Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

Sunday, November 20, 2011

One simple graph: If I were the Speaker of the House...

...I would have a very simple message to the American people. The imminent failure of the "Super Committee" approach to a budget compromise validates the prediction that many conservatives made when John Boehner threw away his trump cards.

So I modified a Heritage graph to make a very simple point. And if I were the House Speaker, I would show this chart to the American people at every opportunity and repeat a very simple mantra:

In 2009, Democrats and President Obama rammed a "one-time" Stimulus spending spree through Congress that ended up costing the American people $840 billion.

Since then, that so-called "one-time" spending spree was built into each and every year's budget because of the Democrats' unprecedented failure to pass a budget.

Therefore our message to Democrats is simple: remove the "one-time" Stimulus spending spree from the baseline budget.

Then, and only then, will we talk about other measures to balance the budget. Not that Democrats have ever worried about "revenues" before spending money they didn't have, mind you -- but, hey, let's give them the benefit of the doubt this time.

How hard is that? Am I the only Republican with Photoshop?

John Boehner is a horrible leader for House Republicans. He is inarticulate. He is unprincipled. And, worse, he is more willing to brawl conservatives -- the Tea Party activists that gave him his speakership -- than he is to fight the radical Leftist Democrats who are dragging our country into an economic abyss.

Which is why he needs to be replaced.

2012 is coming -- and, with your help, I predict a conservative tide that will sweep not only the Sorocrats from power, but many of these so-called Republicans.


How guys like Corzine and Madoff get dealt with in China

When stories like this come down the pike, I get to thinkin' there are a couple o' things about Red China I actually like.

As reported today in the Suzhou evening news:

Former President Shen Changfu of China Mobile Telecom Chongjing Co, Ltd was sentenced to death on charges of taking bribes of over 36 million RMB. (Around $6 million U.S.D)

On 17Nov, 2011 his son Shen Juncheng was sentenced to ten years in prison for taking bribes valued at 13 million RMB ($2M USD) In this case, the son was using his father's connections to support getting new contracts for companies. He was then paid dividends by the companies.

The mentally challenged Thomas Fried-man hardest hit.


Poster Child for Insanity: Los Angeles Times Advocates Even Higher Taxes So Californians Can "Pay It Forward"

Those sounds you just heard were California's beleaguered taxpayers smacking themselves on their foreheads:

California's budget is almost never adopted by the legal deadline, but it was this year — in part because of a new simple-majority-vote requirement that left quarrelsome Republicans out of the discussion, and in part because daydreaming Democrats relied on a vaporous wish that the economy was going to improve and that the state would recoup $3.7 billion more in tax revenues than now seems likely. The shortfall is expected to trigger $2 billion in spending cuts, and Californians who think that's a good thing — that the cuts will impose needed fiscal discipline, or will force the state to make more responsible decisions, or will punish lazy freeloaders or greedy state workers — should wake up and smell the future...

...California is a wealthy state, with enough money and brains to create a future of opportunity and achievement for the next generation. As we face these new triggered cuts and even deeper cuts in the coming year, Californians must now show whether we still have sufficient regard for each other and for our successors to invest a little more today for an abundant, and sustainable, future.

The Times ignores the costs of California's operation as a sanctuary state, which the Federation for American Immigration Reform (FAIR) estimates at $20 billion. Consider just one slice of that figure and the devastating effects that California's open borders policies have on taxpayers:

According to The Modesto Bee, the California correctional system spends $50,000 annually to house each prisoner. This translates to 10 percent of the entire state's budget -- more than double that of the immense California university system -- which is spent on prisoners.

The state prison system currently houses about 155,000 inmates, 21,000 of whom are illegal aliens. Thus, California is spending about $1,050,000,000 (one billion and fifty million dollars) on imprisonment of illegals alone.

There is only way out of this mess for California before cities and the state itself descend into bankruptcy and chaos: they must eradicate collective bargaining rights for public sector workers; they must terminate open borders policies that allow sanctuary cities to exist in California; and they must rein in the regulatory superstate that has sent businesses fleeing the state in record numbers.

The time is now, Californians. You don't have much time left to repair this mess. Reject the idiocy of the Los Angeles Times and the other leftists who have set the state on a course for economic collapse. Vote for freedom.


Another Day, Another Massacre in Syria

Caution: extremely graphic footage.

Just to keep everything straight in my mind... as I understand it, the Obama Doctrine consists of the president staying completely silent on:

...murders of peaceful protesters by Iran's vicious dictators
...murders of peaceful protesters by Syria's vicious dictator
...the Occupy kooks who riot, rape, pillage and otherwise erode the civil society
...Iran's continual threats to wipe America and Israel "off the face of the Earth"
...murders of Christian Copts by "freedom-loving" Egyptians
...incessant rocket attacks by Hamas into Israel
...the continued build-out of Iran's nuclear weapons program
...murders of Libyan civilians by the late, unlamented dictator Gaddafi
...the transit of the Suez Canal by Iranian warships in an outright provocation of Israel
...Iranian military personnel operating with impunity in Venezuela on missile technology
...a failed narco-terror state descending into civil war on our unprotected southern border
...being found in Contempt of Court by a federal judge over the Gulf drilling moratorium
...defying a de facto injunction by a federal judge who threw out all of Obamacare
...the union thugs who have issued countless threats against Governor Walker

However, the president is willing to courageously speak out on:
...How our Egyptian ally should step down
...Israel's construction of apartments in its capital city
...How awesome unions are for Wisconsin
...How awesome the economic recovery is
...How awesome all of the new green jobs he's saved or created are

Crystal clear.


Saturday, November 19, 2011

Yacht Barnacle: the John Kerry Story

When it comes to hypocrisy, criminality, duplicity and elitism, is there anyone in America that tops John Kerry? For you drones: that's a rhetorical question.

BigGovernment.com has obtained records of Massachusetts Democrat Senator John Kerry and his wife Teresa Heinz’s stock portfolios that show almost perfectly timed pharmaceutical stock trades during the Obamacare debate, which fattened their already enormous personal fortune.

...Sen. John Kerry’s position on the powerful Senate Finance Committee’s Health Subcommittee gives him direct access to critical information regarding health care policy. In July 2009, pharmaceutical industry representatives met with key members of Congress to flesh out the Obamacare bill. Then, in November 2009, with the bill’s passage was looking more likely, the Kerrys’ portfolios reflect a drug stock buying spree...

...Even as their portfolios reflected aggressive purchasing of drug company stocks, Sen. Kerry was dumping investments in health insurance companies.

...[Peter Schweizer's new book] Throw Them All Out contends that Sen. Kerry is no stranger to making huge profits off of health care-related trading based on his rare access to information. “Some of [Kerry’s] biggest scores,” writes Schweizer, “were tied to his knowledge of obscure matters that had huge ramifications for certain companies.”

One such instance occurred in 2007, when the government was deciding whether an anemia drug made by Amgen would receive Medicare reimbursement. Before news of the congressional negotiations went public, however, the Kerrys’ investment fund executed two perfectly timed stock sales. On May 4th and 7th, between $500,000 and $1 million worth of Amgen were sold off. The move helped him avoid between $50,000 and $100,000 in losses.

Another example of Kerry’s deft congressional trading happened in 2003 during the negotiations over the prescription drug benefit plan. Kerry’s Senate committee was in charge of the plan’s oversight. In 2003, writes Schweizer, “a stunning 111 transactions of pharmaceutical companies and health insurance companies” were made to the Kerrys’ portfolios.

Peter Schweizer's book is a must-read.


Hat tip: Instapundit.

Occupy Cairo Movement Off To Slow Start [Dan from New York]

Dan from New York:

Yo occupiers! Take a look at this.

Your compatriots in Cairo are having a rough time. Makes you long for the days of Mubarak, and an end to the tenure of President Obama on 1/20/13, don’t it?

Oh, almost forgot, comrades. Things aren’t much better for Occupy Syria, as you’ll see here.

So stop whining about a little mace in the face. You never had it so good.

"At least one person has been killed and more than 600 wounded in fierce clashes between protesters and security forces in central Cairo... The clashes came as police moved to prevent a long-term sit-in..."

The ludicrous Bill Kristol hardest hit.


Horrifying Chart of the Day (and Reason #4,323 that John Boehner Must Be Replaced As Speaker of the House)

Via the Washington Examiner comes this doozy of a reality check:

Consider the negotiating "skills" of House Speaker John Boehner:

• Episode 1: The Continuing Resolution Charade, in which Boehner gives up his trump card -- a government shutdown -- without a whimper

• Episode 2: The Debt Ceiling Debacle, in which Boehner gives up his trump card -- forcing the government to cut spending -- without a fight

• Episode 3: The Case of the Balanced Budget Amendment That Wasn't, in which Boehner hollows out the Cut-Cap-and-Balance pledge and tries to pass a BBA that neither cuts or caps spending

• Episode 4: Super-Committee Cowardice, in which Boehner names RINOs who have no desire to battle the Left nor seriously cut spending

In 2012, we conservatives must rise up and demand that either Michele Bachmann, Paul Ryan or Allen West replace the cowardly, weak-willed, big-government, cocktail-circuit Republican named John Boehner as House Speaker.

We don't have any time left for pathetic losers like Boehner and Eric Cantor who refuse to fight for this country as the Marxist Left drags it into an economic abyss.

I'm sick of these weaklings. And they need to go.


Friday, November 18, 2011

A bargain at any price: the Obama family retinue only costs the taxpayers a couple of million per week

The man who has borrowed and spent more money than anyone in world history has a well-kept secret. It's called "The SAVE Program" and is President Obama's idea of "budget-cutting". Problem is, it asks federal bureaucracies to "shave 20% from certain categories of spending [so they] will be free to [spend] the savings elsewhere."

Got it? Let's pretend an agency saves a million dollars annually on its travel budget. It's then free to spend that million dollars on, I don't know, hiring six more bureaucrats. Brilliant, eh?

The fact is, most of these "savings" will total up to a million bucks or so.

And that million dollars is what Obama and his family cost the American taxpayer... per week:

Discretionary Use Of Private Aircraft:

(One of 2 Boeing 747-200Bs "Air Force One"):

Annual Costs: 700 hours @ $65,000/hr: $45,500,000

...Annual Expenses Total: $59,077,000

Four Years of Same: $236,308,000

Pension And Related Benefits:

Present value of Pension Benefits ($200,000 per year): $2,251,556

Total Expenses: $238,559,556

Average Annual Expenses: $59,639,889

So the President touts a program that he says is going to save billions over "the next several years" when a realistic estimate is more like a couple of million and he spends that in a week?

And that doesn't even count all of the wasteful spending on the First Lady's 22-person staff (the largest ever) and a coterie of personal attendants to the President (beyond the Secret Service). Nor does that count their numerous vacations to all parts of the world on the taxpayer's dime.

Let's be kind and say it only adds up to two million a week.

I call this a "Cloward-Piven savings program".


Hat tip: TrendingRight.

Thursday, November 17, 2011

World War IV? Secret German Report Details a Super-EU Able to 'Take Over Economies of Eurozone Countries'

The Telegraph reports that Germany's leaders have laid down a secret contingency plan for hostile economic takeovers of sovereign members of the EU.

And what could possibly go wrong with that? Besides, of course, a failed Viennese artist with a tiny mustache, a world war, and tens of millions dead?

[A] leaked memo, written by the German foreign office, discloses radical plans for an intrusive new European body that will be able to take over the economies of beleaguered eurozone countries.

It discloses that the EU’s largest economy is also preparing for other European countries, which are too large to be bailed out, to default on their debts — effectively going bankrupt. It will prompt fears that German plans to deal with the eurozone crisis involve an erosion of national sovereignty that could pave the way for a European “super state” with its own tax and spending plans set in Brussels...

...The eurozone contagion is threatening to spread to Spain and France... The six-page German foreign ministry paper sets out plans for the creation of a European Monetary Fund with a transfer of sovereignty away from member states.

The fund will have the power to take ailing countries into receivership and run their economies. Even more controversially, the document, entitled The future of the EU: required integration policy improvements for the creation of a Stability Union, declares that the treaty changes are a first stage “in which the EU will develop into a political union”. “The debate on the way towards a political union must begin as soon as the course toward stability union is charted,” it concludes.

The EU is dead: its leaders just refuse to acknowledge what everyone else in the world knows. It allowed countries to violate their terms of membership, it facilitated outrageous amounts of debt, and it helped promote the contamination of the entire world financial system.

The fuse was lit long ago. The only question is how many weeks (not months) it will all take to implode.


Oopsie! IRS reports Obamacare will force millions to go without health insurance

Gee, it's so surprising how a 2,200-page bill that no one read could lead to all of these... complications:

President Obama's healthcare law will leave millions of families without affordable coverage unless tax officials rewrite the rules on who gets subsidies, advocates warned Thursday.

...The issue risks blowing up in Democrats' face in 2014, when the subsidies for coverage in state-based insurance exchanges become available. House Republicans have already used the glitch, which The Hill first reported in July, as ammunition to hammer the law for allegedly discriminating against marriage.

Advocates shared their concerns in person with the IRS during a hearing on the tax credits after deluging the agency with comments about its proposed regulation last month. The proposed rule would not penalize families that can't afford insurance, but advocates say that's not enough.

IRS officials listened silently for two and a half hours and asked no questions. The Treasury Department has said its hands are tied because of the way the law was written.

In related news, Obamacare architect Jonathan Gruber just threw a temper tantrum.


Ann Barnhardt pulls the plug on her brokerage business: the 'entire system has been utterly destroyed' by MF Global

You may know the gutsy, anti-Jihad crusader Ann Barnhardt from her use of bacon bookmarks or her shocking exposé of Islamist misogyny. But Barnhardt was also, until a day ago, a principal of Barnhardt Capital Management, a commodity brokerage that specialized in cattle and grain.

This is an abridged version of the letter Barnhardt just sent to clients to announce that her firm has ceased operations:

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm...

...And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism...

With Best Regards-
Ann Barnhardt

Barnhardt will continue blogging at Barnhardt.biz

Wednesday, November 16, 2011

Obamacare Architect Jonathan Gruber Fears Supremes Could Rely Upon Constitution, Other Old Documents In Voiding Health Care Law

I've dispensed with my usual blockquote style to interject responses more rapidly because... the stupid, it burns:

Jonathan Gruber, a key intellectual architect of President Obama's overhaul of the American health care system, is a little frustrated... "I'm frustrated that the future of the American health care system rests in the hands of one or two of these unelected people who might make the decision based on political grounds..." a few hours after the Supreme Court granted a writ of certiorari to hear challenges to the Affordable Care Act. "It's very disturbing."


Gruber wasn't disturbed by other rulings, however, that upheld left-wing positions like the Constitutional right to an abortion and the Constitutional right to collect welfare.

The court consolidated several different challenges and will hear a host of issues related to the Patient Protection and Affordable Care Act, which became law in March 2010, granting a full five-and-a-half hours for oral argument. But the central question is whether Congress can require people to buy health insurance, and, if not, whether that mandate can be severed from the rest of the bill.


Yes, because the Constitution can be interpreted to allow a massive, authoritarian, centralized government to force people to buy health care insurance, to buy certain kinds of clothing, to buy certain kinds of housing, and to buy only approved food items. After all, food, housing and clothing are as essential to human beings as heath care (if not more crucial), which means the government can compel you to buy those products.

Those sections are right next to the Abortion Clause of the Constitution.

Gruber, whose ideas also made up the landmark overhaul of health care in Massachusetts that was overseen by then-governor Mitt Romney, thinks that the Obama health care package would still be better than nothing if the mandate were removed, but said that it wouldn't be nearly as effective... Without the mandate, Gruber said, the bill would only cover a third to half as many people, and that premiums go up 20 to 30 percent.


What a schmuck. The European social welfare states -- with cradle-to-grave "free" health care and outrageous pension programs -- are collapsing as we speak. And Gruber thinks that the individual mandate will help drive down costs.

"Look, if this succeeds, then Obama becomes F.D.R. This is the most important social policy accomplishment since the 1960s. And if this succeeds, this could be the kind of benefit to the Democratic Party that Social Security was..."


Would that be the same program of which its trustees -- including Timmy Geither, Hilda Solis, and Kathleen Sebelius -- wrote, "Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative corrections if disruptive consequences for beneficiaries and taxpayers are to be avoided"?

And yet Gruber evangelizes for still more deficits as the economy teeters on the brink of utter and complete collapse. He screeches for more debt as Democrats fight the reform of Social Security and Medicare, which -- according to their own experts -- are poised to implode in just a few years' time. He cries to borrow more money as Democrats have already saddled our children and grandchildren with debts that simply can't be repaid.

There's a special place in Hell for the likes of Gruber, who represents nothing less than an enemy of civilization. For he is helping to shred the most magnificent society ever created on the face of the Earth; and he does so in order to construct some sort of sick monument to Soviet-style central planning, which can't succeed and has never succeeded in all of human history.


Obama Silent as Millionaires and Billionaires at Fannie and Freddie Collect Huge Bonuses From the Taxpayer

After literally years of demonizing "millionaires and billionaires" (which, best I can figure, means people who make $200,000 a year), the President has gone curiously silent about a certain segment of the rich: the guys running Fannie Mae and Freddie Mac into the ground.

Barack Obama has exhorted supporters to object to large bonus payouts at financial institutions that took TARP bailout money. The House Oversight Committee and its chair, Rep. Darrell Issa, want to know why Obama hasn’t objected to the ridiculous levels of compensation at the two largest bailout recipients — Fannie Mae and Freddie Mac...

...lucrative compensation packages may be appropriate for profitable companies in the private sector, but substantial questions exist whether they are appropriate for entities in taxpayer-funded conservatorship, especially those that are bleeding billions of dollars each quarter. In this context, it is important to remember that taxpayers – not corporate shareholders – are footing the bill for these lavish bonuses.

Countdown to Democrat outrage in: three... two... never.


Tuesday, November 15, 2011

Botox-laden swamp-drainer made $100K in two days by savvy investing and blocking legislation, but mostly blocking legislation

Retail investors would love to learn former Speaker Nancy Pelosi's investing secrets, which magically increased her net worth 62% during the worst of the financial crisis (spiking her portfolio's value from $22 million to $35.2 million in a year's time).

CBS News explains how the Botox-laden, swamp-draining, small business-stiffing Pelosi made her millions:

The former speaker and her husband have participated in at least eight IPOs, one of which was from Visa in 2008 - just as a troublesome piece of legislation that would have hurt credit card companies began making its way through the House. The Pelosis purchased 5,000 shares of Visa at the initial price of $44 dollars. Two days later it was trading at $64.

...this stock purchase was made as Visa was engaged in a full-court press to lobby Pelosi to stop legislation to curb credit-card swipe fees to vendors.

In 2007, Visa used an army of lobbyists to try to influence Pelosi, including one of her former advisers, Dean Aguillen... In addition to exploiting the revolving door between Congress and lobbying firms, Visa's political action committee made a $1,000 donation to Pelosi's re-election campaign... Two days after that donation was made, Pelosi met with Visa executives in her office. Aguillen also contributed $1,000 to Pelosi and another $1,000 to the campaign arm of the House Democratic caucusin the first half of 2008.

Dave Del Dotto could not be reached for comment at press time.


Related:

Caller to Mark Levin Show Describes How Nancy Pelosi and her Husband Abuse Their Power to Stiff Small Business
Gallery of Twitches: Stop-Action Photos of Nancy Pelosi as She Faces Blistering Questions


Hat tip: Ace.

Occupy Mom's Basement Begins #omb

Dan from New York:

NY Post, November 15, 2011

Judge: OWS protestors can't return to Zuccotti Park with tents, overnight gear


Protestors will not be allowed to bring tents and overnight gear to Zuccotti Park, a Manhattan judge ruled today, dealing a huge blow to the Occupy Wall Street movement.

"The [protestors] have not demonstrated that they have a First Amendment right to remain in Zuccotti Park, along with their tents, structures, generators and other installations to the exclusion of the owner's reasonable rights and duties to maintain Zuccotti Park, or to the rights to public access of others who might wish to use the space safely," Manhattan Supreme Court Judge Michael Stallman wrote in a four-page decision.

"Neither have the applicants shown a right to a temporary restraining order that would restrict the city's enforcement of law so as to promote public health and safety."

DNC headquarters will reportedly fly its official flag -- which depicts a donkey taking a dump on a police car -- at half-staff tomorrow, after employees have been de-loused.


Monday, November 14, 2011

What do you get when you put a former ACORN community agitator, who never held a job, in charge of the world's largest economy?

Pretend it's a hypothetical question, so you won't grow even more depressed.

Here's the latest Case-Shiller data, adjusted for October 2011.

Say, is that a green shoot?


Compulsive Intervention Disorder

President Obama and other Democrats have routinely pinned the blame for the 2008 housing crisis on the mistakes of the prior administration. In fact, two years ago the New York Times published a 5,100-word article alleging that the Bush administration’s housing policies had “stoked” the foreclosure crisis and, therefore, the financial meltdown. Using a variety of governmental mechanisms, the Times alleged, Bush seduced millions of people into mortgages that they ultimately couldn’t afford.

The Times has forgotten -- or, more likely, chosen to ignore -- a long and sordid history of government involvement with housing.

In 1922, Secretary of Commerce Herbert Hoover, overreacting to a tiny dip in home ownership rates reflected by the 1920 census (from 45.9% in 1910 to 45.6%), warned that three-quarters of all Americans would be renters within a few decades (experts believe that the small drop was actually related to the after-effects of World War I).

The New York Times echoed Hoover's urgency, "The nation’s stability [is] being undermined... The masses [are] losing their struggle for a better life.”

Without waiting to see if postwar prosperity might change the trend, Hoover launched a program of aggressive government intervention into the housing market. Hoover's Own Your Own Home program prompted GM, U.S. Steel and -- most significantly -- federally chartered banks to dive into the housing business.

From 1927 to 1929, national banks’ mortgage lending increased 45 percent. Despite an obviously overheated market, The New York Times applauded the “wave of home-building” turning America into "a nation of home owners."

The 1930 census revealed 47.8% of U.S. households were living in their own homes.

But all was not well. Foreclosures rose from 2% in 1922 to 11% in 1927.

The October 1929 stock market crash touched off bank runs and cash-starved institutions stopped lending altogether.

By 1933, 1,000 homes were foreclosing each day.

Hoover's Own Your Own Home program had created a housing bubble. Mortgage loans more than doubled in less than ten years, a primary reason that 750 financial institutions failed in 1930 alone.

Construction jobs also fell 70% from 1929 to 1933.

You might thank that Hoover's housing debacle would have taught politicians the dangers inherent in engineering housing policy.

Instead, the feds reacted to the crisis by forming the Home Owners' Loan Corporation (HOLC). HOLC was a New Deal bailout organization that turned government into an even bigger player in the housing market. HOLC would buy up troubled mortgages from banks and allow homeowners to refinance.

HOLC turned into a massive federal agency, reaching 20,000 employees at its height. Despite the new loans it negotiated, 20% of these reformulated mortgages defaulted.

HOLC loan officers characterized two thirds of the defaults as borrowers refusing to renoegotiate, as homeowners rightly figured that the government wouldn't kick them out of their homes.

And despite all of its purchases of bad loans, mortgage lending never revived during the thirties.

The feds' attempts at central planning continued with the Federal Home Loan Bank system to provide funds to banks; the Federal Housing Administration to insure loans; the Federal National Mortgage Association (Fannie Mae) to purchase insured mortgages; and the Federal Savings and Loan Insurance Corporation to prevent future bank runs.

Put simply, the U.S. government had federalized much of the mortgage market.

1944's GI Bill included government-subsidized mortgages for returning veterans. By 1949, more than half of U.S. households owned homes and 40% were government-subsidized.

As homeownership grew, political pressure to allow riskier loans increased. As a result, the government eased its lending requirements, approving riskier loans and extending terms.

Predictably, the failure rate on FHA-insured loans spiked by 500% from 1950 to 1960.

By contrast, the foreclosure rate of conventional mortgages barely changed at all; many traditional lenders had maintained strict underwriting standards.

Ignoring all of these issues, the FHA embarked on a massive urban-loan program in the sixties and seventies. It turned out to be a catastrophic failure.

After the riots of 1968, the government passed a law giving poor families FHA-insured loans with nearly no down payments.

The result: massive real-estate flipping as speculators took advantage of the easy loan terms and uneducated home buyers. Foreclosures ran wild in more than 20 cities. The FHA became Detroit's biggest homeowner after it took about $200 million in losses. In New York, the tab ran more than $300 million. The final bill to taxpayers was estimated at $1.4 billion in losses.

Aside from the monetary losses, the program caused many neighborhoods to fall into ruins. Bushwick, a once-stable blue-collar Brooklyn community, became a burned-out husk of its former self as many buyers walked away from their properties and arsonists torched vacant homes. Entire blocks remained burned-out for years.

Once again, Washington's attempts at social engineering had failed as rampant speculation and corruption ran unchecked because the taxpayers were on the hook.

Again ignoring the problems endemic in any central planning of the housing market, the government next stepped into the breach in 1975.

Community agitators claimed studies were demonstrating that blacks were not receiving the same number of loans as whites; and the media jumped on the bandwagon. Experts pointed out, however, that creditworthiness of borrowers had not been taken into account.

Despite these obvious failings, Congress passed the Community Reinvestment Act (CRA) in 1977. It gave regulators the power to deny banks the right to expand if they didn’t lend at "acceptable rates" in poor neighborhoods. In 1979, the Federal Deposit Insurance Corporation (FDIC) rocked the banking industry when it used the CRA to deny the Greater New York Savings Bank to open a bank branch in Manhattan, claiming it hadn't met its lending obligations in Brooklyn.

The theme was repeated over and over again. In 1980, the FDIC told a Maryland bank that its expansion plans would be denied unless it started lending in the District of Columbia, though the bank had no branches there. Then the government began instructing wholesale banks—institutions without retail branches and that don’t lend to consumers —that they, too, had to implement urban lending programs.

Another milestone to the current meltdown was caused directly by the Association of Community Organizations for Reform Now (Acorn), which threatened to stop bank acquisitions in 1986 until it accepted "flexible credit and underwriting standards" for minority borrowers.

Acorn also successfully applied political pressure to Congress, which passed legislation in 1992 that required Fannie Mae and Freddie Mac to devote 30% of their loan portfolios to low- and moderate-income borrowers.

The campaign gathered inertia with the election of Bill Clinton, whose secretary of HUD, Henry Cisneros, began lobbying for zero-down loans, expanding federal insurance and using the CRA and other laws to force private money into low-income programs. Fannie and Freddie (also known as government-sponsored entities -- or GSEs) followed Cisneros' guidelines and further loosened underwriting standards, despite the FHA disaster of the sixties.

To meet the stated goals, the GSEs began enlisting large lenders to meet the new, flexible underwriting standards. In 1994, after accusions in Congress of "egregious redlin[ing]" by Rep. Maxine Waters (D-CA), the Mortgage Bankers Association (MBA) shocked the banking world by signing an agreement with HUD to increase minority lending. The first MBA member to enlist: Countrywide Financial, the firm at the center of the subprime meltdown.

As the volume of low-income loans increased, Wall Street began to take note.

In early 2000 the FDIC proposed increasing capital requirements for lenders making subprime loans, Carolyn Maloney (D-NY) and John J. LaFalce (D-NY) battled the attempts, urging the regulators “not to be premature” with stricter underwriting.

In 1999, despite new lenders in the market, the Clinton administration kept pushing aggressive mortgage products.

In July, HUD increased desired levels for the GSEs low-income lending. In September, the GSEs began purchasing loans made to “borrowers with slightly impaired credit”, lowering the bar still further. In the following years, Congress set higher goals for the GSEs.

By 2007, some $1 trillion in loans had been made to lower- and moderate-income buyers. And Countrywide was the biggest supplier of mortgages to low-income buyers for Fannie Mae.

There was no shortage of evidence that this approach was doomed to fail.

In October 1994, Fannie Mae head James Johnson reminded a banking convention that mortgages with small down payments had a much higher risk of defaulting (actually, three times more likely to default). Yet the very next month, Fannie expanded its program to include products with a 97 percent loan-to-value ratio (a 3% down payment), the result of more political pressure from Maxine Waters and others in Congress.

No matter how high ownership rates climbed, however, a new group below the bar needed help. Massive immigration during the nineties, for example, created huge new pools of prospective borrowers. The Congressional Hispanic Caucus created Hogar, an initiative that eased lending standards for immigrants, and mortgage lending to Hispanics soared. Today, in areas where Hispanics make up 25 percent or more of the population, foreclosure rates are now nearly 50 percent higher than the national average.

Last year, lenders began foreclosing on roughly 2.3 million homes; some experts believe that before the crisis is over, 8 million homes will have been foreclosed upon.

Despite all of these lessons, Washington is preparing for the next housing debacle.

Barney Frank (D-MA) has aggressively resisted attempts to privatize the GSEs, which would eliminate both the risk to taxpayers and the political influence endemic in the series of failures. And the Obama administration’s various mortgage bailout plans have not only failed, they also eerily resemble the New Deal’s HOLC.

Behind all of these efforts are fundamental misconceptions about central planning; that masterminds in Washington can somehow perform better than the free market, where conventional underwriting programs have succeeded admirably in the past without government regulation.

If nothing else, the last ninety years have proven that political tampering in the housing market results in nothing less than disaster. And we're on course for more, if we keep electing big government Statists to office.

The pinnacle of this senseless treadmill is having the likes of Chris Dodd and Barney Frank -- arguably as responsible as any two living individuals for the most recent crisis -- writing the "fixes" for the financial system; or President Obama's pursuit of reduced underwriting standards that "repeats [the] mistakes of the past".

What's that definition of insanity, again?

It's time to get government out of the housing business, once and for all.


Based upon: Steven Malanga's outstanding Obsessive Housing Disorder in City Journal.

Sunday, November 13, 2011

Madoff's SEC regulators get off scot-free; liberals who bleat endlessly for more regulation hardest hit

I just love it when progressives and big government Republicans prattle endlessly about the need for more regulation. Every industry in America is regulated to an unprecedented degree, with thousands upon thousands of federal bureaucrats micromanaging light-bulbs, shower heads, the size of toilet tanks, gas mileage, energy exploration, dishwasher design, and everything else you can think of.

And no industry is more regulated than financial services.

After the housing market melted down thanks to eight decades of government tinkering, none other than Sen. Chris Dodd and Rep. Barney Frank -- prime culprits in the debacle -- put themselves in charge of "fixing" the financial system.

And the fixes consisted of thousands of pages of new regulations.

Dodd and Frank curiously ignored their financial benefactors -- Fannie Mae and Freddie Mac -- which contributed mightily to the disaster. Barney Frank used his pull to get his lover a job at Fannie (no pun intended) and Chris Dodd received sweetheart loan deals under the table.

In other words, the regulators were themselves in need of regulation.

A prime example of this kind of cronyism and corruption involves the aftermath of the Bernard Madoff Ponzi Scheme. Madoff's multi-billion dollar fraud represented the biggest and most obvious failure of the Securities and Exchange Commission (SEC), an agency designed to protect investors against precisely this type of crime.

Despite seventeen (17) years of warnings about Madoff, the SEC declined to seriously investigate until it was too late.

And what happened to the all-too-cozy regulators who should have heeded the warnings and protected investors from Madoff? You guessed it: virtually nothing. Not one was fired.

The Washington Post reported on its Web site Friday that seven SEC employees had been disciplined, based on details provided by a person familiar with the actions. A second source, an official involved in the process, told The Post that Schapiro had received recommendations to fire an employee over the mishandling of the Madoff case.

Later Friday, Nester confirmed details and added that an eighth employee also received disciplinary action. A ninth employee, who was facing a potential seven-day suspension, resigned before disciplinary action was taken, Nester said.

The punishments given the SEC employees varied and included suspensions, pay cuts and demotions.

The employee recommended for termination received one of the more severe penalties, a 30-day suspension along with a reduction in pay and grade. Another was given a pay cut of 5.7 percent. At the low end, one employee was suspended for seven days, another for three days and two others were issued counseling memos, a step below a reprimand.

What needs to be regulated is government itself. Crony capitalism is rampant in Washington, with politicians like Dodd and Frank out to enrich themselves at taxpayer expense.

We don't need more regulations or regulators. What we need are more controls on government, to protect the people from predators like these corrupt slime-balls.


Related: Compulsive Intervention Disorder

Saturday, November 12, 2011

Good news: central planning experts at EPA attempting to shut down "95 percent of North Dakota['s oil] drilling"

Because, heaven knows, you wouldn't want to use any oil when you drill for... oil. The Minot Daily News reports on the EPA's latest job-destroying initiative:

The U.S. Environmental Protection Agency is developing Underground Injection Control Class II permitting guidance for hydraulic fracturing activities that use diesel fuels in fracturing fluids.

"In our opinion, this is an underhanded attempt to pick the lock on the back door and get regulatory oversight over fracturing. As I have said earlier, this could easily stop 95 percent of North Dakota drilling for 18 to 24 months and slow it to half or less of current levels after that," said Lynn Helms, Bismarck, director of the N.D. Department of Mineral Resources.

The EPA is studying any potential impact of fracking on groundwater and drinking water and Helms has said also would impact drilling in the state. That study was announced earlier this year.

Hydraulic fracturing, also called fracturing or fracking, is a process used to break open oil-bearing rock with pressurized fluid and sand. The process is used in about 95 percent of the wells drilled in North Dakota.

..."They have conducted three public meetings and the environmental community is pressing for a broad definition of diesel fuel that would define it as any petroleum distillate that is found in diesel fuel," Helms said... He said this would be a different definition than the other 163 references to diesel fuel in the Energy Policy Act 2005.

Helms said the Independent Petroleum Association of America has filed a lawsuit to stop the process, with oral arguments to be heard in federal court shortly... A brief filed by IPAA legal counsel in March said, in summary, "there is no reason to believe that EPA's new interpretation of the SDWA and its implementing regulations reflects a carefully reasoned change in policy."

It goes on to say, "An agency cannot do so formally or informally without engaging in a proper rulemaking when the consequence for the regulated community is complying at the cost of many thousands of dollars or potentially being subject to an enforcement action. EPA's decision should be vacated and EPA should be barred from enforcing its position until such time as EPA engages in a rulemaking that satisfies the APA and the SDWA."

Should the EPA successfully shut down North Dakota's oil drilling operations, it will have contributed to President Obama's record-setting figure of nearly 3,000,000 U.S. jobs -- many of them union jobs -- destroyed by his environmental, flat-earth, no-growth Marxist bureaucrats.


"If you like your health care plan, you can keep it (except for 4.5 million of you gullible schmucks)"

I wonder how many of these folks were among the saps who voted for Obama?

Throughout the Obamacare debate, President Obama repeatedly promised, “If you like your health care plan, you can keep your health care plan.” Now, Gallup reports that from the first quarter of 2010 (when Obama signed Obamacare into law) to the third quarter of this year, 2 percent of American adults lost their employer sponsored health insurance. In other words, about 4.5 million Americans lost their employer-sponsored insurance over a span of just 18 months...

what’s clear is that, more than 25 months before Obamacare would really go into effect — if it’s not repealed first — employers are already dropping employees from their insurance rolls.

Take Walmart, for example — a prominent Obamacare supporter. Gallup writes,

“The nation's largest private employer, Wal-Mart, announced in October that new part-time employees who work less than an average of 24 hours a week would no longer be able to get their health insurance from the company. Wal-Mart laid out several other cuts to its health insurance offerings, including some workers’ ability get coverage for their spouses. Other companies have already made and will likely continue to make similar changes to their health insurance benefits….

“If Wal-Mart's decision is a precursor of how employers intend to manage their healthcare costs, the downward trend in employer-based healthcare will likely continue.”

So in addition to costing about $2.5 trillion over its real first decade (2014 to 2023), looting nearly $1 trillion from Medicare over that time (according to the CBO), forcing Americans to buy government-approved health insurance under penalty of law, and amassing unprecedented power and money in Washington at the expense of Americans’ liberty — if Obamacare stays on the books, you may like your health care plan, but that doesn’t necessarily mean you can keep your health care plan...

Jeffrey Anderson concludes: "It's time to repeal Obamacare."

And he's right. But we had better nominate a Constitutional Conservative to battle Obama, for the RINOs and big-government, establishment types like Mitt Romney haven't demonstrated they have the stones for this fight.