Tuesday, September 30, 2008

We're beating the b*stards

Nobody else is pointing this out so I will: We're batting two for two.
Last year we beat back John McCain's moronic open borders bill, which had the potential to destroy America. Now we've beaten back George Bush's moronic bailout bill, which would have driven one more nail in the coffin of conservatism, a major force in the nation's growth and vitality.

Here's the Wall Street Journal's take:
"The defeat in Congress of a proposed $700 billion economic rescue package followed an intense outpouring of voter anger, fanned by politicians, interest groups and media on the left and right, that overwhelmed calls from the president and top lawmakers to pass the deal.

Fierce resistance from both ends of the political spectrum drove lawmakers to vote against the economic rescue plan.
Voters opposed to the deal deluged Capitol Hill with letters, emails, phone calls and faxes over the past week. Some 23,000 signatures were collected over two days by Sen. Bernie Sanders, a Vermont Independent, calling for a five-year, 10% surtax on the wealthiest Americans to help fund the bailout. Some prominent conservatives and bloggers criticized the deal as an unwarranted intervention in the free market."

Conservatism may be ailing, but conservatives are ready for battle.

How disconnected is Washington from reality? This disconnected: Today, a talking head on television was bemoaning the "unraveling" of the market while the tape crawlng across the bottom of the screen showed the Dow up by almost 300 points.

New times, new words

Times change, sometimes so fast that language can't keep up. We need new words appropriate for the new circumstances. Here's a start. Please send your contributions. Prurient or scatological words will be accepted only if I really, really like them. I will update this list if I feel like it:

New word: mortcrap
Usage: John Dillinger III murdered his broker Monday after discovering that his huge investment in mortgage-based securities had morphed into mortcrap.

New word: palinizing
Usage: NBC took palinizing to a new level on Thursday, reporting that Sarah Palin's 21-year-old son once violated the lowest standards of human behavior by putting an earthworm on a fishhook and throwing the line into the water, injuring the worm and arousing outrage throughout Alaska.

New Word: idiotocracy
Usage: The preening journalists and deranged politicians who supported the failed mortcrap bailout bill will henceforth be known as the idiotocracy.

New word: republicrat
Bill Clinton continued to formally support Barack Obama Monday while surreptitously working with Republicans on a republicrat alliance that he hopes will sink Obama and alllow Hillary to run again in 2012.

New word: panickypol
Usage: Any politician who tries to scare others into supporting his outlandish, antiamerican proposal, using visions of market crashes and even doomsday, will be known as a panickypol.

Monday, September 29, 2008

Do we want a command economy?

The most persuasive evidence that Barack Obama is unfit for the presidency is the frequency with which he deploys one phrase, "I will invest..."

The implication is inescapable. He plans to install a command economy. He will decide which path to the future is the right one.

This is not what the framers had in mind, nor is it the formula the United States has followed in building the world's mightiest economy.

The president did not tell the Wright brothers to build an airplane.

The president did not tell Thomas Edison to design a light bulb.

The president did not tell Henry Ford to build a car.

The president did not tell Jonas Salk to find a remedy for polio.

The president did not tell Babe Ruth to hit 60 home runs in a season.

Each of these pioneers saw a potential market and tried to accommodate it, confident that rewards would follow.

There have been many other pioneers, some driven by benevolent impulses, others by a desire to get rich. Some got lucky and stumbled across useful products while working on something else.

It is comonplace now, especially among leftists, to disparage wealth-seeking, but without it we wouldn't be where we are.

Paradoxically, it seems to be acceptable among leftists to stuff one's pockets if one is doing so in a government office. Executives of Fannie Mae hauled in tens of millions of dollars each in a few years, at times by cooking the books to inflate profits.

Where are the howls of outrage about this form of wealth-seeking?

In writing the constitution, the framers were influenced by the initial publication of Adam Smith's "The Wealth of Nations" in 1776. The book highlighted the role of free markets and laid the foundation for modern capitalism. Its principles are woven into the law of the land.

The book remains relevant today, as was pointed out by Robert Reich, secretary of Labor in the Clinton administration, who wrote this in an introduction: "Smith's mind ranged over issues as fresh and topical today as they were in the late 18th Century - jobs, wages, politics, government, trade, education, business and ethics."

Elections are, of course, free market principles applied to politics.

It is not hard to find examples of a command economy. Cuba is one. Zimbabwe is another. Russia was a superb example until its empire collapsed and it had to adapt to the modern competitive world.

As the empire teetered, Time sent correspondents to Russia to take the pulse of the people.

When asked to describe the Russian system, a blue-collar worker said, "We pretend to work and they pretend to pay us."

Sunday, September 28, 2008

The pile grows

House Speaker Nancy Pelosi has just shed new light on the bailout.
It is not, she says, a bailout. It is a buy-in.
That means it must be voluntary. Not even the U.S. government is so heavy-handed that it presumes to tell people what to buy. Buying is voluntary.
What is on the market here is extremely unappealing. It is failed home mortgages. The borrowers defaulted. Some businesses that dealt in those mortgages have collapsed and others are teetering.
No one in his right mind - make that no one playing with his own money - is going to voluntarily buy those mortgages for more than 1 cent on the dollar.
So, the governemnt is going to buy those mortgages with our money and then tell us that we wanted to do it.
I would like to call for a show of hands on the question of whether we wanted to do it.

Breakthrough: garbage can be improved

Our overlords in Washington have done something unusual. They have taken a pile of garbage and improved it. It's still garbage, but it doesn't smell as bad. It's also a breakthrough in another respect: Yes, they're going to fork over billions of dollars of taxpayer money, but this timne they're going to ask the recipients to pay back some of it.

In the future, historians will look back and find that the sequence of events went down like this:

1. The Bush administration, eager to expand its voter base, drove down interest rates to allow more low-income people, especially blacks, to buy homes.

2. Mortgage lenders saw what was happening and helped the process along by winking at buyer qualification standards that had previously been enforced. The lenders could do this with impunity because they did not bear any of the increased risk. Two hours after they wrote a new mortgage, they sold it to Fannie Mae or Freddie Mac. The higher risk was now somebody else's problem. The lender used cash from Fannie and Freddie to write more mortgages.

3. Fannie and Freddie, based in Washington, bundled mortgages from Kalamazoo with mortgages from East St. Louis and San Juan de Capistrano, and sold them as bonds. Einstein couldn't have figured out what the actual risk was in any of those bonds. In the old days, the level of risk had been a vital element in determing the price of a bond. In the new regime, Fannie and Freddie sold the bonds for what the market said they were worth. The buyers actually had no idea what they were worth. They only knew that the market for mortgage-based derivatives was going up.

4. Fannie and Freddie, flush with money, ladled it out to politicians who were protecting their interests in Washington, two of them being Sen. Chris Dodd and Rep. Barney Frank, both Democrats. Fannie's and Freddie's interest was to see the gravy train roll on. Their executives, mostly Democrats, were getting rich through lavish bonuses, and Fannie had become a hiring hall for out-of-work Democrats.

5. Some of the low-income people who had bought homes under the new regime began defaulting on their loans. The defaults became a deluge. Vintage Wall Street firms such as Lehman Brothers and Merrill Lynch crashed. Fannie and Freddie were seized by the government. Even in the abyss, government was growing.

6. A panicked Bush administration, on the even of a presidential election, sought enactment of a $700 billion buyout of the failed mortgages, which would rescue private and quasi-government (Fannie and Freddie) busineases at the expense of taxpayers while putting government in the banking business. It's possible that those mortgages will someday regain some value, But it's not possible to assess the probability. Nevertheless, media fans of the Bush regime pounced on this, predicting future "profits" for the taxpayers on their $700 billion "investment." When politics innnnntrudes, conservatives go astray, but socialist euphoria never wanes. The herd of independent minds was cheering the Bush proposal.

7. Republicans in the House, apparently the only political faction in America that still believes in the efficacy of markets, raised a stink. The deal fell apart.

8. In overnight negotiations between newly rational politicians, the proposed deal was transformed. The socialists had suffered a setback in their struggle to install a command economy. One of the other losers is ACORN, a street-wise organization beloved by Barack Obama and many other Democrats. In the original bailout, ACORN was to get 20 percent of any future profits on the failed mortgages. Now, it won't. Those who have a habit of making dead people and dogs vote will have to look elsewhere for their street money.

Saturday, September 27, 2008

More lowering of standards

Time was when bank robbers were unafraid, even cavalier, about their livelihood. Take Willie Sutton. When asked why he robbed banks, he replied, "That's where the money is."
Compare that to what happened a short time ago in Roslyn, N.Y. A would-be robber walked into the Roslyn Savings Bank and demanded money, threatening to start shooting if the teller didn't fork it over.
The teller replied, "You kiddin me?" or something similar.
The robber fled.
More information is available - the failed robber was female - but it won't be reported because the writer is afraid of lawsuits.

Liveblogging and all that

Stephen Green drunkblogged the Mississippi debate over at Vodkapundit. Here's a fragment:

8:09PM Pardon me as I wet myself while McCain spanks Obama over his promise to negotiate with Iran “without preconditions.” It’s like gay porn, only this stuff turns me on. (Sorry, Bruce!)

8:10PM “Let’s talk about this,” says Obama. Isn’t that the goddamn problem, you inexperienced, officious little whelp?

8:11PM Obama is man enough to admit that “it may not work” to have the Iranian president over at the White House. Back in high school, we used to say, “No sh*t, Sherlock?”

8:14PM I don’t know if McCain will win. I still doubt it, and sometimes I dread it.

18PM Don’t get me wrong - McCain is hardly my dream candidate. Unfortunately for me, and the nation, Cal Coolidge has been dead for quite some time now.

8:18PM Do I sound dismissive about the distinguished senator from Illinois? Oh, good!

8:27PM Now that it’s almost over, may I at long last say … “oh, the humanity!”

8:35 p.m. The man simply is not ready for the burden of this office. But I’m more than ready for another martini. So if you’ll excuse me, I’ll see you next week at the next debate. Cheers!

Friday, September 26, 2008

The mouth that roars also threatens

Barack Obama made his foray in elective politics, his first campaign for the Illinois Senate, an imaginative one. By fly-specking the legal work behind his opponents'campaigns, he got them disqualified, including the incumbent. When election day rolled around, he was the only candidate left on the ballot.
That's known as Chicago-style politics.
Recently, in a televised interview, a grim-faced Obama said of his opponent, John McCain's, campaign, "They don't know what they're up against."
Now, blog posts on Instapundit.com and snowflakesinhell.com may provide some insight.
The Obama campaiogn is warning broadcasters to stop running advertisements for the National Rifle Association or risk having their licenses yanked.
If Chicago-style politics appeals to you, bear this in mind. When a rank and file citizen applies for a government job in Chicago, the conversation is said to go like this:
The boss: "Who sent you?"
Applicanat: "Nobody sent me."
The boss: "We don't want nobody that nobody sent."

Thursday, September 25, 2008

What the hell did he say?

Did you ever wonder why the U.S. Congress is one of the most reviled institutions in America? The members seem so decent, except, of course, for the ones who are in prison.
Some members are, of course, extremely interesting.
Take Alcee Hastings, who made news again this week.
His route to the House was circuitous, to say the least.
The story started in 1981 when Hastings was a federal judge in Florida. Out of nowhere, he was accused of what seemd like a clerical matter; he had inadvertently put a price tag on some of his judgments. The price tag in one case was $150,000 for a lenient sentence in a racketeering case.
The House, controlled by Democrats, impeached Hastings, also a Democrat.
The Senate subsequenlty convicted Hastings, who became the sixth federal judge ever ousted by Congress for corruption. The Senate could have barred him from federal office forever, but didn't do so.
In 1992, Hastings ran for the House, and won, joining the body that had cost him his judgeship. He's been there ever since.
This week, Hastings again made news. At a Jewish rally for Barack Obama in Florida, Hastings endorsed the Democratic candiate with these words: "If Sarah Palin isn't enough of a reason for you to get over whatever problem you have with Barack Obama then you damn well had better pay attention. Anybody toting guns and stripping moose don't care too much about what they do with Jews and blacks. So, you just think this through."
A transalator was not immediately available.

The Republicrat Party is born

The Republicrat Party is taking shape.
It's candidate, John McCain, is even in the polls, but holds the whip hand. He has an ace up his sleeve
Signals are being sent, not for the first time.
The Republican Party and the Clinton Caucus of the Democratic Party are coming together. This isn't a marriage. It's a fling and has a limited purpose: defeat Barack Obama and lay the groundwork for 2012.
If it works, the outcome could be momentous and spectacular: Hillary Clinton vs. Sarah Palin.
At the moment, the Russian bear is again making mischief on America's doorstep. The bear lives near Alaska and is prowling in the arctic, in Cuba, and in Venezuela. The last time that happened a combat veteran of WWII, a seasoned man named John Kennedy, inhabited the White House. As a son of the U.S. ambassador to England, he had been tutored for the job for many years.
After a standoff for the ages, the United States prevailed.
Now, the Democratic candidate is Obama, about whom many questions have been raised.
His list of achievements is short, some say nonexistent. His background is murky. His friends and associates are controversial, to put in mildly. He stammers at public appearances.
The question arises: Is this the leader Americans want in a potential confrontation with Putin?
One thing is certain: Barack Obama is no John Kennedy.
Some of those who oppose him are Democrats. Earlier this year, they made common cause with Republicans in a campaign to make Hillary Clinton the party's nominee.
The alliance grew out of a preemptive maneuver by one of America's premier entertainers, Rush Limbaugh, oiperating out of what he calls "the Southern Command."
As Obama gained the upper hand in his contest with Clinton, Limbaugh launched Operation Chaos to keep Clinton competitive. He encouraged Republicans to reregister as Democrats and vote for Clinton in the primaries. Many did. Limbaugh reported their progress on his radio talk show, referring to the interlopers as his "troops."
Clinton finished with more than 18 million votes. An unknown number of those votes had been cast by Limbaugh's covert army.
Soon, the Clintons and the the Republican team of John McCain and Sarah Palin began sending signals back and forth. At the Republican convention, Palin saluted Clinton, saying she had put "18 million cracks in the glass ceiling" that has kept the White House out of reach for women. Clinton promptly returned the salute, saying she would not attack Palin.
Now, the signals are becoming more audacious, to borrow Obamas's favorite word. Bill Clinton: "I'll campaign after the Jewish holidays." Was that the bird? Or am I too eager to see the bird?
The former president also described Palin as an "appealing person" and her family as "gutsy, spirited and real." He did not add, "unlike Obama," but he might have had the phrase in mind.
Clinton also said he won't attack McCain.
Polls show that about one-third of those who voted for Clinton in the primaries will not support Obama. Thet's 6 million voters who are up for grabs. The number might grow much higher.
Consider this scenario: One week before the election, McCain is still even or behind and in need of a surge. He plays the card that he has up his sleeve by saying,"If elected, I will serve one term."
Suddenly, the women of America would be within four years of a goal toward which some have worked all of their lives: a woman in the Oval Office.
That woman might be Palin. It also might be Clinton if she can prevail in another Democratic primary campaign.
The Clintons have an incentive to see Obama lose. If he loses, Clinton can run again in 2012. If he wins, she can run no earlier than 2016.
If McCain wins, he can gracefully step aside after one term, and thereby acquire a devoted bipartisan fan club made up of 150 million women. Historians would record that his selfless action made it possible for a woman - and possibly two - to run for president.
Moreover, the other 12 million voters who were part of the Clinton caucus in 2008 also would have a powerful incentive to vote for the McCain ticket this year. Chances to make historic breakthroughs of this magnitude don't come around that often.

Wednesday, September 24, 2008

McCain is onto something

John McCain is a man of countless certitudes, some of them annoying. His merciless moral judgments fall like bombs from passing sea gulls, and are as welcome. Although global warming appears to have debarked to another galaxy, McCain still talks about it. Hardly anyone else does.

It is easy to think of McCain as the price conservatives have to pay to get Sarah Palin in the Oval Office, hopefully in 2013.

And yet, just when hope is almost out of sight, McCain miraculously rescues himself once again. One sentence does the trick. If elected, McCain will move the political office, otherwise known as the World That Karl Rove Built, out of the White House.

It seems like a small thing, but it isn't. It was in Karl Rove's world that the permanent campaign was born. All politics all the time. Eventually, it became expensive. Very expensive.

George Bush entered the White House in camouflage. He had campaigned as a "compassionate conservative." He was, in fact, a social engineer.
He wanted to put more Americans in their own homes.

Until then, individual initiative and the markets had determined whether someone could buy a home. Bush and his pals figured out how to overcome the markets. They lowered interest rates, again and again. Mortgage lenders soon figured out the game that was being played and began winking at shortomings that previously had disqualified applicants.

After all, if you're going to hold the mortgage for only an hour or two, you're not taking much risk.

Until then, a mortgage had been a homebody, usually staying near the home for 20 or 30 years.

Under the new regime, the mortgage became an international traveler. The lender wrote the mortgage and promptly sold it Fannie Mae or Freddie Mac in Washington, allowing the lender to immediately write more mortgages. Fannie and Freddie bundled the morgages as bonds and sold them all over the world. The money raced through its cycle and never stopped for long.

Even if somebody had an urgent need to locate risk, he wouldn't have been able to find it. Risk was traveling..

From the perspective of the White House, low-income blacks who were able to buy homes might be grateful to the party that had made it happen.

Social engineering plays a storied role in American history. The U.S. Supreme Court got into the act in 1954, when it ruled that racially segregated schools were illegal. Fifty years later, economist Thomas Sowell, who is black, was unimpressed by the results.

"Blacks were already rising out of poverty at a rapid rate that was not accelerated by the civil rights laws and court decisions of the 1950s and 1960s, though, of course, the progress continued," he wrote in a series of newspaper articles. "Yet, half a century of political spin has convinced much of the media and the public that black progress began with the civil rights revolution."
"It did not."
"The key fallacy underlying the civil rights vision was that all black economics lags were due to racial discrimination. The assumption has survived to this day, in the courts, in academia, and above all in politics."

Lyndon Johnson's Great Society made good on the court decision by relying on busing for the purpose of integrating schools. But busing infuriated whites, especially, and caused a spike in racial animosity.

The unintended consequences of social engineering can hurt, but the urge to use government enticements and hammers to achieve social goals never seems to go away.

If a candidate appeears to harbor an inner social engineer, don't vote for him.

Tuesday, September 23, 2008

A tangled web

Somebody is going to write a PhD thesis about this:

DEMACÚ, Mexico – Luis Martínez went from being a successful Dallas businessman to a struggling alfalfa farmer in rural central Mexico because of a North Texas crackdown on illegal immigrants.
Now, that crackdown is squeezing towns across Mexico as immigrant unemployment grows in the U.S. and money sent home declines at a record rate.

There are several possibilities:
1. With fewer dollars coming in from the U.S., the crime rate in Mexico goes up and the Mexican government finally suffers some consequence for its long-term policy of exporting poverty and importing dollars.
2. Mexicans newly unemployed in the U.S. go back to Mexico, causing a strain on its government and relieving pressure on Washington to finish the fence.
3. Instead of going back to Mexico, illegal immigrants turn to crime in the U.S. and send some of the proceeds to Mexico, making the U.S. pay a price for tougher enforcement while Mexico remains a winner.
This would be a thesis that I actually would read.

The mind reader is here

Washington is likely to survive the current crisis in financial markets, but how can it surive this?

"Homeland Security is now testing the next generation of security screening — a body scanner that can read your mind."

On the other hand, technologists may see this as a business opportunity. It'll be a race to invent the first mind scrubber.

A proposed amendment

An amendment to a classic expression is in order: "Never in the course of human affairs have so many rascals pocketed so much for so miserable a performance."

Monday, September 22, 2008

Looking for a producer

Here's an outline for an oppo video that I am prepared to applaud but am unable to produce. Any takers?

Scene 1: The narrator says that viewers are about to meet Barrack Obama's closest associates.

Scene 2: A Tony Rezko look-alike is shown in the shadows. Glancing around, he mutters, "Buy America, but make sure no one sees you." Rezko remains furtive and nervous, glancing around. The narrator: "Tony Rezko helped the Obamas buy their Chicago home. He has been involved in shady transactions and is a convicted criminal."

Scene 3: A clip from the famous video, with Jeremiah Wright shouting, "God Damn America," etc. The narrator: "Obama listened to such sermons for 10 years. If he didn't agree, why didn't he leave?"

Scene 4: Look-alikes for Bill Ayers and his terrorist wife stare angrily at the camera and say, in unison, "Blow Up America, blow up America, blow up America..." The narrator: "Bill Ayers was there on day one of Obama's political career. Together, they blew through one hundred million dollars, but didn't make Chicago's schools any better."

Scene 5: An Obama look-alike appears in a cone of light with a halo. He sings, "God Bless America," etc.

Scene 6: The narrator returns and speaks directly into the camera: "Which one do you believe?"

Losing weight

This is the nightmare scenario that some Democrats are starting to fear:

2008: John McCain and Sarah Palin
2012: Palin and Bobby Jindal
2016: Palln and Jindal
2020: Jindal and
2o24: Jindal and

Twenty-eight straight years in the desert can seem like a long time.
But who's Jindal? The son of immigrants from India, he's the governor of Louisiana. At 37, he already has a resume that many would be proud to call a career.
Worse, he has audacity. Determined to crack down on sexual predators, Jindal proposed a bill that provided for castration of predators convicted of raping children.
The Legislature passed it. It is now the law in Louisiana.
To some degree, castration played into America's quest for fitness. Rape a child in Louisiana and you'll be lighter on your feet when you leave.

Saturday, September 20, 2008

A joyous warrior

The herd of independent minds, otherwise known as the mainstream media, is missing something unusual and probably vital in this year's politics.
They don't fully understand the threat that Sarah Palin poses to the liberal enterprise.
Why? Because they're engrossed in the usual nitty-gritty of presidential elections. Is she qualified to be president? Has she so thoroughly covered her tracks that we won't find anything? Or is there something in her past that we can use to blow up her campaign? What's she said lately that we can use against her?
What they don't understand is this: In her visible, visceral joy and happpiness, Palin is a threat against which the liberals have no defense.
The things that liberals hold most dear - freedom to abort babies, crony capitalism in Washington, govenment intrusion into every aspect of life, assaults on free enterprise, government policies that allow liberals to determine who wins and who loses - are anathema to Palin.
The thing is, ultimately the voters are influenced by the visisble symbols of the two competing outlooks.
Who are the symbols of liberalism? Hillary Clinton. Ted Kennedy. George Soros. Nancy Pelosi. Harry Reid.
Who are the symbols of conservatism? Sarah Palin.
For voters, this may raise an important question: When was the last time I saw a happy and joyous liberal?
Perhaps some voters will take one more step and say, "Maybe she is so happy because of the way she thinks and the way she lives her life."
If that happens the radical feminists who have held the liberal enterprise in line for decades may see a sunset they don't like.

Friday, September 19, 2008

Polls aren't elections

Public opinion polls show Barack Obama and John McCain tied or separated by tiny margins.
That's bad news for Obama. If the past is prologue, he will need a fairly wide lead in the polls to win the upcoming presidential election.
There are reports that Obama campaigners think he has to lead by 5 to 8 percentage points to prevail.
Their obstacle is the "Bradley effect," named after Tom Bradley, longtime Democratic mayor of Los Angeles who ran for governnor in 1982. The polls had Bradley, who is black, up by 10 points leading up to the election, but he lost to Republican George Deukmejian, who is white.
Why? No one has figured it out exactly, but the answer lies in the tangled nature of race relations.
One theory holds that white voters are reluctant to tell pollsters they intend to vote against a black candidate, even though that's what they subsequently do.
The discrepancy between poll numbers and election reslults has become known as "the Bradley effect, but it also has been known as "the Wilder effect" and other names because the pattern has popped up time and again.
Whatever the root cause, black candidates do better in polls than in elections.
Now, for the first time, one of the candidates for president is black. Will the Bradley Effect come into play?
Why not? Thugs have threatened violence if Obama loses, one even predicting a race war.
That would seem to give voters more incentive than ever before to conceal their opposition to Obama.
In Minnesota, ordinarily blue, Obama is barely ahead, and closet supporters of McCain-Palin could easily tip the state into the red column. Several other states are in similar situations.

Thursday, September 18, 2008

Drudge: What Would We Do Without It?

If you want a quick reading of the national psyche you can't beat the Drudge Report.

A quick look on Thursday told me everything I wanted to know.

First, we were still resilient. After taking one on the jaw the day before, we had popped back up. The Dow was up 400 points. Warren Buffet was buying stock with both hands. Californians were snapping up the houses that hadn't burned yet

Memo to mainstream journalists: Price declines are not a calamity on the road to armagedden. The are good, being no more than adjustments to a newfound reality. The axiom goes: buy low, sell high. Remember?
Sensible people were buying things they couldn't afford earlier. They're happy now. The headlline said, "California House Sales Soar as Prices Plummet."
I wonder what economists will do with that revelation.

No one, of course, is more sensible than Buffet. His tried and true formlula goes like this: buy stock in a company that any fool can run because eventually one will. He is a happy billionaire.

Unfortunately, normality also prevailed in academia: "Beaver College Professor Assigns Students to Write Essay Critical of Palin." New dog, same bark.

This is a quiz: Here are the characteristics, you name the occupation: The average work load is three hours a week, the average salary is upward of $100,000 a year, and insanity is not a disqualifier.
The correct answer is: college professor. Everybody gets that one right. I don't know why.

This headline told me that the sports world had quickly returned to normal (Okay, as normal as it ever is): "NBA Star Disrespects National Anthem: 'I Don't Celebrate This, I'm Black.'" Why am I not surprised that he plays for man-child Mark Cuban's Dallas Mavericks?
We should put a time limit on group whining. One century after the terrible event, in this case slavery, the whining has to stop. The buzzer goes off. Whine after the buzzer and you're an instant Haitian. No after-the-play reviews by Al Sharpton, Jesse Jackson or anybody else. You're outa here.
Send me a card. Tell me about Haiti's cockroaches, especially the ones that are now your best friends.

Clueless Europeans still didn't have a clue: "Der Spiegel: The Foundations of U.S. Capitalism Have Fallen." Too bad we're still providing the military shield that allows Der Spiegel to publish in German instead of Russian.

And last, the surest sign of all that America is returning to normal: "Reid: No One Knows What to Do."
That would be Harry Reid, the rumored leader of the Senate Democrats, who are rumored to control that body.

Wednesday, September 17, 2008

Onward and upward

Jamie Gorelick became famous doing government work.
To get rich, she had to go to Fannie Mae, where she practiced crony capitalism with such dexterity that she is now a multmillionaire, at least on paper.
It is a strange reversal of fortune for a woman who was, for a while, in the cross-hairs of those who investigated the government's failure to prevent the 9/11 attacks.
As a deputy attorney general in President Clinton's Justice Department, Gorelick, on March 4, 1995, wrote a legal memo that subsequently prohibited CIA agents and FBI agents from exchanging information regarding suspected terrorists.
The Bush administration's attorney general, John Ashcroft, described the impact of the "wall" as follows:
"In the days before Sept. 11, the wall specifically impeded the investiagion into Zacaria Moussoui, Khalid al-Midhar and Nawaf al-Hazmi. After the FBI arrested Mussaoui, agents became suspciious of his interest in commercial aircraft and sought approval for a criminal warrant to search his computer. The warrant was rejected because FBI officials feared breaching the wall."
"When the CIA finally told the FBI that al-Midhar and al-Hazmi were in the country in late August, agents in New York searched for the suspects. But, because of the wall, FBI headquarters refused to allow criminal investigators who knew the most about the most recent al-Qaeda attack to join the hunt for the suspected terrorists."
"At that time, a frustrated FBI investigator wrote headquarters, "Whatever has happened to this_someday someone will die and, wall or not, the public will not understand why we were not more effective and throwing every resource we had at certain problems."
Despite the controversy, Gorelik left the attorney general's office, without consequence, in 1997. After a short stint in private practice, she joined Fannie Mae as vice chairman, where she remained until 2003.
A federal investigation subsequently determined that, during her tenure, top executives had cooked the books of Fannie Mae, greatly exaggerating profits, so as to maximum their bonuses.
Gorelik left with a total take of $26.4 million for her six years.
Now, Fannie Mae is no longer a quasi-government bank. It is a government bank. The feds have seized it because so much of the bundled mortgage paper that it pioneered turned out to be worthless. Fannie Mae was broke.

They did what?

A sensible investor always asks two basic questions. What is the level of risk? Where, exactly, does the risk reside?
Time was when those questions were easy to answer. When a home buyer applied for a mortgage, the lender would examine his income and other elements of credit worthiness, check the current market rates and offer an interest rate that reflected the degree of risk.
Then government grandiosity made its appearance. Corporate gunslingers assumed control of Freddie Mac and Fannie Mae, the two big mortgage aggregators. Fannie Mae went further, becoming the home of out-of-work Democrats who had done as much damage as they could elsewhere in the government.
When Congress erased the long-standing separation between between ordinary banking and investment banking, in 1999, the hustlers saw their chance. They started bundling home mortgages by the dozen, by the hundreds, by the thousands, and selling them as bonds.
Suddenly, through the magic of government arrogance, all of those differential risks had been reduced to one interest rate, and that rate was high enough to attract high rollers and institutions all over the world.
Worse, some of the mortgages were time bombs, carrying interest rates that underpriced the risk.
Any sensible, old-style investor would have asked, "Why the hell would I buy that? How much risk is there? Where the hell does the risk reside?"
But those questions apparently weren't asked often enough. When high-risk mortgages began going into default, holders of the mortgage-based bonds must have started wondering what it was they were holding. Then the defaults became an avalanche and spread to higher-quality paper, and the holders knew what they had and tried to bail out.
Now, the toll is high and rising. Fannie Mae and Freddie Mac have been seized by the government, always a reassuring sign, and three of Wall Street's five biggest brokerages - Bear Stearns, Lehman Brothers and Merrill Lynch - are on history's ash heap.
A small city in northern Norway has been rendered insolvent.
Soon, momma will reappear, with a list of new regulations in one hand and a stick in the other.
The only winners will be the corporate gunslingers at Freddie Mac and Fannie Mae, who did something that would be impossible without government connivance: they privatized the profits and socialized the costs.

Sunday, September 14, 2008

Pickin on Pickens

What does it say about America when an accomplished national figure goes on television every day, month after month, says something that isn't true, and isn't challenged?
According to T. Boone Pickens, the Texas oil man, the high price of oil on world markets has transformed the oil trade into the biggest transfer of wealth in history.
Not so. The oil trade doesn't result in even a small transfer of wealth. It is simply the aggregate of a large number of ordinary business transactions.
Let's say a refinery in Texas buys a million dollars' worth of oil from Saudi Arabia. The refinery gets oil with a market value of $1 million and pays $1 million to the Saudi producer. The Saudi producer ships away the oil, but now has $1 million in U.S. currency on account.
The wealth of the U.S.and the wealth of Saudi Arabia are unchanged by the transaction.
If, on the other hand, Iraq invades Kuwait, takes control of its oil fields, and sells the oil to Turkey, that is a transfer of wealth.
So why does Pickens take this line of attack?
Probably because scare stories have been working so well.
Take Al Gore, who parlayed global warming into wealth, fame and a Nobal Prize. It all started with the hysteria he and his accomplices whipped up, a hysteria based on nothing more than a 1 degree increase in the world's average temperature over a century.
If Pickens can kindle a fear among Americans that their country's wealth is slipping away through the oil trade, it is bound to heighten fears already aroused that their homes have lost a lot of value and may lose more.
Now that global warming is cooling off as an issue, it's a fine time to turn the spotlight on our shrinking individual and family wealth.
Our wealth is, in fact, shrinking in one sense, but for reasons largely unrelated to the oil trade. Because of reckless mismanagement of spending, including bailouts and entitlements, by the White House and Congress, the U.S. dollar has been losing value. As a result, the dollar buys less and less of the foreign-made goods that make up a bigger and bigger slice of a family's spending money.
So why does Pickens focus on alternatives to oil instead of the shrinking dollar?
Beats me. But a peek at Pickens' investment portfolio might yield an interesting answer.