Bailout Part F

Again I must belabor the point of disagreeing with the Scrub and the assumption that “the Feds made this mess, they might as well clean it up.” I know it is long, I hope you find it worthy.

I have several scenarios that lead to my conclusion but will start with an example.

Example: Having Congress bailout the financial meltdown is tantamount to having a 3-year-old cleanup the bathroom, unsupervised, after clogging the toilet while attempting to flush the grape juice stained blanket and complicating matters by then using the commode for its intended purpose . Yes, like Congress, the child’s intentions were good, afterall, they were just trying to solve a problem, and really, the mess was the fault of the person who purchased the juice in the first place. And just like Congress, the 3-year old will have a self congratulatory grin as (s)he drags the soiled blanket across the new white Berber carpet while taking it outside. And Congress will continue to resemble the tot who, after digging up the prize flower bed in a vain attempt to bury the blanket, tells the neighbors about how dedicatedly they rose up in sacrifice to adhere to the call-to-duty to clean up a mess they could not control. And finally, with a flooded bathroom, ruined carpet, destroyed flower bed, and half buried blanket; the toddler, looking more like Congress than ever, will demand a reward for successfully solving the problem left by some evil, mean spirited, person for someone else to clean up.

Bad case scenario: Year in year out the most fiscally irresponsible single group of people on the planet is the US Congress. Even Republicans who were elected on a platform of fiscal responsibility cannot resist the urge to play Santa Claus. With a “National Economic Crisis” (very sarcastic ‘Oh yeah’ is needed here) at hand, the desire in congress to hide $700 million of pork in a $700 billion bill is tempting beyond their limited ability to cope. When that much money is at stake they just can’t resist the opportunity to try to buy votes back at home. I would expect more ethical responsibility from the Cartagena Cartel then Congress when that much money is at stake.

Worse case scenario: Let’s do a little speculating on some of the possible aspects of what the bailout bill will entail.

• We’ll need a new “Office of Housing and Banking” regulatory agency. This will begin with a budget of $20 million. At 5% growth per year in 2020 the budget will be closing in on $34 million and the director will be railing against budget cuts when it is suggested he suffice with a 3% growth. This will be despite the fact that after the first six months there will be nothing for an agent to do except sign a note stating that (s)he has read the auditors statement for the mortgage companies under their domain. Since the agents will be lawyers and not accountants it will be found in court that they cannot be held liable for any discrepancies. Of course the court in question will be a division of the agency. This agency will be with us forever
• We’ll need a government “Office of Loan Application and Oversight” whose sole responsibility will be to approve all mortgage applications. You think the process was arduous before? Go fill out a passport application then multiply it by one hundred. It will take one year from offer and acceptance to closing. Oh, this mortgage oversight will be a separate government agency from the regulatory branch. No conflict of interest. While less prestigious it will still keep young law school graduates employed and have an initial budge of $75 million. By 2020, due to work load demands and the standard 5% growth, the budget will have ballooned to well in excess of $300 million. The agents will be overworked and do most application checking while on overtime. But fear not, the money will not come out of the Federal budget but will be added on to each and every mortgage in the country. The sole goal of each agent is to be transferred to the “Office of Housing and Banking”. The seniority list will be called ‘the death list’ because someone will have to die for a position to open in the “Office of Housing and Banking”. This agency too will be with us forever.
• Since these agencies are breaking new ground we’ll need experienced personnel to oversee and direct these entities. How about Franklin Raines. He has been CEO of Fannie Mae and assistant director of the US Office of management and Budget. Experience, connections, what more could you want?
• First order of business will be a complete overhaul of the mortgage business in the US. This won’t take the originally estimated six months. Scholars will cite standard project management methodology that a 300 percent error is within tolerances when estimating time of large unknown projects and state that getting this report done in 15 months is remarkable. Yes, they will lament that no home sales requiring mortgages occurred in those 15 months but will cite the near 100% apartment occupancy as being “good for the economy:” When asked about the lack of home sales the safety of the economy and ensuring the greedy are held in check will quiet the naysayer.
• Both the “Office of Housing and Banking” and “Office of Loan Application and Oversight” will have diversity departments. This will be to ensure there is no discrimination based on race, creed, sex, sexual orientation, economic status, or credit history. Mortgage companies who turn down loans based on an applicants ability to pay will be declared, by each agency, guilty of discrimination and fined millions of dollars.

Worst Case Scenario: If the bailout goes through there will be a mountain of new federal regulation. Within this regulation will be a continuance of the bill to get low income people into homes. Therefore mortgage companies will be required to make a certain scalable percentage of the loans to low income high risk sector. When the company issues its X loan number each year, the percentage of low income loans will increase. This means companies will artificially cap the number of mortgages it makes. What results when an artificial limit is placed on a commodity? Well, according to Econ 101 (which apparently, no member of Congress can pass) the result is shortages. What happens when a shortage occurs? The price goes up. What is the price of money for loans? Well, the interest rate. So a couple that has saved diligently (while paying taxes on the interest) to get the 20% down and found a home that costs two years salary will be buried in paper work and wait a year before any hope of seeing their dream come to fruition. Should our heroes get the proper lottery number to actually obtain a mortgage they will have to agree to a 20% interest rate. Think interest rates can’t go that high? Does the name Jimmy Carter ring a bell?

The author wishes apologize to Dr. Tom Coburn Senator from Oklahoma for making him guilty by association, but would like to point out that Senator Coburn purposely, ran for the House and Senate.

The author further wishes to apologize to all of the world’s 3-year-olds. It will be years before any of them do anything heinous enough to be compared to Congress.

Bailout Part E

Why do well feel the need for government intervention? Is the assumption that there is not enough capital in the private sector to handle the load? I understand that Warren Buffet is simultaneously calling for government intervention while buying up stocks for pennies on the dollar. This is great deal for Berkshire-Hathaway, namely have the government ensure that the stock purchased for pennies not only will grow in value, but guarantee the companies will not go bankrupt. Sweet.

The beauty of the free market is it will always find the best, lowest cost, fastest solution. I know Congress has tried to solve numerous ‘problems’, but have they accomplished any? The last problem that Congress successfully solved that I can think of was WWII. I agree with the Scrub that the Feds caused this mess, but remember, the Feds caused this mess while trying to solve a different ‘problem’, namely home ownership for low income earners. Following the law of unintended consequences; what other ‘problems’ are Congress going to create while solving this one?

Bailout, part deux, or is it part D?

I saw that video as well, and was intending to post it, but you beat me to it. Damn you and your chest to hell.

I've come to the conclusion, that this bailout, or something like it, probably needs to be done. In part because to Feds caused the mess, it's their job to fix it. I don't like it, but I don't really see any other way forward.

It's the all Carter's and Clinton's fault

I don't know if the bail plan is the perfect move, but I do know it wasn't GW Bush's fault.

Bailout, Mk Twice

Is my understanding any where near reality?

Is this a good idea, or a bad idea?

Depends. Do you think 1929 to 1941 were good for America as a whole or not?

Let's not forget that we have already started our generation's long war, which means we can't depend on an WWII analog to got us out the "Great Depression 2.0", so, yeah, I'm force to say that the just shy of a trillion dollar bail out is a good thing, in the long run.

The fact that both of us own houses is, really, when you get down to it part of the problem. I'll grant that my owning a house wasn't really my idea, and I sort of got sandbagged by my brother in law on when I had to get the mortgage, but I will point out that my mortgage is not one that got sold down the line, and that I'm not doing any of those weird exotic type things, and my interest rate is both fixed and fairly high. Still, if it wasn't for the fact that we were only going for a fraction of the house's cost, we should not have gotten the loan, based on the fact that I was, at the time, unemployed (and more or less un-employable).

We are pulling out of my death spiral, but it's a long hard row to hoe.

Bailout?

As I understand it, a bunch of banks loaned money to people that had no hope of paying back the loans. The banks then sold the loans, some how turning them into securities. (I'm pretty sure you have to be at least a 15th Level Thief/Magic User to cast this spell.) They then sold these securities to other banks, which then used them as assets to borrow more money. In doing so they managed to contaminate the entire banking/finance sector that, now the people who bought the houses are going back to live on friend's couches and under bridges, the entire damn financial system is threatened with collapsing to such an extent that even businesses that had nothing to do with this mess could go belly up because there will be no money anywhere.

The solution is that the Feds are going to offer to buy the securities, meaning that all the banks won't go under so there will be money in the ATMs. The Feds then will own all of these mortgages, most of which will turn out to be total losses.

Is my understanding any where near reality?

Is this a good idea, or a bad idea?

Email

Obama is running this ad, which makes a big deal out of McCain's supposed inability to use email. As Jonah Goldberg found by using Google, McCain, doesn't use email much, because of the injuries he suffered as POW makes using a keyboard is painful. Great ad for Obama; make fun, albeit indirectly, of a war hero's wounds and piss off the large percentage of American's who don't use email. Two for the price of one.

This reminds me that this is the second time in recent history that the Republicans have nominated a disabled man for President, the other being Bob Dole. Dole, like McCain, never made much of his disability, and never used it for political effect. I brought up Dole because it gives me the opportunity to tell one of my favorite stories. It's actually my wife's story, but I'll tell it anyway.

During the 96 election, my Wife and I were living in very liberal city. My wife enrolled in the local Junior College to take a few classes. Not surprisingly, many of classes degenerated into liberal rants by the teacher, backed by the class. In one class (I think it was American literature) th topic of the day was the evilness of Bob Dole. In the class was a young man in a wheel chair. He became quite agitated and told the class they didn't know what they were talking about. And then he told his story. It seemed that he had within the past year suffered the injury that had placed him in the wheel chair. While he was still in recovery, and come to deal with the fact that he was now a paraplegic, he got a phone call. From Bob Dole. Dole had somehow heard his story and wanted to encourage him. This liberal city was not in Kansas. So the evil Bob Dole, Senate Majority Leader, had found time to try to lift the spirits of a young man who was not even his constituent. I don't really know what to make of this story except that it demonstrates that not all politicians are complete jerks. The trouble is, it is damn difficult to know who they are.

To finish up..

I was web surfing for porn.

Really. Was part of my job. The company I was working for at the time was working on a "child safe browser". Part of my job was to find porn sites and make sure we blocked them.

After the first plane hit we all more or less migrated into the owners office where he had a very large TV.

As it happened, our next round of venture capital was coming from a company in the WTC. The company I was working for started bouncing paycheck shortly there after.

I was. . .

Working in Georgetown when I heard a loud boom. . . . .followed by emergency sirens, helicopters, fighter jets and military vehicles driving down the streets of our nations capital. Ultimately stepping outside and looking towards the sky and seeing nothing but black smoke. Being able to witness first hand the damage to the Pentagon before the flag was draped over the facade; is something I shall not forget.

Where was I.

In surgery. Assisting in the largest ventral hernia repair I have ever done. The defect was so large that two of the largest meshes made had to be sewn together. I don't normally work Tuesdays, but had gone in because they were short handed. Surgery starts at my hospital at 7:15, so we were already started before the news broke. The case was a long and involved one, and as anesthesia personnel came into the room , and went , they brought news, much of it jumbled. First there was a fire at the WTC, then the second tower had exploded. Then a story that a helicopter had hit the Pentagon, then the same time the report that the Towers had collapsed and that a plane had crashed in Pennsylvania. Strangely the news that a plane had crashed in Pennsylvania shook me more than buildings being hit in New York and Washington, or even the news that the Towers had collapsed. New York and Washington, I could understand as targets, but Pennsylvania made it suddenly seem that everywhere or anywhere could be attacked. Of course no one knew the story, we didn't know that only four planes had been hijacked. I, at least, didn't know that all air traffic had been grounded. We didn't finish the surgery until late morning. By then, some semblance of the story was beginning to become clear. I sat in the break room, and watched the film of the towers collapse, and seldom have ever felt as alone. (I somehow missed the big unity moment everyone else had.) I remember hearing the talking heads talk about the search for survivors, and I remembered Oklahoma City. I was in an OR that day too, and I remember the word filtering out that they were finding no survivors in the part of the building that collapsed, only bodies.

Where was I?

I was sound asleep in my warm comfortable bed in north Texas. Coming out of the fog the radio was on and I heard "a plane has hit the second World Trade Center tower". I thought it was a review of a bad movie or a tasteless joke made by the typical morning AM yuk monkey.

My wife on the other hand was in Georgetown and heard the crash and felt the ground shake. I still feel fortunate that I got through to her on the first call as she daily took the blue line metro from King Street to GWU. For those not familiar with the DC metro system, the blue line stops under the Pentagon. Having a rudimentary understanding of probability I was not all that concerned, still it was very nice to hear her voice. We realized the phone system was overworked, counted our blessing and quickly ended the call.

Thanks Mike for opening the subject

Where were you?

If you have to ask, given today's date, what I meant, you are either too young to read this blog or to stupid.

Either way works for me.

Sarah Palin and well, not sure.

I, for one, would like to know what this is of. Regardless, it's way freaking cool. I mean, seriously, what the hell? On the other hand, this does make me want to vote Palin/McCain more than before. I mean, if we can have VP who will hang out with people in odd costumes, in 16 or so years having a President who used to be Prince of Drakenwald will not be so weird.

Sarah Palin is Teddy Roosevelt?

Aside from the obvious lack of a killer mustache, seems that way to me. We could do worse than having a reincarnation of TR as veep, at least IMAO.

Random Thought

Given Ashton's (a 21 year old self proclaimed hippy semi-retired exotic dancer) response to Sarah Palin's speech, the Obama camp is in trouble.

When The Darling Wife (a 43 year old self proclaimed hippy retired exotic dancer pagan fluff bunny) says that "There is something sort of corrupt feeling about Obama", they are in real trouble.

I suspect that neither of them is going to vote for either candidate, but they both fall into the "should be Obamanicas" demographics, so it's a net win for the Palin/McCain camp.

And, yeah, that's how I'm refering the Republican ticket now.

Shame on Sean

I guess Sean Hannity just couldn’t stand it. When given a preview copy of Sarah Palin’s speech the conservative commentator apparently was compelled to quote some of the best lines in an attempt to out-bicker co-host Alan Colmes. This was a full 90 minutes before Palin was presented to the Republican National Convention. Shame on Sean for his cheap attempt to steal her thunder.

Her Guy?

Fearless prediction: the feminists raise an issue with Sarah Palin’s comment “he is still my guy." They will ask “like her car or her jacket, does she own him?” This will be the feminists attempt to show they are “fair” when in fact that will only show they don’t understand simple affection between people who are still in love after many years of marriage.

The Hypocritical

It appears there is something about outspoken conservative women that drive the liberals to hypocrisy.

Why are these liberals who complain endlessly about the glass ceiling and constantly chant that conservatives “want women barefoot and pregnant,” now suddenly concerned about Sarah Palin’s capability to be a good mother?

These are the same liberals for whom abortion on demand is the single most important issue, are now concerned with Palin’s family values?

The same liberals who demand equal rights for women in a “man's world”, and have been stating that women “can have it all,” are suddenly now concerned with Palin’s parenting skills and are shocked above all that she has five children . . . . 5 children!

Why is it acceptable for a man to have five children and not be questioned about juggling a career and family. Yet, a strong, outspoken woman is now being accused of crimes paramount to child abuse by putting her own ideals in the forefront.

On a related topic these liberals somehow have managed to overlook for five years the fact that Nancy Pelosi has five children; yet, there is not a peep from the liberals on her capabilities to run Congress and manage a home.

According to the left, its time for Sarah Palin to get back into the minivan and the kitchen.

VPILF Grandma Part Twice

Regardless of the status of the 5th child, the Obama camp had better tread really freaking lightly with regards to Bristol Palin's current pregnancy (speaking of which, doesn't the the timing of that more or less rule out the possibility that Trig Paxson Van Palin (the newborn with Down's Syndrome) isn't Gov. Palin's own?) giving his own mother's history?


Some important Sara Palin Facts

• Sarah Palin’s finishing move in the VP debate will be pulling Biden’s still beating heart from his chest & taking a bite.


• Sarah Palin isn’t allowed to wield the gavel at the convention because they’re afraid she’ll use it to kill liberals.


• Sarah Palin doesn’t need a gun to hunt. She has been known to throw a bullet through an adult bull elk.


• Sarah Palin can read EBCDIC You are a geek if you get that


• Sarah Palin makes Andrew Sullivan regret some key life choices. You are a blog-wonk if you get that

Vice President Grandma?

I wonder if any of the news outlets speculating on the possibility that Palin’s fifth child is actually her grandchild are the same news outlets that refused to report on the Edwards / Hunter affair because they did not have concrete evidence?