Sure, go ahead, blame the government

Over here, we see:

I think if one observes closely the the fact that the scale of the vertical axes are very different, one may very well have an altered perspective on the role of the GSE's in the mortgage crisis.

In other words, it was the private market's fault. Really?

First, bad English. Second, Fannie and Freddie had "reached more than 80% of market share" this year.

.01 x .80 = .008
.05 x .20 = .010

So: the Government Sponsored Enterprises broke 0.8% of the market, while private enterprise broke 1%. Clearly, a marvelous Victory for Socialism!

So, I take it the U.S. government will simply repudiate the debts of Fannie and Freddie without the embarrassment reserved to the peons in the private sector? And without the threat, needless to say, of jail time for those whose malfeasance crossed the line to outright fraud?

No one treated Lehman Bros paper (stock) as reserves nearly as credible as T-bills. The big investment houses have died from owning Fannie and Freddie paper: stock and the ubiquitous Mortgage Backed Securities.

In little words, Lehman Bros and Bear, Stearns owned Fannie and Freddie securities. Fannie and Freddie owned no paper from Lehman, Bear or other banks or investment houses. Both are now bankrupt. Do the math.

The best evidence of the coming recession.

“How does it feel?”

Heh. This song means so much, but in some ways, it's merely a thing to throw in the hippie's faces: a wet blanket, lovingly wrapped around a brick.

“Dow Drops Nearly 700 In Opening Minutes”

“Looks like I picked the wrong week to stop sniffing glue.”

Jonah Goldberg at the Corner.

See also this.

Time out from politics

The 1970 movie Equinox bears a ton of resemblances to Sam Raimi's The Evil Dead and to his comedic reboot, The Evil Dead II: Dead by Dawn. Four college students (four in the first Evil Dead, two in the second) go to a professor's cabin in the woods. The professor is not there, but they find his notes and an old book, described by the professor as the "bible of evil". Reading a few words from the book brings an evil out of hell, or the woods. Claymation is involved. A castle is seen, which turns out to be in Hell. College kid Frank Bonner ("WKRP in Cincinnati"'s Herb Tarlek) is possessed, acting like an evil twin.

Sam Raimi owes someone some royalties.

In quality, Equinox bears roughly the same resemblance to The Evil Dead as the latter bears to The Evil Dead II: Dead by Dawn, but it has an original creepiness. The (also-possessed) park ranger played by director/writer Jack Woods went on to edit sound for Naked Gun and Star Wars movies. The other writer, Mark Thomas McGee, wrote more horror flicks before moving into television acting.

“There’s really no market discipline on these two companies.”

No shit, Sherlock.

The word on the center-right blogosphere is that the Office of Federal Housing Enterprise Oversight was kept on a short leash by the Democrats in the Senate. Unlike other regulatory agencies, OFHEO was not given a set yearly budget; instead, Congress approved its budget yearly, keeping OFHEO subject to Congressional pressure. Reading this November ’07 interview with Director James B. Lockhart III (late of the Social Security Administration), though, makes you wonder.

Did they really think the market was not overpriced? Was the Bush Administration “in on it,” being clueless or genuinely afraid of not appearing to support minority homeownership? Or are they just that stoic in taking all these hits to get the votes to keep taxes low and support the war effort in Iraq and Afghanistan?

The New York Times article indeed pegs quite a few Democrats, including our bête noir, Barney Frank, but the Administration seems almost complicit in supporting Fannie and Freddie in their mad rush to bankruptcy. Is it really all that sinister? Or did the Administration have its hands full enough staving off even more disasterous Democratic money-spooges to their favorite failure?

For some laughs, the titles of the “Most Emailed” columnists at the Times:

• Maureen Dowd: Sarah’s Pompom Palaver
• Frank Rich: Pitbull Palin Mauls McCain
• Nicholas D. Kristof: Racism Without Racists (guess who Nicky’s writing about!)
• Bob Herbert: Palin’s Alternate Universe

“Newspaper of Record,” indeed.

Also, read the first page of Thomas L. Friedman’s “Swedish Spoken Here.” How does someone who claims to be an internationalist get off invoking such xenophobic dread in his first two paragraphs? OMG, Swedes and Germans are buying things in America and sending them home!! AIIEEEEE!!

The only two articles that sound good are “Capitalism to the Rescue” and “Dick Cheney, Role Model,” but neither are what you would think. If Al Gore had used the Vice Presidency as Cheney has, Pinchloaf Sulzberger would have had to change his underwear.

Barney Frank is Elmer Fudd from the Universe where Spock has a beard.

The Big Lie: Social Security

ETA: Almost as big a threat as Social Security are public and private pay-as-you-go pensions. See the terrible problems in: Illinois, Texas.

Social Security is the third rail of American politics. The Democrats want to make it Welfare 2.0. Republicans want to privatize it, as has been done in Sweden and Chile.

In fact, Social Security has run a 22-year “surplus” of over $2.1 trillion

Federal tax receipts are $2.5 trillion dollars out of a $14 trillion GDP. So let's not get all excited.

For example, as you can see above, in fiscal 2007, the government’s operational (”on-budget”) deficit was $343.4 billion; but after netting in the Social Security surplus and the Postal Service, it “officially” reported a deficit of $162 billion.

Funny, all the blogs I read say we have a $300-400 billion deficit. Not The New York Times, though. Funny.

No one, it seems, wants to privatize Social Security. The AARP said in 2005 of Sweden's private accounts, “The total return for the default fund was -10.6 percent in 2001 and -26.7 percent in 2002.” The Democratic Underground thinks it's all a clever ruse to commit theft.

The New York Times cries at the thought of private accounts. The Times also cries that Chile has trouble making private accounts work. Of course, if you read the article you discover that Chile requires neither the self-employed nor temporary contractors to pay into the system. The U.S. does.

Now follow this link to bankrate.com, if you please. You should be looking at a page ranking of 5-year CDs, from 5.25-3.75% interest.

Now ask yourself these simple questions:

1. Why am I unable to deposit my Social Security into CDs and keep rolling it over?


2. Why do we tax children and grandchildren to pay for their grandparents who, after all, worked all their lives and had 15% of their income taxed for Social Security? Were they really that incompetent at domestic finances?


3. Why is someone who dies childless prevented from paying their Social Security benefits to a niece or nephew?


4. Why has FICA gone up from 2% to 15%? (Don't forget your employer matches your payments exactly.)


5. Why do we think that forcing everyone in the country to learn the stock market by giving them 401(k)s is efficient?


6. Why do we regulate the entire stock market when we really only care about the life savings of little old widows?

Finally, let's talk about that “trust fund.” Social Security surpluses, by law, could not be invested in anything but U.S. Treasury bills. Treasury bills earn about 2.6% interest (half the return of banks). Finally, any money you get by cashing in a mature T-bill comes from the tax revenue of the U.S. government.

In other words, if we had kept the “trust fund,” we'd be paying off Social Security by — raising taxes. Without it, we will have to pay off Social Security by — raising taxes.

Again: with the fund, the SSA would cash T-bills, which the government would redeem by raising taxes. Without it, the government raises taxes and gives the money directly to SSA.

See the difference?

From Republic to Empire to Republic again

Sigmund, Carl and Alfred links and copies Howard Zinn's al-Guardian op-ed. My thoughts below:

both major parties rushing to get an agreement to spend $700bn of taxpayers’ money to pour down the drain of huge financial institutions which are notable for two characteristics: incompetence and greed.

The only economist worth his salt in the Great Depression was Will Rogers: "Stupidity got us into this mess, why can't it get us out?"

And he was right. Loose money crashed the stock market: tight money and protectionism created the Depression. FDR's alphabet soup of TLAs maintained it until America loosened money and dropped trade barriers in celebration of WWII. ;-)

I know, throwing more money at the stupids who counted on an ever-rising market, or Fannie's guarantee to (maybe) bankrupt the US government to protect its risk-riddled portfolios, seems counter-intuitive. (And that's the polite phrase!) But the FDIC will be throwing nearly-dead banks at solvent ones while the Treasury makes up some of the loss sustained by the GSEs.

We will not make any money off this bail-out. We will merely maintain our honor and our economy.

Let’s face a historical truth: we have never had a “free market”, we have always had government intervention in the economy, and indeed that intervention has been welcomed by the captains of finance and industry. They had no quarrel with “big government” when it served their needs.

Yes, and you may say the Mob never minded Prohibition. Your point? And how free was a market with Fannie and Freddie at large? (Loose?) It is precisely the lust of Big Business for Big Government that must be thwarted to save the little guy in his garage.

The first big bail-out was the decision of the new government to redeem for full value the almost worthless bonds held by speculators.

So, "the first big bail-out" was in fact the first time the U.S. government honored its debts? Sophistry.

Look, if the government wanted to help the people who sold those bonds in the long interval between purchase and redemption, then private citizens were perfectly capable of raising a subscription, or the Federal government could have voted a pension. Don't confuse charitable relief (honorable in itself) with honoring your obligations.

The rationale for taking $700bn from the taxpayers to subsidise huge financial institutions is that somehow that wealth will trickle down to the people who need it. This has never worked.

You're damn right. The system must be left open for little businesses to bloom and grow tall enough to reach the sunshine. It's not "trickle-down", it's "bubble-up".

The alternative is simple and powerful.

A perfect description of National Socialism.

Take that huge sum of money and give it directly to the people who need it. Let the government declare a moratorium on foreclosures and give aid to homeowners to help them pay off their mortgages. Create a federal jobs programme to guarantee work to people who want and need jobs and for whom “the free market” has not come through.

Yes, we did that, it was called "excess housing".

Stop foreclosures and you destroy any value in the property that the bank now owns: that means you destroy the bank. (Dems: that means you MAKE THE CRISIS WORSE.) Borrower and lender will have to agree that the illiquid asset is not worth the bank's time and that the would-be homeowner needs a place to live. To get their payments, the banks will have to negotiate. Some houses will be worth more resold, many will not.

Face it, we've all lost. The bubble price of the house is now a chimera. We have to work with the old price of the house, adjusted for inflation.

We have a historic and successful precedent. Roosevelt’s New Deal put millions of people to work, rebuilding the nation’s infrastructure, and, defying the cries of “socialism”, established social security. That can be carried further, with “health security” – free health care – for all.

Except that FDR did not fix the Depression, and now Social Security threatens to destroy us. What will HillaryCare do to us?

How about this: we create private funds out of Social Security (15% of our income, remember). We largely deregulate banks and investment houses, but we set up a special category of bank that will follow very tight investment rules and be certified by a Pension Board (like the Federal Reserve, beyond the direct reach of Congress).

That way, even people who rent (quelle horreur!) can accumulate for a retirement, and the U.S. government will no longer be required to police the entire investment world. No one will be forced to seek funds from these banks, though the attraction will be powerful enough that many will jump through the hoops to qualify.

In the $600bn for the military budget, once we decide we will no longer be a war-making nation.

No, we will merely be poor and bullied. Europe's defense budget will swell if America is no longer there: you'll be poorer, Mr Socialist. Japan and Australia will also swell their armament.

And in the swollen bank accounts of the super-rich, by taxing vigorously both their income and their wealth.

"Our" wealth, don't you mean, Mr Socialist? A few years of that and we shall have no wealth at all. Yes, since only people like Steve Jobs, Bill Gates and Warren Buffet, all too smart to invest in a bubble, have money, we must now punish them especially hard for, uh, being smart.

Only such a bold approach can save the nation – not as an empire, but as a democracy.

Again, National Socialism rears its ugly head. Once Wall Street is firmly ensconced in Washington, D.C.'s bed, we will never pry them apart except after a general war.

Look, folks: Yellowstone burned to the ground, okay? Quit crying. Out of the ash, beautiful things can grow.

Gahhh... Barney Frank has a fanny buddy at FANNIE MAE

The inimitable, eponymous Ace of Spades HQ has the, uh, poop. Yes, Barney Frank, longtime ranking Democrat of the House Banking Committee, has a boyfriend, Herb Moses, assistant director for product initiatives from 1991 to 1998.

Frank takes pains to note how carefully they avoided conflicts of interest.

$700,000,000,000.00 worth.

As Ace so nicely points out:

Why is this just coming out now? At Fox F*cking News, of course.

Why?

Why is it I f*cking know the exact time Sarah Palin had amniotic fluid leakage and I'm just finding this out now?

Ace is referring to the Democratic blog talking point that Sarah Palin supposedly caused Trig's Down's Syndrome by not overnight mailing herself to the nearest hospital when her amniotic fluid leaked. She merely maintained contact with her doctor.

It should be noted that the main freak making these charges, Andrew Sullivan of the Atlantic, is a raging homo. Hey, aren't we all sometimes, but even I understand female anatomy and pregnancy, unlike Sullivan, whose insane rantings on Palin and Trig reveal him to be utterly, sickeningly obsessed.