Archive for January, 2010
Barney Frank, a Reformed Crap Shooter?
Posted by Tom in Centrally Managed Economy, Deficit, Democrats, Financial Crisis, Financial Policy, Real Estate on January 22, 2010
I got all excited when I read this morning’s headline to the effect that Barney Frank would recommend replacing Fannie Mae and Freddie Mac. (Bloomberg January 22nd article here.) Recall that Barney was the Democrat arguing to “roll the dice” with Fannie and its foray into subprime loans. As it turned out this gambling with your tax money was a proximate cause of the financial debacle we are still feeling the effects of.
Well my excitement lasted about a nanosecond. “We’re going to look at the whole question of housing finance…sorting our the function of promoting liquidity in the market and also the secondary market in general but then also doing some kind of subsidy for affordability.” Frank continued, “I don’t know anybody who thinks Fannie and Freddie should continue!”
In other words we’re going to create a whole new government home finance scheme! To bring Fannie and Freddie “on budget” following the recent $291 Billion Fannie-Freddie bailout would cost another $99 Billion according to the CBO. Looks like our $1.4 Trillion 2009 deficit will only go up! A federal debt increase follows as sure as night follows day! (WSJ January 22nd article here.)
When will these socialists learn that government has no role in housing finance? This is not a proper function of government. The market can best handle capital allocation decisions, including home financing. The government has proven it can’t handle them, over and over again. Our children and grandchildren will suffer as a result!
Tom Motherway
Obama Makes Positive Step in Bank Regulation
Posted by Tom in Democrats, Financial Crisis, Financial Policy, Government Regulation, Wall Street on January 21, 2010
Today Obama took Paul Volcker’s advice and proposed new restrictions on the size and activities of big banks. Depository institutions will be barred from proprietary trading, that is making bets with depositor money, part of which is insured by the FDIC. The administration will seek tighter limits on the size and concentration of depository institutions; the new restrictions would go beyond the 10% of insured deposits limit. Also these banks could not own, invest in or advise hedge funds or private equity firms. See the January 21st WSJ report here.
While stopping short of Glass-Steagall which would require the complete separation of commercial and investment banking, this is a good proposal. Hopefully it will force some divestitures among the behemoth financial institutions. In any case the taxpayer will be better protected.
Little wonder serious restrictions are necessary. The liberal giant Goldman Sachs, darling of the Democrats, announced fourth quarter earnings today of $4.95 Billion on revenues of $9.62 Billion–that’s an embarrassing 51%! We taxpayers helped them get there!
Taxpayer bailouts of Wall Street firms should never be allowed to happen again. Firms should be forced into bankruptcy, allowed to fail. A few good healthy failures would put a lot more discipline back into the market and go a long way to eliminating moral hazard.
Obama’s proposal took political courage because he is offending his Wall Street bosses. Financial stocks were down in today’s market. Obama should be applauded for this stand.
Tom Motherway
Republican Health Care Reform: CDHC
Posted by Tom in Economics, Nationalized Health Care, Taxation on January 21, 2010
With the Scott Brown victory and the corresponding loss of his Democratic Senate supermajority, Obama is apparently willing to listen to a less intrusive health care plan. The Republicans should take up the challenge and propose Consumer Driven Health Care, CDHC. Put medical decisions in the hands of the consumer. It would have the following elements:
- A break down of state barriers to insurance company competition. Qualification in one state equals qualification in all states.
- The taxability of benefit compensation as compensation, including health benefits.
- The deductibility of privately purchased medical insurance policies.
- An expansion of Health Savings Accounts, increased deductibility for contributions, and a relaxation of the high-deductible or catastrophic medical policy qualification rules.
- Serious tort reform including a significant cap on non-economic damages.
This combination would reduce costs by virtue of increased competition and reduction of defensive medicine. It would not add one dime to the federal deficit or debt. And it would put the consumer in charges of his medical services.
Admittedly this would take political courage on the part of the Democrats as it would offend their fat-cat bosses, the trial lawyers and the unions. Sometimes you need to do what is best of the country and neglect the special interests.
Tom Motherway
Ugly Fact For “People of the Book”
Posted by Tom in Defense, Foreign Policy, Law, Morality & Religion in the Public Square, Terrorism on January 21, 2010
Mohammed started successfully consolidating Islam from Medina by raiding caravans heading to Mecca. Then, he started spreading Islam from his Medina base with conquests, eventually throughout the Mediterranean world .
For a time, he tolerated “people of the book.” This, the term given to Abrahamic religions, namely Judaism and Christianity, of which Islam claims to be one. Late antiquity through medieval times to modernity the Islamic-other, religious battles and tolerance shifted to and fro. Today, the civilized norm would seem to be benign tolerance in secular, neutral or tolerant environments, certainly to minorities within Islamic dominated societies.
Not so, as set out in Clifford May’s January 21st NRO post, The War Against the Infidels. In it he enumerates this century’s minority persecutions: dynamiting of the Bamiyan buddhas, desecration of the tomb of the prophet Ezekiel, this week’s Christian killings in Nigeria, the murder of Egyptian Coptic Christians, Pakistan church bombings, and the attacks on Malaysia Christian churches.
Very little reporting from Western journalists. Silence from academics, diplomats and politicians. We are too politically correct. We don’t want to offend. Our president goes around bowing and apologizing in the Middle East, but never condemning.
Clifford May sums it up well: “When the dots are connected, the picture that emerges is not pretty: An “Islamic world” in which terrorists are regarded often with lenience, sometimes with respect, and occasionally with reverence, while minority groups face increasing intolerance, persecution, and “cleansing,” and where even their histories are erased. And we in the West are too polite, too “politically correct,” and perhaps too cowardly to say much about it.”
Don’t look for socialist Europe, the UN or the Democratic administration to raise any objections.
Tom Motherway
Finally, Some Sense In Financial Regulation?
Posted by Tom in Financial Crisis, Financial Policy, Government Regulation, Wall Street on January 20, 2010
Perhaps, we will see. But a late item in the January 20th WSJ indicates that Obama is finally starting to listen to experienced voices in the White House, specifically that of Paul Volcker, the former Fed Chairman who has been advocating the separation of commercial banking from investment banking.
As covered in my January 14th post, commercial banks are connected with various deposit guarantees to the government but correspondingly traditionally regulated by bank examiners. Investment banks are advisors, underwriters and traders all involving unregulated risk in the traditional sense. Since the Glass-Steagall repeal in 1999 the two systems have merged big time and we taxpayers have taken it in the shorts as a result. The simple solution is to re-initiate Glass-Steagall and break ‘em up, as was done with ATT and others, successfully!
If today’s WSJ post is correct, Obama doesn’t go far enough but seeks to capture the “spirit of Glass-Steagall.” This half step is certainly in the right direction but still leaves the “too big to fail” nightmare intact and the taxpayers footing the bill.
If we are merely willing to structure regulation so that failure can occur, we will return discipline to the financial system. Because the failure will most likely occur on the risky investment banking side where the worldwide banking system will not be at risk. We will avoid moral hazard. And we will save our children and grandchildren from the debilitating deficit bailouts we have recently suffered.
Let’s hope Obama is more willing to forsake his Wall Street money backers than he has been his union employers. And let’s hope continues to listen to Volcker and separates commercial banking from investment banking. We should support him in this effort.
Tom Motherway
Some In The Fourth Estate Are Waking Up!
When Mort Zuckerman, chairman of U.S. News & World Report, publisher of the New York Daily News, and co-founder and chairman of Boston Properties Inc. says Obama’s “done everything wrong,” you might suspect that the MSM foundation is starting to crack. Mort continues to confess, “I’m very disappointed. We endorsed him. I voted for him. I supported him publicly and privately.” This is in the January 20th post in The Daily Beast.
Zuckerman goes through the litany of Obama failures: health care a fiscal disaster, rotten political hubris, state bribes for votes, union ownership and sweetheart deals. The article is no holds barred, a must read.
I wonder if any of the liberal press will follow Zuckerman’s lead? It would be revolutionary indeed, if they started doing their jobs as journalists!
Tom Motherway
Another Shot Heard ‘Round the World
Posted by Tom in Constitution, Nationalized Health Care, Obama Budget & State of the Nation, Politics on January 19, 2010
Obama’s emergency stump for Coakley on Sunday was as effective as his trip to Copenhagen for Chicago’s Olympic bid. Perhaps with the Nebraska bribe and union Obamacare back-room, tax-pass deal, he contributed to the defeat of a candidate who had a 20-point poll advantage a month ago.
But the real story tonight is the significant victory of an “independent” Republican in a solidly Democratic state. This has not happened since 1972, 38 years ago. Keep in mind that Paul Revere’s ride in 1775 started the revolution which led to the founding of this great nation.
At the risk of being overly dramatic, Scott Brown, Senator Scott Brown, is the real thing. I have never heard a better national victory speech. I predict Scott Brown will someday lead a national ticket.
He was forceful, humble, a man of the people who gave the people credit. He covered the issues of concern on the national scene, emphasizing the Obamacare debacle and the expanse of and intrusion of big government into our lives. Yet he was magnanimous in recognizing his opponent and in acknowledging the interim senator. Later in the speech he did gratefully acknowledge his conversation with Obama saying he was ready for a two-on-two game of hoop with a pick of the president’s choice against Scott with his daughter! (She played round-ball at Boston College!) He did say that he would drive his truck to D.C. so the president could have a look.
He let his military record be known and his strong support for national defense. He strongly opposed giving constitutional rights to foreign terrorists. Spend our taxes on national defense not attorneys for foreign terrorists. This a strong “in your face” to Obama Hussein’s dangerous minion, Eric Holder.
He let it be known that he was ready to go to Washington and start now. I predict the Democrats will seat him without delay. No games, they are already in trouble without compounding their problems.
But the real nuance of the speech was his connection to the Kennedy heritage. He called Ted’s widow. He said that he was proud to hold the seat once held by John Quincy Adams and John F. Kennedy. In other words he connected with history and with the Kennedy mystique. Quite a masterful politician.
Toward the end of the speech after the heartfelt thank-yous, Scott Brown assumed a national mantel without losing his Massachusetts mandate. He said what started tonight early in 2010 would reverberate throughout the country in 2010 and the people across the country should take heart.
We did indeed witness this evening another “shot heard ’round the world.” And, it was delivered without a teleprompter!
Tom Motherway
Evil, Not Just Wrong
Posted by Tom in Environment on January 16, 2010
Tonight I watched “Not Evil Just Wrong” Phelim McAleer’s documentary exposing Al Gore’s alarmist environmentalism for the phoniness it is. It’s subtitle: “The True Cost of Global Warming Hysteria.” It presents the human side well. But it fails to present Al Gore’s profit side from this flimflam. The con artist is making money with this schtick; he is the true fat cat, literally and figuratively! So, as you can tell, I disagree with the title! Here’s a Cavuto interview on the documentary.
Musings on Democratic Personnel
Posted by Tom in Financial Crisis, Intelligence, Terrorism on January 16, 2010
Politics is politics, so you expect political appointments, you know, to the victor goes the spoils. But there may be instances when you want competent people running the show. I would think a couple of those would be investigating the recent financial collapse and investigating our national security lapses. So what do we see in those functions?
Phil Angelides, the former California State Treasurer who oversaw California’s slippage into bankruptcy is now chairman of the Financial Crisis Inquiry Commission charged with finding out causes and solutions to the market breakdowns. He starts out by failing to consider the roles of the Fed, and Barney Frank’s Fannie and Freddie; the scripted conclusions are already set. Apparently, Phil hasn’t learned any lessons while he watched California slip into bankruptcy! See: D.C. Witness Protection Program in the January 15th WSJ.
And how about national security and the intelligence necessary to make it work? The departments are run by so-called managers like John Brennan, Leon Panetta, Janet Napolitano, and Dennis Blair, not by professionals who know how to connect the dots. People like Napolitano are comically clueless. With these people in charge intelligence will continue to fail according to Herbert Meyer a former CIA official. His article Why Intelligence Keeps Failing, in the January 16th edition of Real Clear Politics presents a summary of intelligence from the OSS days to today’s CIA and NSA. His point that only the pros should run intelligence services is hard to refute.
So what do we get from our Democratic rulers in these critical areas? Laughable incompetence!
Tom Motherway
The Dog Doesn’t Mind Being Kicked Now and Then As Long As He’s Well Fed and Housed!
Posted by Tom in Democrats, Politics, Stimulus/Bailout, Wall Street on January 15, 2010
My wife Dede got an email from Vice President Joe Biden today soliciting her support for the proposed Financial Crisis Responsibility Fee on the country’s largest banks. “Barack and I aren’t backing down. But to win, we’ll need the American people to add their voice right away.” He then tells her she can add her name at my.barackobama.com!
Wall Street owns the Democrats but often assumes the role of the pet dog, simply for political reasons. As previously mentioned in my December 12th post, Democrats got 11 of the top 15 aggregate contributions given by Wall Street. As Kevin Williamson reports in his NRO post Paying for the Privilege, Goldman Sachs gave 73% of its campaign cash to the Democrats and the VC guys gave 75%!
“But if the Democrats are gluttons for Wall Street money, Wall Street is a glutton for punishment: The president and his party in Congress are engaging in truly dishonest demagoguery — asNational Review has noted, TARP losses aren’t coming from the banks, but from largely Democratic messes including AIG, the automakers’ bailouts, and Rep. Barney Frank’s beloved foreclosure-prevention program. But even as the Democrats demonize Wall Street and vilify Big Business in general, the pinstripes-and-obscene-bonuses set continues to write big checks to Obama’s party.”
So mean old Joe Biden can posture and puff all he wants in Obama’s charade. Wall Street gets what it wants in good times and bad, the Democrats do Wall Street’s bidding. So the lap dog doesn’t mind being kicked occasionally, after all he is extremely well-fed and well-housed!
I sure hope Dede doesn’t sign Barack’s web page!
Tom Motherway