Mark to Market

There are plenty of charlatans who are to blame for our current financial crisis – such as Barney Frank, Franklin Raines, Chris Dodd, Jamie Gorelick, and Jim Johnson. But there is one overweening reason that, combined with the loopy notion that the U.S. taxpayer should buy everyone (of whatever means and morality) a house. This naive idea has brought this country, like Monica Lewinsky, to its knees. This reason is poorly understood by most and, thus, needs to be explained further. This precipitating event was the FASB’s (Financial Accounting Standards Board) change of accounting rules a year ago (FASB 157) that decreed that companies must daily “mark to market” any balance-sheet assets. Mark to market means that any asset, such as a mortgage must be valued at what a willing buyer and a willing seller would agree to in order to affect a transfer.

Now, when financial panics occur, such transactions become very sticky and thus marking to market becomes degenerative. For instance, if a bank’s asset’s value (such as a mortgage) sinks by $50,000, this means that required capital rations cause a bank to reduce it’s lending by $500,000. This puts the pressure on the bank to raise additional capital to justify its current lending portfolio … and, if unsuccessful, further reduces the pool of willing buyers and the mark-to-market price of its mortgages. A vicious cycle is initiated which, as we have seen, can wipe out a financial institution in a matter of days.

Secretary of the Treasury, Henry Paulson, started his testimony to the Senate on Monday with an explanation of this toxic process. He suggested that we might consider changing this rule to permit a less onerous way of valuing such assets, basically a discounted stream of future income. Thus, if a mortgage is to return so much per month for the next 25 years, one could apply a discount cash flow rate of say 5%. If such a mortgage is in default, then the discount rate would be higher, say 10% and the resultant discounted value substantially lower. But, this is a lot less punishing than what is currently required by FASB 157 … yet far better than what Japan did years ago when banks kept mortgages on their books at full value and it took over a decade for Japan’s financial stability to return.

An interesting twist to this dilemma is that Chris Cox, the head of the SEC, could, with the stroke of a pen, change this “mark to market” accounting requirement … to a discounted cash flow calculation and, thus, possibly eliminate the need for the $700 billion bailout now being debated in Congress. Perhaps, McCain’s calling for Cox’s dismissal had some legs after all.

Uh Uh Uh

"WASHINGTON (AP) - Democrat Barack Obama studied and practiced privately with aides in a Florida hotel Tuesday in the first of three days of intense preparations for his upcoming foreign policy debate with GOP rival John McCain."

They're giving him an uh-uh-uh-dectomy.

Robin’ Robin Hood

Barak Obama, if he is elected, has a Robin-Hood economic plan – tax the “rich” and reward the “poor.” Unfortunately for his election prospects, such wealth redistribution is now taking place in clubs (I can’t say that other word). Hedge funds, the piggy banks of the plutocrats, have, over the last few months, taken multiple financial hits:

- First, the bursting of the oil and other commodities bubbles

- Second, the freeze-up of financial liquidity brought about by the sub-prime mortgage fiasco

- Thirdly, the blood bath on Wall Street due to the failures of Bear Sterns and Lehman Brothers (and, to a lesser extent, Merrill Lynch) and the bailouts of Fannie Mae, AIG, and Freddie Mac

- Fourthly, the world-wide dramatic deflation of emerging-economy equity markets – particularly China and Russia

- Fifthly, the current run on the money market funds to the extent that they needed to be backstopped by the U.S. Treasury

- And possibly others to come

It is the lucky nabob who has navigated these treacherous times with his/her fortune intact. Therefore, Barak’s social-engineering economic promises have become somewhat moot. Come his prospective January inauguration, it is unlikely that there will be an extra penny in the U.S. Treasury for Obama to buy a populist’s vote for his second-term run. He will be lucky if we can pay for Michelle’s redecorating of the White House (as all First Ladies seem prone to do.)

Queasy about Quasi

You’d think we’d learn.

Politicians (and unfortunately, voters) frequently set up quasi-governmental organizations to remove them from the corruption of political patronage and malfeasance. Massachusetts set up the Massachusetts Turnpike Authority (MTA) in 1952 for these very reasons and Congress created Fannie Mae and Freddie Mac in 1968 for many identical rationales. Big mistakes! The MTA sired the “Big Dig” that has cost the taxpayers upwards of $17 billion dollars (about ten times the original estimate) for a series of leaky tunnels and contractor corruption that rival a third-world country.

And Fannie Mae and Freddie Mac were created to buy mortgage securities with the “implicit” backing of the U.S. government. And these two have been, as described by Mort Zuckerman, “the honey pot of the Democratic Party for a number of years.” Now the Federal Reserve Bank has had to step in to save these venerable mortgage-backing institutions from themselves by changing “implicit” to “explicit”. This all done at an ultimate taxpayer cost of probably hundreds of billions of dollars!

What happens with these quasi-governmental organizations is that they are effectively removed from voter oversight but not from the greedy designs of politicians. Interested readers can, within a few minutes of Googling, find enough political patronage abuses in these “companies” to nauseate even the most iron-stomached. Now, the ovine taxpayer has again been fleeced by trusting the public-relations lie of “quasi” being akin to “safe”.

Bull-hockey! Let us, the public, never again believe that fronting the description of a governmental entity with “quasi” is a recipe for keeping our solons’ greasy paws out of the cookie jar.

The Rise and Fall of Nations

Richard Lamm, the former Governor of Colorado, has warned that multiculturalism in our nation is very likely to bring about the failure of our future. See here. A friend, Axel Grabowsky, argues that the Roman Empire did not fall (as per Gibbon) solely because of the dilution of the Roman populus by the huge and continued influx of mongrel citizens from the Roman provinces and, therefore, Lamm’s argument is suspect. In fact, Grabowsky claims that there were as many as fifty reasons for the demise of this and other great empires. He adds, “I do not entirely agree with Toynbee. The empires of the world, ‘all the great civilizations,’ as Toynbee puts it, did have a hand in both their rise and fall, of course. But the outside reasons for both the rise and fall were at least as important as the internal ones.”

This avowal has gotten me to thinking about what does contribute to the rise and fall of empires? I have compiled below the following thoughts (roughly in order of importance):

- Geography – country’s absolute size, number/size of abutting nations, degree of geographic isolation, country’s shape (area relative to border length), number, size and dispersion of satellite territories, mean height above sea level

- Natural Resources – energy sources, mineral resources, amount and fecundity of arable land, timber resources, harvestable animal/fish populations, water resources, pestilence frequency

- Weather – rainfall/snowfall amounts, temperature/seasonal variants, predilection to natural disasters, sunshine amounts

- Demographics – proportion of young vs. older people, gender balance, life expectancy rates, infant mortality rates, immigration/emigration rates

- Infrastructure – quality and number of roads, rails, airports, ports and other public and private buildings; communication systems; other public transportation systems; infrastructure maintenance rates, sanitation facilities; gas/electric utility build-outs

- Cultural Ethos – clear and reinforced national goals, work ethic, morality baseline, stability of institutions, family values, religious faith, innovativeness, a sense of history/traditions, a commitment to the arts, the degree of a population’s hybrid vigor, the degree of cultural integration (salad bowl vs. melting pot, ala Lamm)

- Civil Freedom/Democracy – government guarantees of life, liberty and the pursuit of happiness; a swift and effective justice system; freedom of movement, assembly, expression, and privacy, a non-confiscatory taxing system

- Common Cause/Hegemony – a national identity, a common language, a forward purpose/resolve, a sense of history, a general dearth of prejudice, quality of leadership

- Economic strength – stability of monetary system, size of middle class, trustworthiness in commercial transactions, strength of financial institutions, world-trade effectiveness, health-care quantity and quality, degree of entrepreneurship

- Educational System – breadth, depth and general affordability of educational opportunities, openness to new ideas, a quest for natural truths, scientific/logical rigor, innovativeness encouragement

- Terrain –ease of movement of citizens/merchandise, number of alternative commerce routes, barriers (mountains, lakes, rivers, oceans, etc.) to potential enemies (These factors were much more important a century ago, before the age of airplanes, steamships, and motorized surface travel).

Each of these bullet points could engender a whole paragraph of exposition (or perhaps even a book.) But note, that in my opinion (and I assume Axel’s), such mongrelization as Lamm describes is not at the top of the list. But … it is not insignificant either, particularly when it can (and often does) impact so many other of the above bullet points.

It is an interesting and enlightening exercise to grade our country on these metrics relative to other world powers … to judge for yourself how much longer we may be around.

Small Things

As seen in a photo on the front page of the “Boston Globe” today, at the 9/11 memorial service at Ground Zero yesterday, Barak Obama tossed his rose on the existing pile of commemorative flowers while John McCain bent over and carefully placed his rose. I know it is a very small thing, but one’s temperament is made up of lots of tiny actions … and Mr. Obama has had his share of revealing slips.

You Saw It Here First

I’ve coined a nickname for Sarah Palin – “The Smiling Cobra.” I’ve e-mailed this suggestion to Rush Limbaugh, Michael Graham, Howie Carr, and David Brooks. Soooo, if this is picked up on, you saw it here first!

Palin Peccadillos

In case you didn’t know, Sarah Palin has committed the following serious political peccadillos:

- She coerced he fellow office workers into buying Girl Scout cookies for her daughter
- She has shot and dressed (with a dull knife) three caribou (and her family ate them!!)
- She had her staff work overtime 27 times in the last 2 years
- When she played basketball for Wasilla, she fouled out nine times (once in a tournament!)
- Her cousin, Wilber, twice watched the Playboy Channel
- She had a Brazil waxing back when she ran for Miss Alaska
- When she worked in her husband’s fishing business, she claimed she didn’t like halibut
- While in college in Idaho, she never joined a sorority
- As a sports reporter for KTUU-TV, she often entered the men’s locker room without knocking
- Over her life, she has removed twelve “Do Not Remove” tags from pillows and mattresses

How can we possibly vote for such a monster?

If He Loses

What will happen if the presumptive President, Barak Obama, loses? I know that, given the theatrics of the Democratic convention and Obama’s éclat performance last night, this seems currently a remote possibility. If this were to happen, at least four groups will be extremely put out and this should engender various backlashes:

1) Blacks (obviously) -- I hate to predict nastiness but I would not be shocked to see racial disturbances, even riots, in Chicago, Detroit, South L.A., St. Louis, and Harlem. The black population in America is heavily invested in an Obama victory and his loss would be taken by most as a confirmation of insipient racism and a class ceiling in this country. With emotions running this high it would be a sore temptation to take things out on “typical white persons.”

2) Starry-eyed youths – many MTV graduates have cast their lot with Obama as though he were a rock or rap star. He represents to them a break with the old-fogey U.S. establishment. Just like the funeral of Dianne forced the royal elders in England to bend to the will of the British youth, so many American tater tots want to grab the flag of governance from their “know-better” elders. Denied this win, I suspect that many will turn to subterfuge and even sabotage … like many of their peacenik parents did in the late sixties (and many still do).

3) Moonbats (1960’s anarchist, Hollywood zombies, left-wing radicals, Jimmy Carter) – Not satisfied with causing the death of three million Vietnamese and Cambodian civilians, many “make-love-not-war” aging flower children now see their ultimate revenge as fully grabbing the reins of political power. They clearly wish to restore the Age of Aquarius through Obama. They see him as the Messiah who will dismantle our atomic weapons, tax the skin off the rich, halt our use of fossil fuels (except natural gas, ala Pelosi), provide free health care for all, open our borders to the world, and emasculate our armed forces. Thwarting this opportunity might cause them (many who hold august and powerful positions in corporations and the media) to continue (in spades) the dry-rot of our country’s moral infrastructure.

4) Europeans – as exemplified by the adoring Brandenburg throngs, many Europeans have presupposed Obama’s victory. If he loses, they will shake their heads at the continuing slope-headed stupidity of the American voting public. At least, they will do this unless Russia keeps exhibiting its renewed expansionistic tendencies. That being the case, they might secretly find comfort in the expectation that McCain’s America will once again save their sorry asses from the Big Bad Bear’s threat.

Loopy Prediction

Bill Clinton has recently talked about the Constitution laying out the qualifications to be President. This may be a veiled threat to Barak Obama implying that the Clintons don't believe that he meets these qualifications. This coupled with Hillary's recent statement that she will hold onto her delegates and may indeed have her name placed in nomination suggests to me that the Clintons may challenge Obama's qualifications to be President.

This might be based upon the flap that has arisen over Obama's Hawaiian birth certificate. See: Obama Genesis AND Birth Certificate It is interesting to note that Barak is currently on his way to Hawaii for a week's "vacation". Therefore I make a somewhat loopy prediction that the Clinton's have the birth-certificate goods on Obama (they being the only ones who have legal standing to make such a challenge before the actual nomination ... afterwards any U.S. voter could make such a challenge) and will thus prevent Barak Obama from being nominated ... resulting in pandemonium in Denver.

If I am wrong then I will eat this blog post

Questions for Obama

This morning I had a Walter-Mitty moment … imagining that I was a reporter in a Barak Obama news conference. I realize that some of these questions would engender titters from the assembled main stream media hacks, but then most of you know that this would not censor me. I would love to be able to respectfully ask him from the following list of obvious questions:

- Are you still smoking cigarettes?
- Would you seek to give health-care insurance to illegal aliens?
- What foreign language(s) do you speak?
- As Prsident would you encourage the building of more nuclear power plants?
- Do you own a gun?
- As an ACORN activist did you ever knowingly register a voter illegally?
- Do you subscribe to the Black Liberation agenda? (You have attested that you do.)
- Would you encourage more drilling for oil in the U.S.?
- Do you believe in reparations for American blacks?
- What holidays does your family celebrate (Thanksgiving, Kwanza, Christmas, Easter)?
- Who are your personal heroes (Jesus Christ, Louis Farrakhan)?
- Do you want to build more oil refineries in the U.S.?
- Do you own a Koran or have you ever studied it?
- Did you ever register for the American draft?
- Are you in favor of native Hawaiian liberation?
- What kind of Supreme Court justice would you nominate?
- Your mother hated America … did you ever identify with her in this revulsion?
- If Osama Bin Laden were captured, would you seek to have him executed?

Virgins Gone Wild

From BreitBart.com:

"British tycoon Richard Branson on Monday unveiled a futuristic aircraft that will ferry tourists to the edge of heaven as part of Virgin Galactic's much-anticipated space program.
The aircraft -- WhiteKnightTwo -- was rolled out for invited guests and media at an early morning ceremony in the Mojave desert, north of Los Angeles, at the headquarters of aerospace firm Scaled Composites. "

Given Branson's environmental sensitivity, I expect that it will be fueled by Wimpy Burgers.

Civil Civilization?

Recently, a woman in London stabbed and killed an expectant mother then cut out the near-term baby from her womb. Then she went to a hospital claiming that she had just given birth to this infant. She did this to cover the fact that she had lied to her husband about being pregnant when they got married.

Also, witch doctors and their agents in Tanzania are killing albinos and harvesting their body parts for potions and amulets. More recently a male albino in Dar es Salaam, Tanzania’s capital was killed (beheaded with machetes) and his hands and testicles cut off for these mystical purposes. His wife, also an albino, was seriously injured by these same marauders, but was saved by neighbors. Two of their three children, also albinos, have been placed in protective custody.

Such atrocities make one realize how very close we all still are to being ruled by superstition and barbarism … and how very far the peoples of the world must travel to achieve the Eden that the many assume (and insist) is just around the corner.

Clearly, the patina of man’s civilization remains paper thin.

Ready, Fire, Aim

Barak Obama developed his strategy for Iraq and Afghanistan long before he talked to any of the commanders on the ground in these countries. He has also been the Chairman of a Senate European Affairs subcommittee for the last three years … and has held zero hearings on NATO’s role in Afghanistan. Two years ago he said we must be out of Iraq in fourteen months and then said the “surge” would never work. And he has yet to meet with General Petreus. He placed his stakes in the ground vis-à-vis these two countries before he started on his current fact-finding trip. Yet he still wants the U.S. out of Iraq in sixteen months come hell or high Tigris river water. Isn’t this Obama policy equivalent to “ready, fire, aim?”

Caption Contest

Every week the "New Yorker" magazine runs a contest for subscribers to add a caption to a staff-created cartoon. This week's cover begs for the same treatment. I welcome each blog reader to add a comment containing a suggestion for a caption for this contraversial cartoon. The prize will be a U.S. flag button containing 57 stars.

My suggestion is: "Now we'll never be bothered by "Hips" or her mouthy husband again."

Ironic Irony

"Heavy rains complicate Calif. firefighting efforts
By SCOTT LINDLAW (Associated Press Writers)
From Associated PressJuly 14, 2008 5:30 AM EDT"

Where else but in California?!? This is a recent headline. Phil Graham was right ... we are a nation of whiners. The double irony here is that it doesn't blame George Bush.

Enough!!

I’ve had it!! I am more than fugging tired of having these size 18-EEE carbon footprints telling me that I must cut back on my energy use. These petro-hogs (Barak Obama, Arnold Schwarzenegger, John McCain, John Edwards, Michael Moore, John Kerry, Richard Branson, Al Gore, Deval Patrick, George Soros, etc.) fly around in their private jets, live in mega-mansions with all their energy-consuming accoutrements, drive (or be driven in) huge gas guzzlers and much, much more … and still feel that they can lecture me on how I should live my life. They must have balls the size of coconuts to think that they can get away with such hypocrisy. But what’s even more frustrating? They DO get away with it. Bother!!

A Liberal ...

- would rather save a polar bear, a GITMO terrorist, or a serial killer than a late-term human fetus
- uses guilt-laden emotion to trump logic
- blithely destroys traditions without any thought to the consequences or replacements
- slavishly endorses the current “group think” using focus-group-tested talking points
- labels any thoughtful generalization as “prejudice”
- would rather have “street creds” than be correct
- does not believe in patriotism or displays of same
- believes that all morality is relative and transitory
- worships at the feet of bling-bling Hollywood and glitzy media idols
- supports corrupt world government as being superior to our Constitution
- often believes and endorses our enemy’s propaganda
- would rather sacrifice an American city than insult a minority
- always blames the vicissitudes of life on something or someone else (often George W. Bush)
- frequently speculates without supporting facts
- discourages the self-reliance of others
- propagates half-truths, demagoguery and “spin”
- fights terrorism with lawyers rather than soldiers
- believes that all corporations are evil
- thinks that entitlements trump responsibility
- loves to give away other peoples money
- believes that the government is the solution to all problems
- hates or, at least, disrespects the U.S. military
- would rather sequester natural resources than husband them
- thinks all religion is evil (except possibly Islam)
- supports every class-action suit ever filed

A Conservative ...

- measures success by results, not intentions
- justifies actions with “I think” rather than “I feel”
- is loath to throw out the old before providing a demonstrably better way
- is always suspicious of the current “group think”
- eschews prejudice and embraces fairness
- does not benefit oneself by seeming to help others
- tries to live a productive and moral life
- cherishes and supports tried-and true traditions
- prefers understatement over glitz
- strives with a terrible vengeance to defeat those enemies who would defeat him/her
- respects others at least to the degree that such respect is returned
- tackles the vicissitudes of life with courage and humor
- opts for reliable data over speculation
- is fiercely loyal to deserving compatriots
- encourages self-reliance in others
- abhors half-truths, demagoguery and “spin”
- understands that it is evil (and dangerous) to ignore evil
- thinks that most often “less is more”
- is adamant about not surrendering personal freedoms
- helps the downtrodden with actions … not rhetoric
- allows only minimal government and institutional intervention in one’s life
- tolerates the benign beliefs and actions of others
- husbands his/her resources and environment with a studied rationality

Liberal Intelligensia

A friend recently defended his liberal bent by claiming that most of this country’s intelligensia were liberals. “Aren’t most professors, talking heads, and noted authors liberals,” he asked? Therefore, liberalism must be the correct and the best political course. See ad populum. Now, according to such lemming logic, we therefore must conclude that the consensus found among the illuminati set is never wrong. I started to muse on this warped conclusion and came up with this obvious list of justifying cases:

- Pope UrbanVIII and the priestly set that persecuted Galileo for his notion of heliocentrism

- The monarchs Ferdinand II of Aragon and Isabella I of Castile (including all their court and Spanish secular authorities) who started the Inquisition in order to maintain Catholic orthodoxy

- The large group of pacifists (including Joseph Kennedy Sr. and Charles Lindberg) who strongly resisted the U.S. entry into World War II

- The U.S. Supreme Court and most of the U.S. legal establishment that concluded for almost one hundred years that “separate but equal” was a proper public educational policy

- The large class of conservative clerics of Islam who propound and enforce Shiria law and believe that, among other things, adulterous women should be stoned to death

- The cadre of rabbinical scholars who debate the Torah down to its finest scintilla to justify such things as circumcision, not eating pork, and God’s signing a deed for the land of Israel

- Stalin and the whole scientific establishment of antebellum Soviet Union who dismissed totally the teachings of Darwin

- The rather substantial population of thinking Americans who believe in creationism or intelligent design

- See also Madness of Crowds

I could go on and on but … BOSH!!