One of the presidential campaigns looks to be on the ropes. Any guesses whose?
Normally I don't pay much attention to the Hollywood-celebrity-cum-political-pundit crowd. If I want to hear what they have to say, I'll buy a movie ticket, and they can do their job and entertain me. I pay their salary, after all.
But since they're crawling out of the woodwork on the left at such an alarming rate that I see them everywhere I turn - like so many cockroaches - I figured I'd give a listen to at least one from the right. After all, they're so scarce, they need the love.
So here it is. Dennis Miller said it best:
"I don't know what it is about Sarah Palin, but she is in Obama's melon in a big way."
No kidding. The once-articulate (and don't forget "bright" and "clean," according to his running mate) former community organizer, serial campaigner and "present" voter has been fumbling and bumbling and hemming and hawing and pausing and scrambling like ... well, like Joe Biden trying to cover his "Stand up, Chuck!" gaffe.
The Obama camp has no idea what to do about Palin. Apparently, they clearly saw that, finally, we were getting a candidate for high office who is of the people, by the people and for the people. And that resonated with the people. All along, Obama's been chirping about "hope" and "change." Along comes Palin. She radiates hope, and she's brought change. Hard, fast and uncomfortable change.
And Obama doesn't know what to do, other than cry, "Gimme back my slogan!" like a petulant child who won't share his toys.
So the spin machine started, at a dizzying pace. There have been so many smears on Palin that I can't keep up with them. "Trooper-gate?" Come on, at least be original. (That one has "disgruntled former employee" written all over it, by the way. Except he's not a former employee, he's still got his job.) The "bridge to nowhere" flap? Much ado about nothing. I'll even give the Dems that one. She still fought earmarks, and she's still done wonders for the people of Alaska.
And they, her constituents, love her. That's the real litmus test. What do the people of Illinois say about Obama?
Chirp chirp ... chirp chirp ...
As for the other attacks, the "it's not her baby," "lipstick on a pig," "bikini-clad gun-toter," etc., I won't dignify them with discussion.
Neither would she, which is why she's been kept away from the press. Let the crap die down, let some semblance of civility return to the discourse (if that's even a remote possibility these days), and she'll talk to the propaganda machine's puppets. But the left hooted that this was just another example of her inexperience, that she had to be coached.
Of course, they're not talking about the fact that the wizened old vet, Joe Biden, is being coached for his debate with her. (Given his recent public comments, though, that's probably a really good idea.)
She did do the interview with Charlie Gibson, who was as disrespectful as I've seen a journalist be. (God, how I miss Tim Russert.) Really, his body language, his demeanor, his style of questioning - would he have seriously perched his little reading glasses halfway down his patrician nose and looked down it at John McCain?
McCain would have smiled at him and said, "My friend, let me help you adjust your glasses," then popped Charlie in the forehead hard enough to put him on his pompous backside.
It was disrespectful. And not to play the gender card, but I don't think Chuckles would have acted that way toward a male candidate.
I thought she held her own, especially given that ABC rolled out a clearly biased interviewer with an obvious agenda, who was out to get her. Well, he didn't. She wasn't flawless, but she did fine, especially against an adversarial interviewer.
Of course, the left doesn't think that way. But I've traded a lot of e-mails and message board posts and had several conversations about this. And early on, I observed this truth, and stated it for the record:
Those predisposed to believe she'd do poorly, believe she did poorly. Those predisposed to believe she'd do well, believe she did well.
And that truth has been upheld by every discussion, verbal or electronic, that I've had or seen since.
By the way, nobody's talking anymore about how Obama did with O'Reilly. Maybe that's what's got the Obama camp's knickers in such a twist - their guy takes on Bill O'Reilly, which is supposed to be big news, but once again gets upstaged by the upstart from Alaska.
What's next? Blaming the McCain campaign for Hurricane Ike, because it caused Obama to cancel his Saturday Night Live appearance?
No, the day after 9/11, Obama said, "Okay, the gloves are off now." And launched an attack ad - or, should I say, yet another attack ad, because since the conventions I have not seen one ad talking about Obama himself - going after McCain. I shuddered before I watched it. I thought, "Oh, no, given how vicious and nasty these people have been thus far, I can't imagine what they'll say about McCain now that "the gloves are off." So what did they lead with?
"John McCain doesn't even know how to use a computer."
Seriously - is that your best shot? The political equivalent of "nanny, nanny, boo-boo?"
What a mismatch. War hero McCain doesn't even have to get into the fray. Obama's getting pummeled by the second string, a "hockey mom and first-term governor of one of the least-populated states in the country who before that was mayor of a town of 9,000," as the mantra goes.
Yep, the Obama campaign's on the ropes. It has become ugly.
And there's no putting lipstick on that pig.
************
I leave you with these words from fellow blogger Greg Gutfeld, who succinctly explains the anti-Palin sentiment from the left:
"According to many in the media, we truly have discovered someone worse than Hitler — and it's Sarah Palin.
Head to any left-wing blog or even CNN for that matter and you'll find the zaniest of conspiracies -- froth that even a dude with rabies would find unseemly.
So how can one person create so much bile among folks who claim to be the most tolerant in the universe? I mean, liberals are the good people: They're open-minded, caring and of course, fair.
But somehow, a Republican lady in her 40s is exempt from this treatment. Perhaps, she truly is the devil in a dress, a ghoul that eats children and pollutes the planet and possibly beats Barack Obama, the patron saint of every customer buying wheat germ in bulk at GNC.
But I know the real reason why every single elitist media type is terrified of her. They've never met her. And by 'her,' I don't mean Sarah Palin. I mean 'her,' an actual normal woman with a bunch of kids, an average husband and no desire to watch 'The L Word.'
She's scary to these folks the way Wal-Mart is scary to them: Both are alien to someone who blogs about their chakras. They won't go there, because they've never been there.
To them, hating Sarah Palin is a symptom of larger bigotry against the rest of us, the normal. If they saw her at a party, they would wonder how she got in. She's the anti-Obama, the anti-New York Times, the anti-everything that Tim Robbins loves, which is why I love her — and you should too."
Saturday, September 13, 2008
Tuesday, September 9, 2008
The Morning After
Having had a day to digest the Fannie/Freddie bailout, let's take a fresh look.
Apparently I'm not the only one with indigestion. A Credit Union Times article bore the headline, "Bush Administration Defends Fannie and Freddie Action."
If it was such a great idea, why does it need to be defended?
A taped interview with the President intended to do just that will bear this unbelievable gem:
"I wouldn't call it a bailout, I'd call it a stabilization."
Well, the stabilization has cause credit default swap spreads on US Treasury debt to widen to record highs. Those swaps are a market bet on the likelihood a debt issuer will default. The wider the spread, the greater the chance of default. And they've been an uncannily accurate predictor of corporate defaults, much better than credit ratings.
Of course, a blind truffle-sniffing pig could do a better job than the ratings agencies.
Now, the spreads aren't nearly wide enough - yet - to suggest the Treasury will default. But it could get the attention of the ratings agencies, resulted in a downgrade or negative watch. That would cause Treasury borrowing costs - and hence mortgage rates - to rise.
Even if the ratings agencies don't take any action, foreign investors watch the swap spreads, and will almost certainly start demanding higher yields - with the same impact on mortgage rates.
How's that for stabilization?
The administration will blame Congress' long resistance to action for the need to bail out Fannie and Freddie. While I still don't believe an outright bailout was the right thing to do, the administration is correct in its fault assessment.
A Wall Street Journal op-ed piece this morning quoted another of my favorite targets, Barney Frank, as suggesting that Paulson's plan to begin reducing the size of Fannie and Freddie's MBS portfolios beginning in 2010 - after they're increased through the end of next year - won't happen. "Good luck on that," he said.
Beginning in 1992, some legislators and regulators have recognized the flawed structure and inherent risks in Fannie and Freddie, and Frank has fought tooth and nail against a fix. In 2000, he said concerns were "overblown," and made the statement that there was "no federal liability there whatsoever," according to the Journal.
In 2002, he said, "I do not regard Fannie Mae and Freddie Mac as problems ... I regard them as great assets." A year later, he said "there is no federal guarantee" of their debt. Well, there is now. Shortly after that, Freddie's now-infamous accounting fraud was exposed, and Frank said, "I do not think we are facing any kind of a crisis," and that there was no "threat to the Treasury."
Fast-forward to last year, by which time Barney chaired the House Financial Services Committee. Now, he was claiming he'd always been a proponent of reforming the GSEs. He blamed the lack of action on conservatives that "don't think there should be a Fannie Mae or a Freddie Mac."
The WSJ article goes on: "In January of last year, Mr. Frank also noted one reason he liked Fannie and Freddie so much: They were subject to his political direction. Contrasting Fan and Fred with private-sector mortgage financers, he noted, 'I can ask Fannie Mae and Freddie Mac to show forbearance' in a housing crisis ... And this is exactly what Mr. Frank attempted to prove when the housing market started to go south. He encouraged the companies to guarantee more 'affordable' mortgages, thus abetting their disastrous plunge into subprime and Alt-A loans. He also pushed for, and got, an increase in the conforming-loan limits to allow Fan and Fred to securitize and guarantee larger mortgages. And he pressured regulators to ease up on their capital requirements -- which now means taxpayers will have to make up that capital shortfall."
So Barney, as much as Alan Greenspan, fathered the housing bubble. In his zeal for every American to be a homeowner - whether or not they could afford the mortgages - he used taxpayer money to fuel the bubble, fought protections that could have prevented this mess, and now says it's somebody else's fault. He's more culpable than Paulson.
So why does he oppose reducing the MBS portfolios in 2010? At first blush, one would assume that now that he's got the taxpayer on the hook, he has no problem with siphoning off our money to fund even more homeowners who can't otherwise afford a home.
But the Journal piece points to an even more sinister reason:
"The biggest payoff for Mr. Frank is the 'affordable housing' trust fund he managed to push through as one political price for the recent Fannie reform bill. This fund siphons off a portion of Fannie and Freddie profits -- as much as $500 million a year each -- to a fund that politicians can then disburse to their favorite special interests. This is also why Mr. Frank won't tolerate cutting the companies' MBS portfolios. He knows those portfolios (bought with debt borrowed at taxpayer-subsidized rates) were a main source of Fannie's profits before the housing crash, and he figures that once this crisis passes they can do it again. And this time, his fund will get part of the loot."
I swear, I need to find a nice ex-pat community someplace warm.
************
Besides widening default swap spreads on Treasuries, the bailout also triggered the unwinding of credit default swaps on Fannie and Freddie debt. This will be ugly.
No one knows the exact amount of credit default swaps outstanding on the pair's debt, given the lack of transparency in that market. But it's a lot. Nobody knows how the unwinding will take place. But my guess is it could bring down another Wall Street firm.
************
Want to know the real reason Hank bailed out Fannie and Freddie?
Foreign pressure.
Foreign central banks had increasingly leaned on Bungalow Bill, as I now like to call him, because institutions in their own countries had been heavy investors in Fannie and Freddie debt, and they were fearful of a global ripple effect if the two went under. At the time of the Bear bailout in March, foreign central banks themselves bought about as much agency debt as Treasury debt. Since then, there's been a massive flight to quality, as they were net sellers of agencies in July, switching their money into Treasuries.
But declining values of Fannie/Freddie debt made unloading the stuff costly. And the more they sold, the more they put further pressure on the prices. So, instead of incurring the losses that naturally come with taking risk in the markets, they leaned on Hank, who, with his pal Helicopter Ben, has proven all too willing to throw US taxpayer money at anybody who whines loud enough. So we're taking their losses for them.
I should at least get a free vacation each year in the country of my choice for my largesse.
This is a wealth transfer of unprecedented proportions. All the bitching and moaning about the US shipping jobs overseas is misplaced; that pales in comparison to this. My office is still on US soil, but a third of every paycheck now goes abroad.
I seriously, seriously need to find that ex-pat community.
Apparently I'm not the only one with indigestion. A Credit Union Times article bore the headline, "Bush Administration Defends Fannie and Freddie Action."
If it was such a great idea, why does it need to be defended?
A taped interview with the President intended to do just that will bear this unbelievable gem:
"I wouldn't call it a bailout, I'd call it a stabilization."
Well, the stabilization has cause credit default swap spreads on US Treasury debt to widen to record highs. Those swaps are a market bet on the likelihood a debt issuer will default. The wider the spread, the greater the chance of default. And they've been an uncannily accurate predictor of corporate defaults, much better than credit ratings.
Of course, a blind truffle-sniffing pig could do a better job than the ratings agencies.
Now, the spreads aren't nearly wide enough - yet - to suggest the Treasury will default. But it could get the attention of the ratings agencies, resulted in a downgrade or negative watch. That would cause Treasury borrowing costs - and hence mortgage rates - to rise.
Even if the ratings agencies don't take any action, foreign investors watch the swap spreads, and will almost certainly start demanding higher yields - with the same impact on mortgage rates.
How's that for stabilization?
The administration will blame Congress' long resistance to action for the need to bail out Fannie and Freddie. While I still don't believe an outright bailout was the right thing to do, the administration is correct in its fault assessment.
A Wall Street Journal op-ed piece this morning quoted another of my favorite targets, Barney Frank, as suggesting that Paulson's plan to begin reducing the size of Fannie and Freddie's MBS portfolios beginning in 2010 - after they're increased through the end of next year - won't happen. "Good luck on that," he said.
Beginning in 1992, some legislators and regulators have recognized the flawed structure and inherent risks in Fannie and Freddie, and Frank has fought tooth and nail against a fix. In 2000, he said concerns were "overblown," and made the statement that there was "no federal liability there whatsoever," according to the Journal.
In 2002, he said, "I do not regard Fannie Mae and Freddie Mac as problems ... I regard them as great assets." A year later, he said "there is no federal guarantee" of their debt. Well, there is now. Shortly after that, Freddie's now-infamous accounting fraud was exposed, and Frank said, "I do not think we are facing any kind of a crisis," and that there was no "threat to the Treasury."
Fast-forward to last year, by which time Barney chaired the House Financial Services Committee. Now, he was claiming he'd always been a proponent of reforming the GSEs. He blamed the lack of action on conservatives that "don't think there should be a Fannie Mae or a Freddie Mac."
The WSJ article goes on: "In January of last year, Mr. Frank also noted one reason he liked Fannie and Freddie so much: They were subject to his political direction. Contrasting Fan and Fred with private-sector mortgage financers, he noted, 'I can ask Fannie Mae and Freddie Mac to show forbearance' in a housing crisis ... And this is exactly what Mr. Frank attempted to prove when the housing market started to go south. He encouraged the companies to guarantee more 'affordable' mortgages, thus abetting their disastrous plunge into subprime and Alt-A loans. He also pushed for, and got, an increase in the conforming-loan limits to allow Fan and Fred to securitize and guarantee larger mortgages. And he pressured regulators to ease up on their capital requirements -- which now means taxpayers will have to make up that capital shortfall."
So Barney, as much as Alan Greenspan, fathered the housing bubble. In his zeal for every American to be a homeowner - whether or not they could afford the mortgages - he used taxpayer money to fuel the bubble, fought protections that could have prevented this mess, and now says it's somebody else's fault. He's more culpable than Paulson.
So why does he oppose reducing the MBS portfolios in 2010? At first blush, one would assume that now that he's got the taxpayer on the hook, he has no problem with siphoning off our money to fund even more homeowners who can't otherwise afford a home.
But the Journal piece points to an even more sinister reason:
"The biggest payoff for Mr. Frank is the 'affordable housing' trust fund he managed to push through as one political price for the recent Fannie reform bill. This fund siphons off a portion of Fannie and Freddie profits -- as much as $500 million a year each -- to a fund that politicians can then disburse to their favorite special interests. This is also why Mr. Frank won't tolerate cutting the companies' MBS portfolios. He knows those portfolios (bought with debt borrowed at taxpayer-subsidized rates) were a main source of Fannie's profits before the housing crash, and he figures that once this crisis passes they can do it again. And this time, his fund will get part of the loot."
I swear, I need to find a nice ex-pat community someplace warm.
************
Besides widening default swap spreads on Treasuries, the bailout also triggered the unwinding of credit default swaps on Fannie and Freddie debt. This will be ugly.
No one knows the exact amount of credit default swaps outstanding on the pair's debt, given the lack of transparency in that market. But it's a lot. Nobody knows how the unwinding will take place. But my guess is it could bring down another Wall Street firm.
************
Want to know the real reason Hank bailed out Fannie and Freddie?
Foreign pressure.
Foreign central banks had increasingly leaned on Bungalow Bill, as I now like to call him, because institutions in their own countries had been heavy investors in Fannie and Freddie debt, and they were fearful of a global ripple effect if the two went under. At the time of the Bear bailout in March, foreign central banks themselves bought about as much agency debt as Treasury debt. Since then, there's been a massive flight to quality, as they were net sellers of agencies in July, switching their money into Treasuries.
But declining values of Fannie/Freddie debt made unloading the stuff costly. And the more they sold, the more they put further pressure on the prices. So, instead of incurring the losses that naturally come with taking risk in the markets, they leaned on Hank, who, with his pal Helicopter Ben, has proven all too willing to throw US taxpayer money at anybody who whines loud enough. So we're taking their losses for them.
I should at least get a free vacation each year in the country of my choice for my largesse.
This is a wealth transfer of unprecedented proportions. All the bitching and moaning about the US shipping jobs overseas is misplaced; that pales in comparison to this. My office is still on US soil, but a third of every paycheck now goes abroad.
I seriously, seriously need to find that ex-pat community.
Monday, September 8, 2008
Of Sarah Palin, and Other Political Ramblings
I like Sarah Palin. I told someone before the GOP veep announcement she'd be a good pick.
I'm not going to defend her against the many attacks that have been tossed her way, for two reasons. First, by the time I finished, there'd be five new ones. I could never keep up. Second, most of those attacks aren't worth dignifying with a defense.
I will, however, caution those who attack her - I won't say the left, because I have too much respect for my good friends who are on the left to think they'd stoop to that level, plus I consider myself more middle than right - that they only do their cause and their candidate harm.
For a group that complained loud and long about the "swift-boating" of John Kerry, they are subjecting her to far worse, far more vile, far less fair attacks.
I'll just point out one thing, since I've already weighed in on the ridiculous "experience" question. Oh, alright, I'll add a few more things to the "experience" argument first.
She has used the veto. She has fought a legislature, and worked with them as well.
She's been decried as having been governor of one of the least populous states in the nation.
Well, governors aren't just charged with governing the people, any more than CEOs are just HR managers.
Her state is the largest in terms of land mass in the US. The richest in terms of natural resources. The greatest in terms of ecological importance. And the nearest in proximity to Russia.
That means she's had to marshal more in resources, balance more environmentally sensitive issues, and negotiate more with a hostile nation than any chief executive except the President.
And she's done it all very well, if her approval ratings are any indication.
Hillary Clinton won popular praise for proposing to "take the profits" from the oil companies and give them to the people in subsidies.
Sarah Palin has actually done it, and done it the right way.
As for the notion that she only appeals to small-town America, the knock on McCain - as well as that on Obama and Biden from the right - is that they're "out of touch with America" - McCain because he owns several homes, Obama because he's viewed as an elitist who looks down on middle Americans as "bitter people clinging to their guns and their God." Biden is supposed to balance that, but please - he's a Washington institution who lives in a compound and spends $4,000 a month on train fare.
Sarah Palin is in touch with America. And that's refreshing.
On to my main point. I heard a pundit say the other night that she either puts her family first or her job first - she can't do both.
Women everywhere should be outraged. That comment sets women's rights back 100 years.
What that statement basically charges is that if you work, you're not putting your family first. And that's pure, unadulterated BS. Just think if we applied that standard to men. No one could work. We'd go back to being hunter-gatherers, except we couldn't leave the cave to hunt or gather without neglecting the little Neanderthals.
Please.
I have to think that even Hillary would bristle at that one.
************
I know conventions are all about hype. But man, I respect Cindy McCain.
I want to be like her.
Yeah, she's rich. But first of all, her father came by those riches honestly. He grew up poor, the son of an alcoholic, and his first job was as a paper salesman. A working-class guy who took advantage of the opportunities America offered, worked hard, pulled himself up by his own bootstraps (after serving his country in World War II as a bombardier, during which time his planes were shot down several times - for which he'll no doubt catch grief, as his son-in-law has), lived the American dream and became wealthy.
Sound familiar? It should - it's virtually Barack Obama's story. Except the serving his country part.
Second, she shares those riches generously. That's my dream. I want to be wealthy. Not to have more, but to give more. She's done a considerable amount of mission work. She's committed to using her wealth and influence - and America's abundance and influence in the world - to make this country, this world, a better place for all those who don't have the opportunities and blessings she's enjoyed.
A guy like Chris Gardner gets praise heaped on him for that, as well he should. Will Smith makes a movie about him.
Cindy McCain? All she gets is sneers about how many houses she owns.
Maybe that's because she - like Sarah Palin - is a woman. Maybe if she'd just stayed home and made babies, and daddy had left his money to a son instead (though he didn't have a son to leave it to), people would be more approving of her.
************
The theme here has essentially been gender discrimination. So let me turn my attention to discrimination of another stripe.
Age discrimination.
It is as real, and as prevalent, and as recognized by our laws, as age or race discrimination.
And it's being applied to John McCain.
If I were 72 years of age or older, I'd be outraged. Who says people that age can't be chief executives?
Ronald Reagan was a pretty effective president, though there are some who disparage his record. But history pretty much speaks for itself. Hey, maybe he did sleep through some cabinet meetings. But heck, I would, too.
Jacob Javits, despite his debilitating bout with Lou Gehrig's disease, was sharp as a tack right up until his death at the age of 82. Oh, he also supported labor unions and civil rights, and sponsored the first African-American page and the first female page in the US Senate.
And he was a Republican - a maverick, as it were.
My Dad was also sharp as a tack, right up until the night four and a half years ago when he dropped dead, about 15 years before we all thought he would, based on the longevity of his mother, who lived to be 98, and two of his uncles, one of whom celebrated his 100th birthday, and one of whom missed doing so by two weeks. Dad was 82. Had he been elected president at 72, he could have served two full terms and still enjoyed two years of life in retirement.
And McCain's own mother is 96, suggesting that perhaps the gene pool in that family is also slanted toward longevity. And she's certainly sharp.
But hey, as my Dad proved, some people defy the gene pool. So McCain may not reach 96.
But here's the thing: I'm 49, and I may not reach 50. "No one knows the hour," as the Good Book says.
My daughter came home from high school and said they'd been discussing the election, and that someone had said McCain was too old, because he might die before he served out his term (the same was said of Reagan, and of Cheney as VP).
I told her I had three words for those people.
J. F. K.
************
A final thought. The US population is aging. I don't know the demographics of each party in detail, but I'd have to venture a guess that the parties are relatively equally distributed across the demographic lines, with some notable exceptions.
So I assume that there are a fair number of elderly Democrats. And female Democrats.
To wit, the two oldest people that I know very well are both life-long Democrats. And they're both women.
So my question is this: to what extent do these certain factions within the Democratic party risk alienating a good chunk of their base by decrying one candidate as too old to govern, and by stating that his female running mate should be home tending her babies instead of working?
I don't hear anybody on the right publicly saying that Barack Obama is too black to govern. Discrimination is discrimination. And regardless of its target, it's ugly.
I'm not going to defend her against the many attacks that have been tossed her way, for two reasons. First, by the time I finished, there'd be five new ones. I could never keep up. Second, most of those attacks aren't worth dignifying with a defense.
I will, however, caution those who attack her - I won't say the left, because I have too much respect for my good friends who are on the left to think they'd stoop to that level, plus I consider myself more middle than right - that they only do their cause and their candidate harm.
For a group that complained loud and long about the "swift-boating" of John Kerry, they are subjecting her to far worse, far more vile, far less fair attacks.
I'll just point out one thing, since I've already weighed in on the ridiculous "experience" question. Oh, alright, I'll add a few more things to the "experience" argument first.
She has used the veto. She has fought a legislature, and worked with them as well.
She's been decried as having been governor of one of the least populous states in the nation.
Well, governors aren't just charged with governing the people, any more than CEOs are just HR managers.
Her state is the largest in terms of land mass in the US. The richest in terms of natural resources. The greatest in terms of ecological importance. And the nearest in proximity to Russia.
That means she's had to marshal more in resources, balance more environmentally sensitive issues, and negotiate more with a hostile nation than any chief executive except the President.
And she's done it all very well, if her approval ratings are any indication.
Hillary Clinton won popular praise for proposing to "take the profits" from the oil companies and give them to the people in subsidies.
Sarah Palin has actually done it, and done it the right way.
As for the notion that she only appeals to small-town America, the knock on McCain - as well as that on Obama and Biden from the right - is that they're "out of touch with America" - McCain because he owns several homes, Obama because he's viewed as an elitist who looks down on middle Americans as "bitter people clinging to their guns and their God." Biden is supposed to balance that, but please - he's a Washington institution who lives in a compound and spends $4,000 a month on train fare.
Sarah Palin is in touch with America. And that's refreshing.
On to my main point. I heard a pundit say the other night that she either puts her family first or her job first - she can't do both.
Women everywhere should be outraged. That comment sets women's rights back 100 years.
What that statement basically charges is that if you work, you're not putting your family first. And that's pure, unadulterated BS. Just think if we applied that standard to men. No one could work. We'd go back to being hunter-gatherers, except we couldn't leave the cave to hunt or gather without neglecting the little Neanderthals.
Please.
I have to think that even Hillary would bristle at that one.
************
I know conventions are all about hype. But man, I respect Cindy McCain.
I want to be like her.
Yeah, she's rich. But first of all, her father came by those riches honestly. He grew up poor, the son of an alcoholic, and his first job was as a paper salesman. A working-class guy who took advantage of the opportunities America offered, worked hard, pulled himself up by his own bootstraps (after serving his country in World War II as a bombardier, during which time his planes were shot down several times - for which he'll no doubt catch grief, as his son-in-law has), lived the American dream and became wealthy.
Sound familiar? It should - it's virtually Barack Obama's story. Except the serving his country part.
Second, she shares those riches generously. That's my dream. I want to be wealthy. Not to have more, but to give more. She's done a considerable amount of mission work. She's committed to using her wealth and influence - and America's abundance and influence in the world - to make this country, this world, a better place for all those who don't have the opportunities and blessings she's enjoyed.
A guy like Chris Gardner gets praise heaped on him for that, as well he should. Will Smith makes a movie about him.
Cindy McCain? All she gets is sneers about how many houses she owns.
Maybe that's because she - like Sarah Palin - is a woman. Maybe if she'd just stayed home and made babies, and daddy had left his money to a son instead (though he didn't have a son to leave it to), people would be more approving of her.
************
The theme here has essentially been gender discrimination. So let me turn my attention to discrimination of another stripe.
Age discrimination.
It is as real, and as prevalent, and as recognized by our laws, as age or race discrimination.
And it's being applied to John McCain.
If I were 72 years of age or older, I'd be outraged. Who says people that age can't be chief executives?
Ronald Reagan was a pretty effective president, though there are some who disparage his record. But history pretty much speaks for itself. Hey, maybe he did sleep through some cabinet meetings. But heck, I would, too.
Jacob Javits, despite his debilitating bout with Lou Gehrig's disease, was sharp as a tack right up until his death at the age of 82. Oh, he also supported labor unions and civil rights, and sponsored the first African-American page and the first female page in the US Senate.
And he was a Republican - a maverick, as it were.
My Dad was also sharp as a tack, right up until the night four and a half years ago when he dropped dead, about 15 years before we all thought he would, based on the longevity of his mother, who lived to be 98, and two of his uncles, one of whom celebrated his 100th birthday, and one of whom missed doing so by two weeks. Dad was 82. Had he been elected president at 72, he could have served two full terms and still enjoyed two years of life in retirement.
And McCain's own mother is 96, suggesting that perhaps the gene pool in that family is also slanted toward longevity. And she's certainly sharp.
But hey, as my Dad proved, some people defy the gene pool. So McCain may not reach 96.
But here's the thing: I'm 49, and I may not reach 50. "No one knows the hour," as the Good Book says.
My daughter came home from high school and said they'd been discussing the election, and that someone had said McCain was too old, because he might die before he served out his term (the same was said of Reagan, and of Cheney as VP).
I told her I had three words for those people.
J. F. K.
************
A final thought. The US population is aging. I don't know the demographics of each party in detail, but I'd have to venture a guess that the parties are relatively equally distributed across the demographic lines, with some notable exceptions.
So I assume that there are a fair number of elderly Democrats. And female Democrats.
To wit, the two oldest people that I know very well are both life-long Democrats. And they're both women.
So my question is this: to what extent do these certain factions within the Democratic party risk alienating a good chunk of their base by decrying one candidate as too old to govern, and by stating that his female running mate should be home tending her babies instead of working?
I don't hear anybody on the right publicly saying that Barack Obama is too black to govern. Discrimination is discrimination. And regardless of its target, it's ugly.
A Day Late and a Dollar Short
That's me, today. I meant to post this over the weekend, but I didn't get to it. So now you'll just have to take my word regarding my predictions. (My wife could vouch for me, but she's biased.) I'm also probably quite a few dollars short after this weekend, in part because I'm short the stock market.
And in part because I'm a taxpayer.
I predicted a couple of weeks ago that Paulson would bail out Fannie Mae and Freddie Mac by Labor Day. Missed it by a week.
Yesterday, when the bailout was announced, I read the details - and in this case, the devil is truly in there. I also predicted the Dow would rally 300 points today, then ultimately come to its senses.
See, the whole notion of a stock market rally on a deal that screws stockholders and taxpayers, let alone the idea of a rally on two quasi-government agencies failing, is pretty silly.
But this is the same market that rallied more than 200 points on August 28th because last quarter's GDP number was revised up. So much for the market being forward-looking. Never mind that the revision was built on trade, and the rapid slowing of the British, southern Eurozone, and some Asian economies is piddling that pillar of support away. Or that the original decent Q2 number was built on a one-time economic stimulus - which was largely spent on gasoline - and an unwanted bulge in inventories. Or that Q3 growth is almost undoubtedly in the crapper.
That's okay though. I'm on this train (wreck) for the long haul. My shorts will pay off. I've seen several articles this morning noting that the market has rallied on each government intervention since this debacle began, and that each rally has been shorter and weaker.
On to the Fannie/Freddie bailout. This is a bad idea, and it won't work. To some, it's the only thing to do, though. Here's why.
Fannie and Freddie guarantee about half of the $11 trillion US mortgage market. They buy primarily long-term, fixed-rate loans from banks and brokers who can't take the risk of holding them on their own books. Banks' primary source of funds - your deposit dollars (assuming you're an atypical American and actually have a savings account) - are short-term. You probably don't have many 30-year CDs. So when rates go up, you roll your short CDs and demand higher rates. But banks are still earning the earlier, lower rate on the mortgages they hold, if they hold them. So they'd prefer to sell them. If they can, they're willing to make more loans, and thus more people have access to housing credit, and therefore housing. (The mismatch between short funding and long-term fixed-rate assets spawned the S&L crisis, by the way.)
So if Fannie and Freddie are allowed to simply fail, they go away, and so does the conduit for about $5 trillion in home loans. The implications for housing are dire. Credit becomes uber-scarce. Homeownership plummets. Mortgage rates also go up, because banks will now have to hold the bulk of their loans on their books, and they're going to want to get paid for that. So there will be a higher risk premium, no matter what the underlying Treasury rates do (30-year mortgages are priced at a spread - reflecting the credit risk of the loan - above the ten-year Treasury yield).
And, as we've seen, as housing goes, so goes the economy. Fewer builders building, providing well-paying construction jobs. Fewer people buying houses, filling them up with "stuff," so the people that make and sell the "stuff" make less money - again fewer jobs of all kinds.
So, Hank Paulson - who's apparently forgotten everything he learned on Wall Street - believed the only thing to do was bail Fannie and Freddie out. He cited "three critical objectives":
1. "Providing stability to financial markets." No argument here. But I'd rather see short-term instability that leads to long-term stability, than vice versa, which is what Paulson's given us.
2. "Supporting the availability of mortgage finance." It was the too-easy availability of mortgage finance that got us into this predicament in the first place, Henry.
3. "Protecting taxpayers by both minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the inherent conflict in the GSE structure" (GSE stands for government-sponsored enterprise, which is what Fannie and Freddie are - chartered by the government, back by its once-implicit, now explicit full faith and credit, but with private equity holders).
Okay, that last point begs four questions. Four absolutely, jaw-dropping-bug-eyed-incredulous questions.
First - Hank, is it wise to "minimize the near term costs to the taxpayer" with a plan that will maximize both the long-term costs and their duration?
Second - since when has unleashing policymakers on a problem protected the taxpayer? Holy smokes, Henry - do you not recall the S&L crisis?
Third - if you recognized the systemic risks inherent in the GSE structure when you landed this gig back in July 2006, why on earth didn't you start work on fixing it then, before it was too late?
And fourth - just who in hell are you trying to kid here, anyway?
Okay, so much for his rationale. Here's his plan:
1. Place Fannie and Freddie in conservatorship. Conservatorship is supposed to be a temporary parking spot for a company deemed insolvent until it can return to solvency. Instead, it is the purgatory to receivership's hell. I worked for an S&L that was placed in conservatorship. At the time the government took over, it had more than $300 million in capital. Three years later, it had gone the way of the dodo bird, and at a total loss to the stockholders (myself included) and a net cost to taxpayers (myself again included).
2. Replace management. No more can I make jokes about how Fannie's CEO's name is actually Mudd. He's been replaced by a former Merrill Lynch vice-chairman.
Yes, Virginia, the same Merrill Lynch that has lost $51.8B over the course of the credit crisis. The same Merrill Lynch that ranks #2 on the loss leader board. The same Merrill Lynch whose stockholders have lost 70% of their investment over the last 15 months. The same Merrill Lynch that is vying with Lehman Brothers to be the next Bear Stearns.
Oh boy. I like this pick.
Freddie's boss will be replaced by the former CFO of US Bancorp, which has been relatively unscathed in this imbroglio. One out of two ain't bad, I guess.
Both of the new guys' "compensation will be significantly lower than the outgoing CEOs." Good thing, since an estimated two out of every three dollars of Fannie and Freddie's subsidies from the government went to its executives and stockholders, not to promoting homeownership.
3. The Treasury Department will become a senior preferred stockholder in Fannie and Freddie, in exchange for - get this - "ensur(ing) that each company maintains a positive net worth."
Wow. What's key in that phrase?
First, he didn't say Treasury would maintain adequate capital for Fannie and Freddie, just "positive net worth." They already had that, although not for long. But wasn't their issue capital adequacy? Paulson himself said yesterday, "Their statutory capital requirements are thin and poorly defined as compared to other institutions."
Well, thanks, Hank. They're certainly well-defined now: anything above zero. But that's still a tad thin, don'tcha think?
Second, Treasury will ensure - for as long as need be, up until its blank-check authority expires at the end of next year - that Fannie and Freddie have positive net worth. So, if the new guys continue to screw the pooch and the losses continue to mount and the net worth goes below zero, Treasury will keep flushing money down that toilet.
Our money.
Hank said, "It is more efficient than a one-time equity injection, because it will be used only as needed and on terms that Treasury has set."
I wish I'd seen his speech, because if he actually said that with a straight face, I have to believe that when he was an All-American O-lineman at Dartmouth, they didn't use helmets.
Are you flipping kidding me? "More efficient than a one-time equity injection?" Folks, what he's saying is, "We'll be paying on this ugly pig for most of your lifetimes."
4. Fannie and Freddie will have two "primary mission(s)":
a) "To proactively work to increase the availability of mortgage finance, including by examining the guaranty fee structure with an eye toward mortgage affordability."
Let me tranlsate. Fannie and Freddie charge a fee to guarantee the mortgages they buy and securitize. For years now, that fee has been too low to cover the true underlying risk of the mortgages, as credit standards have loosened and Alan "Mr. Bubble" Greenspan kept rates too low for too long. So recently - also too late and many dollars short - Fannie and Freddie have upped their fees, which has made mortgages more expensive than they were, but once again as expensive as they should be.
Sounds like Hank wants to lower those fees, back to sub-market risk levels. Not a wise move. Just when you thought it was safe to go back in the water ...
b) To "modestly increase their MBS portfolios through the end of 2009. Then to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10% per year ... eventually stabilizing at a lower, less risky size.
Let's read between the lines here. Hank acknowledges that increasing the size of their portfolios - even into 2010 - increases "systemic risk," and he also acknowledges that shrinking their portfolios to a "lower, less risky size" would reduce risk.
So he proposes increasing their portfolios in the short run. Great. More losses. More risk that the losses reach the taxpayer.
Also, the housing crisis isn't expected to be over until the end of 2009 anyway. So just when the party could be getting started, they're going to take away the punch bowl. That should bring a fresh wave of stagnation in the housing market.
To be fair, Hank admits that this step is designed to "promote liquidity in the secondary mortgage market and lower the cost of funding," which it should do. But it won't stimulate housing demand.
Let's put that last point in perspective. The Fed and the Treasury have been intervening in the credit markets since last summer - cutting interest rates, opening up the discount window to everybody but the payday loan shop junkies, and bailing out Bear Stearns and now the GSEs. Not to mention the brilliant and highly effective "Project Hope" and other such initiatives.
What has the effect on housing and mortgage affordability been?
Home prices have continued to fall, reaching fresh year-over-year records every month. Delinquencies and foreclosures have continued to rise, doing the same. And mortgage rates - which were about 6.50-6.60% for a Fannie- or Freddie-conforming, 30-year fixed-rate loan in June 2007, before the Bear Stearns hedge fund collapse that triggered the credit melt-down - were at 6.55% last week. Now, after the bailout, they're running around 6.20%.
Great news! Mortgage rates are down 35 basis points!
Time to sober up. They were as low as 5.50% in January. At the time, purchase mortgage application volume was down about 4% from where it was the previous summer, when rates were a full point higher (and those levels were already down 10% from the bubble's peak). Why? Falling home prices. Today, the 13-week moving average of the weekly volume index is at a six-year low.
Also, it's hard to get excited about mortgage rates finally coming down 35 basis points when the Fed funds target has been cut by almost ten times that amount. Mortgages are priced off the ten-year Treasury yield, which is only down about a percentage point - or a third of the Fed's rate-cutting - since September. And it won't come down much further, with inflation expectations still high. So the bailout-induced reduction in mortgage rates is a function of perceptions of future liquidity. That may play out, and it may not.
The last linchpin in Paulson's scheme is that Treasury will start buying mortgage-backed securities from Fannie and Freddie - a rather incestuous support system - which is also designed to boost liquidity and increase mortgage finance availability.
The downside is that if losses in the MBS market continue, Treasury will take a hit.
Who is "Treasury?"
You, me and China. And China can stop funding anytime it wants. Not so, you and me.
So, what will the actual effects of Paulson's plan be?
1. Fannie and Freddie's stockholders will get nada. That's as it should be. When you buy stocks, you risk losing all your money. Oh, they'll ask for a bailout. If they get it, I'll defect.
2. Mortgage rates will not go down meaningfully enough to stimulate housing demand. The weakness in demand is a function of still-bulging inventories of housing stock, producing still-falling prices. And no one wants to jump on a sinking ship. Until prices bottom out, we won't see recovery in housing.
3. Furthermore, this will not meaningfully increase mortgage credit issuance. Lending standards have tightened - a most appropriate and long-overdue response to rampant speculation. So even if rates cheapen up enough to make a house affordable, and even if would-be buyers are willing to take the plunge - literally - in a falling-price market, many of them will not qualify. Or be able to come up with the reasonable 20% down payments that are now once again, and reasonably, being required.
4. The taxpayer is screwed. This year's budget deficit is already at $370 billion, and it's expected to grow by $105 billion with this week's report for August. The all-time record is $411 billion in 2004. This bailout will cost an estimated $300 billion to the taxpayer.
Let's put that in perspective. The S&L bailout ultimately cost the taxpayer about $125 billion. According to Wikipedia, it "contributed to the large budget deficits of the early 1990s" (which ran around half to two-thirds this year's projected shortfall) and "ended up being even larger than it would have been because moral hazard and adverse selection incentives compounded the system's losses."
If you think there's no moral hazard or adverse selection incentive in this bailout, here's a useful website for you: www.dictionary.com.
There may be another cost. When Paulson was first proposing asking for this blank-check authority to bail out Fannie and Freddie - all the while lying through his teeth, saying he didn't expect to actually have to use it - S&P came out and said that if Treasury bailed out the mortgage giants, the ratings on US Treasury debt might have to be reviewed.
I was stunned. Never in my 20+ years of following this stuff have I ever heard the sanctity of US sovereign debt's rating threatened.
The implications are huge. Higher borrowing costs, leading to higher mortgage rates anyway. And even if the debt weren't downgraded, that will happen: how do you think China and Japan feel about buying US Treasuries now - once they realize how much we've jacked up the national debt? They'll demand higher yields, and get them. And up go mortgage rates.
I have to give Hank credit for having the cojones to actually admit that this is a stop-gap measure and that it'll be up to the next administration and Congress to determine the ultimate resolution of Fannie Mae and Freddie Mac.
To which I'm sure Barack Obama and John McCain say a hearty thank-you.
What Hank is essentially saying is this: "We're going to put an incredibly expensive band-aid on a huge, life-threatening wound, and then let the next doctor on call figure out how to cure the patient."
Unbelievable.
But the best quote comes from New York Senator Chuck Schumer, who said that "avoiding a decision on the issue enhances the likelihood of congressional backing" for the plan.
Even more unbelievable. I thought we elected officials to make decisions, not avoid them. Maybe Chuck's constituents should take the same approach regarding their decision to re-elect the schmuck (the same schmuck who triggered the IndyMac failure, I might add).
Everyone from Alan Greenspan to Obama and McCain to Warren Buffett is saying that this just had to be done - Hank had no choice.
Wrong. There was a better solution: let them fail.
Pony up enough money to protect the bondholders, because the credit markets would truly collapse if the bonds defaulted. But let the stockholders lose their money (which will happen anyway).
And as for the availability and cost of mortgage credit - let the market determine that, as it should. Let private insurers step up to the plate and insure mortgages, based on their inherent risk. So what if homeownership winds up only being affordable for those who demonstrate financial responsibility by saving up a reasonable down payment and paying their bills on time, and can actually repay the mortgages?
Every time I look at Hank's stoic, Anglican face and his polished pate, I think of the old Beatles tune, "The Continuing Story of Bungalow Bill." It describes Bill as "the all-American bullet-headed Saxon mother's son." And the chorus asks, "Hey, Bungalow Bill - what did you kill?"
Oh, not much - just Fannie and Freddie's investors and the US taxpayer. Not bad for a day's hunting.
And in part because I'm a taxpayer.
I predicted a couple of weeks ago that Paulson would bail out Fannie Mae and Freddie Mac by Labor Day. Missed it by a week.
Yesterday, when the bailout was announced, I read the details - and in this case, the devil is truly in there. I also predicted the Dow would rally 300 points today, then ultimately come to its senses.
See, the whole notion of a stock market rally on a deal that screws stockholders and taxpayers, let alone the idea of a rally on two quasi-government agencies failing, is pretty silly.
But this is the same market that rallied more than 200 points on August 28th because last quarter's GDP number was revised up. So much for the market being forward-looking. Never mind that the revision was built on trade, and the rapid slowing of the British, southern Eurozone, and some Asian economies is piddling that pillar of support away. Or that the original decent Q2 number was built on a one-time economic stimulus - which was largely spent on gasoline - and an unwanted bulge in inventories. Or that Q3 growth is almost undoubtedly in the crapper.
That's okay though. I'm on this train (wreck) for the long haul. My shorts will pay off. I've seen several articles this morning noting that the market has rallied on each government intervention since this debacle began, and that each rally has been shorter and weaker.
On to the Fannie/Freddie bailout. This is a bad idea, and it won't work. To some, it's the only thing to do, though. Here's why.
Fannie and Freddie guarantee about half of the $11 trillion US mortgage market. They buy primarily long-term, fixed-rate loans from banks and brokers who can't take the risk of holding them on their own books. Banks' primary source of funds - your deposit dollars (assuming you're an atypical American and actually have a savings account) - are short-term. You probably don't have many 30-year CDs. So when rates go up, you roll your short CDs and demand higher rates. But banks are still earning the earlier, lower rate on the mortgages they hold, if they hold them. So they'd prefer to sell them. If they can, they're willing to make more loans, and thus more people have access to housing credit, and therefore housing. (The mismatch between short funding and long-term fixed-rate assets spawned the S&L crisis, by the way.)
So if Fannie and Freddie are allowed to simply fail, they go away, and so does the conduit for about $5 trillion in home loans. The implications for housing are dire. Credit becomes uber-scarce. Homeownership plummets. Mortgage rates also go up, because banks will now have to hold the bulk of their loans on their books, and they're going to want to get paid for that. So there will be a higher risk premium, no matter what the underlying Treasury rates do (30-year mortgages are priced at a spread - reflecting the credit risk of the loan - above the ten-year Treasury yield).
And, as we've seen, as housing goes, so goes the economy. Fewer builders building, providing well-paying construction jobs. Fewer people buying houses, filling them up with "stuff," so the people that make and sell the "stuff" make less money - again fewer jobs of all kinds.
So, Hank Paulson - who's apparently forgotten everything he learned on Wall Street - believed the only thing to do was bail Fannie and Freddie out. He cited "three critical objectives":
1. "Providing stability to financial markets." No argument here. But I'd rather see short-term instability that leads to long-term stability, than vice versa, which is what Paulson's given us.
2. "Supporting the availability of mortgage finance." It was the too-easy availability of mortgage finance that got us into this predicament in the first place, Henry.
3. "Protecting taxpayers by both minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the inherent conflict in the GSE structure" (GSE stands for government-sponsored enterprise, which is what Fannie and Freddie are - chartered by the government, back by its once-implicit, now explicit full faith and credit, but with private equity holders).
Okay, that last point begs four questions. Four absolutely, jaw-dropping-bug-eyed-incredulous questions.
First - Hank, is it wise to "minimize the near term costs to the taxpayer" with a plan that will maximize both the long-term costs and their duration?
Second - since when has unleashing policymakers on a problem protected the taxpayer? Holy smokes, Henry - do you not recall the S&L crisis?
Third - if you recognized the systemic risks inherent in the GSE structure when you landed this gig back in July 2006, why on earth didn't you start work on fixing it then, before it was too late?
And fourth - just who in hell are you trying to kid here, anyway?
Okay, so much for his rationale. Here's his plan:
1. Place Fannie and Freddie in conservatorship. Conservatorship is supposed to be a temporary parking spot for a company deemed insolvent until it can return to solvency. Instead, it is the purgatory to receivership's hell. I worked for an S&L that was placed in conservatorship. At the time the government took over, it had more than $300 million in capital. Three years later, it had gone the way of the dodo bird, and at a total loss to the stockholders (myself included) and a net cost to taxpayers (myself again included).
2. Replace management. No more can I make jokes about how Fannie's CEO's name is actually Mudd. He's been replaced by a former Merrill Lynch vice-chairman.
Yes, Virginia, the same Merrill Lynch that has lost $51.8B over the course of the credit crisis. The same Merrill Lynch that ranks #2 on the loss leader board. The same Merrill Lynch whose stockholders have lost 70% of their investment over the last 15 months. The same Merrill Lynch that is vying with Lehman Brothers to be the next Bear Stearns.
Oh boy. I like this pick.
Freddie's boss will be replaced by the former CFO of US Bancorp, which has been relatively unscathed in this imbroglio. One out of two ain't bad, I guess.
Both of the new guys' "compensation will be significantly lower than the outgoing CEOs." Good thing, since an estimated two out of every three dollars of Fannie and Freddie's subsidies from the government went to its executives and stockholders, not to promoting homeownership.
3. The Treasury Department will become a senior preferred stockholder in Fannie and Freddie, in exchange for - get this - "ensur(ing) that each company maintains a positive net worth."
Wow. What's key in that phrase?
First, he didn't say Treasury would maintain adequate capital for Fannie and Freddie, just "positive net worth." They already had that, although not for long. But wasn't their issue capital adequacy? Paulson himself said yesterday, "Their statutory capital requirements are thin and poorly defined as compared to other institutions."
Well, thanks, Hank. They're certainly well-defined now: anything above zero. But that's still a tad thin, don'tcha think?
Second, Treasury will ensure - for as long as need be, up until its blank-check authority expires at the end of next year - that Fannie and Freddie have positive net worth. So, if the new guys continue to screw the pooch and the losses continue to mount and the net worth goes below zero, Treasury will keep flushing money down that toilet.
Our money.
Hank said, "It is more efficient than a one-time equity injection, because it will be used only as needed and on terms that Treasury has set."
I wish I'd seen his speech, because if he actually said that with a straight face, I have to believe that when he was an All-American O-lineman at Dartmouth, they didn't use helmets.
Are you flipping kidding me? "More efficient than a one-time equity injection?" Folks, what he's saying is, "We'll be paying on this ugly pig for most of your lifetimes."
4. Fannie and Freddie will have two "primary mission(s)":
a) "To proactively work to increase the availability of mortgage finance, including by examining the guaranty fee structure with an eye toward mortgage affordability."
Let me tranlsate. Fannie and Freddie charge a fee to guarantee the mortgages they buy and securitize. For years now, that fee has been too low to cover the true underlying risk of the mortgages, as credit standards have loosened and Alan "Mr. Bubble" Greenspan kept rates too low for too long. So recently - also too late and many dollars short - Fannie and Freddie have upped their fees, which has made mortgages more expensive than they were, but once again as expensive as they should be.
Sounds like Hank wants to lower those fees, back to sub-market risk levels. Not a wise move. Just when you thought it was safe to go back in the water ...
b) To "modestly increase their MBS portfolios through the end of 2009. Then to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10% per year ... eventually stabilizing at a lower, less risky size.
Let's read between the lines here. Hank acknowledges that increasing the size of their portfolios - even into 2010 - increases "systemic risk," and he also acknowledges that shrinking their portfolios to a "lower, less risky size" would reduce risk.
So he proposes increasing their portfolios in the short run. Great. More losses. More risk that the losses reach the taxpayer.
Also, the housing crisis isn't expected to be over until the end of 2009 anyway. So just when the party could be getting started, they're going to take away the punch bowl. That should bring a fresh wave of stagnation in the housing market.
To be fair, Hank admits that this step is designed to "promote liquidity in the secondary mortgage market and lower the cost of funding," which it should do. But it won't stimulate housing demand.
Let's put that last point in perspective. The Fed and the Treasury have been intervening in the credit markets since last summer - cutting interest rates, opening up the discount window to everybody but the payday loan shop junkies, and bailing out Bear Stearns and now the GSEs. Not to mention the brilliant and highly effective "Project Hope" and other such initiatives.
What has the effect on housing and mortgage affordability been?
Home prices have continued to fall, reaching fresh year-over-year records every month. Delinquencies and foreclosures have continued to rise, doing the same. And mortgage rates - which were about 6.50-6.60% for a Fannie- or Freddie-conforming, 30-year fixed-rate loan in June 2007, before the Bear Stearns hedge fund collapse that triggered the credit melt-down - were at 6.55% last week. Now, after the bailout, they're running around 6.20%.
Great news! Mortgage rates are down 35 basis points!
Time to sober up. They were as low as 5.50% in January. At the time, purchase mortgage application volume was down about 4% from where it was the previous summer, when rates were a full point higher (and those levels were already down 10% from the bubble's peak). Why? Falling home prices. Today, the 13-week moving average of the weekly volume index is at a six-year low.
Also, it's hard to get excited about mortgage rates finally coming down 35 basis points when the Fed funds target has been cut by almost ten times that amount. Mortgages are priced off the ten-year Treasury yield, which is only down about a percentage point - or a third of the Fed's rate-cutting - since September. And it won't come down much further, with inflation expectations still high. So the bailout-induced reduction in mortgage rates is a function of perceptions of future liquidity. That may play out, and it may not.
The last linchpin in Paulson's scheme is that Treasury will start buying mortgage-backed securities from Fannie and Freddie - a rather incestuous support system - which is also designed to boost liquidity and increase mortgage finance availability.
The downside is that if losses in the MBS market continue, Treasury will take a hit.
Who is "Treasury?"
You, me and China. And China can stop funding anytime it wants. Not so, you and me.
So, what will the actual effects of Paulson's plan be?
1. Fannie and Freddie's stockholders will get nada. That's as it should be. When you buy stocks, you risk losing all your money. Oh, they'll ask for a bailout. If they get it, I'll defect.
2. Mortgage rates will not go down meaningfully enough to stimulate housing demand. The weakness in demand is a function of still-bulging inventories of housing stock, producing still-falling prices. And no one wants to jump on a sinking ship. Until prices bottom out, we won't see recovery in housing.
3. Furthermore, this will not meaningfully increase mortgage credit issuance. Lending standards have tightened - a most appropriate and long-overdue response to rampant speculation. So even if rates cheapen up enough to make a house affordable, and even if would-be buyers are willing to take the plunge - literally - in a falling-price market, many of them will not qualify. Or be able to come up with the reasonable 20% down payments that are now once again, and reasonably, being required.
4. The taxpayer is screwed. This year's budget deficit is already at $370 billion, and it's expected to grow by $105 billion with this week's report for August. The all-time record is $411 billion in 2004. This bailout will cost an estimated $300 billion to the taxpayer.
Let's put that in perspective. The S&L bailout ultimately cost the taxpayer about $125 billion. According to Wikipedia, it "contributed to the large budget deficits of the early 1990s" (which ran around half to two-thirds this year's projected shortfall) and "ended up being even larger than it would have been because moral hazard and adverse selection incentives compounded the system's losses."
If you think there's no moral hazard or adverse selection incentive in this bailout, here's a useful website for you: www.dictionary.com.
There may be another cost. When Paulson was first proposing asking for this blank-check authority to bail out Fannie and Freddie - all the while lying through his teeth, saying he didn't expect to actually have to use it - S&P came out and said that if Treasury bailed out the mortgage giants, the ratings on US Treasury debt might have to be reviewed.
I was stunned. Never in my 20+ years of following this stuff have I ever heard the sanctity of US sovereign debt's rating threatened.
The implications are huge. Higher borrowing costs, leading to higher mortgage rates anyway. And even if the debt weren't downgraded, that will happen: how do you think China and Japan feel about buying US Treasuries now - once they realize how much we've jacked up the national debt? They'll demand higher yields, and get them. And up go mortgage rates.
I have to give Hank credit for having the cojones to actually admit that this is a stop-gap measure and that it'll be up to the next administration and Congress to determine the ultimate resolution of Fannie Mae and Freddie Mac.
To which I'm sure Barack Obama and John McCain say a hearty thank-you.
What Hank is essentially saying is this: "We're going to put an incredibly expensive band-aid on a huge, life-threatening wound, and then let the next doctor on call figure out how to cure the patient."
Unbelievable.
But the best quote comes from New York Senator Chuck Schumer, who said that "avoiding a decision on the issue enhances the likelihood of congressional backing" for the plan.
Even more unbelievable. I thought we elected officials to make decisions, not avoid them. Maybe Chuck's constituents should take the same approach regarding their decision to re-elect the schmuck (the same schmuck who triggered the IndyMac failure, I might add).
Everyone from Alan Greenspan to Obama and McCain to Warren Buffett is saying that this just had to be done - Hank had no choice.
Wrong. There was a better solution: let them fail.
Pony up enough money to protect the bondholders, because the credit markets would truly collapse if the bonds defaulted. But let the stockholders lose their money (which will happen anyway).
And as for the availability and cost of mortgage credit - let the market determine that, as it should. Let private insurers step up to the plate and insure mortgages, based on their inherent risk. So what if homeownership winds up only being affordable for those who demonstrate financial responsibility by saving up a reasonable down payment and paying their bills on time, and can actually repay the mortgages?
Every time I look at Hank's stoic, Anglican face and his polished pate, I think of the old Beatles tune, "The Continuing Story of Bungalow Bill." It describes Bill as "the all-American bullet-headed Saxon mother's son." And the chorus asks, "Hey, Bungalow Bill - what did you kill?"
Oh, not much - just Fannie and Freddie's investors and the US taxpayer. Not bad for a day's hunting.
Sunday, September 7, 2008
A Perfect Storm
There's a storm brewing.
No, I don't mean Hanna, or Ike. (And as an aside, the title and topic of this thread is meant in no way to downplay the havoc wreaked by those and other storms. Having spent a week of each of the last two summers in the Gulf, helping to rebuild homes that were damaged or destroyed by Katrina, I have nothing but respect for the forces of a hurricane, and for those whose lives are affected tragically.)
This storm has dollar signs attached to it. A "financial tsunami," as Bill Gross put it. But while I agree with the sage of PIMCO on what's to come, we part company on the proposed solution. He wants to throw money at it.
Why? Because he makes it up in spades if the credit markets get fixed.
Me, I want the powers that be - Congress, the President, the Fed, and especially the Treasury Secretary - who's done enough harm trying to help already - to leave things be. Let nature run its ugly and painful course, and then we can get back to the business of saving, then spending. And our economy will once again be strong. Sustainably strong.
Greenspan intervened in the wake of the dot-com bubble, made money too cheap, too long, and fueled the speculative housing bubble, which is even worse. (Oh, and Greenspan fathered the dot-com bubble too, again with cheap money.) If we try to shore this thing up, I don't think we pull out of the next catastrophe to which the "fix" gives way.
Here are the weather conditions that lead me to predict this perfect storm.
1. The Fannie/Freddie bailout, on which topic I've already ranted. But let me add another couple of points.
First, my fellow bloggers don't seem to like this any more than I do:
"This maneuver is 100% consistent with the government grand plan to boil us like frogs in a pot of debt since, in the govie's estimation, it appears that too many people have suddenly decided not to jump in the cauldron of their own volition." - Fil Zucchi, Minyanville.com
"A strong rally lasts for a while, but it eventually fades and makes a new lower low; each 'rescue rally' has been shorter in duration and weaker in intensity than the immediately prior one." - Barry Ritholtz, The Big Picture
"The Treasury said it will appoint two independent asset managers as financial agents of the US government to manage a government portfolio of MBS ... which means that the US government could become akin to the single largest hedge fund on the planet." Paul Jackson, Housingwire.com
"For housing, this doesn't change anything. Housing fundamentals remain the same: excess supply (especially distressed supply), tighter lending standards, and prices are still too high compared to incomes and rents. The possible slightly lower mortgage rates are almost inconsequential compared to supply and price issues. And the economy is still in recession that will linger for some time." - Calculated Risk
Second, another of my favorite guys, Alan "Mr. Bubble" Greenspan, argued last week that "we need laws that specify and limit the conditions for bailouts - laws that authorize the Treasury to use taxpayer money to counter systemic financial breakdowns transparently and directly rather than through the central bank as was done during the blowup of Bear Stearns." He added that the Fed should not be viewed as a "magical piggy bank."
Hey, Al - neither should I.
He advocated the creation of an agency like the old RTC of thrift crisis days, arguing that "as with the RTC, the public cost could be minimized," according to Report on Business.
Excuse me? I lived under the RTC for two years. The RTC dramatically increased the public cost of the S&L crisis. By more than $300 million in the case of one thrift alone.
2. Overlooked in the bailout was the fact that Paulson extended the same secured credit lines Fannie and Freddie got to the Federal Home Loan Banks.
The FHLBs are the largest US borrowers after the federal government, according to Bloomberg.
If they're not in trouble, why extend the same credit lines to them? Guess where the next shoe might drop?
3. Lehman is going to fail. They can't find a buyer, and not for lack of trying.
4. The next round of earnings reports from the financials are going to be ugly.
5. Option ARM negative-am triggers will start being hit soon, and continue through 2010.
6. I saw a news clip that showed people facing foreclosure are putting the house in their spouse's name, buying a new, cheaper house with a fixed-rate mortgage, and walking away from the first house. They say they'll repair their credit later. This will only exacerbate the problem.
Credit card companies are jacking up rates for the slightest decline in creditworthiness, and cutting limits, too. When these clowns are foreclosed on, their card rates will double. Borrowers of their ilk have already demonstrated they'd rather default on the mortgage than give up the plastic, since that's how they fund their monthly necessities. So the debacle will continue.
Oh - and the new mortgages will be among those guaranteed by the "new and improved" Fannie and Freddie. And the MBS will be bought by the Treasury. Cool.
7. As for credit cards, we're going to start seeing financial institutions fail due to credit card, HELOC and auto loan losses. Look for the first one following third quarter results.
8. Guess what the latest credit "innovations" are? 401(k) and reverse mortgage debit cards. Honest.
The lunacy continues.
No, I don't mean Hanna, or Ike. (And as an aside, the title and topic of this thread is meant in no way to downplay the havoc wreaked by those and other storms. Having spent a week of each of the last two summers in the Gulf, helping to rebuild homes that were damaged or destroyed by Katrina, I have nothing but respect for the forces of a hurricane, and for those whose lives are affected tragically.)
This storm has dollar signs attached to it. A "financial tsunami," as Bill Gross put it. But while I agree with the sage of PIMCO on what's to come, we part company on the proposed solution. He wants to throw money at it.
Why? Because he makes it up in spades if the credit markets get fixed.
Me, I want the powers that be - Congress, the President, the Fed, and especially the Treasury Secretary - who's done enough harm trying to help already - to leave things be. Let nature run its ugly and painful course, and then we can get back to the business of saving, then spending. And our economy will once again be strong. Sustainably strong.
Greenspan intervened in the wake of the dot-com bubble, made money too cheap, too long, and fueled the speculative housing bubble, which is even worse. (Oh, and Greenspan fathered the dot-com bubble too, again with cheap money.) If we try to shore this thing up, I don't think we pull out of the next catastrophe to which the "fix" gives way.
Here are the weather conditions that lead me to predict this perfect storm.
1. The Fannie/Freddie bailout, on which topic I've already ranted. But let me add another couple of points.
First, my fellow bloggers don't seem to like this any more than I do:
"This maneuver is 100% consistent with the government grand plan to boil us like frogs in a pot of debt since, in the govie's estimation, it appears that too many people have suddenly decided not to jump in the cauldron of their own volition." - Fil Zucchi, Minyanville.com
"A strong rally lasts for a while, but it eventually fades and makes a new lower low; each 'rescue rally' has been shorter in duration and weaker in intensity than the immediately prior one." - Barry Ritholtz, The Big Picture
"The Treasury said it will appoint two independent asset managers as financial agents of the US government to manage a government portfolio of MBS ... which means that the US government could become akin to the single largest hedge fund on the planet." Paul Jackson, Housingwire.com
"For housing, this doesn't change anything. Housing fundamentals remain the same: excess supply (especially distressed supply), tighter lending standards, and prices are still too high compared to incomes and rents. The possible slightly lower mortgage rates are almost inconsequential compared to supply and price issues. And the economy is still in recession that will linger for some time." - Calculated Risk
Second, another of my favorite guys, Alan "Mr. Bubble" Greenspan, argued last week that "we need laws that specify and limit the conditions for bailouts - laws that authorize the Treasury to use taxpayer money to counter systemic financial breakdowns transparently and directly rather than through the central bank as was done during the blowup of Bear Stearns." He added that the Fed should not be viewed as a "magical piggy bank."
Hey, Al - neither should I.
He advocated the creation of an agency like the old RTC of thrift crisis days, arguing that "as with the RTC, the public cost could be minimized," according to Report on Business.
Excuse me? I lived under the RTC for two years. The RTC dramatically increased the public cost of the S&L crisis. By more than $300 million in the case of one thrift alone.
2. Overlooked in the bailout was the fact that Paulson extended the same secured credit lines Fannie and Freddie got to the Federal Home Loan Banks.
The FHLBs are the largest US borrowers after the federal government, according to Bloomberg.
If they're not in trouble, why extend the same credit lines to them? Guess where the next shoe might drop?
3. Lehman is going to fail. They can't find a buyer, and not for lack of trying.
4. The next round of earnings reports from the financials are going to be ugly.
5. Option ARM negative-am triggers will start being hit soon, and continue through 2010.
6. I saw a news clip that showed people facing foreclosure are putting the house in their spouse's name, buying a new, cheaper house with a fixed-rate mortgage, and walking away from the first house. They say they'll repair their credit later. This will only exacerbate the problem.
Credit card companies are jacking up rates for the slightest decline in creditworthiness, and cutting limits, too. When these clowns are foreclosed on, their card rates will double. Borrowers of their ilk have already demonstrated they'd rather default on the mortgage than give up the plastic, since that's how they fund their monthly necessities. So the debacle will continue.
Oh - and the new mortgages will be among those guaranteed by the "new and improved" Fannie and Freddie. And the MBS will be bought by the Treasury. Cool.
7. As for credit cards, we're going to start seeing financial institutions fail due to credit card, HELOC and auto loan losses. Look for the first one following third quarter results.
8. Guess what the latest credit "innovations" are? 401(k) and reverse mortgage debit cards. Honest.
The lunacy continues.
Monday, September 1, 2008
Oops, I Did It Again!
Maybe the McCain ads comparing Barack Obama to Britney Spears weren't so far off-base after all - Lord knows Barack does his fair share of sticking his foot in his mouth.
His latest gaffe? Once again, I credit my lovely wife, my muse, for catching this gem. Obama was being interviewed about something or other - heck, I don't even remember what it was, in light of the enormity of his response, but it doesn't really matter. In response, he said, "When I was a Senator ..."
Whoa, hold on, Barack - aren't you a Senator now? I mean, I know you've been busy with this whole campaign thing and all, which has consumed pretty much your entire term as Senator, but still - "was" a Senator?
Alert to all Illinois citizens: you're missing a Senator! Better hold an emergency vote, quick!
This speaks volumes. Barack - the Messiah - has ascended above his current job (for which the good taxpayers of these United States still grant him a paycheck) to become something above being a Senator, yet not-quite-yet-president.
Serial campaigner, methinks, is the nomenclature for his job.
************
And that brings me to my next point: can we once and for all put this whole "experience" argument to rest?
Look, Obama is a guy who runs great campaigns, and gives good speeches.
Trouble is, he doesn't even write his own stuff. I'm as polished a public speaker as he is - Lord knows I do enough of it. But the difference between us is, I write my own stuff. I know from whence I speak. I don't have speech-writers, or handlers. I'm a CEO. The buck stops here. Barack doesn't even know what that means.
Hillary was also given a ton of credit for her "many years of experience." What - sleeping alone in her bed in the White House while Bill was in the Oval Office slipping cigars to interns? Redecorating the place on the public dime? Swiping the china and silver? Ordering hits on guys like Vince Foster?
Let's take another example. Of a guy who had no legislative experience. Who went to West Point, but only after he couldn't get into the Naval Academy. Who was a career Army guy, but never saw the front lines, was never in harm's way, was never under enemy fire. A guy who was president of Columbia University, but in absentia, because at the same time he was Supreme Commander of NATO.
Who resigned from military service in 1952 to campaign for the presidency. Of the United States. Which he won. And did a good enough job to be re-elected. Ike. Remember him?
Then there's that Washington guy - another career military guy who had no government experience. And Jefferson. And so on.
The bottom line is, Sarah Palin was a Chief Executive. Inasmuch, she has more experience than Barack Obama, John McCain and Joe Biden put together. Take it from a guy who's a CEO. And writes his own speeches.
************
Now, let's take a shot at this whole Palin daughter thing, if it really needs to be addressed, which only scum would suggest it would - you know who you are.
If the Palins had locked their daughter in a cage in the basement to ensure she didn't fornicate, we'd certainly hear about it from the left.
Fact is, try as you might, no parent can stop their kid from experimenting, with sex or drugs or booze or whatever. Just ask Obama's mom, or his grandma. After all, he's an admitted teenage doper, born of an unwed teenage mother.
Geraldine Ferraro's kid had serious drug problems, but you didn't see the GOP go after her for that. But hey, the times, they are a'changin'.
************
One last thing. Props to Obama for two things: one, not politicizing (okay, too much, because he did use the hurricane to further his agenda some) Gustav. Though I will say that it was a class act that the RNC's only major speech of the night was to put up the names of various websites whereby one can provide financial support for those affected by the storm. But that's preaching to the choir - liberals won't offer their financial support. They want to tax the "rich" - who are already supporting those causes, with their dollars and their sweat - to provide such relief. What do you expect from a party whose standard-bearer is a guy who talks about the understanding of global poverty issues from the perspective of one whose granny lives in a shack in Africa - but doesn't even have the decency to send her a check once in a while, when he lives in a $2 million mansion and has a $4 million book deal? At least the McCains have already given $25,000 to Gustave victims. Where's Obama's pledge?
My second prop to Obama is for his immediate, strong assertion that Palin's daughter is off-limits. Of course, that's likely damage control to deflect attention to his militant wife's views. There's a significant difference between a young woman who made a mistake, and is willing to live with it, given her recognition of the sanctity of human life, and a woman who denigrates the country that gave her the opportunity to enjoy the incredible wealth and success she's enjoyed, because she feels "victimized."
Of course, I'd expect nothing less from the wife of a candidate who said that if one of his own daughters got pregnant, he wouldn't want her to be "punished by a child." Lucky for him his own mother didn't feel that way.
Unlucky for us, perhaps, but lucky for him.
His latest gaffe? Once again, I credit my lovely wife, my muse, for catching this gem. Obama was being interviewed about something or other - heck, I don't even remember what it was, in light of the enormity of his response, but it doesn't really matter. In response, he said, "When I was a Senator ..."
Whoa, hold on, Barack - aren't you a Senator now? I mean, I know you've been busy with this whole campaign thing and all, which has consumed pretty much your entire term as Senator, but still - "was" a Senator?
Alert to all Illinois citizens: you're missing a Senator! Better hold an emergency vote, quick!
This speaks volumes. Barack - the Messiah - has ascended above his current job (for which the good taxpayers of these United States still grant him a paycheck) to become something above being a Senator, yet not-quite-yet-president.
Serial campaigner, methinks, is the nomenclature for his job.
************
And that brings me to my next point: can we once and for all put this whole "experience" argument to rest?
Look, Obama is a guy who runs great campaigns, and gives good speeches.
Trouble is, he doesn't even write his own stuff. I'm as polished a public speaker as he is - Lord knows I do enough of it. But the difference between us is, I write my own stuff. I know from whence I speak. I don't have speech-writers, or handlers. I'm a CEO. The buck stops here. Barack doesn't even know what that means.
Hillary was also given a ton of credit for her "many years of experience." What - sleeping alone in her bed in the White House while Bill was in the Oval Office slipping cigars to interns? Redecorating the place on the public dime? Swiping the china and silver? Ordering hits on guys like Vince Foster?
Let's take another example. Of a guy who had no legislative experience. Who went to West Point, but only after he couldn't get into the Naval Academy. Who was a career Army guy, but never saw the front lines, was never in harm's way, was never under enemy fire. A guy who was president of Columbia University, but in absentia, because at the same time he was Supreme Commander of NATO.
Who resigned from military service in 1952 to campaign for the presidency. Of the United States. Which he won. And did a good enough job to be re-elected. Ike. Remember him?
Then there's that Washington guy - another career military guy who had no government experience. And Jefferson. And so on.
The bottom line is, Sarah Palin was a Chief Executive. Inasmuch, she has more experience than Barack Obama, John McCain and Joe Biden put together. Take it from a guy who's a CEO. And writes his own speeches.
************
Now, let's take a shot at this whole Palin daughter thing, if it really needs to be addressed, which only scum would suggest it would - you know who you are.
If the Palins had locked their daughter in a cage in the basement to ensure she didn't fornicate, we'd certainly hear about it from the left.
Fact is, try as you might, no parent can stop their kid from experimenting, with sex or drugs or booze or whatever. Just ask Obama's mom, or his grandma. After all, he's an admitted teenage doper, born of an unwed teenage mother.
Geraldine Ferraro's kid had serious drug problems, but you didn't see the GOP go after her for that. But hey, the times, they are a'changin'.
************
One last thing. Props to Obama for two things: one, not politicizing (okay, too much, because he did use the hurricane to further his agenda some) Gustav. Though I will say that it was a class act that the RNC's only major speech of the night was to put up the names of various websites whereby one can provide financial support for those affected by the storm. But that's preaching to the choir - liberals won't offer their financial support. They want to tax the "rich" - who are already supporting those causes, with their dollars and their sweat - to provide such relief. What do you expect from a party whose standard-bearer is a guy who talks about the understanding of global poverty issues from the perspective of one whose granny lives in a shack in Africa - but doesn't even have the decency to send her a check once in a while, when he lives in a $2 million mansion and has a $4 million book deal? At least the McCains have already given $25,000 to Gustave victims. Where's Obama's pledge?
My second prop to Obama is for his immediate, strong assertion that Palin's daughter is off-limits. Of course, that's likely damage control to deflect attention to his militant wife's views. There's a significant difference between a young woman who made a mistake, and is willing to live with it, given her recognition of the sanctity of human life, and a woman who denigrates the country that gave her the opportunity to enjoy the incredible wealth and success she's enjoyed, because she feels "victimized."
Of course, I'd expect nothing less from the wife of a candidate who said that if one of his own daughters got pregnant, he wouldn't want her to be "punished by a child." Lucky for him his own mother didn't feel that way.
Unlucky for us, perhaps, but lucky for him.
Friday, August 29, 2008
More Political Ramblings
I promise, some economic and market stuff is coming. Please be patient. There's just too much political fodder out there to deal with right now.
Item 1: Russian Prime Minister Vladimir Putin has accused someone currently campaigning for the US presidency of inciting Georgia into conflict with Russia.
Please. All one need to to incite conflict between Georgia and Russia is wake up in the morning.
Conflict in that region is as much a given as is conflict in the Middle East, where they've been killing each other since Abraham kicked Ishmael out of the tent.
Putin didn't name names. But he said it was someone who stood to benefit from the conflict.
Hmmm ... could it be ... maybe ... John McCain?
After all, McCain got a boost in the polls following the skirmish. Little wonder; his considerable legislative experience, combined with his in-depth military knowledge, give McCain an edge for the commander-in-chief role that only a purely partisan Dem could discount.
So what does this tell us? Gee, it sure looks to me like the guy's trying to start some rumors about McCain inciting violence abroad for his own political gain. I'm pretty sure he didn't need to do that - like I said, violence in that region brews just below the surface all the time.
And I don't think that he would do that - any more than Clinton's supporters thought he would have wagged the dog following the Lewinsky affair by bombing Afghanistan and Sudan.
Now, why would Putin want to hurt McCain's chances for the presidency? Apparently he'd prefer an Obama White House. That way he'd be free to nationalize oil and gas interests, rebuild the Bear's nuclear arsenal, and invade former republics at will, without the repercussions that might exist under a McCain presidency.
Hey, it's not necessarily what I think. It's obviously what Putin thinks. He's a smart, savvy guy. Certainly more knowledgeable about politics, diplomacy, espionage, and stuff like that than little old me.
And if Vladimir Putin supports Obama for president, that's all the reason I need not to.
************
Okay, on to the the GOP veep pick. A stellar choice in my book.
Before I explain why, I need to pat myself on the back. I said on a message board recently that McCain should pick a woman, and I panned Kay Bailey Hutchinson for being too old, Libby Dole for being even older, and Christie Whiteman for being pro-choice, which would alienate too many of the Republican base that's already a bit skittish about McCain's moderatism. Then I said that Sarah Palin would be a great pick - she's 44, she's a governor, she knows energy and environmental issues inside and out, she's ethical to a fault, and she's pro-life. But nobody's heard of her.
Well, I was right on all but the last count. Now, everybody's heard of her.
What do I like about the pick? All of the above.
She's 44 - a nice counterbalance to McCain's age. She's a governor. Unlike the other three people on the tickets, she's actually run something. She's been a chief executive, in other words. As a CEO myself, let me tell you what that means. A senator, if he or she serves long enough (longer than one term, Barack) might get to be a committee chairman.
I was a committee chairman when I was in my fraternity, in college.
A senator looks at two or three issues a year, and co-sponsors legislation on those issues with one or more other senators. They debate. They give speeches. They vote on stuff (if they're not out campaigning for a higher office).
With a CEO, the buck stops here. You make decisions - broad decisions. You have to look at all issues. You don't vote. You don't rely on a committee. You confer with the smart people that you're smart enough to surround yourself with. But at the end of the day, you make decisions. A day as a CEO is worth a year as a committee chairman.
She's a woman, which could help attract some of the disgruntled Hillary supporters, as well as the "security moms" that helped W win re-election. She knows energy and environmental issues, like I said. She's pro-life, and pro-family - she herself has five kids, one of whom has a disability.
She's been in the business world. She's smart, well-spoken and down-to-earth. She relates well - not just to audiences, like Obama. But to individuals. She's the antithesis of "elitist." You'll never hear her say people are bitter, and cling to their guns and their God. Because she gets people.
She's a fiscal conservative. She jettisoned the gubernatorial jet, in a state where you can't get there from here by road, to save money. Money she put back in the people's pockets. She runs surpluses. And hey, she only has one house!
She's telegenic - I wish we didn't care about that, but the reality of post-TV politics is that it matters. And she has strong ethics - she earned her way into the office of governor on her reputation as a whistle-blower on corrupt state politics, even taking on her own party. She's a maverick's maverick. She is change, but in a tangible sense - not just rhetoric. It's change we can truly believe in, because it's been demonstrated.
There are, however, a few things I don't like - at least politically, in terms of her chances. The fact that she's a woman could alienate some extremists within the GOP that see a "soft" moderate prez nominee teamed up with a woman. I don't feel that way, but there may be some that do. I'm just saying it's a risk of the pick. But McCain's a risk-taker, and I applaud that.
The second thing is the experience factor. Personally, it doesn't bother me. She has a great deal of life experience that could benefit her in the role. And I'd take her experience as CEO of a state 600 times the size of Joe Biden's home state over Barack Obama's 140-odd days actually in the office any day of the week. But the Dems will point out that a half-term governor and former mayor of a town of 9,000 people will be a heartbeat away from the leadership of the free world.
That's okay. The retort is obvious. Better that than having the leader of the free world be a guy who's a half-term senator - and has been campaigning for president most of that time, and who was a state senator before that. A guy Hillary Clinton said "has that speech he gave." A guy Joe Biden said wasn't ready for the presidency. See, I think that the veep role is one where some on-the-job training is okay.
The third thing that could hurt the ticket is the supposed "scandal" brewing over her ousting Alaska's Public Safety Commissioner, who claims he was canned for refusing to fire a trooper who was married to Palin's sister, with the marriage ending in a contentious divorce and custody battle.
If that's true, it tarnishes her image as an ethical standard-bearer. But I always take the word of a "disgruntled former employee" with a grain of salt. Probably because I've had some of them come after me, or I've had to go after them, and I've always prevailed. Truth will out. And in a campaign with a Keating Five alum, Rezko's pal, and a guy who spends four grand a month on train fare and shows up for work a few minutes past nine every day, if that's the biggest ethical knock against her, it shouldn't hurt the ticket much.
This race hearkens back to 1988. You had a relatively inexperienced Democratic presidential nominee, who, in apparent acknowledgment of that inexperience, chose as his running mate a seasoned member of the Senate to bolster up the ticket. Many people said at the time they'd have voted Democratic if the ticket had been reversed.
Including yours truly. Bentsen was a Texas Democrat, which is pretty much like a Republican just about anywhere else.
As for the GOP, you had a Republican candidate that many in the party felt was too moderate. Kemp was the better choice at the time to carry on the Reagan legacy, just as there were better candidates in this year's GOP primary than McCain, in my view. But then, as now, the moderate won the nomination. And he selected an unknown running mate that satisfied the Kemp crowd.
This time it's a little different. McCain's pick wasn't made just to please the GOP base, but also to be inclusive, to appeal to the disenfranchised women who felt the Democrats left them in the lurch. And unlike Dukakis' pick of Bentsen, I'm not so sure Obama's does anything to temper his reputation as being to the far left in his ideology.
And, to paraphrase Lloyd Bentsen, "I saw Dan Quayle in action. And Sarah Palin is no Dan Quayle." (Thank goodness.)
************
Maybe it's just me, but it seems to bode ill for the Democrats that the only way they feel they can attack John McCain is by saying he's just like George W. Bush.
It's so ignorant - just look at his voting record. (I know, the Dems ran an ad saying he voted with Bush 90% of the time. But they cherry-picked the last eight years to come up with that number - they simply chose to exclude the many, many more times he voted against his own party. At least he was there to vote, and not out campaigning for all but 140 days of his last Senate term.)
And think about where he did agree with Bush. He felt the world was better off without Saddam Hussein. (So do I.)
He was highly critical of the way the war was conducted under Rumsfeld. (So was I - but that runs against the Bush Administration.)
And, he acknowledges that the surge worked - as do I, and every other thinking American.
Now, he wants our troops back home. So do I. But he wants to make sure we withdraw in a way that doesn't do more harm than good. So do I. Because he remembers Vietnam. So do I.
Maybe if one has no experience on which to campaign, one can only campaign on the demonization of one's opponent, and on lying to the American people by saying he's "more of the same."
But if that's all you've got, you may be in trouble. And it's getting old. I just hope that, thirty years from now, Dems will have something a little more solid to campaign on than "he's just like George W. Bush." After all, you don't see Republicans campaigning on, "he's just like Jimmy Carter."
************
I'll close with this gem. I may have actually found a reason to vote for Barack Obama.
The House Democratic Caucus chairman told American Banker that an Obama presidency would bring significant financial regulatory reforms (which I don't doubt in the least). He said Obama would bring to the markets "more transparency ... so we don't have this opaqueness where nobody knows who owns what and where the bottom is."
Wait - Obama is going to bring regulatory reforms to the markets that will allow everybody to know "where the bottom is"? That's not transparency, it's clairvoyance!
Sign me up - I'll make a lot of money off knowing where the bottom of every market is.
Of course, there's one little problem. Somebody would have to be on the other side of that trade. The only way to create a market where everybody knows exactly what they need to know to profit, is to just print money and hand it out, something some in the liberal camp embrace. Otherwise, the good chairman is describing an impossible scenario.
But hey - there's always hope!
Item 1: Russian Prime Minister Vladimir Putin has accused someone currently campaigning for the US presidency of inciting Georgia into conflict with Russia.
Please. All one need to to incite conflict between Georgia and Russia is wake up in the morning.
Conflict in that region is as much a given as is conflict in the Middle East, where they've been killing each other since Abraham kicked Ishmael out of the tent.
Putin didn't name names. But he said it was someone who stood to benefit from the conflict.
Hmmm ... could it be ... maybe ... John McCain?
After all, McCain got a boost in the polls following the skirmish. Little wonder; his considerable legislative experience, combined with his in-depth military knowledge, give McCain an edge for the commander-in-chief role that only a purely partisan Dem could discount.
So what does this tell us? Gee, it sure looks to me like the guy's trying to start some rumors about McCain inciting violence abroad for his own political gain. I'm pretty sure he didn't need to do that - like I said, violence in that region brews just below the surface all the time.
And I don't think that he would do that - any more than Clinton's supporters thought he would have wagged the dog following the Lewinsky affair by bombing Afghanistan and Sudan.
Now, why would Putin want to hurt McCain's chances for the presidency? Apparently he'd prefer an Obama White House. That way he'd be free to nationalize oil and gas interests, rebuild the Bear's nuclear arsenal, and invade former republics at will, without the repercussions that might exist under a McCain presidency.
Hey, it's not necessarily what I think. It's obviously what Putin thinks. He's a smart, savvy guy. Certainly more knowledgeable about politics, diplomacy, espionage, and stuff like that than little old me.
And if Vladimir Putin supports Obama for president, that's all the reason I need not to.
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Okay, on to the the GOP veep pick. A stellar choice in my book.
Before I explain why, I need to pat myself on the back. I said on a message board recently that McCain should pick a woman, and I panned Kay Bailey Hutchinson for being too old, Libby Dole for being even older, and Christie Whiteman for being pro-choice, which would alienate too many of the Republican base that's already a bit skittish about McCain's moderatism. Then I said that Sarah Palin would be a great pick - she's 44, she's a governor, she knows energy and environmental issues inside and out, she's ethical to a fault, and she's pro-life. But nobody's heard of her.
Well, I was right on all but the last count. Now, everybody's heard of her.
What do I like about the pick? All of the above.
She's 44 - a nice counterbalance to McCain's age. She's a governor. Unlike the other three people on the tickets, she's actually run something. She's been a chief executive, in other words. As a CEO myself, let me tell you what that means. A senator, if he or she serves long enough (longer than one term, Barack) might get to be a committee chairman.
I was a committee chairman when I was in my fraternity, in college.
A senator looks at two or three issues a year, and co-sponsors legislation on those issues with one or more other senators. They debate. They give speeches. They vote on stuff (if they're not out campaigning for a higher office).
With a CEO, the buck stops here. You make decisions - broad decisions. You have to look at all issues. You don't vote. You don't rely on a committee. You confer with the smart people that you're smart enough to surround yourself with. But at the end of the day, you make decisions. A day as a CEO is worth a year as a committee chairman.
She's a woman, which could help attract some of the disgruntled Hillary supporters, as well as the "security moms" that helped W win re-election. She knows energy and environmental issues, like I said. She's pro-life, and pro-family - she herself has five kids, one of whom has a disability.
She's been in the business world. She's smart, well-spoken and down-to-earth. She relates well - not just to audiences, like Obama. But to individuals. She's the antithesis of "elitist." You'll never hear her say people are bitter, and cling to their guns and their God. Because she gets people.
She's a fiscal conservative. She jettisoned the gubernatorial jet, in a state where you can't get there from here by road, to save money. Money she put back in the people's pockets. She runs surpluses. And hey, she only has one house!
She's telegenic - I wish we didn't care about that, but the reality of post-TV politics is that it matters. And she has strong ethics - she earned her way into the office of governor on her reputation as a whistle-blower on corrupt state politics, even taking on her own party. She's a maverick's maverick. She is change, but in a tangible sense - not just rhetoric. It's change we can truly believe in, because it's been demonstrated.
There are, however, a few things I don't like - at least politically, in terms of her chances. The fact that she's a woman could alienate some extremists within the GOP that see a "soft" moderate prez nominee teamed up with a woman. I don't feel that way, but there may be some that do. I'm just saying it's a risk of the pick. But McCain's a risk-taker, and I applaud that.
The second thing is the experience factor. Personally, it doesn't bother me. She has a great deal of life experience that could benefit her in the role. And I'd take her experience as CEO of a state 600 times the size of Joe Biden's home state over Barack Obama's 140-odd days actually in the office any day of the week. But the Dems will point out that a half-term governor and former mayor of a town of 9,000 people will be a heartbeat away from the leadership of the free world.
That's okay. The retort is obvious. Better that than having the leader of the free world be a guy who's a half-term senator - and has been campaigning for president most of that time, and who was a state senator before that. A guy Hillary Clinton said "has that speech he gave." A guy Joe Biden said wasn't ready for the presidency. See, I think that the veep role is one where some on-the-job training is okay.
The third thing that could hurt the ticket is the supposed "scandal" brewing over her ousting Alaska's Public Safety Commissioner, who claims he was canned for refusing to fire a trooper who was married to Palin's sister, with the marriage ending in a contentious divorce and custody battle.
If that's true, it tarnishes her image as an ethical standard-bearer. But I always take the word of a "disgruntled former employee" with a grain of salt. Probably because I've had some of them come after me, or I've had to go after them, and I've always prevailed. Truth will out. And in a campaign with a Keating Five alum, Rezko's pal, and a guy who spends four grand a month on train fare and shows up for work a few minutes past nine every day, if that's the biggest ethical knock against her, it shouldn't hurt the ticket much.
This race hearkens back to 1988. You had a relatively inexperienced Democratic presidential nominee, who, in apparent acknowledgment of that inexperience, chose as his running mate a seasoned member of the Senate to bolster up the ticket. Many people said at the time they'd have voted Democratic if the ticket had been reversed.
Including yours truly. Bentsen was a Texas Democrat, which is pretty much like a Republican just about anywhere else.
As for the GOP, you had a Republican candidate that many in the party felt was too moderate. Kemp was the better choice at the time to carry on the Reagan legacy, just as there were better candidates in this year's GOP primary than McCain, in my view. But then, as now, the moderate won the nomination. And he selected an unknown running mate that satisfied the Kemp crowd.
This time it's a little different. McCain's pick wasn't made just to please the GOP base, but also to be inclusive, to appeal to the disenfranchised women who felt the Democrats left them in the lurch. And unlike Dukakis' pick of Bentsen, I'm not so sure Obama's does anything to temper his reputation as being to the far left in his ideology.
And, to paraphrase Lloyd Bentsen, "I saw Dan Quayle in action. And Sarah Palin is no Dan Quayle." (Thank goodness.)
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Maybe it's just me, but it seems to bode ill for the Democrats that the only way they feel they can attack John McCain is by saying he's just like George W. Bush.
It's so ignorant - just look at his voting record. (I know, the Dems ran an ad saying he voted with Bush 90% of the time. But they cherry-picked the last eight years to come up with that number - they simply chose to exclude the many, many more times he voted against his own party. At least he was there to vote, and not out campaigning for all but 140 days of his last Senate term.)
And think about where he did agree with Bush. He felt the world was better off without Saddam Hussein. (So do I.)
He was highly critical of the way the war was conducted under Rumsfeld. (So was I - but that runs against the Bush Administration.)
And, he acknowledges that the surge worked - as do I, and every other thinking American.
Now, he wants our troops back home. So do I. But he wants to make sure we withdraw in a way that doesn't do more harm than good. So do I. Because he remembers Vietnam. So do I.
Maybe if one has no experience on which to campaign, one can only campaign on the demonization of one's opponent, and on lying to the American people by saying he's "more of the same."
But if that's all you've got, you may be in trouble. And it's getting old. I just hope that, thirty years from now, Dems will have something a little more solid to campaign on than "he's just like George W. Bush." After all, you don't see Republicans campaigning on, "he's just like Jimmy Carter."
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I'll close with this gem. I may have actually found a reason to vote for Barack Obama.
The House Democratic Caucus chairman told American Banker that an Obama presidency would bring significant financial regulatory reforms (which I don't doubt in the least). He said Obama would bring to the markets "more transparency ... so we don't have this opaqueness where nobody knows who owns what and where the bottom is."
Wait - Obama is going to bring regulatory reforms to the markets that will allow everybody to know "where the bottom is"? That's not transparency, it's clairvoyance!
Sign me up - I'll make a lot of money off knowing where the bottom of every market is.
Of course, there's one little problem. Somebody would have to be on the other side of that trade. The only way to create a market where everybody knows exactly what they need to know to profit, is to just print money and hand it out, something some in the liberal camp embrace. Otherwise, the good chairman is describing an impossible scenario.
But hey - there's always hope!
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