There's My Two Cents: September 2008

Tuesday, September 30, 2008

The First Step In Actually Fixing Something

Good news - one of the things I've been chanting about as part of the fix has apparently been implemented, according to Powerline:

As the economic crisis has deepened over the last several weeks, a number of knowledgeable people have told me that the simplest thing the government could do that would have a significant effect on the availability of credit is to ease the "mark to market" rule. A couple of hours ago, the SEC did just that.

Technically the SEC issued a clarification of the rule, to the effect that banks are not necessarily required to write assets down to the current market level. Rather, "[w]hen an active market for a security does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable."

The mark to market accounting rule has been a significant cause of the drying up of credit. Currently, there is no market for a broad range of financial instruments that are backed by mortgage portfolios. Under the old version of the rule, banks had to value such assets at zero. That's not right; most of them ultimately will have value. But currently, given the uncertainties surrounding the subprime market and some of the instruments themselves, no one wants to buy them.

The effect of such asset write-downs is that the amount of money the bank is allowed to lend is reduced. Thus, the SEC's clarification to the rule should have the effect, in the immediate future, of freeing up a considerable amount of credit.

The real threat to the broader economy comes from the freeze-up of credit markets, not the fact that a few private institutions that gambled heavily on mortgage-backed securities may go broke. If revision of the mark to market rule has as much impact on credit markets as many have predicted, it may strengthen the resolve of those who think there are better solutions to the problems in our financial markets than a $700 billion bailout.

This is great! Now, if we could just have some tax cuts, dismantling of Fannie and Freddie, and the GOP's idea of insurance for bad debt, and we'll hopefully be in business. Let's get over this idea of a bailout and get some real work done!

By the way, the Senate is scheduled to vote on a revised package (the House version that just got shot down along with some tweaks) tomorrow evening. Here are the details:

How it will go down…There will be up to 6 roll call votes on the following items:

(1)Motion to concur on the House message, H.R. 2095, Rail Safety;
(2)a Dorgan amendment relating to H.R. 7081, the U.S. - India Nuclear agreement;
(3)a Bingaman amendment relating to H.R. 7081, the U.S. - India Nuclear agreement;
(4)passage of H.R. 7081, the U.S. - India Nuclear agreement;
(5)a Dodd amendment to H.R. 1424, relating to the bailout package; and
(6)passage of H.R. 1424, the bailout.

Get your fingers dialing:

202-224-3121.

From the little bit of information trickling out, there's some good in this version of the package, and potentially a lot of bad. For example, it sounds like there are some tax cuts in there, but there's also a mention of 'sweeteners', which means earmarks. The real problem is the time crunch. We don't even know what's in the bill yet, and they're scheduling just a few hours of debate on it. There could be provisions in there for Democrat favorites such as amnesty for illegal aliens, funding for ACORN or Planned Parenthood, or any number of other things that the Right will not find a pleasant surprise.

I suggest you contact your Senators and urge them NOT to support this bill until all the provisions are made known and can be fully debated. If they tell you it's an urgent matter that needs to be dealt with right away, then ask them why they waited two days from when the House did its vote. This might be something workable...but we need to understand what's involved before throwing support behind it. Again, we need to do something, but we need it to be the right thing.

Earlier this week we saw the House website shut down because of the volume of opposition e-mails to that version of the bailout. That's the only thing that the idiots in Washington understand, apparently, so let's overwhelm the system again.

Get calling!

There's my two cents.

Link Roundup

Here is today's loaded link roundup. Tons of good stuff - enough to keep you busy for days!

Here at home:

Economic news:

Election news:

War on Terror:

Around the world:

There you go!

It's Official: They Planned The Bailout To Fail

Remember how I posted earlier today that the Democrats' actions on the bailout seemed suspicious? That has now been confirmed by Jake Tapper at ABC (emphasis mine):

Yes, House Republicans didn't deliver many votes and 66% of them voted against the bill.

But considering that only a dozen votes needed to switch in order to provide a different outcome, and 95 Democrats in the House voted against it, critics are now wondering why couldn't House Speaker Nancy Pelosi, D-Calif., have assured a different outcome considering how important she said its passage was?

Rep. Hank Johnson, D-Ga., told me yesterday that he felt no pressure at all to vote for the bill.

Politically Drunk on Power also adds this (emphasis mine):

Pelosi and current leadership planned on utilizing this bill to both protect the party against accusations that they were doing nothing, while requiring enough Republican support to target Republicans who went against their constituency and voted for the bill. As Fox News and NBC both reported early this morning, Pelosi approached the freshman members of the Democratic Caucus and some 16 Democrats involved in contentious races and specifically told them that there would be no repercussion if they were to vote against party leadership and vote no to the bailout package. Although Pelosi did not specifically tell them to vote no to protect their re-election bids, the fact that she purposely told them there were no political repercussions to voting against the party could be considered nothing less than a clear message to protect their own asses. Ironically, nearly every Freshman Democrat and Democratic Representative involved in close congressional races voted against the bill. In addition, Pelosi failed to apply any pressure or threaten Democratic Committee Chairs who were opposing the bill. Committee Chairs Conyers, Filner, Thompson, Green and Peterson all voted against the rest of Democratic Leadership.

Democrats have claimed that many of these 95 saw the wave of Republicans voting no and fearful of their own re-election chances, followed suit. Yet, couldn't the same argument be made in reverse. If Republicans saw that over 40% of Democrats were casting "No" votes, the writing on the wall that Democrats would utilize this vote for political fire would be clear. There are only 2 excuses that Democratic leadership can provide for the failure of this bill. Either they must admit that as leaders, "the buck stops here", and they rushed this vote and failed within their own MAJORITY party; or they must admit that they irresponsibly politicized and purposely failed to pressure their own party members to further the parties political power.

In either case, Pelosi should resign from her leadership position for a clear failure to lead during a period of crisis and failure to deliver on a single campaign promise from her parties platform 2 years ago. In addition, new Democratic Leadership working with Republican Leadership should immediately remove every single member of the Senate Banking Committee and House Finance Committee and install new committee leadership.

[I'll post the actual links if/when I find them.]

I agree with Politically Drunk. The main thing I want to re-emphasize here is that this episode clearly shows that the Democrats are far more interested in scoring a political strike than in actually performing their duties and protecting the American economy.

This is why this has been the worst Congress in history, not only in terms of approval ratings, but also in terms of accomplishment. When the main objective is simply the acquisition and retaining of power, the American people get screwed.

That's what the Democrats do.

There's my two cents.

The Obamessiah's Tax 'Cut' Explained

Finally, someone has explained the details of the Obamessiah's promise to cut taxes on 95% of Americans! Check it out (emphasis mine):

During his Fox News interview with Bill O'Reilly, Sen. Barack Obama responded to one question where the statistics contradicted his position by saying that "there are lies, damned lies, and statistics." He then went on to say that 95 percent of Americans would get a tax break under his economic plan. That's ironic, because his comment on "damned lies and statistics" is the perfect commentary on his own plan. Taken with Sen. Joe Biden's novel definition of patriotism, Team Obama is making an argument that Americans have never bought.

The statistics speak for themselves. Only 62 percent of Americans pay federal income tax, meaning that 38 percent get a 100 percent refund of any taxes withheld. So Mr. Obama's 95 percent that will receive money from the government includes roughly 33 percent of Americans who pay no income tax. One-third of Americans pay no income taxes yet would receive a government check of perhaps $1,000 or more.

That is pure income redistribution. Some pundits argue that this is Keynesian demand-side economics. It is not. Having the government take money from business entities or affluent individuals and giving it to those who pay no federal income taxes is not Keynesian. It's Marxist.

American voters don't buy Team Obama's arguments. A recent Gallup poll shows that 53 percent of Americans believe that Mr. Obama would raise their taxes. A recent Zogby poll shows a majority of Americans understand that raising taxes will hurt the economy.

Energy prices have pounded the U.S. economy. The recent woes on Wall Street have further shaken our weakened economy. Certain pillars of our economy, such as productivity gains and American ingenuity, continue to be powerful economic assets. But the current debt situation, spending trends, the cost of combating global terrorism, along with the energy crisis, leaves our economy in a truly precarious position.

Most credible economists warn that raising taxes during an economic downturn only makes the situation worse. Given our current economic situation, Mr. Obama's tax plan is the equivalent of pouring gasoline on a fire.

Then we come to the Team Obama fantasy that the Obama plan would cut taxes for most Americans. Yes, Mr. Obama says he will cut rates for lower-income Americans, but will more than offset that by raising taxes on dividends, capital gains, higher incomes, corporations, estates, and payrolls. But most Americans own stock, either directly or through their IRA, 401k or union pensions. Dividend and capital gains taxes will take money from all those. Those Americans on Main Street who own a house or have other investments will be punished by a capital gains tax increase.

Businesses and corporations do not pay taxes; we do. Businesses don't have huge piles of money sitting in the closet that they simply turn over to government when taxes increase. For every dollar that you increase taxes on a business, they simply increase their prices by a dollar. Who then pays the tax? We do. We do, when the product that we bought last week for $20 suddenly costs $21.

Mr. Obama's plan for universal health care and increased spending on just about everything costs hundreds of billions of dollars. To keep his promises to provide those things while eliminating the deficit and giving checks to lower-income families, he will have to raise taxes by hundreds of billions of dollars. But if lower-income Americans receive a check for $1,000 under the Obama plan yet have to pay $2,000 more when buying food and clothes, they are worse off.

Affluent Americans have not had a tax holiday during the Bush administration. Most analysts agree that the affluent pay more under Mr. Bush. In 2000, the top 1 percent of earners paid less than one-third of all income tax; now they pay 40 percent. The affluent already carry more of the burden.

The ancient Roman philosopher Pliny the Elder once said, "In wine there is truth." It means that people tell you what they really think once they have a couple of drinks.

I don't think Mr. Biden was drinking on the campaign trail last week, but it was a rare moment of complete candor when he told ABC News that people who are well-off have a patriotic duty to pay higher taxes. That perfectly states the liberal Democratic philosophy that those who do the right things in their personal life to make more money have an obligation not only to pay more taxes (which they do even under a flat tax because 17 percent of higher-income is more than 17 percent of lower-income), but that they should pay an ever-higher additional percentage on top of that. Liberal Democrats consider it patriotic to pay more taxes, and have a consistent record of voting to help nurture our patriotism for us.

That reveals what is really going on here. The statistics don't lie. Team Obama's plan is not economically prudent, and it's not a patriotic tonic for what ails our economy.

This was written by Ken Blackwell, a senior fellow at the Family Research Council, the American Civil Rights Union and the Buckeye Institute in Ohio.

This is exactly the message that McCain needs to get out. Obama's promise to cut taxes on 95% of Americans makes for a great sound byte, but the reality is that even if he does make that cut -- and I wouldn't hold my breath for that, given his track record -- he's promising to raise just about every other tax, as well as allow Bush's 2001 and 2003 tax cuts to expire. The net effect is higher taxes across teh board, even to those same '95%' of Americans. We're going to get pounded by new taxes, courtesy of the Obamessiah's tax 'cut'.

Now you can explain to others why it's a fraud. I know, I know, the Obots won't believe you, and will likely resort to insults when you confront them with facts like this, but the actual intelligent people in this country who genuinely care about the issues will probably be very interested in this information. Spread it widely.

There's my two cents.

The Obamessiah's Fraudulent Donors

Newsmax has an extremely troubling story that truly needs some follow-up investigation (emphasis mine):

More than half of the whopping $426.9 million Barack Obama has raised has come from small donors whose names the Obama campaign won't disclose. And questions have arisen about millions more in foreign donations the Obama campaign has received that apparently have not been vetted as legitimate.

Unlike the McCain campaign, which has made its complete donor database available online, the Obama campaign has not identified donors for nearly half the amount he has raised, according to the Center for Responsive Politics (CRP).

Federal law does not require the campaigns to identify donors who give less than $200 during the election cycle. However, it does require that campaigns calculate running totals for each donor and report them once they go beyond the $200 mark.

Surprisingly, the great majority of Obama donors never break the $200 threshold.

The FEC breakdown of the Obama campaign has identified a staggering $222.7 million as coming from contributions of $200 or less. Only $39.6 million of that amount comes from donors the Obama campaign has identified. It is the largest pool of unidentified money that has ever flooded into the U.S. election system, before or after the McCain-Feingold campaign finance reforms of 2002.

"We and seven other watchdog groups asked both campaigns for more information on small donors," [Massie Ritsch, a spokesman for CRP, a campaign-finance watchdog group] said. "The Obama campaign never responded," whereas the McCain campaign "makes all its donor information, including the small donors, available online."

The rise of the Internet as a campaign funding tool raises new questions about the adequacy of FEC requirements on disclosure. In pre-Internet fundraising, almost all political donations, even small ones, were made by bank check, leaving a paper trail and limiting the amount of fraud. But credit cards used to make donations on the Internet have allowed for far more abuse.

In a letter dated June 25, 2008, the FEC asked the Obama campaign to verify a series of $25 donations from a contributor identified as "Will, Good" from Austin, Texas. Mr. Good Will listed his employer as "Loving" and his profession as "You." A Newsmax analysis of the 1.4 million individual contributions in the latest master file for the Obama campaign discovered 1,000 separate entries for Mr. Good Will, most of them for $25.

In total, Mr. Good Will gave $17,375.

There can be no doubt that the Obama campaign noticed these contributions, since Obama's Sept. 20 report specified that Good Will's cumulative contributions since the beginning of the campaign were $9,375. In an e-mailed response to a query from Newsmax, Obama campaign spokesman Ben LaBolt pledged that the campaign would return the donations. But given the slowness with which the campaign has responded to earlier FEC queries, there's no guarantee that the money will be returned before the Nov. 4 election.

Similarly, a donor identified as "Pro, Doodad," from "Nando, NY," gave $19,500 in 786 separate donations, most of them for $25. For most of these donations, Mr. Doodad Pro listed his employer as "Loving" and his profession as "You," just as Good Will had done.

But in some of them, he didn't even go this far, apparently picking letters at random to fill in the blanks on the credit card donation form. In these cases, he said he was employed by "VCX" and that his profession was "VCVC." Following FEC requests, the Obama campaign began refunding money to Doodad Pro in February 2008. In all, about $8,425 was charged back to a credit card. But that still left a net total of $11,165 as of Sept. 20, way over the individual limit of $4,600.

Here again, LaBolt pledged that the contributions would be returned but gave no date. In February, after just 93 donations, Doodad Pro had already gone over the $2,300 limit for the primary. He was over the $4,600 limit for the general election one month later.

In response to FEC complaints, the Obama campaign began refunding money to Doodad Pro even before he reached these limits. But his credit card was the gift that kept on giving. His most recent un-refunded contributions were on July 7, when he made 14 separate donations, apparently by credit card, of $25 each. Just as with Mr. Good Will, there can be no doubt that the Obama campaign noticed the contributions, since its Sept. 20 report specified that Doodad's cumulative contributions since the beginning of the campaign were $10,965.

Okay, stop to think about that. For someone to give 786 donations of $25 is just silly. Even if you stretched that out over the entire 2-year Obama campaign, you're talking about someone sitting down to donate $25 twice a day! The other guy did the equivalent of three times a day! What about the rest of these unknown donations? Who are these people who do nothing other than sit around donating $25 to the Obamessiah???

But there's more - foreign donors:

The FEC has compiled a separate database of potentially questionable overseas donations that contains more than 11,500 contributions totaling $33.8 million. More than 520 listed their "state" as "IR," often an abbreviation for Iran. Another 63 listed it as "UK," the United Kingdom. More than 1,400 of the overseas entries clearly were U.S. diplomats or military personnel, who gave an APO address overseas. Their total contributions came to just $201,680.

But others came from places as far afield as Abu Dhabi, Addis Ababa, Beijing, Fallujah, Florence, Italy, and a wide selection of towns and cities in France.

Until recently, the Obama Web site allowed a contributor to select the country where he resided from the entire membership of the United Nations, including such friendly places as North Korea and the Islamic Republic of Iran.

Unlike McCain's or Sen. Hillary Clinton's online donation pages, the Obama site did not ask for proof of citizenship

With such lax vetting of foreign contributions, the Obama campaign may have indirectly contributed to questionable fundraising by foreigners.

In June, Libyan leader Moammar Gadhafi gave a public speech praising Obama, claiming foreign nationals were donating to his campaign.

"All the people in the Arab and Islamic world and in Africa applauded this man," the Libyan leader said. "They welcomed him and prayed for him and for his success, and they may have even been involved in legitimate contribution campaigns to enable him to win the American presidency..."

Though Gadhafi asserted that fundraising from Arab and African nations were "legitimate," the fact is that U.S. federal law bans any foreigner from donating to a U.S. election campaign.

A pair of Palestinian brothers named Hosam and Monir Edwan contributed more than $31,300 to the Obama campaign in October and November 2007, FEC records show.

A Newsmax review of the Obama campaign finance filings found that the FEC had asked for the redesignation or refund of 53,828 donations, totaling just under $30 million.

But none involves the donors who never appear in the Obama campaign reports, which the CRP estimates at nearly half the $426.8 million the Obama campaign has raised to date.

Until now, the names of those donors and where they live have remained anonymous — and the federal watchdog agency in charge of ensuring that the presidential campaigns play by the same rules has no tools to find out.

Where is the outrage? Where are the calls for investigations? Who is going to look into this to ferret out the truth? Why is Obama keeping this information secret - what is he hiding?

I suspect that much of this is coming from a group of George Soros employees sitting around with a handful of AMEXes working full-time to funnel money to the Obamessiah, but that's just a hunch. Regardless, we deserve to know where this money is coming from, and why Obama is hiding the sources. These are troubling details that the American public should know before election day arrives.

There's my two cents.

More Bailout Follow Up

Now that we've all slept on the House rejection of the bailout plan for a night, things seem to be coming a bit more into focus. The first thing to note is that the sun did indeed rise, and life is continuing. Michelle Malkin has the early-morning roundup:

Don't look now, but stocks are down a whopping 1 percent in Germany and are flat in Britain and France.

U.S. markets are poised to open higher.

Most Asian stock markets are holding up well too. The Shanghai Composite closed down just 0.2 percent; the Hang Seng closed up 0.8 percent; Bombay's BSE 30 closed finished the day up 2.1 percent.

Flashback: "The US stock market could suffer a devastating crash with shares losing a third of their value this week if Hank Paulson's financial bailout plan fails, US Treasury officials have warned."

Are you seeing why it's wise to question what these Treasury officials say? As I posted last night, this is a very big deal and needs to be addressed quickly, but it is not quite to the level of panic-inducing hysteria that some think it is. Just keep calm, and pay attention to what's going on. We need the right solution, not the first one thrown out by the people who would most benefit from it.

Here's a brief recap of the voting yesterday. The general consensus from House leaders was that the bill would probably pass. If all of the Dems had voted for it, they would have passed it. Even so, the Dem leadership figured if they could turn a net total of 12 Rep votes, they'd get their bill. It didn't happen, and wasn't particularly close, either. What happened after that was what I consider the quintessential problem with Congress.

House Reps took the microphone and whined about how Pelosi got up right before the vote in a hyper-partisan tirade that turned off some Reps. Seriously?? That's the best you can come up with?? That's got to be the lamest excuse I've ever heard! Sure, Pelosi took a potshot...what's new? She's an ultra-Left hack, and has always been an ultra-Left hack. If you expect anything better of her, you're an idiot. Yes, they were ill-advised and ill-timed remarks, but to suggest that it was her words that scared off that handful of (apparently spineless) Reps who were otherwise going to support the plan is to call all of us Americans complete idiots. You've got to be kidding me!!! With all the legitimate problems with this bill, and came up with this. It's pitiful.

Honestly, my opinion of House Minority Leader John Boehner has dropped by about 100% since Friday. He went from a defender of the American people to ridiculous and insulting. Very bad move (and I am not alone on that opinion). The Dems are rightfully mocking Boehner's suggestion, saying that they'd be happy to talk 'uncharacteristically nice' to the Reps if they'd come back and vote for the bill. Boehner is dead to rights on that one...it was one of the most stupid things I've seen Reps do for a long time.

Anyway, don't get me wrong, I'm not taking the Dems' side on this. Let the fact once again be made clear -- and I will repeat this as often as necessary to get the truth out there -- that they had the votes to pass this bill without any Rep support at all! This was their baby, no question about it. The fact that 95 Dems voted against it (a full 40% of the Democrats in the House) illustrates that Nancy Pelosi is either the worst Speaker in the history of the House because she failed to keep her party in line...or that she really didn't want this bill to pass.

That's right, I'm beginning to think this was a Democrat rope-a-dope. Here's the short version: they set up the bill, used the crisis for political advantage, bullied a bunch of Reps into supporting it, and are now out there blaming them for its failure. Keep in mind that this is all happening about a month before a major election, the primary concern of voters right now is the economy, and the media will continue to propagate the lie that it was solely the House Reps who killed the bill. It's at least plausible, is it not? Now, consider the fact that only 8 of the 44 Dems who are facing re-election in tough districts in November voted for the bill...then consider the fact that Barack the Obamessiah himself never truly came out (officially) in favor of the bill. Is this starting to look like a setup to anyone else?

Maybe I'm giving the Dems too much credit, but the numbers and results just don't add up to me. Something else is going on.

If nothing else, McCain is right about Obama's effect on this bailout in this statement:

"When Barack Obama released remarks today that praised the passage of America's economic rescue plan, just before his allies in Congress voted to kill it, it revealed just how out of touch Barack Obama has been during this crisis. As our country stares economic disaster directly in the face, Barack Obama has called for higher taxes we can't afford, more federal spending we can't afford and shown failed leadership we can't afford."

This is something he needs to continue repeating, and he needs to find a way to drill it home in the upcoming debates. If he can do that, Obama will be finished in November.

The other thing that really irritates me is the way the Dems are portraying this. For example:

"Democrats are doing our part to improve the administration's flawed plan, but we will need the support of more Republicans to get this done," Senate Majority Leader Harry Reid, D-Nevada, said in a statement.

"With the stock market recording its largest point drop ever in the aftermath of this vote, it has never been more clear how important it is to put politics aside and come together to stabilize our economy for all Americans," Reid said. "I hope House Republicans will reconsider their vote and decide to put country first."

Okay, so Reid is calling Republicans un-American by voting their conscience. He's not the only one. Pelosi did it last weekend before the vote even occurred:

She also vocally attacked Republicans, saying they were unpatriotic in refusing to go to the table earlier in the week, but said she is glad the two sides are nearing a deal.

Where is the outrage in the media? Where are the calls for resignations and apologies? Why is it okay for the Left to call the Right un-American or question their patriotism, but it's not okay for the Right to do the same with the Left? This is hypocrisy at its finest, on full display for anyone with an objective mind to see. Pelosi's quote also insinuates that Reps refused to attend this meeting when the fact of the matter is that they were not even invited. This is the hypocritical, lying, double standard that has become standard operating procedure for the Left.

Personally, I have no problem questioning the patriotism of the Left, and I sincerely hope more elected Republicans grow a spine and do the same.

Anyway, back to the bailout. I complain a lot about what the first bailout plan included, so what are my ideas for solutions? I've seen a few things that I believe would fix this mess in a hurry, and they include:

1. suspend capital gains taxes and reduce corporate taxes (temporarily, at least)
2. reform the mark-to-market rules of establishing value
3. pull the bad debt from failed mortgages under the FHA and establish insurance on it

Here are some details to explain those suggestions:
1. Suspend taxes: Duh. Eliminating taxes will suddenly free up private capital, which will flood into the market and provide instant liquidity. Even if the suspension is for only a year, it will have an immediate effect.
2. Mark-to-market:

By a relatively simple accounting adjustment, troubled banks' assets and capital could be increased and credit kept available. Accounting purists, cover your ears. Eyes glaze and minds wander when I say balance sheet, so let's use the acronym BS, a more appropriate description. BS's have two sides: assets on the left, liabilities and capital on the right. Banks are required to maintain certain levels of capital (the difference between assets and liabilities) in order to make loans. When assets shrink, capital shrinks. When the ratio of capital to assets drops to a certain level, (think ten-to-one), banks are not allowed to make loans. And if it drops too low, they can be classified as insolvent. This can happen overnight, and it did.

Wall Street and the markets tend to fluctuate wildly based on emotion and speculation (both up and down), and as such are inherently inaccurate. Mark-to-market was implemented to try to stabilize that through a new way of establishing the values of assets based on the skepticism of a potential buyer rather than the optimism of the owner. Either way, asset values are tricky to assess, and subject to manipulation. The unintended consequence, then, allowed fraudulent corporate leaders (think Enron, Fannie/Freddie) to inflate their asset values well beyond what they were actually worth.

Suspending the mark-to-market rule would allow banks and accountants to revalue their assets based on more sound criteria than the euphoria or panic that pervades the floor of the New York Stock Exchange minute-by-minute. Sub-prime mortgages will likely have much higher values if considered in a longer-term perspective -- such as hold-to-maturity. I believe that the vast majority of mortgages will perform in the long term.

Presto. Up goes assets; up goes capital; banks can make loans again.

3. Insurance:
This is one of the House additions to the bailout plan, and could work very well for certain kinds of debt (bad mortgages). Financial guru Dave Ramsey seems to like mark-to-market in principle, but explains how it worked out badly in recent weeks:

Merrill Lynch was sitting with $30 billion tied up in sub-prime loans with houses. Stupid! They get what they deserve for doing that, and I'm with you on that. Those houses didn't become worthless all of a sudden because those people couldn't sell their bonds. Since they couldn't sell them, they basically gave them away for 22 cents on the dollar. Now do you think all those houses lost 80% of their value underneath that deal? No, they didn't, so they gave them away for 22 cents on the dollar (about $6 billion total) because there was no market for them. Nobody wants to buy sub-prime bonds because they suck. They're junk bonds. But at 22 cents on the dollar, it's a bargain because even if you foreclosed on every one of the houses in there, you'd probably get $20 billion back out of $30 billion, and so the company that bought those for $6 billion got a deal! But there's no market for them. That's where these companies are stuck. They can't sell this stuff, but accounting-wise, they've had to mark it down to market and it's frozen the marketplace.

Economist Wesbury is saying that if we change that one rule and don't force them to mark down to market value and just let them hold on to all the stuff, and say just on sub-primes for this period of time you can change that rule -- a temporary change -- that'll free the market up. It's seized right now; it's frozen. This will thaw it out and get it going again. He says that'll solve 60% of the problem ... and I think he's right.

He also offers this solution:

I don't like giving them any money or any help with my tax dollars. But I'd rather see that than see the whole thing turn completely upside down in a fruit basket turnover than have a whole meltdown or something and freak out here in the middle of the election season. Why don't we just take the FHA insurance program and extend it across these sub-primes? What that means is that you and I are guaranteeing the lender that they're not going to lose as much or any money on those mortgages. Now I don't like guaranteeing them, but I like it better than buying them. In other words, instead of $700 billion in tax-payer debt going out there to bail out these companies, just extend the insurance out. You could probably do that for less than $40 billion. It's like a 95% savings!

If the government insured those mortgages, they would then be marketable. And could sell them. And the companies would stay afloat. And we, the people, don't have to get into the mortgage business. Now we're going to get in there a little bit because of the insurance on those getting foreclosed on. But foreclosures aren't causing this. This is being caused because these companies are frozen and seized up. We've got to let some of the steam come off and put some oil in there to get this thing moving again. We can do that without going into debt $700 billion.

I think that there are a lot of Americans that understand the basics - we've got to do something, and that probably means some taxpayer money on the line. Fine, we get that, and we understand that sometimes you have to spend money to make money. The rub, of course, is how much money taxpayer money is on the line. I am much more likely to get on board with $40 billion than $700 billion, and I think a whole lot of people would agree with me.

What it all boils down to is a failure of just about everyone in Washington, for decades. Our political leadership has failed utterly, and is so disconnected with Americans that none of them are really trusted anymore. Personally, I trust the handful of people whom I know for a fact have stood for financial responsibility (Jim DeMint, Marsha Blackburn, Jeb Hensarling, Sam Graves, Tom Coburn, Mike Pence, and a handful of others), but they are depressingly few and far between. The constant stream of attacks from the Left in public office and the media has not only eroded the trust in Bush, but also in our entire political leadership. That lack of trust is a big problem that will have to be addressed for the future of our nation.

But, it is also a huge opportunity. Historian Victor Davis Hansen:

The stage is set for someone to play Washington, Lincoln, or Churchill. An entire generation of leadership is failing, as the world watches aghast.

Greedy Wall Street hot shots are worse than discredited.

Rep. Nancy Pelosi at the hour of national crisis proved why she may well be the worst House Speaker in the history of the Congress.

The more Sen. Dodd and Rep. Frank shout and demagogue in front of the cameras, the more desperate we know they are to talk their way out of their own past reckless and unprincipled conduct.

Lame duck President Bush is spent, tired and knows only that he will blamed for something he tried to prevent.

Sec. Paulson thought he could bark out orders at Treasury and expect underlings to snap to attention as they did once for him as Goldman Sachs. And when they didn't, in vain he went to one knee — arrogance to fawning in a matter of hours.

The utterly corrupt Left-wing members of the House who green-lighted the thievery at Freddie Mac and Fannie Mae that started the panic will be lucky if they are not targets of a special prosecutor.

Free-market Republican House members gave high-minded speeches and then panicked in the face of populist outrage just when the country needed their calm, hand-in-glove with Democratic House ideologues — the one claiming we are getting socialism, the other robber-baron capitalism.They are as captive to public outrage over the bailout now as they soon will be to the next phase of outrage over shattered retirement accounts.

Barack Obama is again voting present, clueless while trying to act cool, waiting for calls, and issuing hourly contradictory statements adjusted to perceived CNN punditry and Drudge headlines.

Somewhere, somehow the American people need a steady voice of experience to rise above politics, stop the bickering, calm the country, get the proper guarantees passed, promise the needed reform — and so lead and inspire.

Can John McCain seize the moment and transcend the campaign?

Personally, I doubt it. Even if McCain wins in November, he's not exactly a favorite of the Right (he's only got his base of support due to Palin), and he is only barely tolerated by the Left (because he's not one of them all the time). Still, Hansen is right that the vacuum of leadership is gaping. There are a lot of Americans who want someone to step into that vacuum to provide compassionate, principled leadership on the economy, national security, and the promotion America as the greatest nation on the planet. Who will it be?

I hope we find out sooner rather than later.

There's my two cents.

Sources:
http://michellemalkin.com/2008/09/30/carnage-in-the-markets-carnage-in-the-markets-carnage-in-the-markets-oops-never-mind/
http://corner.nationalreview.com/post/?q=MTY3OTg4MzMwNTUxYzg5ZWJiY2EzMzJkODM1Y2VlM2M=
http://hughhewitt.townhall.com/blog/g/f59bcc0a-4d5d-44e2-91ed-b7dc006bcafa
http://hughhewitt.townhall.com/blog/g/0dd06a57-87f4-4c75-ac5f-71bdf80d7b18
http://hughhewitt.townhall.com/blog/g/b95e56cb-b4f9-47ff-9add-e8f582c334fe
http://hughhewitt.townhall.com/blog/g/f98279a6-002b-4577-98b6-f246e0d00d8d
http://www.necn.com/Boston/Politics/Pelosi-matter-of-making-a-decision/1222556313.html
http://poligazette.com/2008/09/28/democrats-play-public-pelosi-calls-gop-unpatriotic/
http://www.cnn.com/2008/POLITICS/09/29/bailout.fallout/?iref=mpstoryview
http://article.nationalreview.com/?q=ZTg5YTc0MWQ3NDM3MjcxYjVmYzI1ZjQ0N2Y5MmEyOTg=
http://article.nationalreview.com/?q=MTBjMWVlNjExZGI4ZDMwNzYzNzBkNDU3YmQ4MDU5ZTQ=
http://www.americanthinker.com/2008/09/the_trilliondollar_question_ar.html
http://righttruth.typepad.com/right_truth/2008/09/whos-un-american-whos-un-patriotic.html
http://www.daveramsey.com/etc/fed_bailout/economic_cleanup_10887.html
http://corner.nationalreview.com/post/?q=MTgxNDYxN2IzODE3NWM1MmIyMGUxMTY5ODQ3OGY2Yjc=
http://corner.nationalreview.com/post/?q=NWVkNmRkMjU0YTlhYmI0MjEyYTk3NGQ0ZmI2MGY0ZjU=

Monday, September 29, 2008

A Little Perspective On The Crisis

This mess is bad, no doubt about it. But, don't give in to the panic-inducing hysteria quite yet. Here's some perspective:

Today’s stock market drop is a record point drop, but does not even crack the top 10 single-day percentage drops in American history.

Let’s stop pounding the panic buttons.

***

On FNC right now, Neil Cavuto emphasizes that lending is going on and puts a damper on Heather Nauert’s panic-button heaving about credit-freeze anecdotes.

Are there businesses getting turned down for loans? Yes.

Here’s a novel thought: Maybe banks are finally learning they shouldn’t fork over money to bad risks.

***

Reader Jamie e-mails this link to a history of US stock market crashes and adds:

I like that the headlines are calling today’s crash the “worst ever.”

In terms of absolute points, sure. In terms of percentages in a single day of trading, 1987’s stock market crash was far worse, and the NASDAQ slide of 2000-2002 was massively worse.

I think news media just can’t resist panic mongering. I imagine them all in the washroom of their office when the soap pump runs out of soap and they all stand around for 10 minutes going, “DOOOOOOOOOM! DOOOOOOOOOOOM!!” until the janitor shows up and puts in more soap.

So, don't go taking your money out of the bank yet, and don't freak out. This is very serious, and will have to be addressed (and we'll likely feel some pain no matter what solution gets implemented)...but let's not go overboard.

There's my two cents.

The Obamessiah's Silencing Ways

Barack the Obamessiah apparently feels that freedom of speech is optional when it comes to people who disagree with him. I've mentioned this before, but it's getting worse. Take a look at some more examples.

Back in August, Michelle Malkin blew the story open by pulling together a series of events in which Barack Obama took deliberate actions to silence dissent:

Where are all the free speech absolutists when you need them? Over the past month, left-wing partisans and Democratic lawyers have waged a brass-knuckled intimidation campaign against GOP donors, TV and radio stations, and even an investigative journalist because they have all dared to question the radical cult of Barack Obama. A chill wind blows, but where the valiant protectors of political dissent are, nobody knows.

On August 11, I called the American Civil Liberties Union national headquarters in New York for comment about the Chicago gangland tactics of one of these groups — a nonprofit called "Accountable America" that is spearheaded by a former operative of the Obama-endorsing MoveOn outfit.

"Accountable America" is trolling campaign finance databases and targeting conservative donors with "warning" letters in a thuggish attempt to depress Republican fundraising. (You'll be interested to know that the official registered agent of Accountable America is Laurence Gold, a high-powered attorney for the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) who has testified before the Senate complaining about the use of campaign finance laws to stifle the speech of union workers — a pet cause of the ACLU.)

The ACLU press office failed to respond.
...

On Monday, Obama demanded that the Justice Department stop TV stations from airing a documented, accurate independent ad spotlighting Obama's longtime working relationship with unrepentant Weather Underground terrorist Bill Ayers. Obama summoned his followers to bombard stations, many of them owned by conservative-leaning Sinclair Communications, with 93,000 e-mails to squelch the commercial.

On Tuesday, the Obama campaign sent another letter to the Justice Department demanding investigation and prosecution of American Issues Project, the group that produced the Ayers ad, as well as Dallas billionaire Harold Simmons, who funded it.

And on Wednesday, Obama exhorted his followers to sabotage the WGN radio show of veteran Chicago host and University of Chicago Professor Milt Rosenberg. Why? Because he invited National Review writer Stanley Kurtz to discuss his investigative findings about Obama's ties to Ayers and the underwhelming results of their collaboration on a left-wing educational project sponsored by the Chicago Annenberg Challenge. The "Obama Action Wire" supplied Rosenberg's call-in line and talking points like this:

"Tell WGN that by providing Kurtz with airtime, they are legitimizing baseless attacks from a smear-merchant and lowering the standards of political discourse. … It is absolutely unacceptable that WGN would give a slimy character assassin like Kurtz time for his divisive, destructive ranting on our public airwaves."

...

Welcome to the future: the politics of Hope and Change enforced by the missionaries of Search and Destroy.

Having set the stage, the Obamessiah continued his thuggery:

The local newspaper, the Fredericksburg Free Lance Star is up in arms:

NOT ALL COUNTRIES guarantee their citizens the right to virtually unbridled freedom of speech. The United States does. Would someone please tell the campaign of Sen. Barack Obama? And the dozing guardians of liberty at the University of Mary Washington?

Mr. Obama, the Democratic nominee for president, is scheduled to speak at a rally at the university today. The public is invited to this forum, on property it, the public, owns. However, signs and banners will not be allowed, according to the organizers and compliant campus officials. Suddenly, UMW is a First Amendment-Free, or at least a First Amendment-Crippled, Zone, subject to the self-serving preferences of politicos. Why does an Obama rally–or a McCain rally or a Nader rally–justify taking a little off the top of Americans' most fundamental rights?

A UMW spokeswoman says that the Obama campaign required the sign-and-banner ban. That campaign tells us that the ban is for "security" reasons. But a spokesman for the U.S. Secret Service, responsible for protecting presidential candidates, says that the service has no objection to signs at rallies, provided that no "part of the sign could be used as a weapon"–e.g., a heavy metal pole or a sharpened stick. Finally, the McCain campaign tells us, "We encourage people to make signs at our events."

Hmmm...one candidate encourages signs at rallies, the other one bans them. Guess which one comes from the party of tolerance...?

Now the silencing is getting even more direct. In Pennsylvania, the Obamessiah has again threatened TV and radio stations against their exertion of free speech:

The Obama camp has been threatening television and radio stations to keep them from airing anti-Obama ads.

The latest target is the NRA and stations in Pennsylvania.

Earlier this week, the National Rifle Association's Political Victory Fund released a series of radio and television spots to educate gun owners and sportsmen about Barack Obama's longstanding anti-gun record. In response to the NRA-PVF ads, a clearly panicked Obama campaign and the Democratic National Committee (DNC) are doing everything they can to hide Obama's real record by mounting a coordinated assault on the First Amendment.

They have gone to desperate and outrageous lengths to try to silence your NRA by bullying media outlets with threats of lawsuits if they run NRA-PVF's ads.

The Obama camp is particularly angry with an NRA ad entitled "Hunter" which lays out Obama's record on gun control.

You can see the "Hunter" ad — Go Here Now.

Other NRA ads include "Way of Life" and another focusing on Joe Biden's record, "Defend Freedom, Defeat Obama."

Fortunately, the NRA is more than happy (and able) to fight back:

The NRA says Obama's camp are sending out these "intimidating cease and desist letters" to cable operators and television stations, threatening their FCC licenses if they run the ads.

The NRA charged that "Obama and the DNC have been using strong-arm tactics reminiscent of Chicago machine politics to try and cover up the truth and silence NRA by forcing the stations to assist them in hiding Obama's radical anti-gun record."

And now, Obama and the DNC have opened a new front in their assault on your First Amendment rights by calling on their followers to contact these station managers to demand that the stations not run NRA-PVF's ads.

NRA stands behind the accuracy of these ads, and NRA attorneys have responded to the Obama campaign's despicable and abusive attempt to trample on the First Amendment by sending a thorough rebuttal to station managers. This rebuttal clearly and conclusively refutes the Obama campaign's fallacious claims that the ads are inaccurate.

The NRA has set up a Web site detailing its position on Obama at www.gunbanobama.com.

The Obamessiah takes it one step further in Missouri, positioning his brainwashed underling Obots in positions of power to prosecute any station that runs an ad against him:

Last Tuesday without any fanfare, the Barack Obama campaign announced Jennifer Joyce and Bob McCulloch, the top prosecutors in St. Louis city and St. Louis County, were joining something called an Obama truth squad.

They plan to respond immediately to any misleading advertisements and statements that might violate Missouri ethics laws.

"We want to keep this campaign focused on issues," Joyce told me. "Missourians don't want to be distracted by these divisive character attacks."

The truth squad's plan is to indentify false attacks and respond immediately with truthful information, Joyce and McCulloch say.

The Obama campaign says prosecutors from the Kansas City area and some rural areas are also joining the truth squad, and Jefferson County Sheriff Glenn Boyer was also expected to be part of the team.

That sounds benign enough, but anyone with an understanding of Barack the Silencer Obamessiah's previous tactics and history of Chicago gang-style politics can read betwen the lines well enough. This is evidenced by Missouri Governor Matt Blunt's statement
condemning the idea:

"St. Louis County Circuit Attorney Bob McCulloch, St. Louis City Circuit Attorney Jennifer Joyce, Jefferson County Sheriff Glenn Boyer, and Obama and the leader of his Missouri campaign Senator Claire McCaskill have attached the stench of police state tactics to the Obama-Biden campaign.

"What Senator Obama and his helpers are doing is scandalous beyond words, the party that claims to be the party of Thomas Jefferson is abusing the justice system and offices of public trust to silence political criticism with threats of prosecution and criminal punishment.

"This abuse of the law for intimidation insults the most sacred principles and ideals of Jefferson. I can think of nothing more offensive to Jefferson's thinking than using the power of the state to deprive Americans of their civil rights. The only conceivable purpose of Messrs. McCulloch, Obama and the others is to frighten people away from expressing themselves, to chill free and open debate, to suppress support and donations to conservative organizations targeted by this anti-civil rights, to strangle criticism of Mr. Obama, to suppress ads about his support of higher taxes, and to choke out criticism on television, radio, the Internet, blogs, e-mail and daily conversation about the election.

"Barack Obama needs to grow up. Leftist blogs and others in the press constantly say false things about me and my family. Usually, we ignore false and scurrilous accusations because the purveyors have no credibility. When necessary, we refute them. Enlisting Missouri law enforcement to intimidate people and kill free debate is reminiscent of the Sedition Acts - not a free society."

To hear the words 'the stench of police state tactics' coming from a Governor should be a clear sign of problems. Instapundit has a more comprehensive roundup of the dissent-squashing tactics being employed. Now it looks like Jennifer Joyce is playing the victim card while being dishonest about the mission of the 'truth squad'.

Even more indicative of just how serious this 'truth squad' idea is would be this e-mail conversation with one of the above-mentioned Truth Squad-ers:

I spoke with Bob McCulloch, Missouri prosecutor, about the truth squad story. I asked for an example of a lie that he would have to set straight. He used the example of the sex education for kindergartners. He believes that Barack Obama supported legislation that would protect kindergartners from inappropriate touching and not a wide spectrum of sex education in that age group. I asked if he read the legislation. He said "no."

I told him that if I hear him calling the sex education story a lie, then I would know that he had either not read the bill or was just going to lie for Obama no matter what the legislation actually says. He went into the idea that anybody can analyze legislation any way they want and that my analysis may not be correct. I told him that a monkey could analyze this legislation and know that the law is not specific to only inappropriate touching of kindergartners, but adds that age group to a wide array of sex education. He does not believe me. And so it goes.

Now, be honest with yourself. Is this a legitimate 'truth squad' that is interested in actually finding and communicating the TRUTH, or is it an intimidation racket with the full power of legal prosecution behind it?

For all of you Obama followers: I challenge you to defend this. Seriously. How do you defend a candidate who calls on his supporters to swamp stations who run ads that -- though truthful -- don't flatter Obama? How do you defend a candidate who repeatedly calls on the executive branch to take legal action against people who don't agree with him? How do you defend a candidate who openly stands for the clear abridgment of the 1st Amendment? How do you defend a candidate who employs Stalinist tactics against his opponents?

I really want to hear from you, because I don't believe it's possible.

There's my two cents.

Bailout Aftermath

Just a couple quick points:

"From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Senators Obama and Reid, Speaker Pelosi and others. Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families.

"Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.

"Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.

"This bill failed because Barack Obama and the Democrats put politics ahead of country."

—McCain-Palin senior policy adviser Doug Holtz-Eakin

While this does hurt McCain, who took drastic measures to get legislation passed before the debate last Friday, it also hurts Obama, who not only failed to get an agreement but also failed to even take an active role. There's leadership for you.

Anyway, Democrats are blaming Republicans for ruining the bill. Never mind the fact that the vast majority of the American people (who were paying attention) didn't want it, either. Also never mind the fact that the Democrats have a majority in the House - they didn't need a single Republican to pass this bill! If you hear this rant, don't let it slide by, because it's blatant misrepresentation.

Larry Kudlow offers the following report:

A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.

As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson's advice and sign that kind of legislation.

Personally, if this scenario plays out, I would probably withdraw my support for the rescue mission and switch to plan B, which would center on the FDIC and its bank-recapitalization powers. The bank-ownership issue, in particular, could lead to heavy nationalization of America's financial system with a three-house Democratic sweep in November.

I'm not forecasting, because I don't know the next bill's content. And while McCain's polls are heading south, he could still win. But a three-house Dem sweep to implement some off the very onerous provisions being talked about could set up the end of the U.S. financial system as we know it.

As you can see, the battle is not over. Keep contacting your Reps and urging them to adopt fiscally responsible, free market solutions.

There's my two cents.

Bailout Vote Record

Here's the record of the vote:

	Ayes	Noes	PRES	NV
Democratic	140	95
Republican	65	133		1
Independent
TOTALS	205	228		1

I'll pass along more analysis as it comes out, but as you can see, this defeat hinged on significant opposition from both parties. If nothing else, we can see that Nancy Pelosi is incompetent to hold her party together.

There's my two cents.