Fear of Clowns

"Faith may be defined briefly as an illogical belief in the occurrence of the improbable."
- H. L. Mencken
gozz@gozz.com

Friday, July 03, 2009

Howard Zinn: Untold Truths About the American Revolution 

Right.

Canada is independent of England, isn't it? I think so.

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Tuesday, October 07, 2008

Agree with McCain on this - sort of 

I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to make those -- be able to make those payments and stay in their homes.

Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy.

However, this was the proposal I supported - as proposed and explained by two Yale economists two weeks ago before the Wall Street bailout was enacted - as an alternative to the Wall Street bailout.

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Sunday, October 05, 2008

Go shopping, or Party's over? 

Adding to my claim that the Bush policy to increase home ownership contributed to this crisis, I'll reference a wider observation on how other Bush policies got us to where we are now economically. Andrew J. Bacevich writes.

From the very outset [of Bush's"War on Terror], the president described the "war on terror" as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. "Get down to Disney World in Florida," he urged just over two weeks after 9/11. "Take your families and enjoy life, the way we want it to be enjoyed." Bush certainly wanted citizens to support his war -- he just wasn't going to require them actually to do anything. The support he sought was not active but passive. It entailed not popular engagement but popular deference.

...[The Bush Administration] sought no additional revenue to cover the costs of waging a protracted conflict. It left the nation's economic priorities unchanged. Instead of sacrifices, it offered tax cuts. So as the American soldier fought, the American consumer binged, encouraged by American banks offering easy credit.

... Bush seems to have calculated -- cynically but correctly -- that prolonging the credit-fueled consumer binge could help keep complaints about his performance as commander in chief from becoming more than a nuisance. Members of Congress calculated -- again correctly -- that their constituents were looking to Capitol Hill for largesse, not lessons in austerity. In this sense, recklessness on Main Street, on Wall Street and at both ends of Pennsylvania Avenue proved mutually reinforcing.

The laissez-faire economy can do no wrong ideology which has engulfed the Republican Party for three decades has quite possibly lead our country on a road to ruin --- and it seems for now the Party itself. For decades, fueled by anti-government and anti-regulation big money sponsors, conservatives have groomed their new leaders from every avenue - from campus organizations to local politicians' campaigns to K Street lobbyists into embracing the ideology of laissez-faire economics.

The current economic crisis seems to have undone in just a few weeks the decades-long effort by GOP patrons to turn our nation's economy into an naked aristocracy with big business at the helm. Party's over?

To unlock the mystery of the earlier [Wall Street bailout] bill's stunning rejection, consider two numbers: 82 and 0. The first is the percentage of retiring Republican representatives who voted for the bill. The second is the percentage of Republican freshmen who did.

... The new guard is fiercely stubborn, gutsily insubordinate, drama-loving and -- compared with the 82-percent-for-compromise old guard -- unadulteratedly ideological. And it could take the GOP off an even higher cliff than the one the party lurched off two years ago.

The 2007 presidential primary promised to provide a swift survival-of-the-fittest test for the competing new visions. When Sen. John McCain prevailed, it seemed that the winning philosophy was one that, in the main, dumped Republican orthodoxy in favor of solutions-oriented practicality. (In case you've been living in a spider hole this year and haven't heard, McCain likes calling himself a maverick, a doer, a wooer of independents, a post-partisan.)

But McCain's triumph actually hid the fact that, at the lower levels of the party, the emerging center of gravity is more conservative, not less. In the House, such young members as Jeb Hensarling (Tex.), Mike Pence (Ind.) and their ideologically purist soulmates on the Republican Study Committee (which absorbed most of the GOP freshmen) began to influence the party's agenda from the right, clamoring to make pork-busting the GOP's focus, demanding legislation to lower taxes and even mounting a prank revolt on a war-funding bill in May, just to flex their muscles. "The American people thought Republicans weren't acting like Republicans," Hensarling explained.

Yes, I agreed with House Republicans on their "NO" vote, but upon completely different reasoning. And yes, the blogosphere is rife with bloggers who worship big business as the new messiah, but then again somewhere around a quarter of Americans still approve of Bush's job performance.

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Tuesday, September 30, 2008

The Trickle-Up Bailout - the solution starts here 

The economic crisis didn't start two weeks ago but is serious. The plans being bandied about Washington all center upon gambling an unfathomable amount of money buying "toxic assets" from banks that are maybe worth something, maybe worth nothing. Nobody knows. If someone knew what they're worth, that someone would be buying them up. That nobody wants to buy them at any price is testament to their potential worthlessness. Besides, who in their sane mind would pay good money for a toxic asset?

This essay appears in today's Washington Post. Shorter: instead of bailing out the banks that got us to where we are, buy mortgages directly from troubled mortgage holders on 6% 30 year terms; if the mortgage holders still can't keep up, take a like claim in the future value of the house.

The financial crisis is a liquidity crisis, yes, but it is ultimately a product of homeowner failures to pay. Unless this fundamental problem is fixed, we will continue to see -- and need to treat -- the symptoms. The proposed bailout ignores this. Yet the sum being demanded from taxpayers is almost certainly more than sufficient to pay off all currently delinquent mortgages.

... Some will argue that it is grossly unfair to pay off the mortgages of borrowers who took risks and lost. In other words, why should my profligate neighbor be rewarded for overleveraging himself?

Because such unfairness is a small price to pay to avoid a rapid transition to a socialist economy, the collapse of our financial system (and its related global implications) and a frightening shift of economic power toward the executive branch. Why shell out $700 billion to Wall Street dealmakers and the companies they managed into this mess? Wouldn't it be preferable for individual homeowners to benefit directly?

... When Congress returns, lawmakers are likely to modify and then pass the administration's bailout proposal. They should consider ways to implement this bottom-up solution. Combining this approach with the government's proposal could greatly benefit taxpayers. Yes, the government's swift purchase of illiquid securities would stabilize compromised financial institutions and the credit markets. But the notion that taxpayers would benefit in the long run is pure speculation, particularly if the government overpaid for the securities. On the other hand, once a government-sponsored refinancing wave kicked in, the full value of the securities in the government's portfolio would be restored, and they could be sold off in an orderly manner, with Uncle Sam taking profits that would cover the cost of the bailout.

-- William N. Goetzmann, Director, International Center for Finance at the Yale School of Management and Jonathan G.S. Koppell, Associate Professor of Politics and Management, Yale School of Management & Director of the Millstein Center for Corporate Governance and Performance

If you feel so moved, print and fax (find fax number here) the essay to your Senators and Representative or call and say "trickle up"! As always start the communication with your name and address so it's known you're a voting constituent.

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Monday, September 29, 2008

Hurrah! 

Congress for once didn't hastily give the Bush Administration whatever they want whenever they cry "emergency!"

Granted, the final bill was better that what the administration asked for, but now Congress will have the opportunity to consult with many economists on a solution, not just a couple guys in the Bush Administration.

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