Wednesday, January 27, 2010

The Mighty Scott Brown: an Army of One

Good News.

In a special election to fill the US Senate seat held for over four and a half decades by the dearly departed and Honorable Senator Ted Kennedy, a relatively unknown state politician in Massachusetts named Scott Brown, a Republican, is elected in the bluest blue state in the nation. He upsets the unbalance in the US Senate adding the 41st vote for the minority and ending the Democratic Party's filibuster proof, and out of control, 111th Congress. This apparently has put and end to the ill, and secretly, conceived Health Care Reform legislation, saving the country from certain bankruptcy.

Thank you Senator Brown, and thank you Massachusetts.

Sunday, January 24, 2010

The Economy is Improving; What Happened and Why

Let's talk about our current economic condition. I've been looking around and learned a few things I'd like to share.

I believe this recession (2008 through 2009), that some are calling the "Great Recession"* was caused by the federal government.

I was going to say that Wall Street "fat cats" helped as well, but I believe they were doing what everyone wanted them to do, maximize profits, follow the rules that the government imposes on them, and honor their contracts. This benefits everyone.

The reasons for the recession are multifaceted, but the prime mover in this debacle seems to be the FEC's Financial Accounting Standards Board's (FASB) modification their "mark to market" rules in Financial Accounting Standards (FAS) number 157, which forces investment firms to estimate and report the value of their holdings, for taxes, investor information and other purposes, to current market values. This makes sense on the surface, but if there is a market slow down, such as the subprime market hitting the skids, where their holdings cannot be easily liquidated, the value goes down.

In the subprime situation, many loans were adjustable rate loans and started adjusting upwards as the prime lending rate went up in mid 2004 through 2008. (Coincidence? I wonder if Mr. Bernanke had any part in this?)

Here is what I believe happened

A real estate bubble soars upward with easily available credit due in part to a low prime rate and subprime loans, peaking in 2006.

- By 2004 there were trillions of dollars in mortgages and investments in the subprime loan markets, backed by Fannie Mae and Freddie Mac, two "quasi governmental" organizations that guarantee the loans.

- The Federal Reserve increases the prime lending rate (money the Fed loans to banks and others) from 2.00% in 2001 to a peak of 6.25% in June of 2006.

- Throughout the same period, investment firms obtain and repackage mortgage loans into security derivatives and sell them to investors around the world and making profits all over the place. As long as the money is flowing, such as mortgage holders making their payments; no problem.

- Through 2006, subprime mortgage holders' payments increase with many doubling and tripling. Many who could just barely make their payments now cannot afford them and mortgage holders default and and banks foreclosure.

- In 2007 the housing market becomes saturated with over priced real estate. Many are denying that it is a serious problem.

- Investors who bought properties as investments, such as those who "flip" them, find the market flooded and real estate values are tanking. They start walking away from the debt.

- New terms, "illiquid", "toxic Assets" and "derivatives" become every day words in the general American population.

- In September 2007, the Federal Reserve starts lowering the prime lending rates.

- FASB tightens the asset estimation and reporting requirements of FAS 157. They became effective for businesses with fiscal years beginning after November 15, 2007. Under the stricter requirements, firms that invested in these toxic assets, had to report the loss of billions of dollars is their assets.

- Over 100 companies fold due to the now illiquid assets they were stuck with.

- Markets around the world that invested in these (once) high yield derivatives lose capital causing a panic in our federal government. (if those countries fail, who will loan this government more money?) Representative Barney Frank (D-NY) runs around denying it was his fault.

- The federal government start picking winners and losers in the financial services and investment companies. While loaning funds to some financial institutions, the government decides not to assist Lehman Brothers Holdings, Inc., the competitor to Treasury Secretary Henry Paulson's former employer, Goldman-Sachs (GS). GS, who turned a profit from the subprime meltdown, would later receive $12.9 Billion in bailout funds from the Troubled Asset Relief Program (TARP).

- In September 2008, Secretary Paulson pushed for bailouts of $700 Billion (TARP) to shore up the now almost defunct financial markets in this country and abroad. He got it done and President Bush signed it.

- American International Group, Inc. (AIG) receives Bailouts totaling $122.8 billion by the end of 2008, with more to follow. Nobody can say where the money went.

- The Obama pre-administration complains about executive bonuses being paid by companies that received taxpayer hope dollars.

- General Motors (GM) is laying off employees; In 2008 GM was down 13,000 salaried employees since 2000 & 40,000 hourly jobs are gone since 2006 (NY Times). They were closing plants and reporting that they will not have enough operating capital to pay their employees and creditors. Along with Ford and Chrysler, they are asking for a bailout. GM received $9.4 Billion in December 2008 (CNN Money), and more bailout money was to come.

- As businesses fail, being unable to secure funds to continue to operate due to a "bad banking environment", millions around the world became unemployed. This causes more foreclosures, lost homes and lost investments, many of these investments were retirement accounts. Many who were planning to retire now must continue to work (if they can find a job).

- In March 2009 President Obama says he does not want to run the automobile industry, but fires GM CEO Rick Wagoner (Politico), tells GM what vehicles to produce, and insists that GM downsize, destroying thousands of jobs. GM totals 40,000 more layoffs for 2009 alone (LA Times).

- In March 2009 President Obama instructs GM on how to run its business or he will cut off the bailout funds (Business Week).

- GM files for chapter 11 protection under the bankruptcy laws after receiving bailout funds several times, being nationalized the President of the United States. The federal government then claimed a sizable percentage of GM stock and gave the remaining stock to the UAW.

The net result of the change to FAS and the failure to properly mange Fannie and Freddie: subprime market crash, stock market crash, housing market crash, worldwide recession, the loss of millions of jobs, millions lose their homes, and the US Deficit is tripled with hope dollars. Our government nationalizes some banking and automobile manufacturers, acting like 1959 Cuba or 1971 Venezuela, and the list goes on.

This is how we find ourselves trying to climb out of a recession in 2010. The mortgages that were "owned" during this period had their values drop as much as 50 percent making them "upside down', meaning investors and home owners owed more than the property was worth. Many investors and owners started walking away from this bad debt. The debt was guaranteed by Fannie Mae and Freddie Mac, two quasi-governmental entities that now held trillions of dollars in debt from these loans.

The good news

Realizing what they have done (primarily from the discussions of Steve Forbes) but continuing to blame former President Bush, they changed the mark to market rules last April (FAS -157, 2009), easing the rules and stabilizing market prices and the economy is improving.

This is why I am of the opinion that the US Congress caused and allowed this recession through...

- handing off the power to regulate markets to the FEC, who produced poorly thought out market rules instituted with their failure in the Enron debacle in mind.

- decades of intimidating financial institutions to give loans to people who in all likelihood would be able to make the payments for very long.

- turning their backs on the indicators (from as far back as 1998) and prompts from the Bush administration to reign in Fannie Mae and Freddie Mac hopefully before it became too late. Committees refused to hear the advice, senators promised filibusters if any interference with their plans to lend money in an exceptionally risky manner, with charges of racism and other bogus claims to prevent any change to the status quo (which is ironic as now, while in the majority, the Democrats are labeling the Republicans as the "party of no").

Hey, maybe we should give the health care insurance industry to a board or commission created by these guys. What could go wrong?


*No doubt trying to equate it to the actual Great Depression to bypass President Carter's "great recession"

Thursday, January 21, 2010

Kudos to Lanny Davis, Mostly...

I have to admit that I really do not care for many lawyers, especially those who help move the liberal agenda along with (what I consider) frivolous lawsuits. Lanny Davis, former special counsel to President Clinton, has earned new respect from me. He has written an editorial published at the Wall Street Journal's online edition where he takes America's progressives/leftists to task and blames them for the successful campaign of Senator Scott Brown (R, Massachusetts) . Read it HERE.

He rightly informs progressives that they did not lose due to a poorly run campaign by Democrat Martha Coakley as they claim. Instead they lost because of the message. That is one in a row for Mr. Davis.

Mr. Brown ran his campaign on stopping ObamaCare. That was the message. Mr. Brown knew, as did the voters, that ObamaCare is very similar to the universal health care program former Governor Romney signed into law. The voters did not like it, as the polls proved.

But my praise for Mr. Davis is short lived as he goes on to confuse the issue in the fashion of defense lawyers and especially lawyers supporting Democratic tax and spend programs . He says,
"According to polls, fears about the Democrats' health-care proposal played a prominent role in Mr. Brown's victory yesterday. In the last several months, the minority congressional Republicans have dominated the message on health care—and stamped on the Democratic Party the perception that we stand for big government, higher taxes, and health insecurity when it comes to Medicare."
While voters do fear the Democrats' completely partisan, bribe ridden, country busting, freedom destroying, health care plan, it was not because Republicans, congressional or otherwise, "dominated the message" and branded the Democratic Party as standing for big government, higher taxes, and health insecurity.

The fact is that the Democrats in government and in the news have earned the label of standing for big government, higher taxes, and health insecurity. They did not need Republicans to create this persona. They did it themselves.

And contrary to Mr. Davis' point of view, if the GOP had been dominating the news with their message, why it that only a very few know that the GOP had offered an alternative health care reform (HCR) plan? HERE

Did you even know that there is one? It's been around for almost a year now. And there are others from the GOP. The excuse used when anyone mentions the failure to report his newsworthy item is that the GOP is the minority and plan would go nowhere anyway, so why bother? Even O'Reilly from Fox News Channel makes this excuse.

Folks such as Mr. Davis routinely accuse the GOP of being the "party of no" in some Orwellian psychosis where they project their own MO at their opponents, while being careful to omit that there is an opposing plan, preventing Republicans from offering amendments to HCR

It is a well known fact that the legacy media (broadcast news such as ABC, NBC, CBS, & major newspapers), consist mostly of registered Democrats (85% at last count) and still enjoy the vast majority of viewers and readers. Much more than the few balanced or conservative radio and cable news and news talk shows. That being so, the legacy media always support their people in the Democratic Party and in government as much as they can get away with. This is the reason that many believe that the GOP have no plans, are undercutting HCR, and are only trying to prevent Democrats from doing anything for purely partisan reasons.

But Lanny does not stop here. He continues with a thorough rewrite of history. He injects a small truth, then lets the creative juices flow. He shows anyone who is paying attention that he cannot be trusted to be truthful on any subject.

In revamping President Clinton's re-election win, he states,
"He did so by creating a new ideological hybrid for a still-progressive Democratic Party: balanced-budget fiscal conservatism, cultural moderation, and liberal social programs administered by a "lean and mean government." This New Democrat combination appealed to Ross Perot independents concerned about deficits, and also to traditional Republican suburbanites who were culturally moderate on issues like abortion and gay rights but opposed to high taxes and wasteful, big-government bureaucracy."
President Clinton did no such thing. He was against the GOP's budgets, which brought him kicking and screaming to balance then surplus (for what it's worth). There nothing lean about government when he repeatedly (3 times) refused to sign a welfare reform act (beginning of the term "party of no") until one of his marketing agents warned he'd lose the election.

FYI Mr. Davis. "Liberal social programs" cannot be administered by a "lean and mean government." The two are polar opposites and are totally incompatible.

Mr. Davis,
"Then, in 2008, Barack Obama added something extra: a commitment to a "new politics" that transcended the "red" versus "blue" partisan divide."
I'm sorry, but Mr. Obama may have such an idea in his heart and may be able to articulate his well thought out marketing speeches, but he has yet to implement any such transition, paying only lip service to those high ideals.

"Obama's health-care proposal did not include a public option;"
You may call semantics if you like, but candidate Obama repeatedly professed suport for a single payer health care plan. A rose by any other name is still the public option.

"Bottom line: We liberals need to reclaim the Democratic Party with the New Democrat positions of Bill Clinton and the New Politics/bipartisan aspirations of Barack Obama"
I, as a conservative, can only hope and pray that Democrats are more open about their liberal ideology. As it is now, they hide behind the terms used by moderates when they are not moderate at all. If they follow your plan, Mr. Davis, they will finally come out of the closet and let the voters know who they truly are. Then we could vote for our representatives as opposed to the representatives of the Democratic Party or the Republican Party or the well monied special interests.

If Mr. Davis wants to find the real partisans, simply get a mirror.

Friday, January 15, 2010

David Axelrod: Wrong on Wrong.

Mr. Axelrod, President Obama's Senior Adviser, has written a article designed to ridicule his opposition and confuse the electorate titled, "What Karl Rove got wrong on the U.S. deficit" at the Washington Post. According to his writing, he and others, including Carl Rove, were invited by the Washington Post for a sort of brainstorming session. Mr. Axelrod seems to only taken way this...
"Of all the claims Rove made, one in particular caught my eye for its sheer audacity and shamelessness -- that congressional Democrats "will run up more debt by October than Bush did in eight years."
He then starts in with a revisionist view of recent history that excludes important information (an effect of tunnel vision) and fills it in with his self-serving version.

I saw this opinion piece referenced on the Huffington Post and could not resist calling Mr. Axelrod on his deliberate misuse of the facts and his attempt at rewriting history. The HPost only allows 250 words to be posted by the rabble (me) when they don't delete them altogether. So, I've revised and continued my rant here.

Here is how it went with more...

Dear Mr. Axelrod.

I want to thank you for revealing the true nature of our current government. Orwell’s characters surely have nothing on you and the rest of the White House's leadership. You have taken a modicum of truth and twisted the facts completely out of reality. The way you write them has little relation to the real story.

Let’s try to set the record straight.

So first, from what I've seen so far not many in the White House today know how the US government lawfully operates or even have a fundamental knowledge of the US Constitution. You will have to understand how our government is supposed to work according to the written and agreed to US Constitution. Recall that the government is in place to serve the people with power on loan from them, not to serve any politician or their advisers, cabinet members or anyone holding public office.

Quickly: Congress appropriates, the executive branch spends what the congress allows them (you) to spend. Both branches, along with the third branch, the US Supreme Court, are supposed to "support and Defend the Constitution of the Unites States." Simple, really. You will see how this is important very shortly.

You continue...
"The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus -- with a projected 10-year surplus of $5.6 trillion."
Pop quiz, class: Who did the appropriating? (This means gathering up the funds from various sources to be spent in the service all Americans

Answer: The Republican controlled congress.

Bill Clinton didn't spend a dime that was not appropriated by congress, revealing that they, not just the president, are responsible for the surplus.

But President Clinton also left office with the country in a recession. Your party quickly turned it into an Orwellian campaign slogan claiming President Bush "caused" it. No really. During the campaign of 2000, pundits were echoing Democrat strategist talking points, specifically, they claimed Bush was "talking down the economy" when he mentioned that the economy was slowing down.

This makes me wonder if the Democrats haven't been talking down the war and costing lives. Harry Reid on Iraq 2006, "This war is lost". But I digress.

The Bush Administration inherited a recession (Washington Post), followed with the extremist Muslims finally proving that they were at war with us on 9/11/2001. Something they (Islamic extremists) have known since 11/04/1979.

These two big issues, war and recession, along with the US Congress are the major cause of the deficits, not Bush’s economic policies. In fact Bush's tax policies reversed the recession and produced real GDP growth every year after 2001 until the 2008 when the congressional banking/mortgage/securities/illiquid assets crash and burn began its meltdown.

The funny thing is that President Bush, a truly classy individual, did not blame his predecessor for the recession and other problems. And doesn’t call Obama, and you, on your blame game.

Your "fiscal irresponsibility” remark misses the mark.

It was the regulations, or lack there of, produced by the US Congress that was "laissez-faire", with Rep. Barney Frank claiming that Fannie and Freddie were "fundamentally sound" and said Bush's proposals to fix them were "inane". Then after the fall in 2008 he voted for those changes. I would say that no one was watching AIG or the others, but somehow, I know that's not true. It seems the tax and spenders always have on eye on profit makers so they can tax and spend more. In his budget report in April of 2001, Bush asserted that Fannie Mae and Freddie Mac were "too large and over-leveraged" (Rove, WSJ) , but was shut down by Democrats in congress. Recall that the US Senate during President Bush's administration was not filibuster proof and Chris Dodd (D-Con) said the Bush recommendations were "ill advised" successfully filibustered any changes. In 2008 Senator Dodd supported the same changes.

Your next whopper,
"deepest economic catastrophe since the Great Depression",
is another fabrication. Unemployment is at 10+%, inflation is 0% (supposedly), and growth is stalled, but slowly coming up in the third quarter of 2009.

The truth is the current Obama/Democrat led congress-owned recession is the worst since the Carter "malaise" of the late 1970's, with double digit unemployment, inflation and mortgage rates. The Great Depression was much worse where FDR kept the unemployment rate at 14-21% throughout most of his 3 administrations (see chart HERE). The financial market "crisis" of 2008 is nowhere near as troublesome as Carter's or FDR's Great Depression.

In more classic subterfuge, you say,
Economists across the political spectrum agreed that to deal with this crisis and avoid a second Great Depression, the government had to make significant investments to keep our economy going and shore up our financial system.
And that’s where you lose my confidence in government's ability to handle economic issues. The president should see this as a clear learning moment to stop interfering with the free market system. The government had to do something, but it wasn’t obligating $700 Billion to hand over to the former employers of Secretary Paulson (Goldman-Sachs) among other supporters. The money that this country does not have I now refer to as “Hope Dollars”, as everyone hopes that the program will work, and they hope that America’s lenders won’t cut off the spigot and politicians hope they won't get the blame when it doesn't work. I had also thought that federal level politicians hoped that it would also get paid back. But I now know, after the next grotesque abuse of the US Constitution known as “American Recovery and Reinvestment Act“ where you obligated another $787 Billion that you do not have in pork programs, that no one in the White House or the majority in congress are concerned about it at all.

Obama administration's rigorous stewardship added transparency and accountability…

We know, from watching the US Congress that no one in government knows what the word “stewardship” means (back to laissez-faire attitudes). And as for transparency; I'm afraid that there is a disconnect between the dictionary meaning of the term and the Obama White House definition. The president of "change" has changed nothing except running up the national debt and running down confidence in America.

The textbook examples of Orwellian speech continue under your,
At the same time, we also recognize that we need to address the long legacy of overspending in Washington.That is why, shortly after taking office, Obama instructed his agency heads to go through the budget page by page, line by line, to eliminate what we don't need to help pay for what we do."
What! Again.

Sure, you called for it, but you have no one who is capable of deciphering it even if it were fairly accurate. None of the president’s economists, nor even the president, have any real world experience. None have worked in the private sector in their adult life. Exactly how would anyone in the White House know how to address the economy in a helpful way? (I guess I’m being Orwellian now. You may be able do it in a helpful way, but the only help would go to the Obama administration.)

We know that spending was a problem and the President read his plan to us. Then he followed the speech by obligating another $420 Billion in hope dollars in March. He must have a short memory.

"As a start, the president proposed billions of dollars in cuts, and he'll continue to fight for them and others in the upcoming budget."
Yes, Billions in cuts from Medicare, Medicaid and the defense budget. I seem to recall the demonization of Speaker Newt Gingrich when he spoke of, but tried to implement, a program to reduce the overhead in Medicare, characterizing it as "withering on the vine". Democrats grabbed this single phrase and turned it into 'evil Gingrich wants to end Medicare and Medicaid' when no such thing was recommended. Where are these people now that the President wants to cut over $500 Billion from Medicare in actual cuts.

"Obama had been more successful in getting his proposed cuts through Congress than his predecessor was in any of his eight years in office."
Of course he did. President Obama had a filibuster proof majority in the US Senate and a majority in the US House of Representatives. President Bush did not have this luxury.

Mr. Axelrod says that the president has insisted that the health care reform not add to the deficit, but their is ample evidence that a smoke and mirror subterfuge is going on here. First the Congressional Budget Office (CBO) says it will add a trillion dollars to the deficit, even with Medicare cuts. They cannot have that, so in a show of totalitarian power, the president calls the nonpartisan CBO head into his office and miraculously, the same reform plan will really reduce deficits by $132 billion.

And this...
"But the course correction that was so badly needed after the previous administration has begun in earnest."
You know, it become so common place for this administration to continuously blame anyone they can (other than themselves) including the previous administration, so-called greedy CEO's and "Wall Street Fat Cats", for those things that go wrong that it is expected. And most all of it as a consequence of government's meddling in areas they know nothing about.

One of the first rules of leadership is to take responsibility for one's actions. This president and his followers absolutely will not accept any responsibility for the state of this union.

As I've noted above, it is the US Congress that spends the money. They are mostly responsible for the deficits and the national debt. This president was a member of the congress that voted to spend all that money on wars, Medicaid, Medicare, the executive departments and on bailing out US and foreign banking and investment institutions, from 2007 to his inaugural. He was part of the majority that did not try reign in Fannie Mae and Freddie Mac, even though they had the power to do so. Even previous congresses wouldn't take on Fannie and Freddie. All of your blaming Bush and others is nothing more than an attempt at slight of hand, to redirect the voters attention away from the real perpetrators: the US Congress. I have to tell you, it does not work and makes the president look amateurish.

But it is not all bad. I believe the president should have his own agenda and at times it may be at odds with the congress. This is how President Reagan ended up with deficits. He had an agenda and the US Congress had their agenda. The word of the decade was "compromise". Reagan took responsibility for the deficits on his watch, as did Presidents George H.W. Bush, William J. Clinton and George W. Bush. None of them blaming their predecessor for the problems that were theirs to solve. They had leadership abilities and did compromise with each other. This president and this congress will not.

Obama is trying make a major shift from our market based economy to a government owned and operated economy and he along with the Democrat controlled congress are spending borrowed money at a breath taking rate.

The bottom line is Karl Rove is correct. The congressional Democrats "will run up more debt by October than Bush did in eight years." Heck, they already have.

Thursday, January 7, 2010

NPR: Learn To Speak Tea Bag

Mark Fiore of creates juvenile, uninformed, flash cartoons. Some his most popular include "Gun Crazy", and Gringo Guns, has a created another flash cartoon, titled "Learn To Speak Tea Bag", that reveals the sense of humor and intelligence level of Progressives everywhere. Its title implies that it is going to teach Progressives to understand what Tea Party protesters, fondly referred to as "Tea Baggers", are saying.

One of the first lines in the 'toon, shows a poor schlub trying to handle the big words like "health insurance reform", "negotiate drug prices", "expense caps" and "public option". Our poor schlub tries to discuss the public option and degrades quickly into his apparent last resort, "socialist". He tries other complicated topics and falls into "socialist" again. The poor sapp, eh? Funny, eh?

Maybe not.

The cartoon relies on the Democrat strategy of attempting to marginalize and devalue a sector of the electorate that does not agree with their ideas. And, since they have no solid evidence or history to back their expensive hair-brained schemes, they must rely on lies, redirecting attention and emotion to get any support at all.

NPR decided it would be a good idea to give Mr. Fiore a soapbox on their website. But Mr. Fiore's opinion piece struck my funny bone. Why funny? Read it. He is blowing his own horn in the third person. It's as if he's referring to some other person as a "guru". Too funny.

Small note: I wonder if the president was referring to the Tea Party protesters (T PP) when he said people were getting upset a "pee peeing on everything".