Well, Hillary's gone and done it. She's gone off the deep end. And I knew she would.
Like Bill, she's too full of herself to concede, even when she's clearly defeated. So she's taking the fight all the way to the convention, and trying desperately to get the Michigan and Florida delegates seated. Michigan - where Obama wasn't even on the ballot - offered her a compromise: 69 delegates for her, 59 for Obama (she beat "uncommitted" by a margin of 65% to 35%).
But Hillary wants them all. Why? Because she needs them all, if she's to claim the nomination.
In Florida, she's trying a populist approach, whipping voters into a frenzy. "You didn't break a single rule," she tells them. No, but the party did, and she didn't protest back then. "The outcome of our elections should be determined by the will of the people," she tells them, "and we believe the popular vote is the truest expression of your will."
Oh, really? Funny, I can't find a single speech she gave before the primaries and caucuses got underway where she argues that the delegate system should be discarded in favor of the popular vote. Why? Because she didn't feel that way until it suited her (lost) cause.
Yet she wants delegates seated. Hypocrisy? You bet.
This will only continue to divide Democrats, and it can't be good for the party. But I don't think that's what she wants. I think she knows she's lost, but she wants to wound Obama to the point that McCain beats him, so she can run again in four years. She doesn't want a solid Obama to win, then perhaps win a second term, then endorse his veep (which certainly won't be her), forcing her to wait anywhere from four to 12 or 16 years for another shot.
********
Speaking of hypocrisy, when asked why, on an income of $240,000 a year, Barack and Michelle Obama didn't give more money to charity (they contributed less than 1% of their income), they complain about the high cost of raising kids, and having to pay back expensive student loans. (Gee, I make less than that, and I have a kid and some debt, but I manage to give a heck of a lot more than 1% of my income to charity.)
But now that they're millionaires (and giving more to charity, but still not a significant percentage, and they've only been doing since Barack declared his candidacy), Barack apparently feels differently about the bracket that he formerly struggled to live in.
Justifying his planned tax hikes, he said, "Once people are making over $200,000 to $250,000 they can afford to pay a little more in payroll tax." But wait - they can't afford to give to charity, not if they have kids or loans. So how can they afford to pay more in taxes?
This is what's wrong with big-government types. The world is better off if we direct our money to charity, under our own guidance, than if we trust politicians with it. Case in point: Obama himself, who has already - in his notably short tenure in Washington - proven himself adept at serving up pork. He requested $330 million in pork for his home state in a single year.
One example was the $1 million he requested for the University of Chicago Medical Center. A worthwhile cause, perhaps. Though maybe the fact that one Michelle Obama is a vice president of the hospital has something to do with the request. Or the fact that her pay for that role nearly tripled shortly after her husband got elected as Senator.
But it's probably just a coincidence. She probably just went plaintively to her boss, hat in hand, and explained how difficult it was for her and Barack to pay for their kids' dance lessons and sports supplements (which she recently complained cost about $10,000 a year - good Lord, what kind of supplements are they giving those kids?), and repay those darned expensive student loans, so could she please have a raise? And voila, her boss tripled her salary. Yeah, I'm sure that's how it went.
********
More on the Obamas: Barack - who's been seen by some as lacking the backbone to be Commander-in-Chief - showed his moxie in a recent interview, when he said that making Michelle a campaign issue was "unacceptable." Well, sorry, sport, but you're not dictator - er, President - yet, so you don't get to make that call.
Hey, he trumps her out on the campaign trail, uses her to appeal to the female vote, with which his opponent has an edge, encourages her to campaign on his behalf. So anything she says - especially things like "I've never been proud of my country," or "America is a mean country" - is fair game. Just ask Hillary, whose spouse's acute case of foot-in-mouth has cost her numerous times. Or ask John Kerry.
And another curious thing: Michelle's Princeton thesis, which addressed the topic of race, has been shelved by the University until November 5. Hmmm. Wonder who Princeton supports for President?
********
Finally, a thought from my good friend Rick Maner. The Democratic candidates often appeal to the blue-collar crowd by talking about how they're going to tax the "rich" to take care of "the working man." Well, Rick takes umbrage to that reference, as do I.
While certainly not "rich," we fall into the tax bracket to which both Clinton and Obama plan to put the screws (and I daresay we give more to charity than either of them). So their implication is that we're not "working men." Just because we don't carry a union card, or come home with grease on our pants and dirt under our fingernails.
Don't get me wrong, there's nothing wrong with those that do. I admire the work they do. But I work equally hard. Granted, what I do uses my brain more than my hands. But the average mechanic or plumber could no more do what I do, than I could do what they do. Someone apparently values what those of us in the higher tax brackets do - those of us that earn our living working for someone else, not trust fund babies or the like - or they wouldn't pay us what they do.
So, Hillary and Barack, when you say you're going to take care of "the working man," I'm curious: what are you going to do for me? At least I don't take two years away from my desk, while still drawing a salary, to run for President.
Thursday, May 22, 2008
Monday, May 19, 2008
Random Musings
Just a few thoughts rolling around my head after a great week in Charleston, SC. What a beautiful city, and a living history museum.
********
This blurb, taken from a paper titled "The Financial Instability Hypothesis" by Hyman P. Minsky, is an excellent technical description of the current state of economic affairs:
"Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units [defined as those that can fulfill all their contractual payment obligations by their cash flows] to a structure in which there is large weight to units engaged in speculative [units that can meet interest payment obligations out of cash flows, but often must roll over liabilities to re-finance] and Ponzi finance [as the name implies, units that must borrow or sell assets to meet principal and interest payment obligations]. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values."
Likely, indeed.
********
Much has been made of John McCain's vision of the world in 2013, but many have missed the subtlety of the date he chose, which is significant. The next Presidential election is in 2012, so by choosing 2013 as the year in which all this will come to pass, he's basically saying, "Elect me, then re-elect me, and all my campaign promises will be fulfilled - but you've got to give me two terms to get it done." White House hopefuls have used this tactic for years.
********
Everybody seems to be trying to talk us out of this recession. There's jawboning coming from every angle: the obvious, like the President, Hank Paulson and Ben Bernanke; bank economists; CNBC pundits (naturally); other economists; and general media talking heads. But talking this recession down won't work. Everyone's ignoring the 15% additional decline in real estate values that's coming, the continued increase in homes on the market, looming defaults and foreclosures, and the coming crimp in consumer spending (despite stalwart assertions that the third quarter will see a boost in spending from the tax refunds, the majority of which will be saved, used to reduce debt, or channeled directly into the gas tank.
Word to the wise: brace yourselves.
********
Speaking of the rebates, let's put them in their proper perspective. The sum total of the rebates, as part of the overall stimulus package, is about $100 billion. File that factoid away for a minute.
Much of the spending spree of the early years of this decade was fueled by using homes as ATMs. Let's break those numbers down. From 2000 to 2005, mortgage debt grew by about $4 trillion. Half that volume came from refinancing. That's $2 trillion.
A 2002 Fed survey found that 25% of refinance funds were used to make consumer expenditures (dumb, dumb, dumb, but we'll leave that rant to Dave Ramsey). That's $500 billion, over five years, or $100 billion a year. That works out to about 1% of total personal consumption expenditures, or about 0.7% of GDP. And it's dried up now - there's no equity left to tap, and lenders are increasingly reluctant to let homeowners even try to tap it if they have it - so that's a 0.7% drag on output growth, in an economy that's only growing by 0.6% annualized.
Back to the rebates. If 100% of them get spent, that only boosts GDP by 0.7% (and please don't feed me the multiplier effect crap). That only offsets one year's worth of the now-vaporized home equity spending boost, which will remain vaporized for several years. What then?
And, if the more likely scenario of just about 25-40% of the rebate money getting spent materializes - and I'll bet much of that spending would go toward necessities, which now account for about 57% of the average American family budget, vs. less than 52% at the beginning of this decade - the impact is far less, on the order of about 0.2% of GDP.
Some stimulus.
********
This blurb, taken from a paper titled "The Financial Instability Hypothesis" by Hyman P. Minsky, is an excellent technical description of the current state of economic affairs:
"Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units [defined as those that can fulfill all their contractual payment obligations by their cash flows] to a structure in which there is large weight to units engaged in speculative [units that can meet interest payment obligations out of cash flows, but often must roll over liabilities to re-finance] and Ponzi finance [as the name implies, units that must borrow or sell assets to meet principal and interest payment obligations]. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values."
Likely, indeed.
********
Much has been made of John McCain's vision of the world in 2013, but many have missed the subtlety of the date he chose, which is significant. The next Presidential election is in 2012, so by choosing 2013 as the year in which all this will come to pass, he's basically saying, "Elect me, then re-elect me, and all my campaign promises will be fulfilled - but you've got to give me two terms to get it done." White House hopefuls have used this tactic for years.
********
Everybody seems to be trying to talk us out of this recession. There's jawboning coming from every angle: the obvious, like the President, Hank Paulson and Ben Bernanke; bank economists; CNBC pundits (naturally); other economists; and general media talking heads. But talking this recession down won't work. Everyone's ignoring the 15% additional decline in real estate values that's coming, the continued increase in homes on the market, looming defaults and foreclosures, and the coming crimp in consumer spending (despite stalwart assertions that the third quarter will see a boost in spending from the tax refunds, the majority of which will be saved, used to reduce debt, or channeled directly into the gas tank.
Word to the wise: brace yourselves.
********
Speaking of the rebates, let's put them in their proper perspective. The sum total of the rebates, as part of the overall stimulus package, is about $100 billion. File that factoid away for a minute.
Much of the spending spree of the early years of this decade was fueled by using homes as ATMs. Let's break those numbers down. From 2000 to 2005, mortgage debt grew by about $4 trillion. Half that volume came from refinancing. That's $2 trillion.
A 2002 Fed survey found that 25% of refinance funds were used to make consumer expenditures (dumb, dumb, dumb, but we'll leave that rant to Dave Ramsey). That's $500 billion, over five years, or $100 billion a year. That works out to about 1% of total personal consumption expenditures, or about 0.7% of GDP. And it's dried up now - there's no equity left to tap, and lenders are increasingly reluctant to let homeowners even try to tap it if they have it - so that's a 0.7% drag on output growth, in an economy that's only growing by 0.6% annualized.
Back to the rebates. If 100% of them get spent, that only boosts GDP by 0.7% (and please don't feed me the multiplier effect crap). That only offsets one year's worth of the now-vaporized home equity spending boost, which will remain vaporized for several years. What then?
And, if the more likely scenario of just about 25-40% of the rebate money getting spent materializes - and I'll bet much of that spending would go toward necessities, which now account for about 57% of the average American family budget, vs. less than 52% at the beginning of this decade - the impact is far less, on the order of about 0.2% of GDP.
Some stimulus.
Monday, May 5, 2008
Long Time, No Blog
It's been a lengthy hiatus from the blog for me. I've actually been doing so much music writing and recording of late that I haven't had much free time, but I wanted to get a brief post out here.
From Reuters: "Prosecutors ... are stepping up their scrutiny of players in the subprime-mortgage crisis ... A task force of federal, state and local agencies will look into potential crimes ..."
I was glad to read this. Let's go after the people who promulgated this mess. But as I read further, my hopes were dashed.
The range of crimes being looked into? Mortgage fraud by brokers, securities fraud, insider trading and accounting fraud. The targets? Wall Street firms like UBS and Bear Stearns, lenders like Countrywide, builders like Beazer Homes, and major insiders.
How about going after the ratings agencies for totally missing the boat on assessing risk, which is their one and only job? How about going after the bond insurers for taking on excessive risk? (Sure, in a free market you should be able to take on as much risk as you want. But some of the monolines still carry AAA ratings, even after losing 95% of their value and having to borrow at rates up to 14% to raise the capital they have to raise to stay alive. So maybe it comes back to the ratings agencies.)
Finally - can we prosecute the people who lied about their incomes, assets and ability to make the payments on their loans? Who knew they wouldn't be able to make the payments on a low-teaser rate ARM once it reset, but didn't care because they just knew their new McMansion's value would go up by double digits every year until the end of time? Or the people who just stop paying their mortgage because their house is now worth less than the loan balance, even though they can make the payment?
Barney Frank doesn't think so. Ol' Barn wants to bail those people out, to the tune of $2.7 billion of taxpayers' money, including taxpayers who also happen to be responsible homeowners and renters. (For more details, read my article "Kill (This) Bill" in our company's newsletter for May - go to www.cnbsnet.com, and click on the story in the MarketCast box.)
Well, I think Barney should be prosecuted with the rest of them for even proposing such a notion. I'll bet less than 1% of delinquent subprime borrowers were unwittingly duped by a rogue lender. The rest were as criminal as the lenders, Wall Street, the builders and the ratings agencies. Or at least criminally stupid, as Barney Frank appears to be.
From Reuters: "Prosecutors ... are stepping up their scrutiny of players in the subprime-mortgage crisis ... A task force of federal, state and local agencies will look into potential crimes ..."
I was glad to read this. Let's go after the people who promulgated this mess. But as I read further, my hopes were dashed.
The range of crimes being looked into? Mortgage fraud by brokers, securities fraud, insider trading and accounting fraud. The targets? Wall Street firms like UBS and Bear Stearns, lenders like Countrywide, builders like Beazer Homes, and major insiders.
How about going after the ratings agencies for totally missing the boat on assessing risk, which is their one and only job? How about going after the bond insurers for taking on excessive risk? (Sure, in a free market you should be able to take on as much risk as you want. But some of the monolines still carry AAA ratings, even after losing 95% of their value and having to borrow at rates up to 14% to raise the capital they have to raise to stay alive. So maybe it comes back to the ratings agencies.)
Finally - can we prosecute the people who lied about their incomes, assets and ability to make the payments on their loans? Who knew they wouldn't be able to make the payments on a low-teaser rate ARM once it reset, but didn't care because they just knew their new McMansion's value would go up by double digits every year until the end of time? Or the people who just stop paying their mortgage because their house is now worth less than the loan balance, even though they can make the payment?
Barney Frank doesn't think so. Ol' Barn wants to bail those people out, to the tune of $2.7 billion of taxpayers' money, including taxpayers who also happen to be responsible homeowners and renters. (For more details, read my article "Kill (This) Bill" in our company's newsletter for May - go to www.cnbsnet.com, and click on the story in the MarketCast box.)
Well, I think Barney should be prosecuted with the rest of them for even proposing such a notion. I'll bet less than 1% of delinquent subprime borrowers were unwittingly duped by a rogue lender. The rest were as criminal as the lenders, Wall Street, the builders and the ratings agencies. Or at least criminally stupid, as Barney Frank appears to be.
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