The Meltdown

So everybody has been affected by the meltdown, at least everybody with either a mortgage or investments in the stock market. And we all wonder, "what is the root cause?" I believe one gentleman from a financial forum I read pins it to the special interest lobby of Fannie Mae and Freddie Mac:

Fannie [Mae] and Freddie [Mac] had such powerful lobbyists that no attempt to reform or regulate Fannie and Freddie could make it through Congress. In all fairness, there were a number of Republican Senators and Congressman who have been sounding the alarm for at least 15 years. They knew it was only a matter of time before the taxpayer would have to bail them out. They were voices crying in the wilderness. There was no way to stop such large special interests. Fannie and Freddie spent tens of millions of dollars lobbying congress. Is there something inherently wrong with that? Government sponsored enterprises spending millions to lobby the government?

So, who were the lamebrains obstructing reform?

Since 1989, 534 individual legislators recieved money from Fannie and Freddie. Who recieved the most? Chris Dodd, Democrat from Connecticut, Chairman of the Senate Banking Committee and the Senator who had a couple of special arrangements with Countrywide, Fannies biggest customer. Who was second in line? A newcomer, who had only been in congress for three years, the junior Senator from Illinois, Barack Obama, who now blames Bush for the problem, and says he's going to run a different kind if Washington, free of special interests. There's a sucker born every minute.

Change you can believe in? So long as you believe, "The more things change, the more they stay the same".

Daily Mutterings

Let me state for the record I'm not a huge fan of mortgage bailouts. I could be made to understand why the government feels the need it has to "do something" about this pressing concern--because the chattel (voters) are clamoring for relief from "predatory lenders" who took advantage of them. "It's not our fault," they cry, "We wouldn't be in this position if it weren't for the big, bad wolf with huge eyes, and big teeth, and 0% down mortgages. Besides, it's for the good of the economy."

What a fairy tale.

Defaulting borrowers and lenders alike are equally at fault for low lending rates, bizarre mortgage products, and fast 'n easy money. It's not solely on the shoulders of the lenders. They made the money easy, but somebody reached into the cookie jar and took far more than they could eat--"Their eyes were bigger than their stomachs."

Borrowers and lenders made their bed, they should be made to lie in it. Many families could have emulated the neighbors (now in danger foreclosing) and taken out variable rate loans with 0% down to buy their houses; many could even have used such techniques to buy "more". They did not. Fiscal prudence forced them to accept the reality they could not (should not?) afford "more" where their neighbors pretended the economy would supply their desires. Historical insight reminded them of the adjusted maxim, "Whatever goes down, must come up." Too bad the neighbors didn't look to the past.

What part of cyclic economies did the neighbors not understand?

Economies run in cycles and grow in spurts. The incredible growth in recent years must inevitably result in a time where the gears of the nation must rest and catch its breath. 'Tis natural. It's like pruning a tree, the deadwood--the inefficient companies, the bad fiscal decisions, the poor lending practices--must be cut away and burnt. Hence, I see no reason why the government should bail out greedy corporations or greedy borrowers. The problem with a bailout is that the welfare of the greedy lot will be forced upon those of you who were fiscally conservative, or smart enough to know when to refinance.

Sucks to be Northrop Right Now

It is highly likely the Air Force will reopen the tanker contract previously won by NGC and subsequently protested by Boeing. At stake is $35 billion. Obviously, the winner today is Boeing's KC-767AT proposal and NGC's KC-45 proposal the loser, but I argue the real losers are the armed services who will have to endure yet another delay before a replacement tanker will come online to replace the aging KC-10 and KC-135 fleet.

I ask you, after the Boeing fiasco where that company was penalized for rigging the first attempt to award the contract, how did the Air Force blow this one? I would have thought all of the t's were crossed and the i's dotted; now it seems the Air Force dotted the former and crossed the later.

Although the KC-45 airframes produced in Alabama, they are EADS designed Airbus A330s, a European product. Boeing 767s are produced and designed in Seattle. Is this a case of parochial protectionism? I would argue we need to overlook such concepts, for it is far better to procure best-of-breed products, we would be endangering our servicemen and women to do otherwise. Of course, where products involve sensitive or classified information, I argue to keep it all onshore. The tanker, though, is an airframe, not communications encryption.

One might also suspect a deep conspiracy--with defense dollars dwindling for new development because of ongoing war commitments--this could be a ploy by the brass to further delay committing money to this project on the contractor's dime until a new fiscal year comes about.

In the end, we taxpayers can only watch the DoD as it compounds newer and more ingenious ways to budgetary disaster.

Here's an Idea...BUDGET

So, California finds itself in another budget deficit brought about by a combination of a declining economy and increased spending. So obviously, the answer is to raise property taxes by reassessing businesses benefiting from Prop 13. In the article, the union-backed California Tax Reform Association calls assessment of business property under Prop 13 "poor fiscal and land-use policy". The gist of the article is to flog the idea for yearly property reassessments of businesses for the purposes of taxation.

Wrong-headed move my friends. This just shows the problem of the public mindset towards government spending.

The liberalists intend for you to believe the woes of a budget deficit are brought by the underpayment of taxes by businesses and, although not explicitly stated but certainly meant, those citizens in certain tax brackets. After all, it is a truism in American politics that "faceless" corporations and the "rich" are getting away with robbery. In short, the CTRA wants us to buy into the idea "not we're spending too much, it's that we're not making enough".

How many of us have fallen to that line of argument in our own personal fiscal operations? I'll raise my hand as long as you raise yours. But the first rule of mastering your personal finances is not getting a higher paying job or winning the lotto. The first rule is to control your spending.

The solution to California's fiscal problems is to spend less. Don't create additional programs. Don't allow the status quo to drain the treasury. Don't raise taxes. When there isn't any money in the checking account, don't charge up the credit card. What's true for the kitchen table budget is true for public government.

The American Citizen Won

The Supreme Court ruled Thursday that the District of Columbia cannot ban a citizen from keeping a handgun at home, throwing out one of the nation's strictest gun control laws.

Writing for the 5-4 majority, Justice Antonin Scalia said that the Constitution protects an individual's right to keep and carry a gun.

The only bad news was the decision was 5-4, it should have been 9-0. Its a reminder that elections count and if you don't want the USSC to reverse it when the next president appoints two more liberal justices, vote in November. Sitting on the sideline is not an option, it is the same as voting for the other person.

Thursday Update

US military shoots down separating missile in test

And they said it couldn't be done. Good job America. Yes we need it unless you want to trust our survival on the kindness and rational behavior of North Korea or Iran.

Another increase in Federal spending. Only $845 billion over 13 years or $65 billion per year or $197,000 per person in the US per year for additional foreign aid to be spent by the United Nations. I don't know about you, but don't we have things we could do with this money at home or better yet, not spend and let our kids have a lighter debt load?

Nutcase

Chavez continues his war against capital as he sets a 60 day ultimatum for cement companies to strike a deal over the nationalization of their assets in Valenzuela. Mexico based Cemex, Switzerland's Holcim Ltd, and France's Lafarge SA would become minority owners in the units they built in Valenzuela. Generously,

the companies could negotiate over continuing as minority partners in their units and over compensation for the loss of their assets

How nice.

According to Hugo, I can barge into your house, demand you sell it to me, and then allow you to negotiate to keep part of what you already own. If Chavez is so hot to own these companies, why doesn't he go out and tender an offer to buy shares? This is not an issue of eminent domain and the public good--unless you deem that it is in the public good for the government to monopolize industry--it's an issue of deprivation of property. It's easy to deprive faceless corporations, despite the reality these corporations are really a collective of thousands of employees, myriad suppliers, and customers that are as personal as you or me. In the end, all corporate entities boil down to people. Where will it stop?

Maybe today it's a company, tomorrow it may be the individual.

Stupidity

Struggling Ohio village mulls income tax to get share of lottery winner's payout

AMELIA, Ohio (AP) — Officials in the southwest Ohio village of Amelia say they are resisting the urge to quickly pass a local income tax to get a share of the $196 million lottery ticket that was sold there. The windfall could mean more than $1 million to the struggling village of about 4,000 people east of Cincinnati. But Mayor Leroy Ellington says he wants to hear what residents have to say before the village council decides.

Questions:
1. What is to prevent the winner from moving before collecting the ticket?
2. Retroactive laws are not constitutional and
3. If the government promises no one else will get taxed except the "rich", well that was how they got the amendment to the constitution approved for income taxes, only the rich will be taxed.

Do you feel rich?

Simply Amazing

The currency of the United States discriminates against blind people the courts have ruled.

It also discriminates those who are color blind and illiterate or do not know how to read Arabic numbers.

And judges and lawyers wonder why people seem to think Shakespeare's line "The first thing to do to improve society is to kill all the lawyers", while often taken out of context is not such a bad idea in theory.

More feel good environmentalism. Wind is clean, coal is dirty energy. Of course no one is counting how much energy was used to build the wind farm verses the coal plant in their calculation.

More on the law of unintended consequences

Most of Columbia's exports to the US enter duty free (no tariff on them). Most of the US exports to Columbia have a tariff (tax) on them making them more expensive.

The free trade agreement between the US and Columbia would remove most of the Colombian tariffs on US products thus making US exports cheaper there and so we can increase the sale of US products there. See how much the tariffs are costing US manufacturers.

The DEMOCRATIC Congress is opposed to the Colombian Free Trade Act because it will hurt American jobs.

Wait, increasing US exports to Columbia will hurt US workers??? Are these people that ignorant, stupid or blind? Enquiring minds want to know.

Is this the US or USSR??

This could be quite frightening for us as a society. Click a link and go to jail.

Hat tip Instapundit.

King Dollar . . . . . .

Larry Kudlow over at NRO says we must make the dollar king again and make it strong. His argument is the dollar has been falling against the EURO and other currencies and this has lead to an increase in inflation in the US. It has also made imported commodities (read oil) more expensive since the countries that sell oil will demand more dollars to get the same purchasing power when the dollars are converted to their local currencies.

There is a problem with making the dollar king quickly.

You have to make people (foreigners) want dollars by giving them better returns on their investments. That means raising interest rates. Currently the US government is trying to head off a recession by lowering interest rates.

Kudlow says we should do what we did back in 1981-1982 to make the dollar strong. I'm not sure I want to see the government raise interest rates to 18% for US Treasury bonds. That will drive us into a deep recession for sure.

A longer but better way in my opinion is we have to decrease our imports and increase our exports. That means we have to cut spending so our government deficit is less (thanks to the tax rebates the deficit for the current fiscal year is expected to be almost $500 billion instead of about $100 billion). We also need to import less oil. That means drilling in Alaska and off the coast of Florida and California. We also need to promote more manufacturing jobs in the US so we do not have to import as much stuff but can export more. We can do all of this but it will be a slower process then just raising interest rates and will take more political capital. However in the long run it will make the US a stronger place.

If McCain (or Clinton or Obama) want to make the dollar king again, lets hear how they will do it in a way that will strengthen the country instead of hurt it.

The future of California??

New Jersey's Governor has unveiled a budget that cuts spending in absolute terms by $500 million from last years budget.

The NJ lawmakers are NOT happy with the budget which cuts spending in all areas, but they no longer have a choice.

California is or will soon be in the same situation. We currently are looking at a $16 billion dollar deficit for this year, which is half over, and a greater deficit for next year. A lot of programs are going to have to be cut because tax increases are not likely. People can say we should just raise taxes, but if the Republicans won't do it (thank goodness, State income taxes is already over 9% of income on top of federal income tax, not to mention sales tax and property taxes), then spending will have to be cut. Government programs are going to have to be consolidated or eliminated and Sacramento will not be able to micro manage each aspect of our lives.
The sooner we start the cutting, the less pain there will be. Its like getting into a cold pool. If you ease yourself in, its painful, but if you just jump in and get it over with, its a shock but its not as painful as the slow entry.

Supreme Court Justice Clarence Thomas

A look at why he rarely comments from the bench.

Suppose surgeons started discussing the merits of removing a gallbladder while in the operating room, Thomas said, as quoted by U.S. News & World Report. "You really didn't go in there to have a debate about gallbladder surgery," he said. Similarly, "we are there to decide cases, not to engage in seminar discussions."

Read the whole article.

Eco-Pork

San Francisco mayor creates a redundant, sweetheart position for an aide in the name of Mother Earth, milk and honey and the dude/dudette is titled the "Director of Climate Protection Initiatives" and will be compensated at the bargain rate of $160,000 a year. $160,000. That sure can buy a whole lot of carbon offsets. This is in spite of the presence of "two dozen other city employees already working directly on climate issues at a cost to taxpayers of hundreds of thousands of dollars" and a projected budget deficit of $233 million.

Bloated carbon emissions? Try bloated government.

(H/T: Instapundit)

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