. That's because the report predicts that 48% of all mortgages will be "underwater" by the end of the first quarter of 2011. A mortgage that is "underwater" is one where the mortgage is larger than the value of the house. These sorts of mortgages have a significantly higher incident of defaults. Currently, the number of properties that are underwater is estimated to be at 26% by Deutche Bank. That's bad enough but their estimation is just down right scary at 48%. All mortgage types will see increases in "underwater" mortgages and even prime loans will have 41% of their mortgages under water. (currently on 16% of prime loans are underwater)

This phenomenon, where borrowers owe more than the home is worth, became the elephant in the room. None of the programs helped these sorts of borrowers and this particular study showed that a substantial number would soon be underwater.

This became a central problem for all loan modification programs. With nearly fifty percent of all mortgages soon to be underwater, no loan modification program would do much unless there was something in there to help them.

The problem is that in order to help these folks you'd not only need to lower their rates but the amount they owed. Loan modifications are already inherently open to so called moral hazard. That is that they reward bad behavior. If these borrowers' balances are lowered along with their rates that makes that phenomenon even greater.

So, the original loan modification program put out last spring didn't include any mortgage that was underwater. The Deutsche Bank study showed that such a program wouldn't do much. So, the administration has expanded their loan modification program to include some of these.

This is exactly what Wade Rathke has been calling on for months.

But for many the chairs in the church haven’t changed. Bruce Marks of NACA and John Taylor of the National Community Reinvestment Coalition have been long allies, and not surprisingly their position mirrors mine: there have to be write downs. Jack Schakett, formerly of Countrywide and now in about the same job with Bank of America concedes, as he always has, that there is a place for write downs, and believes they should be extended. Wells Fargo, as always, continues to keep its head in the mud and believe that someone else will solve the problem they helped create.


But, in this world, 7+ million underwater borrowers are crying for a solution, and writing down principle owed still seems like the only horse to ride.

The payment reduction some of these borrowers would receive could be more than fifty percent. Many of them simply over bought. Most would get a deal a borrower that is on time would never get. This dynamic was at the heart of the mortgage class war that I predicted that I believe turned into the Tea Party movement. There's a bigger problem. It's of policy. I've often quoted this Wall Street Journal article.

Is a housing bailout the solution for clogged-up credit markets and a faltering economy? What the Fed has been doing and did again yesterday hasn't really worked, notwithstanding the pops it produces in the stock market every time it shovels liquidity into the system. The Fed's latest move provides financial institutions another $200 billion in direct short-term lending against their unsaleable housing collateral. The Dow Jones jumped 416 points. But it won't restart markets for the underlying collateral.

Where are the speculators, vultures and hedge funds? Where are the big money players willing to buy the exotic but still substantial mortgage-backed securities for which markets have ceased? The Fed's liquidity rush seems only to have convinced them the time is ripe for staying on the sidelines.

To get to a real solution, speculators and investors need to believe that home prices are hitting bottom, that any mortgage debt they might buy today for 80 cents on the dollar today won't be worth 30 cents tomorrow. Then the vultures will pile in: The transfer of wealth from the overleveraged banks and hedge funds to those who kept cash handy will be shocking, ugly and cathartic -- but it will also be relatively quick. Credit markets will begin to function again. The economy will grow.”

Until there is a bottom, there are no "vultures". Without "vultures" there is no recovery. Loan modifications artificially prop up markets. There is no bottom.

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Thursday, March 25, 2010

Video, Quote and Word of the Day

fatidic (adjective)


The proper means of increasing the love we bear our native country is to reside some time in a foreign one.

William Shenstone

BofA to Consider the Reduction of Mortgage Balances

Bank of America will become the first bank to consider the reduction of mortgage balances as part of their mortgage rescue plan.

The program, while limited in scope and available by invitation only, signals a significant shift in efforts to deal with the millions of homeowners who are facing foreclosure. It comes as banks are being urged by the White House, members of Congress and community groups to do more to stem the tide.

The Obama administration is also studying whether to provide more help to people who owe more on their mortgages than their homes are worth.

Bank of America’s program may increase the pressure on other big banks to offer more help for delinquent borrowers, while potentially angering homeowners who have kept up their payments and are not getting such aid.

Citigroup is also said to be making such a consideration. So far, the program will be extremely limited.

This was a bone of a debate between myself and Wade Rathke. Rathke was adament that the reduction of balances was critical not only to giving borrowers an affordable mortgage but to show a correct balance sheet for banks.

That's because we've seen the reduction of real estate values and Rathke believes that mortgage balances need to reflect that or banks are showing assets that are simply not realistic.

I see all these programs as foolhearty and so this would only extend a misguided policy.

Caldwell to Challenge Health Care's Constitutionality

By the end of 2010, I predict that Buddy Caldwell will take over for Joe Liberman as Republican's favorite Democrat. Caldwell is conducting the most serious investigation of ACORN. At some point, I believe he will come down with serious charges. He's also become the first Democratic AG to challenge the constitutionality of health care reform.

Caldwell said through a spokeswoman that he has not yet decided whether Louisiana will join other states that are fighting the health care bill on constitutional grounds, or file a separate suit to "protect the rights of Louisianians that are adversely impacted by the recently passed federal legislation on health care."

The comments by Caldwell, a Democrat, came on a day when Florida Attorney General Bill McCollum announced that he and nine other attorneys general plan to challenge the constitutionality of the bill as an infringement on state sovereignty.

Gov. Bobby Jindal said he supports Caldwell's efforts, and that the bill that cleared Congress late Sunday without a Republican vote is an unconstitutional expansion of federal power because it would require most Americans to carry health insurance by 2014 or face a fine.

This is a break through in that Democrats can no longer claim that these challenges are strictly partisan. The number of states that are challenging the constitutionality of health care reform is growing. That will become the story of the spring and summer. It's hard to imagine that the Supreme Court won't look at this case. From there, it's anyone's guess.

The issue will come down to whether or not the federal government can force an individual to buy anything, health insurance included. Such a view would see the powers of the federal government as quite expansive.

Whatever the outcome, the spectacle of about half the states taking on the federal government will be political theater at its finest. It will also be a major embarrassment for Obama as many states revolt against him. Of course, if he loses, his entire administration will again be in danger.

Financial Reform a Treasury Power Grab

Newt Gingrich shed some light on what new powers the Secretary of Treasury will have in the new financial reform bill.

The government is to take over not only defaulting financial companies but those “in danger of default”. Five conditions are listed to define default and in-danger-of-default. Two are straightforward—the company will be filing for bankruptcy shortly or its board or shareholders agree to a government takeover.

The other three conditions allow the government to take over even when a company is not filing for bankruptcy and its board/shareholders do not consent. What it means is that the secretary of the Treasury can decide that a company is about to collapse even if it does not look that way to other people.

Wrap your arms around that. The Secretary of Treasury can take over any company they deem "too big to fail" and do with it as they please.

Watered Down Iran Sanctions

The sanctions against Iran have been watered down to satisfy Russia and China.

The U.S. has backed away from pursuing a number of tough measures against Iran in order to win support from Russia and China for a new United Nations Security Council resolution on sanctions, according to people familiar with the matter.

Among provisions removed from the original draft resolution the U.S. sent to key allies last month were sanctions aimed at choking off Tehran's access to international banking services and capital markets, and closing international airspace and waters to Iran's national air cargo and shipping lines, according to the people.

If we learned anything from the Bush administration it's that going to the UN and kow towing to Russia and China doesn't work. These sorts of sanctions were seeked and received throughout the Bush administration and we got nowhere.

Wednesday, March 24, 2010

Video, Quote and Word of the Day

celerity (noun)


If your lens is prejudice, you're wearing the wrong prescription.

Carrie Latet

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Tuesday, March 23, 2010

Stupak Rumor Mill

Stupak's opponent has been gaining notoriety since Stupak caved on Obamacare.

The Benishek for Congress Facebook page, which had gone largely unnoticed, added over 13,000 new members overnight. That compares to Stupak's Facebook page, which boasts 2,056 fans.

Many of the newfound support appeared to come from Tea Party activists.

Benishek tells Newsmax, "I admire the tea party people. The tea party people I've met are standing up for the Constitution."

Now, some Republican officials in the state of Michigan are encouraging another individual to enter the race. That is Dennis Lennox. I interviewed Lennox last year as his campaign for the state legislature was heating up. Lennox is said to be weighing his options and will be making a decision soon. He would present a formidable opponent to Stupak.

UPDATE: I just communicated with Lennox and he said he is giving serious consideration to running.

The Three Views of Health Care Reform

Bernie Goldberg was on O'Reilly last night talking about the media reaction to the passage of health care reform. Goldberg explained it like this. Liberals believe that health care is a moral issue. In other words, health care is a moral imperative and thus we need legislation that will expand health care coverage to all.

Meanwhile, conservatives view health care as an economic issue. We can't expand health care coverage to 30 million more people and be able to afford. Health care reform won't work because we simply can't afford it.

Then, there are those that view health care reform as all part of a plot to turn America into a European style Social Democracy. Those are the folks that Goldberg and O'Reilly said were absolutely lighting up talk radio in a near uncontrollable rage. They are the Tea Party types. Who are they? They are the libertarians. They see health care reform as a philsophical issue. They hate government and this expands government. That's why they go into a nearly uncontrollable rage at the thought of Obamacare. It is opposite of their core philosophy.

There is a small and nuanced difference between a conservative and a libertarian. For sure, they have many similiarities. Think of it this way. Conservatives hate government regulation. Yet, if you asked the typical conservative if they thought that we should have an FDA, they'd likely say yes. A libertarian would want the FDA abolished. That's what drives the uncontrollable anger. Conservatives believe that Obamacare simply doesn't make economic sense. Libertarians believe Obamacare is the antithesis of the core of their world philosophy.

Bibi: Jerusalem "Not a Settlement"

Bibi Netanyahu has a flair for saying things that are memorable. In his speech to the UN, he uttered "have you no shame" to all those that entertained the idea that the Holocaust didn't exist. Now, referring to the expansion of settlements in Jerusalem, Netanyahu has uttered an equally memorable phrase.

The AIPAC crowd responded with notably more enthusiasm to Netanyahu's assertion that Jews had been building in Jerusalem for 3,000 years and that Israel would continue to do so.

"Jerusalem is not a settlement. It's our capital," Netanyahu said to a prolonged standing ovation.

The neighborhoods Israel has built in east Jerusalem are an "inextricable" part of
the city, the Israeli leader said, and will remain part of Israel under any peace agreement.

So, the tension continues to build between Israel and the U.S.

Monday, March 22, 2010

Stupak's Challenger Soars

Bart Stupak's challenger in the general election has gone from unknown to relatively unknown.

Michigan Rep. Bart Stupak's (D) distinction as the man who secured passage of health care reform for Democrats could make him a national target of Republican
and conservative interests. He now has a Republican challenger, who in about 24
hours since Stupak cut a deal with the White House -- giving Democrats the
necessary number of votes -- has gotten a lot more well known.

Dan Benishek, a surgeon who announced his candidacy one week ago, went from about 3,500 Facebook friends Sunday afternoon to 14,500 by mid-Monday. Benishek has also received mentions from a few well-known conservative bloggers, including Michelle Malkin who linked to his makeshift campaign Web site.

This is a race to watch. Stupak is entering his tenth race in his district. He usually wins by a lot more than his party in his district. Obama split with McCain here in 2008 but Stupak gained 65% in the same election.

The Democrats were weary of having a close vote and having their rank and file being accused of being the vote that put health care reform over the top. It appears that Stupak has become that guy because it was his coalition that put the Dems over the top.

If this becomes a race, the Democrats are going to see things get really ugly. If not, then maybe all the excitement is a bit premature.

Illinois Supreme Court Rules on Provena

A couple weeks back, I did a piece on the state of non profits in America. Central to that story is the situation surrounding Provena Health Care. They're a non profit hospital system mostly in central Illinois but also in parts of the Chicagoland area as well. That hospital system experienced a significant amount of growth all while nearly providing no care to the area's poor. In fact, providing so called charity care is vital to qualifying for non profit status. As such, the Illinois Department of Revenue challenged Provena's tax exempt status. The case was still awaiting a ruling from the Illinois Supreme Court when I wrote that piece. That has since been decided.

The Illinois Supreme Court says Champaign-based Provena Covenant Medical Center didn't provide enough charity services to be exempt from property taxes.

The Supreme Court on Thursday upheld a lower court ruling that supported the Illinois Department of Revenue's claim that the medical center couldn't avoid property taxes as a charitable institution.

Here's how Heather O'Donnell of the Center for Tax and Budget Accountability explained the decision.

The Court clarified that charity care is the standard in Illinois for property tax exemption. Bad debt, Medicaid and Medicare shortfalls and other community benefits do not constitute charity for purposes of the local tax break. Still no clarity on how much charity is enough. The Court kicked that issue to the legislature.

So, the court ruled exactly what is charity care but it didn't rule just how much charity care a hospital must provide to still be a non profit.

Critical Mass Against But Not For

All reports had the phone lines buzzing for weeks with people calling on to register their opposition to health care reform. In fact, we've watched all sorts of examples of critical mass against health care reform.

We saw it with town halls. We saw it with the elections in Virginia, New Jersey, and Massachusetts. We also saw it with the explosion of the Tea Party movement which has been dedicated to defeating this legislation.

In fact, we saw this type of critical mass once before recently. That was when John McCain and Ted Kennedy proposed their immigration reform. Once again, the phone lines lit up with people's displeasure with that bill. There was protest, outrage, and that bill was ultimately defeated in part because of that outrage.

What we haven't seen in a long time is a critical mass for something. There was a glimmer of hope a few years ago when Heath Shuler proposed the SAVE Act. That is Secure America through Verification and Enforcement. It was a bill that would have created a database, id cards, and stronger border enforcement against illegal immigration.

Everyone that learned about supported the bill. Some supported it enthusiastically. Furthermore, because Shuler is a Democrat and the bill has tough border enforcement, it enjoyed bi partisan support.

Unfortunately, the bill was introduced under the leadership of Nancy Pelosi and so it had no chance of reaching the floor. Because it had no chance of being introduced, most people never heard about it. Instead of reaching critical mass, the SAVE Act turned into a sort of cult favorite among political junkies.

Still, we've been stuck in such a cynical political climate that we only reach critical mass when we are against something.

Video, Quote and Word of the Day


a divine inspiration

If everybody contemplates the infinite instead of fixing the drains, many of us will die of cholera.

John Rich

The Court Challenges Begin

Nearly forty states may join Virginia in challenging the constitutionality of the passed health care reform. Virginia will be first to formally file suit.

Virginia Attorney General Ken Cuccinelli was the first to announce Monday that he will file a legal challenge -- as soon as Obama signs the bill.

Florida Attorney General Bill McCollum also plans to announce Monday morning that he and top prosecutors from nine other states are filing a lawsuit to "protect the rights" of the American people from the bill.

Initially, I was excited because there are a lot of interesting constitutional issues at play here but now I realize that health care reform may not go away for years and that's not good. Up to forty different states may in fact join Virginia in challenging this bill.

Sixteen Thousand

That's the number of new IRS agents that will be hired just to enforce the new health care bill.

Watch for Republicans to hammer at this number. That's because it tells quite a story. First, we all hate the IRS. So, if it's even more intrusive, that is even more visceral. Those IRS agents will be hired to enforce the individual mandate, the mandate on employers, and to enforce all other parts of the new bill. Now, when the Democrats claim this isn't a government takeover of health care, the Republicans will quickly remind Americans that sixteen thousand new IRS agents will be hired to enforce it.

Sunday, March 21, 2010

Never In History

Think about how many signs there have been that no one but the Democrats in D.C. wants this bill. First, there's the polls. They are all against the Democrats. Second, there was the town halls. They were rowdy and all against the bill. Then, there's the elections. In both New Jersey and in Virginia, Republicans cleaned clocks. If that wasn't enough, Scott Brown won in Massachusetts. Now, the phone lines are burning up and all against health care reform.

It's not hard to see what the people want. Yet, the Democrats are determined to pass it anyway. So, how do we measure what will happen? That's impossible because never have politicians been shown such a clear path and decided to move another way anyway. (at least on issues beside war) So, how badly will this hurt the Democrats? No one knows because the arrogance has never been this strong.

ACORN Virtually in Bankruptcy

This news isn't nearly as important as it sounds.

The community organizing group Acorn, battered politically from the right and suffering from mismanagement along with a severe loss of government and other
funds, is on the verge of filing for bankruptcy, officials of the group said Friday.

Acorn is holding a teleconference this weekend to discuss plans for a bankruptcy filing, two officials of the group said. They asked not to be identified because they were not authorized to speak to the news media.

Over the last six months, at least 15 of the group’s 30 state chapters have disbanded and have no plans of re-forming, Acorn officials said. The California and New York chapters, two of the largest, have severed their ties to the national group and have independently reconstituted themselves with new names. Several other state groups are also re-forming outside the Acorn umbrella, and will not be affected if the national organization files for bankruptcy.

In fact, ACORN is disintegrating and at the same time all its parts are morphing and changing their names. So, in fact, ACORN will disintegrate but its parts will morph. This is all part of the process.

Netanyahu Won't Slow Down Settlement Construction

The facedown continues.

Israeli Prime Minister Benjamin Netanyahu said Sunday he would not restrict construction in east Jerusalem, a step requested by the U.S., but would upgrade upcoming indirect talks with the Palestinians to include the main issues dividing them.

Netanyahu originally had wanted to put off a discussion of issues like the status of contested east Jerusalem, final borders and the fate of Palestinian refugees until direct talks are launched.

It was not clear what Netanyahu's declared refusal to budge on east Jerusalem -- the territory that lies at the crux of the Israeli-Palestinian conflict -- would mean for future relations with Washington and the rest of the international community.

Netanyahu's moves go nowhere near the U.S. demand to cancel a major new housing project at the heart of the row, but apparently he has offered enough to prompt U.S. Secretary of State Hillary Rodham Clinton to call them "useful and productive" and dispatch an envoy back to the region this week.

For more coverage check out Jeff Jacoby and Charles Krauthammer.

Health Care and Immigration Reform

Luis Guitierrez, the Congressman from Illinois, recently switched from a no to a yes on health care reform. Guitierrez was against the Senate's version because it didn't allow illegals to buy insurance on the exchange even with their own money. He switched from a no to a yes because he says that he's been given a commitment by President Obama to push hard for comprehensive immigration reform.

"I've spent the past week speaking at length with the President and his staff. In fact, I spoke with him again just this morning. I shared with him that I believed that we could have a victory for every American who deserves affordable, high-quality health care and for the immigrants of our nation.

"I told President Obama I would not sacrifice either goal. After extensive discussions with the President, I believe we have a health care bill I can vote 'yes' for, and I believe we have a commitment to move forward on a comprehensive immigration reform package as soon as possible.

Immigration reform is about to be introduced by Democrat Chuck Schumer and Republican Lindsey Graham.

Our plan has four pillars: requiring biometric Social Security cards to ensure that illegal workers cannot get jobs; fulfilling and strengthening our commitments on border security and interior enforcement; creating a process for admitting temporary workers; and implementing a tough but fair path to legalization for those already here.

So, Gutierrez is supporting this bill on the faith and hope that the president will help push the Schumer/Graham immigration reform package or something similar. Of course, there's already a hurdle. Graham says there is no immigration reform if health care passes.

The first casualty of the Democratic health care bill will be immigration reform. If the health care bill goes through this weekend, that will, in my view, pretty much kill any chance of immigration reform passing the Senate this year,” Graham said in a statement blast-emailed to the Washington press corps.

Frankly, President Obama has used up all his political capital on health care reform. The country is tired, the legislators are tired, and most of all their staffers are exhausted. No one has the energy for a bruising fight. Some have gone to speculating that Obama will try and ram his entire agenda through on reconciliation: cap and trade, financial reform, education reform, and immigration reform. I wish them luck.

Obama got Gutierrez' yes vote and Gutierrez got a vague promise that amounts to nothing.

Saturday, March 20, 2010

"Riveting" Television

All day today, cable news has been fixated on the health care debate. It's been non stop analysis and hyper analysis over the bill, its consequences, and its chances of passing. Frankly, I don't think that we've learned anything. I'm still totally bored. On the other hand, when I asked a Congressional aide for a comment on health care reform, they responded,

I can’t wait til it’s over!

That says it all.

Friday, March 19, 2010

The New ACORN Housing Corporation

ACORN Housing recently changed its name to Affordable Housing Centers of America. That continues a trend of former ACORN affiliates changing their name.

More interestingly, the new organizations shows as one of its chief supporters, Henry Cisneros. That's the same Cisneros that's the former HUD secretary. Here's what Cisneros says about the organization on their front page.

Organizations come and go and times change, but commitment to helping our fellow citizens should never fade. It is this commitment to helping our fellow citizens that is the true character of those who have been in this fight. It is the character of Affordable Housing Centers of America helping people who need it most. As Mayor of San Antonio, Secretary of the U.S. Department of Housing and Urban Development, and a private developer, I have seen the benefits of this work up close, and I look forward to working with you.

A picture of Michael Shea is right above a photo of Cisneros. Shea is of course the former head of ACORN Housing and now he leads the new organization.

Dr. Agwunobi Sighting

I got tipped off to this article out of Spokane.

Providence Sacred Heart Medical Center may add 75 patient beds after reaching a proposed settlement with state health officials.

Such an expansion would make Sacred Heart a 719-bed hospital, but at a cost to sister hospital Holy Family, which would surrender 25 of its beds under the terms of the agreement announced Wednesday afternoon.

The deal will have to withstand a 30-day comment period and then receive final approval by the hospital and the Washington State Department of Health, which licenses and regulates the number of beds allowed in a community.

This continues the bizarre and inexplicable behavior of Providence Health Care under the leadership of Dr. Andrew Agwunobi. Upon taking over at the beginning of 2009, he announced that he would need to make cuts to staff.

This was in and of itself peculiar because as of December 2008, the hospital system had near $2 billion IN CASH. Then, last fall, their proposed buy out of Rockwood fell through.

Providence Sacred Heart Medical Center’s chief executive charged Rockwood Clinic’s leaders with bad-faith dealings and ethical lapses the day after Rockwood stunned Spokane’s medical community by announcing it would align with Sacred Heart’s main rival.

“It is clear to us that the interim leadership of Rockwood is leading the Rockwood physicians down a very dangerous path fueled purely by profit motive,” said Sacred Heart CEO Dr. Andrew Agwunobi.

This was also curious. After all, if the hospital is in such dire straits that it needed to cut staff, why was it involved in a buyout. With that buyout falling through, Agwunobi was able to secure this deal for expansion.

Providence is a non profit hospital. It pays no taxes. I've recently written a piece about non profits. Most watch dogs I've spoken with including one that watches over Providence itself agree that non profits acting like for profits while paying no taxes is a huge and under reported problem.

Who Will Pay Greece's Bills?

It appears there's a power struggle forming for who will NOT help Greece pay off its debts.

After weeks of backing a European rescue for the financially troubled Greece, Germany shifted course on Thursday, signaling that help should come from the International Monetary Fund rather than Greece’s neighbors.

Meanwhile, France would like to see the EU help to bailout Greece. Greece is hoping to get a break on the rate their bonds are currently paying. Their bonds currently have a premium of 6.25%, almost three percentage points higher than Britain and the U.S. A lot of this comes down to geopolitical ego. Greece doesn't want to approach the International Monetary Fund because that's generally reserved for the developing world and Greece wants to maintain the appearance that it's already developed.

So, no one wants to step. The whole affair has shown just how flawed and vulnerable the EU is. A few years back, some were claiming this would challenge the U.S. in terms of economic might. With Greece's problems, the Euro has simply gotten crushed. Thus, a massive weakness has been exposed. The EU is driven as much by its weakest link as by its strongest.

Greenspan: More Oversight of Banks

Now he tells us. Alan Greenspan famously gave millions of novice home owners the green light to jump into adjustable loan mortgages is now advising more oversight over banks.

After more than six decades as a skeptic of big government, the former Federal Reserve chairman, now 84, is gingerly suggesting that perhaps regulators should help rein in giant financial institutions by requiring them to hold more capital.

Mr. Greenspan, once celebrated as the “maestro” of economic policy, has seen his reputation dim after failing to avert the credit bubble that nearly brought down the financial system. Now, in a 48-page paper that is by turns analytical and apologetic, he is calling for a degree of greater banking regulation in several areas.

Greenspan argues for higher reserves, a return of Glass Steagall, and he wants a requirement that banks hold bonds that automatically convert to equity when their equity falls below the required level.

Under capitalization is one of the untold stories of the financial crisis. Banks were not only taking massive risk but they were highly leveraged in that risk. A return to Glass Steagall is something I have endorsed as well. The third idea is most interesting since it's not been proposed anywhere I've seen. It's a way to make banks more accountable for their risk and it would reduce moral hazards.

Greenspan continued to insist that his own low interest rate policy didn't get the ball rolling on the crisis.

NY Governor's Race Heats Up

The New York Governor's race just heated up.

The campaign for the Republican nomination for governor was blown wide open on Thursday as the party’s presumptive frontrunner, Rick A. Lazio, lost key support after a last-minute entry into the race by a conservative Long Island Democrat.

he Democrat, Steve Levy, was quickly amassing Republican endorsements, just hours after he said he would switch parties and seek the Republican nomination.

Mr. Lazio, seeking to contain the damage and play down the growing number of defections from his campaign, hit back on Thursday, calling Mr. Levy, the Suffolk County executive, a “rank opportunist.”

Steve Levy is a moderate who had no chance in the Democratic primary. Lazio seemed to be a shoe in for the Republican nomination that appeared to be heading for being a sacrificial lamb against Anthony Cuomo in the general election.

Now, there's a reason to follow the race. Already, several county Republican heads have switched their support from Lazio to Levy. Lazio was the consensus choice but he didn't exactly get Republicans excited.

Now, we have a race. The first race is to the power brokers of the Republican party. The next race is to the delegates in their convention.


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