How is This For Screwing You?

The NY Times did a story on people who bought homes they could afford or were saving up to buy a home getting shafted by the latest attempts to bailout the troubled individual home owners.

Use Your Head

I implore our elected leaders as well as those about to be elected to take the real pulse of the country before using our tax dollars in a wanton fashion. And pehaps before you use our tax dollars against us. This ABC News story has comments with a clear sentiment. That sentiment is clearly stating that foolish and irresponsible people should not be bailed out. By a 4 to 1 margin, CNN readers do not want to see their tax dollars used to bailout individual homeowners.

Skeletons Falling Out of the Closet

It looks like someone who knows something about the deals Senator Dodd and others received on their Countrywide loans is spilling his guts to the Justice Department. Along with Senator Christopher Dodd, the story cites Sen. Kent Conrad, former Fanie Mae CEO Franklin Raines, Henry Cisneros, Richard Holbrooke, Alphonso Jackson, and Donna Shalala and James Johnson.

I wonder when they will start looking at loans from Northern Trust Bank and a certain junior Senator from Illinois.

This Will Be A Disaster

The government is working on a plan to remove the risk of foreclosure from 3 million home owners.

These over priced, ill financed homes need to be returned to the market in order to return home prices to historically normal levels that are in parity with costs of renting and personal incomes. Everyone who was priced out of the market by the real estate bubble along with the millions who have yet to come into the market place will NEVER be able to afford to own their own home without some sort of drastic action to readjust incomes to costs of ownership. In simple terms, I am talking about massive inflation with no real growth in wages. Incomes will rise to meet the cost of living indices. Other costs for food, energy and other consumer goods will rise too. Once again Washington is looking to rob Peter to pay Paul.

The other problem I have with this that "Paul" accounts for less than 10% of the households in the country, who are in trouble with a mortgage. Peter is a bit larger and more complex. The "Peter" who is paying is the rest of the population, who aren't in trouble with their mortgage. "Peter" is every potential home owner who was priced out of the market. "Peter" is every young person who has yet to graduate from school and enter the work force in pursuit of the American dream which is being stamped out by people like Christopher Dodd, Barney Frank, Nancy Pelosi, Harry Reid, Hillary Clinton and Barack Obama.

Their names and dozens of other political leaders who have pandered to an uniformed public, in the name of Main Street, will appear on the epitaph of the American Dream, as it killers.

This Must Be Really Bad

The LA Times is refusing to release a video where Barack Obama is at a dinner toasting and singing the praises of a man with ties to a Palestinian terror group. I say it must be bad, because the appearance of impropriety that the existence of this video creates is staggering in my mind. Lets not forget that Barack Obama is a man who has only one degree of separation between himself and the founder of Hezbollah, Hassan Nasrallah. There are far too many questionable ties between Senator Obama and terrorist organizations to allow this man to become President of the United States. Let’s not forget that these terrorists don't care if they kill, Democrats or Republicans, as long as they are American citizens.

Someone Explain How This is Legal

So, last night the wife and I are watching TV and on comes this Obama commercial, showing a web site with a calculator to show what the savings you'll reap from the 2 candidates tax plans if you plug in your salary, dependants, deductions, etc. I tell the wifey to go that URL, after all, I trust the Tax Policy Center as impartial and honest. We get to the web site and this is what we found ...

We have received many inquiries about an Obama campaign commercial that seems to imply that the Tax Policy Center (TPC) has a tax calculator that can be used to see how the candidates' tax plans would affect people. We don't. The calculator shown in the commercial was designed by the Obama campaign and is in no way affiliated with the nonpartisan TPC.

I have to say, I am really shocked at the out and out lying on the part of the Obama campaign. The ad doesn't imply it, it shows the TPC web site with an application that will tell you that you'll save more money with Obama's tax plan.

Its one thing to register homeless ghetto trash to vote. It’s quite another to tell a lie on TV, like the TPC tax calculator. Watch the video to the end when the guy says he wants to Obama do his hizzle or something. Classic.

Its a shame that McCain will not take of the gloves and start really fighting hard, because the Obama campaign is guilty of everything that the Democrats have accused the Republicans about. I guess for once the Democrats came up with the bigger scum bag.

Calling a Spade a Spade

Even The Boston Herald is calling out its brethren for being biased and partial. In fact The Boston Herald even goes so far as to suggest that people have more faith in Congress, whose approval rating is below that of the President, than they do in a fair and impartial media.

Corruption of the News Media

I really despise this years election cycle. I feel like it has robbed me of my pragmatism, which I valued so much. I've turned into a stark raving Republican and I don't like it very much, but I find it easier to stomach than the current hypocritical line of rhetoric from the Democrats. The way in which the business of electing our representative leadership has changed and not for the better.

My first caveat, I haven't watched much TV news over the last 5 years. Perhaps 10% of my news comes from TV, the rest from various internet outlets. Next, I am a Republican who has become highly disenchanted with W, to the extent that I voted for both Webb and Moran in the last few years. That will not happen again, after their votes on the housing bailout.

I have never really bought into the whole liberal media conspiracy thing. I have always felt that Fox News was overtly biased toward the right.

A recent spat of business travel had me spending a lot of time in airports, where I was subjected to a lot of CNN on airport TVs. I have say, what I saw left me disappointed, appalled and disgusted. CNN clearly displayed a Democratic bias in the amount of coverage and the tone of the coverage for the Presidential candidates. I find this to be a significant betrayal of CNNs principals. As a news outlet, which is what CNN likes to portray itself as, CNN should be offering fair and impartial coverage, but it isn't.

CNN is passing off its liberal agenda as fact or news, when in fact it seems more like CNN is helping to create news and sway events. The way I see it, CNN is overtly pressing its editorial agenda while trading on its solid gold reputation as news agency.

I will direct you all to this article, it describes a lot of what I have observed, from an insider in the inside of the news business.

Media's Presidential Bias and Decline

Summing it All Up

In a recent conversation, I reminded a friend of mine, that for months, I have been saying that we were entering the toughest economic stretch in generations. This was his response...

The 60s got weed and free love.
The 70s got coke and disco.
The 80s got heavy metal and coke.
What did we get? R&B, crystal meth and econnomic fuckery.

What can I say? We got screwed.

This Will Be The Trigger for Runaway Inflation

Recently, Boston Federal Reserve President Eric Rosengren called on the government to do something to bolster home prices. I find it incomprehensible that someone who is educated and informed, like a Federal Reserve President could be this short sighted. For some reason, the government and politicians fear being perceived as doing nothing, which is exactly what the current dilemma requires, because meddling with the natural way in which our economy works is what got us in this mess in the first place?

Even with the last 2 years worth of declines, home prices NEED to come back at least another 20% to approach historical norms, parity with the cost of renting and approach reasonable levels with respect to personal income.

Anything that artificially maintains current home prices will only serve to set the table for another economic crisis in the future. I believe that this crisis will be of epidemic inflation. The only thing that is going to get housing moving again is if younger people can afford entry level homes, which will allow subsequent echelons of home owners to move up. That is the way it has worked in this country for generations. Short circuiting the natural flow of home owners and buyers can only end negatively.

If entry level home prices, and other strata of home prices for that matter, remain at artificially supported levels the consequences will be dire. Cost of living indices will be higher and employers will be forced to pay higher wages to attract quality staff. Higher wages will translate into higher costs for other non-housing related goods and services. Thus, in the long run the working man will see little real growth in income. The relative growth in income will be another mirage that will suck in more and more unwitting people. While I lack the PhD in economics needed to forecast exactly where and how the next disaster will strike, my horse sense tells me that any kind of individual home owner bailout will be the catalyst for it, just like the CRA was for the housing bubble.

A final note on any potential bailout of the individual home owners ... If you are not a home owner and you are a tax payer, your tax dollars are being used against you. In a sense, the government is denying you your right to pursue the American dream; they are denying you, your Constitutional right to pursue happiness in order to help out the foolish, greedy, ignorant home owners who purchased homes that they truly couldn't afford. The time has come to pay the piper and putting off that bill will only make it worse in the future.

Obama’s Agenda, Not so Altruistic

Judge For Yourself

If you read this article and strip out the political rhetoric, you really have to sit back and scratch your head. Sure most of what the author presents is circumstantial, but there is an aweful lot of coincidence that is hard to just write off as coincidence.

How Can the Dems Sidestep Blame?

With evidence like this?

Thanks Moodys

Reuters is reporting that Moodys is now calling for a 2010 bottom. Its nice, but your still not there. Look at the ARM resets coming up. It will easily be 2011 before we find a bottom. Homes are still vastly over priced. And for some reason, fools with more money than sense are still over paying. For some reason Moodys thinks that banks will be done writing down bad paper by 2010, but I think the paper has to go bad before you can write it down, especially considering the just in time accounting processes banks use these days. Considering how caustic the 2006 ARMs are said to be, I can't quite see how the end of the tunnel comes before 2011 or even 2012.

Questioning the Voters of CA, NY, MO, AL & MA

How in the world did you people elect and reelect people like Rep. Maxine Watters, Rep. Greg Meeks, Rep. William Clay, Rep. Arthur Davis and Rep. Barney Frank? Ms. Watters calls Franklin Raines leadership outstanding shortly before he was forced to resign because of accounting irregularities at Fannie Mae. Keep in mind; this is the guy who is giving advice to Senator Barack Obama, who if GSE's weren't exempt from Sarbanes/Oxley, he would be in jail right now. One of these clowns, Rep. Greg Meeks, even accused the Director responsible for Federal Housing Enterprise Oversight of playing political games when he testified under oath before Congress to sound the alarm about the misdeeds of Fannie Mae and Freddie Mac. Seems like the truth is coming out. I hope the voters of California, New York, Missouri, Alabama and Massachusetts have the stones to votes these guys out of office. I don't care if you elect Republican or another Democrat, but for god sakes, replace these people with someone more competent.

Irresponsible & Incomplete Reporting at MSNBC

I find it highly irresponsible for MSNBC to have a Timeline of how we got to where we are today and they start that timeline is 2007. The Community Reinvestment Act and its roll in the current financial crisis which grips this country is not new. When a reputable front line news agency puts out half truths and incomplete stories its beyond irresponsible. Shame on MSNBC.

Obama's Double Standard

Its rather ironic that Barack Obama would hold Wall St and Main St to such a double standard. In reference to the $700 billion Wall St buy in, Obama said, "When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration". Yet in the next breath he panders to uninformed voters in appealing for a bailout for an individual borrowers. Its seems to me, that the less than 10% of the population who are in trouble with an irresponsible mortgage, could easily be characterized as a relative few.

As someone who isn't in trouble with a mortgage, I see little to no value in helping the relative minority of the population who were clearly irresponsible. I depend on the banking industry for nearly every aspect of my day to day life. Conversely I do not depend on my neighbors all day long. Lets consider last Friday for me.

6:20AM	Arrive at the metro and use my bank debit card to add value to my metro card.
6:45AM	Arrive at Starbucks by my office and use my bank debit card for a coffee.
11:45AM	Shop online and use my bank debit card to buy a gift for my wife.
12:15PM	Purchase lunch, using my bank debit card.
2:30PM	Check my bank account online to see that my payroll cleared.
2:35PM	Check my 401K account online to verify the correct contribution.
4:15PM	Arrive at the metro to go home and use my metro card which was funded by my debit card this morning.
4:50PM	Arrive at the grocery store on my way home to pick up milk, hamburger rolls and dog biscuits which I paid for with my bank debit card.
7:25PM	Sign onto to my bank website to pay bills for electric, phone, satellite TV, etc.

Not one single time last Friday was I dependant upon my neighbor staying in his over priced, ill financed home. I am betting most people's days work something like last Friday did for me. Similarly, none of the 90%+ Americans who are not in trouble with their mortgage need their neighbor to stay in their home to get through the day.

Subprime Meltdown Explained

http://www.youtube.com/watch?v=TxgSubmiGt8

The Dems Fiddled While Banking Burns

Here we are, in the middle of the worst financial crisis in two generations, perhaps ever, and instead of decisive action House and Senate Democrats are using this crisis and the legislation that would atleast soften the blow if not alleviate much of this mess, to push their own agenda. Don't forget that the Democrats are largely responsible for the beginning of the mess. Their guy, President Bill Clinton lit the fuse on this disaster. While perennial TheLastGoodIdea villain, Christopher Dodd rails at the President Bush for his lack of over sight he and the rest of his crony's forget that this problem was started by one of their biggest hero's.

Last night while you ate dinner or perhaps slept, another major cog, Washington Mutual (WaMu) failed. I place the blame squarely on the House and Senate Democrats who see their own agendas as more important than the well being of the institutions which you and I depend on for all of our daily business.

The thing the Democrats don't seem to grasp, is that I do not depend upon John Q Public to pay his mortgage, but I do depend on his bank and many others not to undermine my bank, so that I can continue to live a life that doesn't depend on my having a goat to trade for groceries or a chicken to trade for a couple of gallons of gas. Similarly, you don't need me to pay my mortgage, but you do need my bank to be a healthy member of the financial community to which your bank belongs and depends. I used to know how much money I needed to retire, now I wonder what piece of livestock I will have to trade for a few years in the sun, because that is the direction we are headed should people like Senator Christopher Dodd, Represenative Barney Frank or Senator Barak Obama continue push their own agenda, which is not integral to the health of our banking institutions, and holds up legislation that supports the banking industry upon which every man, woman and child in this country depends for the foundation of our day to day lives.

More Election Year Pandering

Our anti-hero, Senator Christopher Dodd continues to stick it to millions of US tax payers. His inability to pass a piece of legislation without tacking on his own agenda is already legendary and continues to foil intelligent plans, like they did when Fannie Mae & Freddie Mac were bailed out. Main St got its ill concieved bone. Dodd wants to put limits on compensation for executives of companies which accept help. That’s fine, but Dodd also wants more plans to prevent foreclosures among loans that are purchased under this plan.

In short, renters, Senator Dodd wants to use your tax dollars against you again.

By maintaining the value of over priced home homes, anyone who doesn't own a home will still be facing an over valued market that will have even less impetus to correct. While this chart is a little old, it still illustrates just how far out of parity home prices are respect to personal income which has grown at a rate under 5% and barely kept pace with stated inflation. Even with the last 2 years of stagnation in housing prices, its growth rate vastly outpaces the growth rate of personal income.

Historically its always been less expensive to rent than own, but never in modern history has the gulf between the cost of owning and renting been this big.

It would be fine if the add ons that Senator Dodd was trying to add had something to do with securing some profit or returned revenue to the US tax payer though this bailout, but by continuing to support a bailout of the individual home owners, Senator Dodd and other legislators, like Democratic Presidential nominee Barak Obama, continue to rob Peter to pay Paul. At present, nearly 60% of US citizens own homes that are within their means and almost one third of the population rents their home, leaving a scant 8% of the population in trouble with their mortgage. Any continued bailout of the individual home owners forsakes anyone who doesn't already own a home. It also leaves the next generation with very little chance of owning a home which obviously creates a titanic problem that future Presidents and aspiring home owners will have to deal with. In short, this bailout will short circuit itself and leave the US tax payer worse off in the long run, because of the myopic, partisan, election year pandering on the part of the fat cats who don't keep their eye on the till and are quick to point the finger at everyone but themselves when things go in tank.

The Leopard Changed Its Spots!

Back in 1999, the NY Times was telling anyone and everyone that the current lending standards were going to get Fanne and Freddie into trouble. Now today they are blasting away with both barrel's at Bush and McCain for allowing the banking industry to run amok of themselves and the output of sub prime mortgages. Most notably this was occurring under the express direction of a Democratic President, William J Clinton. The NY Times article said that a bailout of Fannie Mae and presumably Freddie Mac too would result in the largest bailout of the banking industry. And poof ... it happened. And now the leopard has changed its spots and has gotten into lockstep with the Obama campaign to blame the current Republican administration. Now, I am no fan of GWB, but at some point it gets absurd to blame the man for everything.

Time For A Hard Look In The Mirror

I love how everyone is looking for a scape goat; politicians, bankers, fed chairmen, etc. How about looking at ourselves. And by ourselves, I mean the people who waded hip deep into these bad mortgages. Just because you "can" afford something doesn't mean you should buy it. I can afford the payment on an Mercedes SL 550, of course I can't pay the rest of my bills after that, but I "can" afford it. Fucking morons left and right. I say this because there is bound to be individual outcry from all over. Our do nothing Congress is already bitching.

Worst Case Playing Out, Quietly

While the Federal Government might have stepped in to bailout AIG, I think you have to consider this failure averted as a failure none the less. Nouriel Roubini predicted a cascade of failures and that is indeed what we're seeing, in spite of the fact that everyone is still trying to put lipstick on this pig. Lehman was tanking, they waited too long to try and find a dance partner. Merrill Lynch got gobbled up by nobody's favorite bank and legislation author, Bank of America. AIG has fallen. Only the government bailout prevents this story from truly sounding like what it is. And oh yea, Fannie and Freddie got bailed out last week. Now, we see Morgan Stanley taking a lesson from the Lehman Brothers failure. They appear to be looking for a meger partner/buyer before their balance sheet completely tanks. The day of the large investment banks is certainly beginning to wane. How the current situation can be viewed as anything other than the worst case scenario is impossible, yet the mainstream media continues to take a myopic view in its reporting.

The Sky May Be Falling

And I am not Chicken Little.

The cascade of consequences from the subprime meltdown may be coming home to roost like you can’t believe. If you've read my blog for any amount of time, you know that right now, in this bear market, I have been a disciple of New York University economist, Nouriel Roubini. This weekend a post by Roubini describes a potential cascade of events which will likely start on Monday morning, probably while you read this blog entry if your up early.

In short, what Roubini described this spring and what he is surmising will happen Monday morning will go down in a manner that is eerily similar to the consumer bank failures of 1929. One key difference is that the failures will, mostly effect institutions that are not key consumer banks. The one notable exception is Washington Mutual (WaMu). While these are not big consumer banks that you and I depend on every day, the effect will be profound and make this summers events look like a walk in the park. The impending failure of Lehman Brothers is quite similar to the predicament that afflicted Bear Stearns this spring. However, the problem is that the Fed and Treasury Department have steadfastly said that there will be no further commercial bailouts after Fannie & Freddie. There is still a possibility that the Fed will flinch and give in and do the right thing. I still believe that preserving the banking system of this country and its key institutions is essential to our nation’s security.

Why am I blogging this? Because I think the $300 Billion that Congress committed to the Foreclosure Relief Act this summer, which I think is in vain, could have been very helpful in brokering a potential bailout of Lehman Brothers. Bailing out Lehman might avert a cascade of broker dealer and bank failures that will be historic. Remember where you are right now; history is unfolding right before our eyes. September 15th 2008 is going to be one very memorable and infamous day if things go down the worst case, but plausible path. I'm not talking about relatively trivial regional banks like Indy Mac. I am talking about financial institutions like WaMu and AIG, major financial institutions which affect most tax paying US citizens. The preservation of these institutions benefits us all, while keeping your irresponsible neighbors in their over priced homes does not.

In short, take cover, because it’s likely to be a bad day at the OK Corral.

Where are Randolph and Mortimer Duke when we need them

Surprise! Fannie and Freddie Loved Obama

According to CNN Money, Senator Barack Obama was the third largest beneficiary of a $178 million lobbying effort by disgraced mortgage giants Freddie Mac and Fanie Mae. Mean while, his opponent in the upcoming Presidential election received about $1900 a year from that same lobbying effort. Its getting really hard to believe that Senator Obama is really the voice of change. Change is guaranteed, someone other then George W Bush will be President in January. For Senator Obama to claim the mantle of candidate for change is a farce. He might be new, but his ideas, role and actions speak of times gone by. In other words ... Obama is the same old shit that has earned Congress a lower approval rating than that of embattled President Bush. Imagine that.