Thursday, June 18, 2009


President Obama’s financial regulation proposals have some areas of merit but mostly miss the point.
He continues to misidentify a key component of the causes of the situation. Obama blamed the financial crisis on "a culture of irresponsibility" from Wall Street… exotic mortgages that hide exploding costs… (confusing) home mortgage disclosures… and complex financial instruments

The missing piece is that all of these things had their source in Congressional action.

The basis of the problem was a complete disregard of prudent lending practices. That was a result of the desire of Congress to see that everyone owned their own home. Since that was impossible under the historic lending rules, Congress, through Fannie Mae, changed the rules. Income, down payment and credit history requirements were abolished and the government guaranteed the loans. So Banks made them. When that wasn’t enough, the same Agencies began to guarantee Adjustable rate and Balloon mortgages that postponed the true payments needed. And Banks made them with the encouragement of the government agencies.

Second, those confusing disclosures are all based upon Congressional requirements. Some Congressional staffer thought up the APR calculation and all the other fine print that is an entrench part of the process. Does anyone really think that the financial institutions would want to do all that stuff if it wasn't required by Congress?

And all of those complex financial instruments were developed based upon federal guaranteed loans. In hindsight, a bad idea but they were guaranteed loans. Where was the guarantee when it was needed?

The thing that the President is missing is that the entity that needs regulation is Congress

Monday, June 15, 2009

Tax Promises

One of the key campaign issues was President Obama’s pledge not to raise taxes on anyone making less than $250,000 a year. We are now finding out the small print. He is sponsoring legislation to tax health benefits as income; he is forcing energy prices higher through cap and trade and alternative energy schemes; he has raised the price of cars through additional environmental requirements; he want "well off" senior citizens to pay more for Medicare and a means test for Social Security is sure to follow; he supports the proposed additional tax on cell phones and there is no apparent end to it. He claims that there were no earmarks; theysimply renamed $750 billion dollars of them. All of it was needed stimulus stuff like the Edward M. Kennedy Senate Institute - which was obviously not an earmark.

Friday, June 5, 2009

Judge not

Judge Sotomayor’s nomination has created several questions that deserve serious review.

Her supports have tried to spin her comment about a wise Latina woman doing a better job than a white guy in any way but what it actually means. The President has even said that he presumes she would restate it. The people who have called it a racist statement have not been contradicted. The statement is indefensible. Her supporters simplify vilified anyone who says the statement is what it is. They have no answer to what would happen to anyone who said that a "wise" Republican white guy would be a better judge than a Latina.

Another statement she has made is in connection to the vetting process prior to her nomination. Apparently, the White House didn’t review her decisions or anything related to her judicial career. They were more concerned with her heritage and racial background. Her admission of this has nothing to do with her qualification. It reflects directly on the White House. Clear instances of racial discrimination are approved of the victims are not members of a class.

The worst but most predictable thing about the whole situation is the position of the media. They are clearly the Administration’s cheerleaders. There are no questions about her comments or her admittedly racially based vetting process - just euphoria. Reporting is dead. Sad.

Thursday, May 14, 2009

The Lottery

A female teacher from Baldwin is getting $5 million from the school district for sexual harassment. The principal supposedly used sexist language in front of her. As a result, the taxpayers of Baldwin have to pay for her emotional distress, everyone pays for higher insurance rates and this woman gets millions. Her husband even gets $250,000 for “emotional pain”.
The first response to this is to ask where to sign up to get harassed. The second is to question the decision to give this woman millions. If it were proven that the principal is a lout (the story speaks only of allegations and trial testimony (he said and she said is not proof) fire the guy, give her back pay and move on. This decision is just dopey. The listed offenses are that he used sexist language, actually mentioned a student’s underclothes and made a derogatory comment about the woman when she filed suit. Who is defining sexist language these days and how much does it costs to use it? If people can see a student’s under clothes, it is inappropriate and the principal should say/do something about it. If an employee sues you for millions calling the complainant a name seems a reasonable response. What are the appropriate comments that would not cost the school district money?

And who was actually punished - the principal or the tax payers?
Where does it say that someone’s personal comments are the responsibility of the employer?
Has no one ever heard the “sticks and stones” rhyme?
Juries seem to have the opinion that there they can help someone hit the jackpot and no body pays except the insurance company. Just dopey


There is certainly no justification for driving while impaired. The regulatory problem is that, like many social issues, the issue has been taken over by extremists. The impairment level has been lowered in the social interests of eliminating the problem to the point where a glass or two of wine and you fail the test. Meanwhile the penalty for driving while impaired has remained the same and is too lenient. You can run over someone and get a few months.
The easy solution is to raise the impairment level to one that indicates actual impairment and increase the penalty. If someone is stopped and fails or refuses the breath test, automatically impounding the vehicle, impose a substantial fine and a jail stay. No arguments.
Continually lowering the level and making the penalty a slap on the wrist. Under the current system there are serious multiple offenders driving around and endangering us all.

Good Health

The current Administration sees Socialized medicine as the solution and its getting closer. The reality is that there is no one in the process that is interested or has any incentive in controlling costs.

The providers are getting the money so why should they lower costs. There is no price competition.

The only thing the government as payer can do is to ration the care. It will just take longer to get anything. That is the Socialized model in England, Canada and elsewhere.

The consumers have no real way of shopping for anything. There is no possible end to the health care problem as long as the consumer has no interest in the pricing process. We shop for everything else we buy except health care. But when shopping is allowed, the prices come down over time. The prime examples are Lasik surgery and optional cosmetic surgery which are generally not covered by any medical plan.

Changes to the current system are certainly needed but they must include giving the customer a reward for assisting in the cost control process.

Sunday, May 10, 2009

Free Enterprise

The day after Thanksgiving, a Long Island WalMart had some advertised sales. These sales drew a crowd of customers, even before the store opened. When the store did open, the assembled herd stampeded into the store and trampled an employee who unfortunately died. The local DA took WalMart to court. WalMart settled out of court for a few million dollars and court control over future security procedures and providing make work jobs for 50 local unemployables.
From WalMart’s point, they get rid of a criminal case that would have cost more to fight in court but the dead guy’s relatives will still sue them for something in civil court. From The DA’s perspective, she won over the evil corporation. WalMart now has to submit safety plans for Government approval. And government control over business takes another step forward.

But what was WalMart guilty of? Offering good at prices that attracted too many people? Having customers that were unable to act like civilized people? The logical solution for WalMart seems to be to raise their prices and not have sales.

Wednesday, May 6, 2009


Federal Reserve is measuring the Banks for their ability to handle stress. This is a blatant and uncontrolled attempt to nationalize the banking industry. The banks that need capital are going to have to go to the government for it; converting the preferred stock to common would raise the capital (lower the debit). That means that the Govt will own more of the banking industry. That won't work. The same people responsible for the wonderful job the Departments of Education and Energy are not going to get the financial industry to work. There will be 535 CEOs in Congress with uninformed opinions of what to do. Anyone who will be hired will be a GS- 12 who is willing to work for a limited salary in another Govt job. That's just swell.

In a related matter, Congress is working to loosen lending standards. Are they total morons? Of course they are. Loose credit standards are what started all of this. The Fed report complains that Banks are tightening their lending parameters - as they should. If a down payment, a good credit history and a proven good credit history had always been requirements for a mortgage we would not be where we are now. The hope is that these are the “more difficult” parameters that Congress is complaining about..

The goal should be that financial institutions, including Fannie Mae and Freddie Mac, make loans that will be paid back. Continuing to make loans based upon people's "need" to get a loan rather than ability to repay will only mean more defaults and more bail outs.

Wednesday, April 29, 2009

Guns and Responsibility

An email that is making the rounds get me annoyed. Another one of my pet peeves:
The topic was gun ownership which is certainly a constitutional right but.
The email was off the cahrts to defend the right to bear arms. One reason given was that an armed citizenry prevented the Japanese from invading the US in WWII. Another staement was that the murders committed by Stalin, Hitler and Mao and their armies would have been prevented if it wasn't for gun control lawsthat they passed. Pretty funny and pathetic stuff. Good arguments can and should be made but saying stupid things to fill space just turns people off.
The main problem is – like other social issues – everyone involved is extreme. One side wants complete unilateral disarmament and the other wants the right to have any kind of weapon and an unencumbered sales market.

If only bad guys having them that is obviously not good but neither is arming every meatball who has a few bucks. A middle ground would be that you can have any kind of non-automatic weapon you want. The But: It has to be registered and traceable. The owner is completely responsible for it. Forever. If it is used to commit any crime, the owner is guilty. No excuse; not “I lost it”; not “it was stolen”. Responsible people can have them but they have to be responsible.

The NRA has the worst press office since McCain. They should be including things that people can agree with. They should be campaigning for really tough penalties for the bad guys. Much tougher than they want now. Even in a “tough” state like NY, the dopey football player who shot himself while carrying an unregistered gun in a public place is only liable for 2 years max and he might skate anyway. Armed Robbery doesn’t get much more and it gets dealt away in plea deals.
Their argument against background checks, waiting periods and keeping records is really weak. Known wackos shouldn’t have them, nobody needs one immediately, and records are part of the cost.
There are also reasonable limits. No one needs an assault weapon, a bazooka or like military ordinance.


The 100 day mark was an opportunity for the media to grade President Obama. Not surprisingly, they continued in their cheerleader roles and gave him universally good grades. The interesting part of the grades was that many of them were admittedly commenting on his media presence rather than on his policies. The ability to use the Presidential office as a pulpit is certainly an important part of the job. There is also no doubt that President Obama is good at it - even using Joe Biden’s minimalist criteria of being “clean and well spoken”.
Unfortunately for the future of the United States , it is the policies that count. President Obama is doing exactly what he said he would during the campaign. No one listened to him in the anti-Bush mania but Obama is re-distributing wealth and nationalizing industry. After firing the CEO of a GM and turning over Chrysler to the UAW, he is forcing the banks to nationalize. His administration is refusing to allow them to even begin to pay back the bailout money. They have established the “Stress Test” which will force the banks to convert the preferred stock the Gov’t now owns to voting common stock. The result will be that Congress will be in charge of the Banks. These are the same people who ran Fannie Mae and Freddie Mac into the ground and caused this situation in the first place. The only question now is which well run government agency (?) will form the model for how the banks should be operated.

Saturday, April 25, 2009

Political crimes

Whether their specific opinions were correct or not, the idea of an administration determining that the policies of a prior administration are subject to criminal penalties is a major issue. Such action will have a significant impact on the actions of any future administration. All politicians have their own view of the best course of action. Elected officials should not have to worry that their opinions will become crimes because of a shift of a few votes in the next election.

The specific legal basis of whether these prisoners were covered by the Geneva Convention is open to discussion. The prior Administration solicited legal opinions and acted upon them. People from all points of the political spectrum can cite policies and legal opinions that they believe should be declared “illegal”. In the past, Lincoln’s suspension of habeas corpus and Roosevelt’s interment policies were directed at US citizens as so were much more significant to the national principles. They took these actions (right or wrong) based upon their determination of the best interests of the Country.

Subjecting prior policies to prosecution is something that happens in the third world when there is a coup. The proper judgment of an administration’s policies is the next election.

Monday, April 13, 2009


A recent editorial about Energy policy manages to get the facts right and miss the point. It quotes President Obama as “determined to force utilities to reduce carbon emissions by making fossil fuels more efficient”. It misses the part about this being a tax. When the government purposely makes a commodity cost more, that is a tax. It is a tax on everyone and everything: the middle class, those earning over $250,000, people out of work, anyone that uses any electricity, anyone that buys anything that is made using electricity, or drives a car. The editorial looks to LIPA to make a choice as to how to keep costs down in the face of this energy tax and complains that there is no plan. The point is to oppose this tax. The proper response is to identify that this is a tax and inform people of the results of this ill considered energy initiative.
This would be a little less onerous if there were an immediately available alternative. But there is not. When will every power plant in the country be powered by a renewable source? When will everyone have a hybrid car or a windmill in every back yard except if it blocks Ted Kennedy’s view? With no viable alternative, Congress and the President are purposely raising the price of everything. Prices will rise, job creation will be adversely impacted and businesses will pass any increase on to their customers. The untaxed price of oil will come down as our demand lessens, so products from India and China (the world’s largest sources of pollution) will benefit. China and India will pollute even more, while all Americans get to pay more for everything. And how long will this situation last? The answer is that President Obama and this Congress do not care. They have an agenda and push it forward regardless of who is in the way. The reality is that the American public is in the way but they don’t care. If they are going to do this, it might be a better fit with economic conditions to reward those who meet standards rather than raising costs for everyone.

Sunday, March 29, 2009

History repeats

A recent article in my local paper (LI Business still awaits feds’ mortgage aid - Newsday) contains the seeds of repeating the entire mortgage fiasco. A complaint from the owner of a mortgage company is that “bank lending is the way it was 20 years ago.” He means that potential borrowers now actually have to a down payment, prove their income and have a good credit history. He is correct; that is exactly how it was twenty years. That was when there was no financial issue with mortgage lending. In the interim, Freddie Mac, Fannie Mae and Congressional leadership changed the standards so that everyone could own their own home. They encouraged mortgage brokers such as these to make loans to anyone who could fog a mirror with the result that we are where we are. This guy apparently wants to do the same thing all over again. He gets a few points per loan and everyone else pays for it. Another guy, a “senior loan consultant”, complains that the required credit scores have been raised. Good. If loans had been made to credit worthy people in the first place none of this would have happened.
This one-sided tripe is an insult to your readers. Everyone who was interviewed has a vested interest in lending to any credit risk that knocks at their door. These guys are either stupid or greedy. Business articles should have some level of balance.

Monday, March 23, 2009


President Obama has announced his opposition to a recent law that was rushed through Congress. The law is retroactive and narrowly written to target taxing the income of specific people. The law is clearly unconstitutional. The media has come to the position that the President’s stand is brave and courageous. Incredibly, the same media castigated the members of Congress voted against the law in the first place.

The situation is that two groups of people reached the same conclusion. The media says that President Obama is brave while the Republicans who voted against at the peak of public furor were obstructionists. The position that the mainstream media takes is apparently based upon who says what. It is small wonder that newspapers lose circulation and the nightly news shows lose viewers.

Saturday, March 21, 2009

Congressional Follies

The AIG hearings have once again demonstrated the total intellectual poverty of our elected representatives. Once again, they get some face time to move the spotlight from their own ineptitude. They rant about millions in order to get their billions in earmarks under the radar. The same happened with the Auto execs private airplane rants while Congress (Pelosi et al) take private jets on fact finding junkets to Italy.
Meanwhile, Senator Dodd puts special bonus enabling legislation in the TARP bill as a favor to a Secretary of the Treasury who can’t pay his taxes. Everyone denies everything for a while until they have to admit it. So, Congress “solves” the problem by passing a retro-active (unconstitutional) law. Then they pass a bonus limit that insures that the most able CEOs will not want to work where they are most needed. The best turnaround specialist CEO in the world can make more money elsewhere. Brilliant!


The best thing that has happened to Congress recently is the ineptitude of the AIG bonus story. This story has removed the Congressional earmark issue from the public view. The earmarks misappropriated billions (B) of dollars to various pet projects which are generally of no use to the public at large. The AIG bonus issue is counted in the millions (M). This money was still misappropriated and still of no use to the public but the Congressional boondoggles were many orders of magnitude worse. So now our Congress gets to grandstand at another CEO for doing exactly what our Congress does. Meanwhile, President Obama also expressed outrage. He does not mention that his Secretary of the Treasury has been the architect of these bailouts since the beginning. The beginning is from the Bush Administration where he designed all of this without any oversight.
This is the Secretary that we had to have even though he couldn’t figure out the need to pay his taxes - that was just an oversight; this is the same man who approved these bonuses in the first place – another oversight; the same man who was supposed to have a comprehensive plan completed last month – it is now on schedule for maybe next month. A true comedy of errors. To keep up the comedy, President Obama goes on Leno and makes a joke about the handicapped – another oversight. What this whole gang does not have but needs desperately is oversight

Thursday, March 12, 2009

The End of Days

The job market is tight for everyone. The recent news article about nervous students was good for a laugh but shows where we are. The article was several interviews with soon-to-be graduates and some helpful hints about interviews. The hints included telling people who want to be professionals of some sort that that sweatshirts/ jeans are inappropriate for interviews and that their cell phones should be hidden (hidden! - how about turning them off?).
People who need such advice should be given a paper hat and name tag at graduation. Something they can use.


The earmarks issue has been around for years and paid any attention. The line item veto has been talked about for years with no action from either party. We now have a President who believes that earmarks are “an old way of doing business”. He even signed the current bill – with its thousand of earmarks – in private. His characterization of the imperfect bill is correct but he signed it anyway. There was no imminent deadline. It could have been sent back to Congress all of the pork removed and resubmitted without the government coming to a stop.
He proposes to have rules for earmarks – in the next bailout bill – which are laughable. In the future, every earmark will have a “legitimate and worthy public purpose”. That is not a rule; that is rhetoric. It just means that he has a vague sense that the current earmarks do not meet this criterion but he isn’t going to do anything about it. Unfortunately, the future earmarks will be reviewed under existing standard of “you approve mine and I’ll approve yours”. Everyone gets to say that the standard is met and the circle continues.
The related comments by Steve Israel and the Democratic leaders further eliminate the possibility of any real commitment to change. Representative Israel announced that he will no longer seek earmarks to for profit companies; Representative Pelosi announces that earmarks to for profit companies have to be competitively bid. So, the for profit company who contributed to their election campaign still gets the help (just from the low bidder) and John Kerry still sponsors the Edward M. Kennedy Institute for the Senate – but that doesn’t have to go through the nasty bidding process. The chances of Senator Kerry eventually working at this Institute are excellent.
Even the proposal to have the earmarks published on the sponsor’s website means that earmarks would be scattered over hundreds of government websites. Publishing a consolidated list of all earmarks and who sponsored them was not considered. That would be way too much information for the public to have.

The simple solution is that there should be no earmarks. The only reason they exist is to allow professional politicians to further their own agenda. They are either payback for past and future campaign contributions or providing places for them hide when they are voted out (see the Edward M. Kennedy Institute for the Senate).

Friday, March 6, 2009

Another mistake

There are things in the mortgage bill that are clearly indefensible.
Many of the mortgages involved were made with a very small or no down payment. Because of this even a small downturn would have put them underwater. So what? Everyone house is worth less than it was 2 years ago. This plan rewards the people who did not save for a down payment and does nothing for the people who saved and bought within their means. Further, the current value of the house has nothing to do with the mortgage payment. The people living in the house either continue to live there or pay rent someplace else; the current value no bearing on anything. Also, the plan does not include any mention of what happens when the value of the house appreciates. Does the borrower get to refinance and take more cash out? It puts the government (taxpayers) in the position of supporting bad investments and punishing good ones.

Many of the mortgages were refinances. The property owner mortgaged the equity, increased their payments and received (cash) in return for a larger monthly payment. The plan includes these mortgages but there is no attempt to determine where the cash went or if there is any left.

The plan provides these “qualified” borrowers $1,000 a year for 5 years for making payments on time. Because the overwhelming majority of people bought homes they could afford and saved for a down payment to keep the payments with the proper range, their payments are on time. The plan rewards the people who got themselves into difficulty is because the payment. Again, the wrong behavior is given incentives.

The plan proposed that people whose payments exceed 55% of their pre-tax monthly income get counseling. Again, bad behavior is rewarded. If the payment is 55% of pretax income, that means, even with a low tax rate of 20%, almost 70% of the borrower’s income was going to a mortgage payment. That is the point at which government thinks the borrower help. So people are in houses they had no chance of paying for (or even eating regularly) and the government supports their wanton behavior. Again, people who live within their means get to pay for it.

The next assault on sanity is to give Bankruptcy court judges the power to unilaterally alter the mortgage terms. This incredible proposal means that a judge can lower the amount owed and the interest rate to whatever fits the borrower capability – voiding the lending contract. That means the bank loses money – and who pays for that - and future contracts are no longer secure. The point is to encourage lending. But this would accomplish the opposite. Lending takes place because the lender believes that the borrower will honor the terms of the loan. This creates a situation where a third party can void an otherwise valid loan contract. That certainly does not encourage a lender to lend any money to any one. Further, since the risk is increased, the interest rate will go up. Another foolish proposal that is consistent with the absurdity of the entire Making Homes Affordable program.

Thursday, March 5, 2009

Early Accomplishments

In just over 5 weeks President Obama has:
Promised money to oil producing countries to bolster the image of the US to Muslims
Insured that the most capable CEOs will not work at troubled banks
Provided mortgage support to people who took cash out refinances and can’t account for the money
Appointed a union leader to run the Auto Czar committee
Appointed the CEO of a failed bank specializing in sub prime mortgages to his economic advisory committee
Shown that he knows almost no one who pays actually taxes
Released a guy from Guantanamo who went directly to work for the terrorists in Syria
Destroyed any progress made on welfare reform in the last 20 years.
Continues to try to scare everyone about the economy
Still has not released any background information on himself
Refused to stop the absurd earmark spending
Given money to people who don’t pay taxes,
Given money to people who chose have children but don’t make enough to support them
Spent more money faster than anyone ever has

Sunday, February 22, 2009


Personal responsibility continues its trip toward extinction. Run up huge credit card bills and the evil credit card company made me do it; take out a mortgage you never had a chance of paying and the evil bank made me do it; smoke 3 packs a day for thirty years and its an addiction; get drunk and drive over someone and it was the bartender’s fault. The truth is that the credit card company doesn’t force anyone to buy anything; the bank gives out stacks of disclosure statements about what the payment is that no one bothered to read; and millions of people have quit smoking and drinking. The airwaves are full of attorneys advertising that if anything ever happened for any reason to anyone, they should call and have a consultation about a law suit. No matter what happened, it must be someone else’s fault.
The result of all this is an increase in medical costs, insurance rates, unsafe roads, fewer doctors. All at the expense of people who are prudent with their purchases

To push this epidemic along the President has determined that anyone who has a mortgage that they can’t pay should get a do over. Regardless of how big the mortgage is, he will cap your payments at 31% of monthly salary. Of course, that is what the reasonableness test of a mortgage was for years. Obama’s plan means that regardless of income level, the home of dreams is within reach. A terrific plan: get a million dollar house and make $1,000 a month. The house payment is only $310 dollars per month. The criterion to get in on this is simple – just take out a loan that you never had a chance of paying back.

This is economic policy on a par with making the minimum wage $50 an hour so that everyone makes $100,000/ year and we have no problems. Ridiculous.

Meanwhile, the vast majority of people who pay their mortgage (and may be struggling to do so) get to foot the bill.


During the election, it was clearly that the overriding issue for the majority was the removal of George Bush. The idea that this would have happened anyway never occurred to most; the important thing was Change. As a result, the election was almost entirely devoid of issues.
Two things were made clear. First was that Obama was going to end the war faster than GWB. The pledge to pull the troops has been replaced by a vague policy of getting the troops out of Iraq in about 16 months – maybe.
The second thing that Obama made clear was that there would be a redistribution of income. Not much was made of it then but this was repeated often. The President is certainly delivering on that promise. He is giving $1,000 per child (more if there are more than 3) to people who don’t pay taxes, paying the mortgages of people who bought houses that they, and providing incentives to states to enroll more people on welfare. This is not economic stimulus.

Friday, February 20, 2009


Representative Pelosi, her husband and an entourage went to Italy at taxpayer expense. Her reason is that Italy is the United States strongest ally in NATO. (She apparently highly values the Italian Army.) Anyway, after castigating the Auto CEOs for wasting money, this pack went to museums, saw the Pope privately, got her grandmother’s birth certificate and otherwise fiddled while the US economy was in flames.
Taxpayers are also paying for another group’s trip to India to commemorate the 50th anniversary of MLK Jr. studying the ways of Mahatma Gandhi. This bunch included some Congressmen, MLK III and his wife, a jazz musician and others.
These are the people (all Democrats to be politically correct) that are telling us that these are tough times and everyone will have to make sacrifices.
They consider the tough times and sacrifices to be for everyone else. They are acting like a ruling class. These Emperors have no clothes.

Thursday, February 19, 2009

Poster Boy

My local newspaper (Newsday) had a story today that praised President Obama's Foreclosure plan. The poster boy for the story was a guy who owned a house worth $240,000 6 years ago. He recently refinanced the house for $428,000. That would mean he received in the neighborhood of $188,000 in cash. His aim was to “do some work on the house” and “build up his business”. The story goes on to say that the work on the house never happened. There is no mention of what went into his business. He is a self employed magician who makes balloon animals. Perhaps he bought a few more rabbits and another hat to pull them out of but it seems unlikely that it went into any business plan. Regardless, his problem is that after the refinance he is no longer able to make the payments. The reporter is in full sympathetic mode and never asked what happened to the $188,000. (Quite an example of investigative reporting.) There seems to be no good reason why he should get any help other than food stamps yet he is held as the exemplar of the programs "needy".
Why should people who took out the cash at the high point get support and get to keep the money, while those who did not get nothing?

Wednesday, February 18, 2009

Under Water

One of the aims of the President’s Foreclosure solution is to provide help to people who have a home that is now worth less than the mortgage. He wants to change the mortgage to reflect the current value because the house was worth more last year than it is worth today. And if it is worth more in the future than it is now does the mortgage revert back to its current terms? Does anyone give any money back? Historically, housing values fluctuate over time; mostly they have increased but fluctuations happen.
It is instructive to look at the option of doing nothing in this situation. Two things are certain under this action: People who didn’t make a down payment will get money; people who did make a substantial down payment will get nothing. Once again, the government is subsidizing the wrong thing.


Our Secretary of State has visited the country where our President spent his formative years and announced that the image of the United States needs to be improved in Muslim countries. These are the countries that spawn suicide bombers, deny women’s rights, prohibit any religious beliefs except their own, seem incapable of any form government except dictatorship and theocracy, cut people’s hands off for minor offenses, and deny both the Holocaust and Israel’s right to exist. This wonderful record indicates to our Administration that it is the United States that needs to improve its image.
Certainly it would be good if the USA had a stellar history and image to portray to the world. But the price of improving this image is the real question. She pledged a new American openness to ideas from abroad, especially the Muslim world. Are the ideas we should be open to about suicide bombers, or women’s rights? She also announced that more development aid was on the way to these countries. With the US domestic economy in its current condition, it makes sense to the administration to send additional aid to an oil exporting country to improve our image. When the tsunami hit the first aid given was by the US; I missed all the Iranian aid to New Orleans.
The images I do remember are the pictures published shortly after 9/11. The pictures were of millions of people in the streets of various Muslim cities celebrating 9/11. Of course, this was before the media determined that Islam was the religion of peace. It was when every TV station was showing panel discussions which invariably included the imam saying: “it is very sad but you must remember that Israel…”
The image that most needs to be corrected is not that of the USA.

Tuesday, February 17, 2009


It was just a few weeks ago when the Democratic Senators signed a pledge never to accept any Senator nominated by the disgraced Governor of Illinois. They very quickly reversed that pledge, had their hearings and accepted Burris. Mr. Burris more than likely lied under oath and certainly is guilty of withholding information. Such is apparently the norm in Chicago politics as shown by several governors and a few Representatives who have worn the orange jump suits. It is fortunate for us all that President Obama was able to succeed in this cesspool without being tainted. Ha!

Sunday, February 15, 2009


Senator Schumer claims that no one cares about a “little, tiny, yes, porky amendments”. This is just another positive proof of how out of touch he is. He and most of the rest of the professional politicians on both side of the aisle have no idea of the world where money is real and not just numbers on an amendment. These “tiny” bits of pork are each millions of dollars. Even he admits they are pork. The reason for them is not to assist economic recovery in any way. They are essentially bribes paid by the politicians to each other with our tax money. Everyone gets to go back home and brag about what they put in the package for the benefit of their financial supporters. This is about these people getting themselves re-elected – not economic policy.
His argument that Republicans were focusing on these things as a reason for not supporting the measure is an outrage. He wants everyone to support the bill and rejects any criticism that large portions are unnecessary. At the same time, he admits that they are unnecessary and have no place in the package. By his own statements, the bill would have the same economic impact without them but the waste involved should be condoned anyway. So, what are they there and why is he supporting this garbage?
Senator Schumer should be looking for another job.

Thursday, February 12, 2009

Rushing to disaster

Rush has to change or go.
Radio is one of the few outlets that can get through the media censorship of any conservative opinion. Radio and a few commentators have brought many issues to the public that would others wise go unnoticed. Unfortunately, some of the commentators have lost their way. Leading the pack of those running in the wrong direction is Rush Limbaugh.

Rush has become a legend in his own mind. His political and philosophical disagreements have become personal vendettas. What started out as a platform for conservative thought has become a daily episode to feed his ego and preach to the choir. Pointed satire has given way to snide comments and forced laughter that do nothing to promote his political position. The man is an embarrassment to anyone with a conservative thought. Rather than using his pulpit to promote alternative solutions, it has become a daily negative monologue that feeds the media a steady diet of his easily refuted rants.
The most recent example is his rant about the Florida woman at the Obama photo op. A tape is all over the Internet. It is decidedly not what Rush said it was. She simply did not say what Rush heard. Then there is his Operation Chaos debacle in the primary. The Stop Hillary Express was an exercise in personal dislike and ego gratification that did nothing other than to energize lots of Democrats that never would have voted. His audience of worshipers loves it, agrees and believes his every word. There is no real effort to convince the occasional undecided voter that might tune in.

This is not about compromising on principles. It is about presenting them in a manner which can actually have an impact. We have a minimum of 4 years of this President and 2 years of this Congressional majority. For any change to be made, positive alternatives have to be offered to the people undecided. The majority has proven to be influenced by rational discussion that is well presented (see Reagan/Obama). That two such different philosophies can win proves the point. Rush’s brand of faux-conservatism can never be the majority and he and his audience needs to figure that out.

What happened?

The President elect earned his victory. But the euphoria that still surrounds it has generated a cycle of analysis which has completely misinterpreted the results. His victory had many fathers:

The Republican Party ran the worst possible candidate they could. They ran the one man of all their initial candidates that could be most closely associated with incredibly unpopular George W. Bush. They created situation where the candidate had to run against to people, allowing Senator Obama to trumpet a “Change” that meant one thing: Change George W. Bush.

Senator Obama was a terrific candidate for television and a good speaker. Senator McCain’s ratings in these areas are positive only in comparison to Bob Dole.

Senator McCain, the worst available candidate, ran a horrid campaign. He had no real thrust; presented no reason for offering his candidacy and seldom stuck to an issue for long.

Senator Obama made the politically correct decision not to accept public funds. He did break his initial promise but it was the correct thing for him to do. It enabled him to outspend McCain about 4:1.

Senator Obama had overwhelming media support. Senator Obama was the least vetted candidate in since Jimmy Carter. His policy proposals were never analyzed for cost, he was allowed to skate on his past associations ,and the media went to great lengths to ridicule McCain's running mate.

The race factor was a significant benefit to Senator Obama and this was ably assisted by Limbaugh's "Stop Hillary Express"

Issues played almost no part in the election. War, Illegal immigration, fixing the tax structure, and correcting the health care and social security messes were all secondary to the issues above.

Wednesday, February 11, 2009


While Congress fiddles with how to give away money, how much pork goes to where, and how much 3 GOP Senators get as a payoff, here a compromise suggestion that will save money:
For one year, collect no federal tax on anyone who is making less than $250,000 per year. People get about 25% more income each week to buy things, pay their mortgage, or save. The money is immediately added to the economy.
If people buy things, that’s good. It stimulates demand – like a stimulus package is supposed to. If people pay their mortgage, that’s good for housing prices and the value of mortgage securities. If people save it, that is good for the credit markets.
Congress gets to still tax people earning over $250,000 (one of their goals), but those people don’t pay anymore than they are paying now.
The only loser is Congress who does not get to waste the money the way it wants to.

Tuesday, February 10, 2009


President Obama continues to his record of appointments. He has chosen a series of people who have chosen not to pay their income taxes until caught. Most recently, he announced his Economic Advisors. These appointments included Penny Pritzker.
Ms. Pritzker was the CEO of Superior Savings Bank. According to the FDIC report, Superior collapsed due to “the failure of Superior Bank was directly attributable to the Bank’s Board of Directors and executives ignoring sound risk management principles” and cost taxpayers hundreds of million. In addition to this experience, Ms. Pritzker has another qualification for this post. She was the National Finance Chair of 2008 Democratic Party presidential candidate Barack Obama’s campaign. Change we can believe in.

Thursday, February 5, 2009

What now?

In the last Presidential election, a very unpopular President, a weak and uninspiring candidate, and the overwhelming bias of the media resulted in the election of a Democrat as President and secured an overwhelming majority in Congress. This interrupted the steady national trend of the last 30 years towards conservatism and away from government dependency.
From Reagan through Gingrich there had been a meaning and a philosophy which was attractive to a majority of Americans. And, there was a spokesman; someone who could get past the media censorship and make a case for what was to be done.
Even the Clinton interruption was minor. His elections can be attributed to unpopular and uninspired candidates and a third party candidacy that split the conservative vote. But the country quickly elected a conservative Congress which governed while Clinton “fiddled”.

While most of the true believers of the mid-90’s kept their promise to return to private life, the remainder lost their way. Professional politicians were created; spending went off the charts; there was no spokesman or leadership. With no real aim, they quickly lost Congress and then the Presidency.

How does this get better?

First, whatever group still remains that believes in free markets and avoiding the dependencies of the redistributionist philosophy that is currently in power, needs to talk about what they stand for. This group also needs to find a leader - someone who can string a few words together (as opposed to the last 5 presidential elections).

Regardless of where this person is, everyone needs to speak with a reasonably consistent voice; do the talk shows, get out to the people – all the people – with their ideas. State simply what should be done and why. Don’t allow the media to portray the negatives – offer real alternatives. Have a positive plan. “Just say No” is not a political platform. How does a Contract sound?

This message needs to emphasis things that are important to everyday life - Job creation, Taxes, Schools, Medical Care. The basis of what needs to be done is Economics. The social agenda is very nice but does not appeal to the majority of voters. Gay marriage is just not a significant issue to people who are overtaxed, unemployed, have no medical insurance and kids who can’t read.

The media outlets that conservatives do are many radio voices. These guys are extremely popular but spend much of their efforts preaching to the choir. This incredible energy needs to be turned from self congratulation and argument into making a cogent presentation. Efforts such as the “Stop Hillary Express” do nothing to convince anyone of the correctness of a position but do turn people off – and it worked out so well.

Meanwhile, there is a Liberal President. The real differences should be presented as real differences, again with positive options to correct the many real problems. Even though the differences are great, this cannot be allowed to devolve into petty personal hatred (See the “Stop Hillary Express”). That will only lose the public relations war, again.

Monday, February 2, 2009

Tax Payers

The transparency of this Administration is quite obvious. It is clear that President Obama’s nominees believe that paying taxes is the job for the middle class. He has proposed a Treasury Secretary who doesn’t pay taxes until he is caught and he was approved. His nominee for H&HS Secretary doesn’t pay taxes until he is caught but he will be approved too. Incredibly, they are both taking credit for paying back taxes (after they were caught), like that makes it all better. These were not complicated misapplications of the convoluted tax code. These guys collected income and simply did not report it. This is pretty basic error and something that – for instance - the head of the IRS should be expected to know and would be laughed at if used as an excuse in Tax Court.

While both have admitted to their errors and the Democrats have been falling over themselves in the media trying to explain away these small oversights because “we really need these guys”. The reality is that the country needs people who pay their taxes even more than it needs people who illegally avoid them.


Congress and the President seem to be in a desperate rush to save everyone in foreclosure. However, there are several reasons for foreclosures and blindly giving everyone money will not help anything. While people have health issues or some other catastrophe that can severely impact income, there are other reasons.
One of the primary reasons for that the local foreclosure rate is the huge increase in value that occurred in Nassau and Suffolk . As a result, many people refinanced their mortgages in order to access this increase in equity. How many of the foreclosure are in this category? Why isn’t this reported? Where did the money go? Why should these people be helped unless that cash out is returned?
Another reason is that people bought homes they could not afford. When Fannie Mae changed the rules, any borrower could qualify for almost any amount. That does not mean that people had to buy the largest home they could find. For the largest purchase of a life time, some level of care or prudence should be exercised. Stupidity should have no claim on government funding.


A relatively unknown woman from up north has been appointed to the US Senate by Governor Patterson. Her qualifications include being able to see Buffalo from her house, being a hunter and liking the outdoors. Sounds pretty familiar. The skits on SNL are eagarly anticipated as is ridicule by the press. Or is that a one way street?

Friday, January 30, 2009

Mortgage Market

What is the target for the mortgage market? The constant blather is that the market needs to open up. But the paper and TV ads are still hawking mortgages and the no longer daily mail still contains offers. The difference is that borrowers apparently have to be qualified to obtain a loan. Banks are providing mortgages but are forcing people to make downpayments, prove their income and other similar restrictions. Our legislators apparently do not consider this open enough and want the return to requiring borrowers to be able to fog a mirror. More trouble awaits.


It would be instructive if the reporting would properly define the money Washington is giving away.
The mortgages made according to Freddie Mac and Fannie Mae rules and purchased by them are guaranteed by the US Treasury. The federal government had an obligation to make the banks whole for any of those mortgages. This is not a bailout. It is paying a contracted debt - ill conceived though it may have been. Of course, they could have repurchased all of those mortgages for less than half of the additional “bailout” money. The difference went to pet projects of our bipartisan scoundrels in Congress.
Money given to the auto industry is a true bailout. Giving non-competitive companies large amounts of money, with no reason to suspect that money will resolve their operating problems, is a truly absurd. What will make the Big Three any more viable when that money runs out? The problem is their non-competitive labor contract. No amount of money will make then viable when their labor costs to build the same car – if they could build the same quality car – are over $4000 per car higher.


What has happened to the idea of investigative reporting? We are in the midst of the greatest economic story in 80 years and the best analysis of what happened that the media can come up with is that it is the result of greed and lack of regulation. As attempts are made to recover from this debacle is would be instructive to know the answers to the traditional Who, What, When, Where, Why, and How questions. This can only help to identify what went wrong, who to listen to (and who not to listen to) and what to do next.
To help the next budding Pulitzer prize winner:
Who at Fannie Mae and Freddie Mac change the time tested lending guidelines (20% down payment, etc.) necessary to obtain a mortgage back by these agencies? This Agency guarantee placed the full faith and credit of the US treasury behind the loan.
Who in Congress or the Executive Branch appointed these people?
Where are the people now? How are they involved in any potential "solution"?
When were these guidelines changed?
When the Banks made these mortgages according to the Agency guidelines, were they wrong to make loans mortgages that were full guaranteed by the US Treasury?
Who in Congress blocked any investigation into what was happening? Where are they now?
Why is the money given to the Banks a “bailout” if the mortgages were guaranteed? Why isn’t that called fulfilling the contract? Does the money provided exceed the total of the loans made?
Now there are efforts to help the borrowers retain the homes even though they can’t pay the mortgage. But before that happens, does anyone know:
How many of these loans were refinances where the borrower received cash based upon the appreciation in the house value. Where is that money? Why should anyone who did a cash out refinance get relief unless the cash that was taken is given back?
How many of these foreclosures are on second homes or investment properties? Why should the government guarantee bad investments?

Answers to these questions, and the many questions that further investigation with generate, will go a long way to clarifying the situation so that the proper course came be charted, determining who to listen to in the future, and ridding ourselves of the Congressional dolts who put us in this situation.


The editorials about Geithner is beyond belief. They support a Treasury Secretary nominee who is a tax cheat. “Careless mistake” is not a defense that the Treasury Secretary should employ. The head of the IRS should have a clean record – at least on tax payments.
Your defense incredibly compares his “error” to the size of the bailout and determines it “just isn’t a big deal”. What percentage of the bailout has to be stolen to qualify as a big deal? Madoff?
Presidents should be given some latitude to assemble the team they want”. The issue is whether this concept applies only to President Obama, to any Democrat, or whether the same courtesy would apply to a President of any political party.

What help?

Once upon a time there was economic turmoil. An unpopular President was turned out and a new messianic figure was installed and immediately went to work. That time (1932), President Roosevelt gave us the WPA, CCC et al, an alphabet soup of Federal Agencies and their accompanying regulations. The Federal Government expanded exponentially. The results are instructive. After 8 years of this furious action, the unemployment rate was still over 17% (Bureau of Labor Statistics).
Based upon this result, there is no reason to for any of our elected officials believe that this package will have the desired impact.
But they plod on under the same plan: The Government extracts money from the economy, passes it through the Federal bureaucracy and (re)distributes it back in the economy under their rules. The result is more debt, the amount of money is reduced by the mechanics of the government distribution, and there are more regulations to stifle industry.
The answer is to spend less money at every level of government. There is a war that the incumbent promised to stop (now that will take 16 months), there is an endless list of things that the government is involved in that it shouldn’t be doing and our politicians all have their pet projects which should be investigated. The list of expenditures involved in this package should be made public in excruciating detail. The public must be made aware of how these funds are spent.


The President signed a bill that allows states to set individual regulations on car emissions. This is a worthy goal but it is consistent with many government actions in that the consequences are not considered. The immediate result of this one is that there are 10-12 states that are poised to write their own regulations. Each is guaranteed to be different. These differing standards will have to be met in a combination of ways. Car emission systems will have to be different from state to state. Detroit will have to make different versions for each state. Auto manufacturing will become less efficient and more expensive. The companies suffer and the buyer will pay more. The other thing that will change is gasoline production. Without having any sympathy for the oil companies, it is clear that a limited number of refineries will have to make more different types of gasoline. This will make that process even less efficient and it is a certainty that these companies will simply pass along any additional expense. Regional shortages are also a probability as it will be impossible to reallocate gas to where it is needed because it will not be the same product.

Equal Pay

The transparent Administration is living up to its promise. It is transparently paying back the lobbyists that supported its campaign. This time it is with the Equal Pay amendment. This Act is based upon well publicized headlines from studies showing that women earn less then men. The immediate conclusion is that there is widespread discrimination in the workplace. But these studies only compare the total salaries of men and women and the hours worked to identify this difference. No mention is made of a comparison of men and women in the same job in the same company with the same seniority. Where anything more specific is cited, comparisons are based upon “similar” jobs – where “similar” means jobs that the study thinks are the same or should be paid the same. The resulting misinformation is used to generate outrage at the companies who are discriminating.
This is not to advocate discrimination of any type. Only that the problem are we trying to solve should be properly identified before enacting legislation requiring businesses to spend more money to fill out more forms. This does not help economic recovery. It will help to generate lawsuits.

Sunday, January 18, 2009


What has happened to the idea of investigative reporting? We are in the midst of the greatest economic story in 80 years and the best analysis of what happened that the media can come up with is that it is the result of greed and lack of regulation. As attempts are made to recover from this debacle is would be instructive to know the answers to the traditional Who, What, When, Where, Why, and How questions. This can only help to identify what went wrong, who to listen to (and who not to listen to) and what to do next.
To help the next budding Pulitzer prize winner:
Who at Fannie Mae and Freddie Mac change the time tested lending guidelines (20% down payment, etc.) necessary to obtain a mortgage back by these agencies? This Agency guarantee placed the full faith and credit of the US treasury behind the loan.
Who in Congress or the Executive Branch appointed these people?
Where are the people now? How are they involved in any potential solution?
When were these guidelines changed?
When the Banks made these mortgages according to the Agency guidelines, were they wrong to make loans mortgages that were full guaranteed by the US Treasury?
Who in Congress blocked any investigation into what was happening? Where are they now?
Why is the money given to the Banks a “bailout” if the mortgages were guaranteed? Why isn’t that called fulfilling the contract? Does the money provided exceed the total of the loans made?
Now there are efforts to help the borrowers retain the homes even though they can’t pay the mortgage. But before that happens, does anyone no:
How many of these loans were refinances where the borrower received cash based upon the appreciation in the house value. Where is that money? Why should anyone who did refinance get relief unless the cash taken is given back?
How many of these foreclosures are on second homes or investment properties? Why should the government guarantee bad investments?

Answers to these questions, and the many questions that further investigation with generate, will go a long way to clarifying the situation so that the proper course came be charted, determining who to listen to in the future, a ridding ourselves of the Congressional dolts who put us in this situation.

Saturday, January 3, 2009


They media (print and television) have completely lost any semblence of impartiality. The overwhelming media support given to Obama should have embarassed even Barbra Steisand. Thanks to the media and the incredible unpopularity of George Bush, we now have the least vetted President-elect since the advent of radio.
Any criticism of Obama's history was branded as racist while SNL could say anything about McCain/Palin (even ridiculing an autistic child) which were reported as news the next day. It is interesting that SNL has been criticized for their take on Gov. David Paterson but, of course, people from his party are off limits.