Monday, September 22, 2008
Saturday, September 20, 2008
Who's To Blame?
As the economic crisis deepens amidst a volatile election season, many look back to the reasons the market is experiencing such a downturn. Many point to a lack of regulation of mortgage lenders like Fannie Mae and Freddie Mac. But that just leads to another question...who is responsible for not regulating them?
If one listens to the rhetoric being spewed by Sen. Obama, one would think it was Republicans, not Democrats who are in the hip pocket of the Fannie Mae/Freddie Mac crowd. Unfortunately, even people not that good at research can perform a simple Google search to find the real answer...That Sen. Obama was actually the one being described as "family" by the CEO of Fannie Mae, not McCain.
Furthermore, Obama is #2 in contributions from FNMA ($126, 349), despite being in Congress less than 1/2 of one Senate term. The #1 spot goes to Democrat Chris Dodd ($165,400). Furthermore, Obama took $6,000 from FNMA PACs, McCain took zero. McCains total contributions from FNMA were $21, 550. McCain ranks 53rd in FNMA contributions.
Obama's spokesman David Plouffe said on March 27, 2008 that "If we're really going to crack down on the practices that caused the credit and housing crises, we're going to need a leader who doesn't owe the industry any favors." It appears Plouffe was not talking about his own candidate, Sen. Obama. Take a look at the following campaign contribution stats, taken from Congressional Quarterly and the Center for Responsive Politics:
$370, 500 - Lehman Bros
$5,395 - GMAC
$150, 850 - Credit Suisse First Boston
$11,250 - Countrywide
$9, 052 - Washington Mutual
$161, 850 - Citigroup
$4,600 - CBASS
$170, 050 - Morgan Stanley
$1,150 - Centex
$351, 900 - Goldman Sachs
Total $$ from Top Subprime Mortgage Companies:
$ 1, 180, 103
Two of Obama's top advisers, Franklin Raines and Jim Johnson, are former CEOs of FNMA as well. (Raines succeeded Johnson.)
Furthermore, McCain sponsored legislation in 2005 (The Federal Enterprise Housing Regulatory Reform Act) which called for additional/more regulations for FNMA. The bills sponsors (all Republicans) were John Sununu, Elizabeth Dole, John McCain, and Chuck Hagel. The bill was blocked by Democrats. http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN00190:@@@X
McCain's comments at the time:
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005 The United States Senate May 25, 2006 Section 16 Record Text Sen. John McCain [R-AZ]:”Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. I urge my colleagues to support swift action on this GSE reform legislation.”
Depression Era Politics
Great article on how today's market crises are different from the Great Depression. The article also gives great insight into what works and doesn't work vis a vis Resolution Trust Corps, Reconstruction Assoc's etc.
Thursday, September 18, 2008
Charlie Rangel's fall from grace is long and hard (That's what she said?)
Sen. Charlie Rangel, under investigation for tax fraud/evasion/et cetera called Sarah Palin "disabled" on WCBStv today (New York Station). The transcript of the comment:
CBS 2 HD: "Why are the Democrats so afraid of Palin and her popularity?"
Rangel: "You got to be kind to the disabled.
CBS 2 HD: "You got to be kind to the disabled?
Rangel: "Yes."
Rangel: "You got to be kind to the disabled.
CBS 2 HD: "You got to be kind to the disabled?
Rangel: "Yes."
Pretty disgusting comment especially when the woman whom you're calling disabled is a mother of a son with Down's Syndrome.
Nice one Charlie.
It's the Economy, Stupid!
Each year the National Taxpayers' Union (NTU) analyzes congressional members' votes and ranks them based on these votes (related to anything affecting taxes, budgets, etc.) In 2007, the top 20 members in both House and Senate were Republicans. Anyone above 70% is deemed a "Taxpayers Friend" while anyone scoring below 23% is a "Big Spender."
McCain: 88%
Obama: 16%
Biden: 11%
Hillary: 17%
From the Press Release of the NTU: "The Taxpayers Score measures the strength of support for reducing spending and regulation and opposing higher taxes. In general, and higher score is better because it means a Member of Congress voted to lessen or limit the burden to taxpayers"
Another thing to consider - Obama swears he will only raise taxes on those making $250,000+ per year. What he actually means is couples make that much (so that individually, someone may only be make $125,000/year. Furthermore, 80% of the top income tax bracket is in fact small businesses, which employ about 75% of the U.S. workforce. Where do you think they will get the money to pay for the huge tax increase Obama is proposing? By cutting workers and lowering salaries or by passing it on to customers in the form of higher prices. This practice restricts on savings, investments and expansion! Thus, Wal-mart may end up paying a smaller percentage in taxes than a small business. Does that sound fair? No, but then again, neither do higher taxes.
An Argument Against Government Spending
Some Democrats argue that by increasing federal spending, we can stimulate our economy. However, history has shown us that that is rarely the case. Higher spending leads to a decrease in business investment and reduction in growth opportunities (according to a study done by researhers are Harvard, Columbia, and Boston College). When federal spending grows, the stock market falls (case in point - what's going on right now!) A study by Lowell for the Joint Economic Congress found that the rise of stock market averages from 1994-1999 reflected a decrease in federal spending (as a percentage of Gross Domestic Product - GDP). Thanks, mostly, to Republicans limiting pork barrel spending (Lowell E. Gallaway and Richard K. Vedder, Government Size and Economic Growth (Washington D.C. Study prepared for the Joint Economic Congress, December 1998). Thus, to increase economic growth, one should create an environment in which the private sector can best flourish (since it is more productive than the public sector). This means lower taxes, fewer regulations, and a truly free trade economy.
***UPDATE
Obama, while criticizing our nation's current spending, is promising to spend tens of billions more dollars on a U.N. program that gives cash to poor countries. Cuz throwing more money at problems usually works.
McCain was RIGHT about Obama sex-ed ad.
So in a sickeningly excellent turn of events, it seems McCain's ad regarding Obama's support for kindergartener sex-ed was dead-on-balls accurate. Obama did in fact support "comprehensive sex education." Which is what? you might ask. Well, the bill (linked at the end of this post) states that children of all elementary and secondary (public) schools should be taught about Sexually Transmitted Infections/Diseases and how to prevent pregnancy. It's a huge worry for Kindergarteners...And first graders, so I hear. The following is excerpted from Byron York of the National Review Online:
"The second purpose [of the bill] was to increase the number of children receiving sex education. Illinois’ existing law required the teaching of sex education and AIDS prevention in grades six through twelve. The old law read:
Each class or course in comprehensive sex education offered in any of grades 6 through 12 shall include instruction on the prevention, transmission and spread of AIDS.
Senate Bill 99 struck out grade six, changing it to kindergarten, in addition to making a few other changes in wording. It read:
Each class or course in comprehensive sex education in any of grades K through 12 shall include instruction on the prevention of sexually transmitted infections, including the prevention, transmission and spread of HIV. (emphasis added)
Certainly, Obama wasn't flat out lying about the part about protecting elementary schoolers from sexual predators - the bill contains a small section on that. However, in no way does it comprise a majority of the bill nor can it be said to be the bill's primary purpose. Furthermore, while the bill may not explicitly state that teachers must educate children about the actual "act of sex" it is a mystery to me how it would be possible to teach about STDs without mentioning how they are transmitted and what their symptoms are. Yes?
Another fun nugget of cheerfulness - TNS Media Intelligence Campaign Media Analysis Group (TNSMI/CMAG) and the University of Wisconsin Advertising Project analyzed the political ads being (officially) produced/sponsored by each respective campaign. Both campaigns are spending approximately $15 million per week across all states and territories (about $7.8 million per candidate/week). McCain's ads are typically paid for by McCain and the RNC while 97 percent of Obama's ads are paid for solely by his campaign. The study found that 77 percent of Obama's ads qualify as "negative" while only 56 percent of McCain's are "negative. The organization is nonpartisan.
In case you're curious, the breakdown by state:
Table 1: Advertising Spending by State
| McCain | Obama |
Colorado | $553,000 | $522,000 |
Florida | $1,040,000 | $1,327,000 |
Iowa | $352,000 | $148,000 |
Indiana | None | $263,000 |
Michigan | $761,000 | $954,000 |
Minnesota | $472,000 | $18,000 |
Missouri | $353,000 | $504,000 |
Montana | None | $37,000 |
North Carolina | $245,000 | $300,000 |
North Dakota | <$1,000 | $22,000 |
New Hampshire | $225,000 | $172,000 |
New Mexico | $214,000 | $155,000 |
Nevada | $365,000 | $297,000 |
Ohio | $812,000 | $801,000 |
Pennsylvania | $1,612,000 | $948,000 |
Virginia | $312,000 | $868,000 |
Wisconsin | $487,000 | $432,000 |
* Money spent by the Obama campaign in Minnesota was in the Rochester market,which also covers parts of northern Iowa.
Anyway...happy day for us! McCain's bounce is certainly finished, but if he continues the emphasis on the economy and keeps us thinking about my girl Sarah, I think the polls will remain close if not tied until November 4th. :-) Happy reading!
Links!!
Illinois SB 99 www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=3&GA=93&DocTypeId=SB&DocNum=0099&GAID=3&LegID=734&SpecSess=&Session=
Negative campaign data:
http://marcambinder.theatlantic.com/archives/2008/09/obamas_run_more_negative_ads.php
Wednesday, September 17, 2008
There are so many things wrong with this ad I really can't even list them all.
'I'm so proud of all of them [soldiers killed in Iraq. But it's the price we pay for freedom."
-Claremont Anderson, 2006 (http://www.militarycity.com/valor/1464138.html)
The DNSC (Democratic National Senatorial Committee), headed by Chuck Schumer (of course) is essentially pinning the death of Major Stuart Anderson on Sen. Norm Coleman. Because he voted for the war? Because he voted to fund the war? I think, then, we can also blame the war on Hillary, Obama (funding), and, interestingly, Chuck Schumer himself. Furthermore, Norm Coleman's opponent in Minnesota is Al Franken, and he verbally supported the war at the time of the invasion (Interview, MSNBC, 2002). I hope Minnesota is smarter than Al Franken is.
Tuesday, September 16, 2008
Does anyone even know what a subprime mortgage is?
I googled it and I was completely expecting it to be a trivia question but alas, it was not. But the following is an interesting article from the LA Times (That well known bastion of conservative politics) stating that Obama and Clinton have become the new darlings of Wall Street. Economic policy advisers are questioning whether Obama will shape his economic policies based on his friends on Wall Street.
If Obama told me he would shut Barbra Streisand up if he wins the presidency, I would totally vote for him. But she sang at his $28,500/person dinner tonight so I don't think that's in the cards unfortunately for me.
In case, like me, you're struggling with the gobbledegook of the financial crisis and what the heck "regulation" actually means, a few quotes below:
The Democrats throughout the past year have been calling for the kind of control that the Fed has over banks, which is super-strict oversight. It would mean Wall Street firms would have to keep larger "capital reserves" (actual money I think) on hand. The problem is that it means less money for lending, trading, and "underwriting new securities."
While Republicans advocate an updating of regulations (they are currently fragmented, difficult to understand, and many are obsolete), they ideologically reject strict or severe regulation of financial activity. Treasury Secretary Henry Paulson (who was Hamilton's graduation speaker last year) stated the general gist of what Republicans are hoping for:
“The objective here is to get the balance right,” Mr. Paulson said last week. “Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.”
Another issue with regulation is the experiences of the past. Some point to the fact that despite having bank regulators, they
"did little to slow the explosive growth of high-risk subprime mortgages, many of which were “liar’s loans” that did not require borrowers to verify their incomes."
Essentially... there's a difference between "strict" regulation and "consolidating" regulation. There are problems with both, but both McCain and Obama are calling for more regulations on Wall Street. Congrats to anyone who actually could have explained any of this without Google.
Subscribe to:
Posts (Atom)
