Saturday, May 30, 2009

Literalist Remix

Good stuff.

Brutally Honest Is On A Roll

With four great finds.

I Don't Care What Anyone Claims Otherwise

But as babies develop, soliloquies come first, and after that, paragraphs, then sentences, and finally, words.


Friday, May 29, 2009

Well Said


Our political system (and, heck, our overall culture) rewards those who divide up pies far more lavishly than those who bake them. This is probably not sustainable over the long term.

Attempts To Rig The Mortgage Market Becoming An Epic Fail?

I've never understood the point of the Fed trying to keep mortgage rates down. Isn't this a virtual guarantee of massive capital losses for the banks who've been pushing 4.5% mortgages when rates go up to a more sane level of, say, 8%?

Mish has a must-read post on the massive dislocation in the mortgage market a couple of days ago (a 30 percent spike in mortgage interest rates on Wednesday).

In the post he quotes one Mark Hanson:

As Bad As You Can Imagine

With respect to yesterday’s episode in the mortgage market -- yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST. This is not uncommon over the past five months, but not that common either. Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.

A good friend in the center of all of the mortgage capital markets turmoil said to me yesterday “feels like they [the Fed] have lost the battle...pretty obvious from the start but kind of scary to live through it ... today felt like LTCM with respect to liquidity”.

The negative consequences of 5.5% rates are enormous. Because of capacity issues and the long timeline to actually fund a loan very few borrowers ever got the 4.25% to 4.75% perceived to be the prevailing rate range for everyone A significant percentage of loan applications (refis particularly) in the pipeline are submitted to the lender without a rate lock. This is because consumers are incented by much better pricing to lock for a short period of time…12-15 day rate locks carry the best rates by a long shot. But to get this short-term rate lock, the loan has to be complete enough to draw loan documents, which has been taking 45-75 days over the past several months depending upon the lender’s timeline. Therefore, millions of refi applications presently in the pipeline, on which lenders already spent a considerably amount of time and money processing, will never fund.

Furthermore, many of these ‘applicants’ with loans in process were awaiting the magical 4.5% rate before they lock -- a large percentage of these suddenly died yesterday. To make matters worse, after 90-days much of the paperwork (much taken at the date of application) within the file becomes stale-dated and has to be re-done with new dates -- if rates don’t come down quickly many will have to be cancelled out of the lender’s system. To add insult to mortal injury, unless this spike in rates corrects quickly, a large percentage of unlocked purchases and refis will have to be denied because at the higher interest rate level, borrowers do not qualify any longer. For the final groin kicker, a 5.5% rate just does not benefit nearly as many people as a 4.5%-5% rate does. Millions already have 5.25% to 5.75% fixed rates left over from 2002-2006.

This is a perfect example of why the weekly Mortgage Applications Index is an unreliable indicator of future loan fundings and has been for a year and a half. As a matter of fact you will see this index crumble over the next few weeks at the same disproportional rate as it increased over the past several months if rates don’t settle lower quickly.

With respect to banks, mortgage banks, servicers etc, under-hedging a potential sell-off with the Fed supposedly having everybody’s back was a common theme. Banks could lose their entire Q2 mortgage banking earnings and middle market mortgage banker may never recover or immediately have to close shop.

Lastly, consider sentiment -- this is a real killer. This massive rate spike may have invalidated hundreds of billions spent to rig the mortgage market literally overnight. This leaves the mortgage and housing market very vulnerable. Mortgage loan officers around the country are having a very bad day today explaining to their clients why their rate was not locked and how rates are going to come right back down. They will not feel like getting too aggressive taking new loan applications at least for the next month unless this corrects quickly.

We have to see where all this settles over the next few days before making a near to mid-term call on the outright damage because at this point, Fed or Treasury shock and awe is almost certain. Another common theme has been ‘if it doesn’t work throw much more money at it’. Obviously they have been following this closely for the past few weeks, as conditions started to deteriorate, and have likely been waiting to see where the upper range was before shocking in order to get maximum benefit…that would be a humongous short squeeze in Bonds. The problem is…if they do shock her and it is sold into with the same fury that we have been seeing, there may not be an act two.

Denninger also has something to say about all of this.

Dear Leader Wants *You* To Make History With Him!

But hurry! Supplies are limited!

You'll definitely be wanting one of these for your household altar/worship space.

I think my favorite one is the earnest liberal guy in front of Air Force The One. Well, actually he's probably just in front of a campaign plane, but I think I might have just coined a new term...

Wednesday, May 27, 2009


Mark Shea highlights a rejoinder to some atheist "reasoning":

I tend to skim my comboxes and can miss conversations, especially when they involve people who a) play well with others who are b) chatting about subjects that I've already hashed over with c) people who are saying the same tired stuff. I figure they've got things well in hand and don't need me to net.nanny them. The up side is: Less work for me. The down side is: you can sometimes miss wonderful replies like this one from reader Rosemarie to one of the dumbest atheist tropes out there:

Atheism is the default position!
Ever looked in on a hospital's maternity ward? All those little babies in plastic boxes? All atheists. They don't learn god-belief until they are indoctrinated into the religion by their parents and their environment.

This is not a strong argument. Just because something is characteristic of babies doesn't mean it's desirable for adults.

What would you say if someone seriously tried to argue the following:

"Incontinence is the default position!
"Ever looked in on a hospital's maternity ward? All those little babies in plastic boxes? All incontinent. They don't learn bowel or bladder control until they are indoctrinated into toilet-training by their parents and their environment."


"Inability to speak is the default position!
"Ever looked in on a hospital's maternity ward? All those little babies in plastic boxes? All unable to speak. They don't learn speech until they are indoctrinated into a particular language by their parents and their environment."

Better yet, how about this one:

"Ignorance of science is the default position!
"Ever looked in on a hospital's maternity ward? All those little babies in plastic boxes? All know nothing about science. They don't learn it until they are indoctrinated into scientific training by their parents and their teachers."

You see? Just because babies don't know about science doesn't mean everyone should reject science. Even so, just because babies apparently know nothing about God doesn't mean everyone should reject God. It doesn't logically follow.

I scrolled up to see who Rosemarie was replying to and got as far as this mixture of parrot talk and "original thinking":

Just like you are a-zeus-ist, a-allah-ist, a-fairy-ist, a-invisible-pink-unicorn-ist... basically you are very similar to me, you're an atheist in almost everything but the religion you were indoctrinated into by your environment. I'm just atheistic in a few more things.

I still have to get to reading some of this Aquinas fellow, though I have the vague suspicion that he doesn't adress the Plantinga Disaster.

That last one is a good one. I'm sure an atheist would agree with my reasoning if I said, "Now I know that you reject spontaneous generation, perpetual motion, the luminiferous ether, and phlogiston. In rejecting Darwinism, I'm just rejecting one more theory than you!"


What About Her Empathy For The Constitution?

Image Hosted by

A couple of good Brutally Honest posts.

Tuesday, May 26, 2009

Selective Bigotry

If five Catholics was a theocracy, what does that make six?

Great Quip

Seen in comment here:

A trillion here and a trillion there, and pretty soon you're talking about fake money.

This Post Written By The Matteoan Interpretive Community

From the blog according to the tradition of Mark Shea, a fascinating defense of the gospels having been written by their purported authors.

That's A Smart Crab!

Amusing Onion News Network piece highlighted here. Replace "crab" with "Obama's economic policies" and this it is no longer a satire.

I Find Her Candor Most Refreshing

The obvious, stated. And guffawed over.

Deconstructing Propaganda

Excellent takedown of an LA Times "woe-is-me" piece about California's budgetary gotterdammerung.

Get Your Cuteness Fix Here

At the bottom of this post, a series of photos of an adorable one pound baby deer.

Finally--Finally!--Someone For The Supreme Court Who Represents My Legislative Interests

I might have been too quick to judge Obama in the past. This was entirely unexpected. A direct quote from his nominee:

“I would hope that a wise white man with the richness of his experiences would more often than not reach a better conclusion than a Hispanic woman who hasn’t lived that life.”

Damned right that the supreme law-making body of the land should properly represent my race and sex!

Leftists Unfamiliar With This Thing Called 'Class'

Give it a rest, Barack.

Sunday, May 24, 2009

Good Tactics

Neoneocon highlights some gentle but effective ways to disarm boorish political blow-hards.

Friday, May 22, 2009

Absolutely Foolproof

End the government monopoly on counterfeiting!

You Might Not Be A Republican


The good ones:

If you supported, endorsed and voted for the Democrat for President, you might not be a Republican.

If you supported, endorsed and voted for the Democrat with the most liberal voting record in the Senate, even to the left of self-described socialist Bernie Sanders, you might not be a Republican.

If you refused to vote for the Republican, a war hero and former POW who had 26 years experience in Congress and one of the more liberal voting records among Republicans in the Senate, because he was too conservative, you might not be a Republican.

If you think we have nothing to learn politically from the Republican who won 49 states and the most electoral votes for President ever in US history, all just 25 years ago, you might not be a Republican.

If you think the trouble with the Republican who cosponsored McCain-Feingold campaign finance reform, McCain-Leiberman global warming legislation, and McCain-Kennedy comprehensive immigration reform is that he is too conservative, you might not be a Republican.

If you think the trouble with the Republican President who signed McCain-Feingold, supported McCain-Kennedy, championed and signed No Child Left Behind, championed and signed prescription coverage under Medicare and increased federal spending over President Clinton's levels across the board, is that he is too conservative, partisan and ideological, you might not be a Republican.

If you think a Republican with published SAT scores that imply an IQ of 125-130, or smarter than 95% of the population and in the range of Lincoln, Rousseau and Thackeray, and who graduated from Yale and then earned an MBA from Harvard is stupid, but a Democrat who has not released any of his education records is the smartest President ever, you might not be a Republican.


If you think the experience of voting "present" 129 times, writing a second autobiography while in office, never holding an executive position and beginning a run for President just one year into a first Senate term is more impressive than being mayor of a city, oil & gas commissioner of a state that provides up to 20% of the country's oil and gas, and governor of that state while enjoying a 90% approval rating, you might not be a Republican.

If you think a presidential campaign revolving around "hope", "change" and "yes we can" is the mark of intellectual gravitas, you might not be a Republican.

If you think the man who called his own grandmother a "typical white person" has transcended race, you might not be a Republican.

If you think a $459 billion deficit under a Republican is irresponsible, but a $1,845 billion deficit under a Democrat is responsible, you might not be a Republican.


If you think the way to win votes is by imitating John McCain (who lost) and Arnold Schwartzenegger (who helped put California $21 billion in the red), but eschewing the examples of Ronald Reagan (who won twice, once with 49 states) and the Newt Gingrich congress (who won the House for the first time in 40 years), you might not be a Republican.

If you think the way to win more votes is to imitate the Democrat Congress, the most unpopular Congress in polling history, you might not be a Republican.


If you think it is OK for a Democrat President to kill a wanted terrorist by dropping a cluster bomb on him and those around him, including civilian women and children, all without any kind of hearing or tribunal, but a crime for a Republican President to authorize that a terrorist be yanked by his shirt collar to learn how to avoid civilian deaths, you might not be a Republican.

Another Good Pro-Life Ad

Wednesday, May 20, 2009

They Didn't Mean A Single Word


And Then There Was Only Guantánamo . . . [Victor Davis Hanson]

With the Democratic no-go on Guantánamo (I'll leave it to the better informed to ascertain the degree that the Democratic Congress came to the rescue of an embarrassed Obama administration and cut off funding for the shutdown to allow him an out with the now familiar excuse of "they did it — not me, who keeps promises"), I think we now have come to the end to the five-year left-wing attack theme of Bush "shredding the Constitution."

Except for the introduction of euphemisms and a few new ballyhooed but largely meaningless protocols, there is no longer a Bush-did-it argument. The Patriot Act, wiretaps, e-mail intercepts, military tribunals, Predator drone attacks, Iraq, Afghanistan — and now Guantánamo — are officially no longer part of the demonic Bush/Cheney/Rumsfeld nexus, but apparently collective legitimate anti-terrorism measures designed to thwart killers, and by agreement, after years of observance, of great utility in keeping us safe the last eight years.

Add in the Holder statements about Guantánamo in the 2002 interview, the Pelosi/Rockefeller/et al. waterboarding briefings, the need to consider torture in past statements by senators such as Schumer, and I think historians will now look back at these "dark years" as largely a collective, bipartisan effort.

All of which leaves us a final musing: If so, what was the hysteria of 2001-2008 about other than simple politics?

I doubt we get any more movies about ongoing renditions, redactions, any more Checkpoint-like novels, any more waterboarding skits and reenactments, any more late-night comedians doing their Bush tapped, intercepted, tortured, renditioned, tribunaled poor suspect X routines.

And I guess as well that the good old days of supposedly flushed Korans in Guantánamo and Omar the poor liberationist renditioned to Cairo are over. We are now in the age of a sober and judicious President Obama who circumspectly, if reluctantly and in anguish at the high cost, does what is necessary to keep us safe.

And we won't see a brave young liberal senator, Obama-like, barnstorming the Iowa precincts blasting a presidency for trampling our values with the shame of Guantánamo, wiretaps, intercepts, renditions, military tribunals, Predators, Iraq, etc. That motif just dissolved — or rather, it never really existed.

It short, all the fury, the vicious slander, the self-righteous outbursts, the impassioned speeches from the floor, the "I accuse" op-eds by the usual moralistic pundits — all that turned out to be solely about politics, nothing more.

Secularist Ignorance

Illustrated here.

God Spam

This is great!

How Do They Know Which Direction The Causation Runs?

This yahoo science story carries the implication that some people are more sociable because they have a greater amount of grey matter "in the orbitofrontal cortex (the outer strip of the brain just above the eyes) and in the ventral striatum (located in the center of the brain)."

But who is to say that some people don't have more grey matter in these areas because they are more sociable? If, as would be the case under Thomistic metaphysics, the soul is the form of the body, then the direction of causation assumed by "modern science" is precisely backwards.

A scientist is quoted in the article:

"Sociability and emotional warmth are very complex features of our personality. This research helps us understand at a biological level why people differ in the degrees to which we express those traits," he said.

But why couldn't one just as well say,

"The structures in the brain supporting sociability and emotional warmth are very complex features of our neurophysiology. This research helps us understand how the personality of the soul causes people to differ in the degrees to which such traits are given a material expression via brain structure."

To the credit of the quoted scientist, he does understand that such correlations do not actually prove the direction of causality:

However, Murray noted that this research is "only correlational and cross-sectional" and "cannot prove that brain structure determines personality. It could even be that your personality, through experience, helps in part to determine your brain structure."

Tuesday, May 19, 2009

Proving Again And Again And Again That They Are Devoid Of All Principle


Ministers of Truth [Victor Davis Hanson]

True, the far Left, in the manner of the far Right's hatred of Bush's Iraq War and his support for Israel, has begun to murmur disappointment with Obama.

But it is quite astounding that the mainstream liberal media — NY Times, Washington Post, NPR, PBS, Time, Newsweek, etc. — has simply offered no substantive criticism of Obama's flips on renditions, military tribunals, wiretaps, intercepts, Iraq, or — given their past fury over the Bush deficits — the Obama plan to run up more red ink in a year than Bush did in eight.

Bush was constantly criticized by mainstream conservatives for his comprehensive immigration proposals, for deficit spending, for failure to veto any bills in the first term, for No Child Left Behind, for the prescription drug benefit, for the Harriet Miers nomination, for the first pullback from Fallujah, for appointments like Scott McClellan and "Brownie," etc.

The result, I think, will prove fatal for the media. For the last eight years, rendition (hey, they even made a hit-piece movie about the supposedly awful practice), intercepts, military tribunals, and Iraq were sort of the refrains of the liberal-media choruses. Looking back, in light of the Obama media, was such hysteria simply politics, pure and simple? Bush did it: bad; Obama did it: fine? Was the issue always just Bush, and never (as alleged) the Bush profligacy in spending — given the silence now over Obama's crazed borrowing? Was there never any real concern about the supposed "cultural of corruption" when the media seized on a Tom DeLay, Duke Cunningham, Mark Foley, etc. — given the pass granted to Rangel, Dodd, and the tax-fraud nominations to the Cabinet.

In other words, to pick up any of these magazines and newspapers now is to see tortured apologies to explain why a flip-flopping Obama is playing "long-term" or "not going to get suckered by his base" or "first has to clean up the Bush mess" instead of disinterested commentary about (a) the disconnect between what Obama now does and what he once said; (b) the staggering amount of debt added, and how to pay the sums off.

Perhaps the media doesn't get it that the American people can more easily take the bias of an attack-dog, go-for-the jugular media that claims it is the watchdog of the public trust and therefore must skin the president, far more than such carnivores suddenly becoming sheepish and obsequious, as ministers of truth, rephrasing and repackaging the party line. How odd that just six months ago we had screaming reporters and columnists talking about the near-end-of-days with Bush — and now doing contortions to assure us that things suddenly aren't that bad after all, or that we must give Obama flexibility and time to sort out the prior mess. Quite scary, all this chest-thumping about tough journalistic integrity of 2001-8 suddenly devolving into, "Hey everyone, we can reassure you that the Emperor really does have clothes on."


Seen in this comment thread:

Since when is saying you don't believe in the abomination that is "gay marriage" being "anti-gay"?

I am not in favor of calling Jello "ice cream" either but that doesn't make me anti-gelatin.

"Wearing Out Your Arrogant Little *ss With A Recyclable Paddle...Priceless."

Got the title for the post from a comment to the Dr Sanity post which highlights this creepy commercial:


Interesting comments to a "provocative" post challenging people to give up their internet anonymity. There are some good ones, but I liked this joke:

A guy on a motorcycle was driving by the local zoo and noticed a lion had snagged a little girl and was about to tear her to shreds. He jumped off his bike and rescued the little girl by punching the lion, repeatedly, on the snout. A journalist questioned the man after this brave deed, and asked him for some personal information; Among other things, the man told the journalist he was a Marine and a Republican. Armed with this information, the journalist wrote this headline for the New York Times: “Crazed man assaults African immigrant and steals his lunch”.

Excellent Pro-Life Video

See it here.

Monday, May 18, 2009





The Larger Truth At Notre Dame

Great post.

Socratic Questions

The irrational intransigence of the Darwinist camp in the origins debate grows tiresome, as does the endless polemic and spurious argumentation. In response to yet another rant I saw somewhere about the nefarious intentions of the Discovery Institute, a rant that is supposed to fill the role of some sort of scientific argument, I realize that some really basic foundational questions need to be asked. When I get the opportunity, I'd really like to dialog (not engage in some sort of insult-slugfest) with an internet Darwinist (i.e. the kind who sport a scarlet-'A'-for-atheism on their blog and spend most of their time talking about how stupid theists are) about the following questions in a one-by-one fashion:


Would it be fair to say that a principle should be regarded as sincerely and honestly held only if it is applied consistently? And conversely, that if it is invoked only when convenient and ignored when inconvenient, that it is not, in fact, honestly held and, hence, not really a principle?

Would it be fair to say that you are invoking the principle that ideological/worldview biases can result in untrustworthy or incorrect science?

Would it then be fair to say that the degree to which faulty science will be done or asserted depends on how crucial a particular scientific stance or result is to upholding a particular ideological/worldview bias?

Would it be fair to say that if apparently unguided evolution via random variation and natural selection (AUEVRVANS) turned out to be true that a great many theists would be able to shrug their shoulders and say “well, that’s the way God did it?” For example, I personally have been informed on many occasions by proponents of AUEVRVANS that one can be both a theist and acknowledge the truth of AUEVRVANS. I believe this is the position of the NCSE. On the other hand, I’ve read frustration expressed by scientific atheists that theists go on believing regardless of scientific arguments, because they can always say “that’s the way God did it”. Thus, the atheist himself testifies that he is aware that the question has little de facto impact on many theists (even though he thinks it *should*). I’ve also seen theists berated by atheists for not changing their views due to the atheist’s understanding of the scientific evidence. In effect, these atheists are telegraphing that they hold the scientific evidence to be absolutely pivotal to the worldview question. So we have some atheists proclaiming (or complaining) that AUEVRVANS is no threat to theism, while others proclaim that it is a decisive support for atheism (otherwise why would Richard Dawkins have proclaimed “Darwin makes it possible to be an intellectually fulfilled atheist”?). In effect, they are saying that AUEVRVANS is a “don’t care” for the theist position, but very much *not* a “don’t care” for the atheist position. And a great many theists would certainly agree.

Would it be fair to say that if AUEVRVANS turned out to be demonstrably false then a great many atheists would find their atheism to be untenable? For example, I personally have never heard or read an atheist proclaim that if it turned out that evolution were a guided process that this would have absolutely no effect on their atheism. And I don’t believe that opponents of AUEVRVANS typically inform atheists that one can be both an atheist and a believer in guided evolution. After all, it is Richard Dawkins himself who said, “Darwin makes it possible to be an intellectually fulfilled atheist.” Do you assert that Darwin being essentially wrong would not matter?

Given this asymmetry in cruciality-to-worldview of the truth of AUEVRVANS, then wouldn’t it be at least equally prudent to consider how atheism might have skewed the interpretation of scientific evidence?

Would it be fair to say that if scrutiny only needs to be applied to theism as a skewer of scientific interpretation, then a non-existent general principle is being disingenuously invoked, and therefore that if atheism does not really *need* to be scrutinized as a skewer of scientific interpretation then neither should theism, and finally that if theism does, in fact, *need* to be scrutinized as such a skewer due to such a principle, then so does atheism?

The Age Of Frugality

Excellent financial article.

It ends on this hopeful note:

3) The biggest benefit of all might just be the change in politicians to, dare I say it, "Responsible Government". What a notion. I know I'm stepping out on a fragile limb. There's a quote I love that states, "Man (society) gets the politicians they deserve". And we have been (as a society) greedily chasing rolling asset bubbles, and climbing the ladder of material wealth for a couple of decades now, and we have politicians that reflect the values of greed. We have some of the narrowest minded, self-interested, and narcissistic politicians seen in centuries. Frankly and sadly, we have the politician we deserve.

However, as the age of frugality continues, and society begins the adjustment of living with less, living within our means, being net savers, and focusing on the quality of the human experience, those attitudes will reshape the consciousness of American society, which will in turn (I hope) demand those very same qualities from a new fresh face of American politicians. Politicians that, dare I say it, provide responsible oversight, prudent financial management, reduced spending and living within their means with our money. Hopefully we'll have politicians that do not answer to the few but the many, and embrace the American middle class! Then, and only then will the great American dream be reborn for all!

Good Rant

Gerard Jackson:

The inimitable Adam Smith once quipped that "there is a great deal of ruination in a country". But then Mr Smith had never met President Obama whose idea of financial responsibility would make the feckless and cynical Louis XIV look like a nineteenth British treasurer. This ideologue has set the United States on a spending and borrowing binge that is unprecedented in its history and which is impossible to sustain.

This joker is borrowing about 50 cents for every dollar he is spending. To be honest, he's not actually borrowing it. No one in his right mind would lend this irresponsible spendthrift a dime. No, it's the US citizenry, many millions of whom were sufficiently deluded to vote for this clown, who are being made to borrow not billions of dollars but trillions. Thanks to Obama and his fellow congressional villains the US is facing a tidal wave of red ink and it has yet to sink in to the public mind what this means for future living standards. Yet this political charlatan has the gall to publically warn his fellow Americans that their reckless extravagance will have to be severely curbed. Last week the Poseur in Chief stated:

We can't keep on just borrowing from China. We have to pay interest on that debt, and that means we are mortgaging our children's future with more and more debt.' Holders of US debt will eventually 'get tired' of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. 'It will have a dampening effect on our economy.

This character makes a debauched Bible-punching fraud look like John the Baptist. He gave the country a deficit heading for $2 trillion dollars and trillions more as far as the horizon and beyond, he goes on a spending spree that would embarrass Champagne Charlie, he takes out a mortgage on the country that could break it financially and he then lectures the citizens for being irresponsible. This is like a rapist accusing his victim of being a slut who had it coming to her. The man is ideologically driven and criminally irresponsible.

And behind his thoroughly iniquitous behaviour there stands that rotting edifice called the Democratic Party, the most corrupt organisation in America. (The only difference between congressional Democrats and the Mafia is that the Mafia has a code of honour). Standing behind this suppurating mob of bandits is the so-called mainstream media, a group so mendacious, so contemptuous of the truth that their duplicity would embarrass even Goebbels.

So while Obama lectures the country on fiscal responsibility he and his merry band of economic trolls are scheming to impose on America a phony universal health plan the expense of which is so monstrous that it could be the final financial nail in American prosperity and military power. And I stress military power for a reason. If Obama's spending is not halted the American military will have to be savagely cut.

There is no doubt in my mind that the destruction of US military power is one of the driving forces behind Obama's manic rush to try and impose irreversible levels of spending and debt on the US economy of such proportions that the push to virtually demilitarise the country in an effort to curb spending and check rising taxes might become irresistible.

But there is one thing that eventually brings the Obama's of this world undone: economic laws. Bernanke is doing his best to promote Obama's agenda by trying to flood the country with money. And I do mean flood. Never before has the Fed acted so recklessly with the money supply. However, Bernanke knows that this must lead to surging inflation and if not halted a collapsing dollar and rocketing interest rates. But to apply the monetary brakes means raising interest rates. That would cause share markets to dive along with bond prices.

America is not a banana republic. Obama cannot call out a horde of redshirts to do his bidding. He cannot order the military to close down radio stations and harass and arrest opponents. What he can do -- and has -- is instruct his media groupies to assassinate the character of his critics. He can also stack the bureaucracy and the courts with politically corrupt leftists (is there any other kind?) which he and the congressional Democrats are intent on doing.

Nevertheless, his arrogant speech on the economy has revealed that he has at least a glimmering of where the economy is heading if something is not done to change economic course. But being a Dem his solution will be higher taxes. And that is probably what lay behind the speech. Having foisted on Americans an unsustainable financial burden in a mere 100 days he is now preparing them for tax increases. And make no mistake, under these circumstance only the super rich -- the ones who supported him -- will be able to avoid the burden, everyone else will pay through the nose. There will be no escape for the great mass of Americans.

It is interesting though that Democrats are so dense that they believe additional regulations, more taxes and greater spending are the solution to every problem -- particularly the ones they create. Taxes will hit savings and investments and they will strike at productivity. Regulations will greatly restrict energy production and raise prices. This in turn will curb production and raise unemployment and savage industry.

It should be obvious to any reasonably intelligent person that if these policies are not abandoned or simply dramatically restrained the next four years could make the Carter presidency look like an economic Elysium.

The Yellowstone Analogy

Charles Hugh Smith:

Just as forestry management's attempt to suppress forest fires enabled ever larger conflagrations, so governments' attempts to suppress global neoliberal capitalism's crisis will fail.

The first task of those at the levers of neoliberal global capitalism is to deny that global capitalism is in crisis.

"Neoliberal" refers to a model of State-managed capitalism which has been in vogue since the Great Depression and the Keynesian revolution: when capitalism's business cycle veers into discomfort (unemployment, slowing sales and borrowing, etc.) then the State (government) suppresses recession with monetary policy (making money cheap and abundant) and fiscal policy (quantitative easing, injections of liquidity, stimulus programs, etc.)

Sounds good, but the Yellowstone Analogy reveals the flaw in this suppression strategy. "Free market private sector capitalism's" normal business cycle of over-investment and excessive risk-taking is naturally followed by a reduction in debt, the liquidation of bad loans and excess inventory, a trend to reduced risk, etc.--in other words, a fast-burning forest fire which incinerates all the dead wood, clearing space for the next generation of growth.

For decades, the operative theory of forestry management was that limited controlled burns-- mild reductions of dead underbrush and debris--would essentially reduce the possibility of a major fire to near-zero.

But the practice actually allowed a buildup of dead wood which then fueled the devastating forest fire which swept Yellowstone National Park in 1988. Various revisionist views sprouted up later, claiming the fire was not the result of misguided attempts to limit natural forces...

Now we're in a financial conflagration which is widely considered the result of failed risk-suppression policies. All the derivatives originated and sold were supposed to, along with "self-regulating markets" (smirk), limit the risks in the financial systems to near-zero.

In other words, even as dead branches piled ever higher, various complex hedges would insure no fire in the FIRE economy would ever spread.

Meanwhile, Mr. Greenspan and other officials made sure the slightest whiff of debt reduction or other signs of recession were instantly snuffed with superlow interest rates and abundant government stimulus.

But this private and public risk suppression not only failed to eradicate risk--it enabled risk to grow to unprecedented levels.

Globally, the State has responded to this failure to suppress risk by creating gigantic new risks and transferring them to taxpayers and buyers of government-issued debt.

The suppression technique being pursued by governments everywhere are simple: borrow and print staggering sums of money to bail out the private-sector banks which sparked the crisis, and then borrow and print even more money and throw it into the economy in an attempt to match the fiscal stimulus of World War Two spending.

Unfortunately, all this stimulus is essentially adding more dead wood to an already vast pile which is already choking what's left of the economy's living forest. Rather than close down failed banks and businesses, various games are being played to negate the fires of creative destruction which real capitalism needs to thrive; without a write-off of bad debts and risky failed gambles and a closure of overcapacity then the new business cycle cannot take root.

Isn't it obvious that by trying to make forest fires a thing of the past then you're actually killing the forest? The same mechanism is at work in the multi-trillion dollar attempts to make financial cycles of over-indebtedness and excessive risk a thing of the past.

The financial firestorm of 2008 burned off some of the dead wood, but it left no clearing. Thus the smouldering embers will light all the new bad debt and deadwood blanketing the floor of our moribund, choked economy and a new round of monetary easing and fiscal stimulus will be attempted.

But policy makers will find the willingness of capital to flow into more low-yield government debt will be near-zero. The zombie banks and businesses--the equivalent of dead but still-standing trees--will finally start toppling over.

You can't make people who are already over-indebted take on more debt, and you can't make people whose collateral is falling creditworthy. To shove more debt into the system is to pile more deadwood onto the already-dense pile of dry debris littering every inch of the economy.


Neoliberal capitalism is in crisis for one fundamental reason: the State has played "the fixer" with monetary and fiscal policy in the belief that risk could be suppressed or mitigated or even massaged away by spreading it over the entire taxpaying populace.

But the excesses of credit, risk, bubbles and overcapacity are now gutting the very middle class which the State relies on to pay most of the taxes. And as tax revenues dry up, entitlement spending ramps ever higher and borrowing is no longer cheap or even possible, then the State and the "private sector capitalism" which depended on passing off its risks and gambles-gone-awry to the State will find the firestorm was not suppressed-- it was only delayed--and not for long.

Sunday, May 17, 2009

Show Me The Data, And I'll Believe In Your Theory

A cliche-spouting leftist, very gently put in her(?) place.


Saturday, May 16, 2009

Great Observations

Mark Steyn (context provided, the observation is in bold):

Under Britain's National Health Service, for example, smokers in Manchester have been denied treatment for heart disease, and the obese in Suffolk are refused hip and knee replacements. Patricia Hewitt, the British Health Secretary, says that it's appropriate to decline treatment on the basis of "lifestyle choices." Smokers and the obese may look at their gay neighbor having unprotected sex with multiple partners, and wonder why his "lifestyle choices" get a pass while theirs don't. But that's the point: Tyranny is always whimsical.

The rest of the piece is a tour-de-force.

Another great phrase from the piece:

The crisis isn't the lack of money, but the lack of citizens.

A T-Minus Zero, Unleash Hell

30 seconds of footage from an Apollo 11 launch pad camera shot at 500 fpm, and expanded to 8 minutes, with narration.

Good stuff.

Friday, May 15, 2009

Radical Inspiration, Radical Responsibility

I think henceforth if anyone asks me whether I am a Democrat or a Republican, I'm just going to answer, "Neither one. I am a Founding Father."

Two reasons for this: Firstly, because it is the Founding Fathers and their vision that inspires me, not the two headed beast that is our current master. Secondly, because it is the responsibility of all who hold to this ideal to stand up if the situation calls for it and to act in the capacity of a Founding Father. Who knows who duty will call, but there is nothing wrong with the country that some new John Adams or Thomas Jefferson or Benjamin Franklin couldn't fix. And no, I'm not crazy enough to think I'm that guy. But the real problem is not that the country isn't "conservative" enough, it is that it ditched what the Founders bequeathed to us. We've got to get back to our true roots ("radical" is Latin for "root").


Seen here:

No less a man than my natural father tried to thwart me by using ridicule, he a former atheist (now deceased), by using the old canard, "If there were no God, Man would invent Him."

I replied, "Yes, but Dad, conversely, if Man did not exist, God would invent him."


Seen here:

As the Archbishop said on Greta last night--discussing Obama at Notre Dame:

"Would Planned Parenthood have the Pope speak and give him an honorary degree?"

Stay Tuned

The shape of things to come.

De-Emphasizing The Indefensible

Is any further proof needed that she is lying?


NYT looking particularly ridiculous today
Thomas Lifson

It's been many a year since I actually paid money for a dead tree version of the NYT (once upon a time I subscribed - for many years). So I haven't confirmed the following, but it is believable.

This morning, on MSNBC's "Morning Joe," Joe Scarborough pointed out that the story of Nancy Pelosi accusing the CIA of lying to her only rated a story on page A20, while every other paper in the country had it on page 1. Moreover, Joe also correctly noted that Abu Ghraib rated many, many front page stories for months.

All across America, people are laughing at the transparent news agenda of the Times. When a newspaper is having trouble surviving, adopting the profile of a laughingstock is not a good move.

Update: Bill Carroll advises us that the LA Times runs a close second: the story is on page A15. Another failing paper in another huge city.

Good Point

Seen here:

Beyond applauding Carrie and her steadfastness, I think an important point should be made. Asking a woman in a beauty contest to testify against the sacrament of marriage between a man and a woman is an intrinsically absurd proposition. If her presence in such an event has any point, it is to highlight the gift of womanhood, to proclaim to men that God has prepared for them a perfect partner. To ask a woman engaged in celebrating her femininity to declare that it is fine if a man chooses to refuse this gift is a negation of what she is trying to communicate.

Good Question

Mark Shea:

The question is not "Why did the Church persecute Galileo in its centuries-long war on science?"

The question is, "How come, when historically illiterate post-moderns want to complain about the Church's "centuries-long war on science" they can always only think of Galileo?

Yup. Another point: the Church has been around for 20 centuries, which means that if it is so evil, it must have averaged at least one total outrage per century. It should be rather easy to come up with a list of 20 outrages. Yet there are only a cliched and fundamentally misunderstood three that ever get mentioned (Galileo, Crusades, Inquisition).

Total Fiasco

VDH on Palin's first 100 days. I knew she'd be a disaster as President!

This is one to e-mail to all your lefty friends.

Not Owning A Car Is Less Expensive

Some very well expressed contrarian thinking.

Not Far From The Truth


(2009-05-15) — House Speaker Nancy Pelosi, under scrutiny for her changing accounts of when she knew about the CIA’s enhanced interrogation techniques, said today that she was not informed until late 2003 that Muslim terrorists had used passenger jets to kill thousands of people in the World Trade Center and the Pentagon on September 11, 2001.

“One of my aides mentioned in passing that she had been to a CIA briefing months earlier about these techniques,” said Rep. Pelosi. “At the time, I thought the discussion was theoretical…that this was something that could happen. It wasn’t until October 2003 that I learned that these methods had actually been used on American soil.”

Crashing hijacked planes into buildings full of non-combatant civilians is one of several “enhanced immolation techniques” forbidden under U.S. and international law.

Rep. Pelosi, clearly rattled by reporters’ questions on the subject, first said she knew nothing about the 9/11 attacks, but later acknowledged that she was “too busy helping Democrats win a majority in Congress to get involved in the details of a matter that was being handled through appropriate channels.”

These Are The Voyages

Saw Star Trek last night. Bravo!

You could do worse than to read what Lileks has to say about the movie.

His review concludes:

It wrapped up fast, which was welcome. I hate movies that drag the final cataclysm on and on, but when this was done, it was done. Then it was one final piece of chocolate for the fans - [minor spoiler] - before curtain call. All the characters in place, everyone stepping into the shades of their predecessors, staring into a bright new future that you can be damned sure will have a sequel...

Then the voice over; then the theme, and it’s like they emptied an entire can of Reddi-Whip on the entire cake. You’re ten again, and you can’t possibly be happier.

Except I’m not ten; I’m a middle-aged man, for heaven’s sake. But when I was a child I saw the first episode of Star Trek ever broadcast, at my Grandfather’s farm house, in living color, and I’ve loved it ever since. It would be pathetic to say this meant something to me, but I’m sorry: It would be a lie to say it didn’t.

What Tangled Webs We Weave

When first we practice to deceive.

Thursday, May 14, 2009

Prrof That The Real Road To Wealth Is Via Going Green


H/T Dr Sanity.


Karl Rove:

If Mrs. Pelosi considers the enhanced interrogation techniques to be torture, didn't she have a responsibility to complain at the time, introduce legislation to end the practices, or attempt to deny funding for the CIA's use of them? If she knew what was going on and did nothing, does that make her an accessory to a crime of torture, as many Democrats are calling enhanced interrogation?

Senate Judiciary Chairman Pat Leahy wants an independent investigation of Bush administration officials. House Judiciary Chairman John Conyers feels the Justice Department should investigate and prosecute anyone who violated laws against committing torture. Are these and other similarly minded Democrats willing to have Mrs. Pelosi thrown into their stew of torture conspirators as an accomplice?

It is clear that after the 9/11 attacks Mrs. Pelosi was briefed on enhanced interrogation techniques and the valuable information they produced. She not only agreed with what was being done, she apparently pressed the CIA to do more.

But when political winds shifted, Mrs. Pelosi seems to have decided to use enhanced interrogation as an issue to attack Republicans. It is disgraceful that Democrats who discovered their outrage years after the fact are now braying for disbarment of the government lawyers who justified EITs and the prosecution of Bush administration officials who authorized them. Mrs. Pelosi is hip-deep in dangerous waters, and they are rapidly rising.

Monday, May 11, 2009

For Leftists, 9/11 Is No More Than Fodder For Jokes, And Wishing Death Upon Your Political Opponents Is SOP

Just sayin'.

Kathy Ireland On Abortion

Great job.

Quote Of The Week


The Journal report quotes one anonymous -- but asinine -- Obama administration official as opining that:

"You don't need banks and bondholders to make cars," said one administration official.

Leftist Beer Goggles

A fun Gagdad Bob post.

"Letter of Amends from a Recovering Liberal in Berkeley"


It Could Not Possibly Have Been A Photo Mission

Good circumstantial evidence highlighted by Althouse. So release the passenger manifest/donor list, already, Obama!

Amusing Mixed Metaphor

From a commenter here:

Doing a 1994 and throwing the Democrats out of control of Congress is our only serious hope of derailing this train wreck (hmmm, that metaphor might need a little work).

Also, from the same comment section, a well-expressed prophecy:

Next: as the UAW runs Fiatler into the ground, and the administration forces Government Motors to discontinue most of its bestselling models in favor of unsalable econoboxes, the Japanese and Ford will eat their market lunch.

So it will be time for another kneecapping in order to keep Obama’s union constituency afloat. I predict a massive Ford strike, with USLRB forcing brutally uncompetitive terms on the company; and Card Check to force UAW control of the Japanese auto plants, with perhaps some targeted tax penalties thrown in.

Sunday, May 10, 2009

Friday, May 08, 2009

There Is Nothing--Nothing!--More Tyrannical And Sinister Than The Idea Of Smaller Government

The "Far Right" is a complete fiction, as explored here.



Now, That's A Graphic!

Graphic was part of this Big Hollywood article, which begins:

Recently, at the office (a place I sometimes affectionately refer to as Obama Central), I made the mistake of printing out a Washington Post editorial that questioned the foreign policy expertise of our new Commander-in-Chief. By the time I got to the printer to pick it up, someone else had already seen it - and stamped “DENIED” across the top of the page in red ink. Next to that was scrawled, “RIGHT WINGER GO HOME.”

The first thing that went through my mind was: cross burnings. The second was: children are evil (my workplace is overrun by hundreds of twentysomethings)...

Why Haven't The GOP Morons Been More Ass-Kickin' Like This All Along?

Proof that the conservative case doesn't have to be lamely apologized for.

Pompous Congressional Windbags Satired In Hotel Commercial

This is good:

H/T Brutally Honest.

Thursday, May 07, 2009

This Is Why They Pay Instapundit The Big Bucks

Reynolds has a certain concise way of putting things:

UH OH: Weak Treasury auction sends stocks lower. “The government had to pay greater interest than expected in a sale of 30-year Treasurys. That is worrisome to traders because it could signal that it will become harder for Washington to finance its ambitious economic recovery plans. The higher interest rates also could push up costs for borrowing in areas like mortgages.” It’s like people are losing confidence in the Obama Administration’s willingness to see that bondholders get paid. Oh, well — what could go wrong, really?

"A Family Is Any Two Or More People Who Love The Government"

Is a great Gagdad Bob headline.

Surpassing Strange

That a system (the US government/banking cabal) that cannot possibly survive without access to astronomical amounts of borrowed money, would tell potential and actual creditors that they can go to hell (and this is precisely what is going on in the blatantly illegal Chrysler/GM creditor screw-overs).

Due to such lawlessness and contempt, a complete wipeout in the government debt markets is being ushered in with ever increasing speed. This is probably what the leftists want, because they imagine that, in a total collapse of our political/economic systems into a Mad Max scenario, they will somehow come out on top. In this, they are gravely mistaken. But, it seems, some people are only capable of learning through direct experience.

This Trailer Is To 'The Shining' As MSM Reporting And Democrat Campaigns Are To Their Real Agenda

See the insightful article where I found this here.

Git That Sucka!

Apropos of nothing, this is pretty funny:

Wednesday, May 06, 2009

Dealing Drugs Keeps Criminals Off The Streets

Interesting point at Ace of Spades:

Next, the idea that criminal drug-dealers will suddenly become law-abiding drug dealers is perplexing.

Let me explain. Drug dealers do not deal drugs because it's a family tradition, like alfalfa farmers in Montana. They do not choose to deal drugs because they just love dealing drugs.

They are criminals, by choice. They have chosen to deal drugs, choosing that particular trade, over other criminal activities, not over legal activities.

What they are after is money. The choose to smuggle, manufacture, and sell drugs because it makes them a lot of money. And even though this money comes at a high non-monetary cost -- namely, intrusive investigations by cops, bizarre personal lives, and the prospect of spending many years in jail -- they've chosen this profession. The monetary benefits, they've decided, outweigh the non-monetary costs of obtaining the money.

Now, legalization opponents often suggest that drug dealers who make large profits on their product will simply continue selling drugs in a decriminaliztion regime, despite the fact that profits will drop to normal levels. Like, what a shopkeeper makes, maybe 6-10% profit on any particular item, rather than the 200-1000% profits they currently enjoy in a regime of criminalization.

This is silly. The drug dealers are drawn into the trade by the profits, not the product. They are willing to risk prison in order to get those profits. They became drug dealers in the first place for those profits.

In a decriminalization regime, such profits-at-the-expense-of-lawbreaking types will not, by and large, simply start selling legalized pot at small 6-10% mark-ups. If they were content with such mark-ups, they could have just bought a 7-11 franchise, or opened up a comic-book shop. They didn't. And they didn't, of course, because they want the profits. They don't care about the drugs per se. They have chosen a profession in which they're willing to make huge profits in exchange for risks to their freedom and lives.

The option of selling legal, normal-profits good was open to them, as it has been open to everyone. They chose against it. If they were content with this level of small profit for lots of work, they could have just opened a hardware store after making a certain level of money in the drug trade. By and large, they don't currently do so, so they won't do so if drugs become an good which earns a more typical profit level.

Which means that the criminals now selling high-profit contraband will not now suddenly turn to selling normal-profit legal goods. Again, they always could have done that; they chose against it. Instead they will turn to other huge-profit criminal activities, whether selling other contraband or heisting your TV out of your home.

To some extent, I guess, there will be "layoffs" in the criminal sector, because a nation can only support so large of a criminal industry (and will only permit so large of a criminal industry). So there may be some reduction in criminal behavior -- but many, perhaps most, of our current criminal class which just happens to be in the drug trade will turn to other criminal activities which afford them the profit levels they seek. If pot no longer offers those profits, they'll turn to importing women into forcible prostitution or armed robbery. Or whatever. What they won't do is become respectable businessmen, making normal levels of profits at the costs of lots of work and financial risk.

Because, again, they always had the option to a toy store. They didn't, not because they're so in love with the profession of the drug trade, but because they're in love with earning profits their legitimate skill-set and abilities wouldn't normally entitle them to. The one part of the skill-set they have, the one thing that makes them money, is the willingness to kill and beat people who threaten their trade, and their willingness to be killed or imprisoned in pursuit of that trade. Their skill-set, in short, is mostly the acceptance that life is cheap, and that is ultimately what makes them their nut.

And the legalization of drugs will not change this. They will not become more skilled in legitimate ways than they were before; their stock in trade will continue to be violence and a willingness to break laws and chance jail. And they will simply migrate to other criminal endeavors...





Fake, Fake, Fake

Not a surprise.

Tuesday, May 05, 2009

A Reprimand For Il Duce

Business Insider as quoted at PowerLine:

The President has just harshly castigated hedge fund managers for being unwilling to take his administration's bid for their Chrysler bonds. He called them "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."

The responses of hedge fund managers have been, appropriately, outrage, but generally have been anonymous for fear of going on the record against a powerful President .... Furthermore, one by one the managers and banks are said to be caving to the President's wishes out of justifiable fear. ...

Here's a shock. When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back. However, they know, or should know, they take the risk of not being paid back. But if such a bad event happens it usually does not result in a complete loss. A firm in bankruptcy still has assets. It's not always a pretty process. Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first. The process already has built-in partial protections for employees and pensions, and can set lenders' contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

The above is how it works in America, or how it's supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler's creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.

Let's be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients' money to share in the "sacrifice", they are stealing. ...

The President's attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. ... Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power. ...

Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people's money. The President's comments here are backwards and libelous.

There is more in the full article, which concludes:

I am ready for my “personalized” tax rate now.

Trekkies Bash New Star Trek Movie for Being ‘Fun, Watchable’

The Onion.

Chrysler Roundup

At Neoneocon.

But The Training Bras Are So Comfortable!

Why should the press take them off?

The Anchoress nails 'em.

Excellent Market Ticker

A must-read.

Denninger points out that the looming problem with Option-ARMs is not interest rate resets, it's the fact that once the outstanding balance hits 110% of the loan value (remember, an option ARM allows folks to make payments that are substantially smaller than what would be required by amortization, adding the shortfall to the principal), the loans convert to fully amortized. All the folks that could just squeak by paying only the interest (or less) then are massacred by a huge hike in the monthly bill.

Says Denninger:

But if you think those numbers are a horror show, the real ugliness isn't found there. It is in fact found in all the foreclosed-but-unsold and not-yet-foreclosed "but will be" housing stock. Through the nation I am getting reports, some hard and some anecdotal, that lenders are sending out NODs (default notices) and then sitting on the process intentionally.

Why would they be doing that?

Simple: Most lenders who have these notes either in a security or as "whole loans" they were unable to pawn off on someone when the securitization market collapsed are holding them at "par" - the total amount outstanding.

If they sell they are forced to realize the loss; so long as they have a "reasonable belief" it will perform or be bought out (e.g. a government-sponsored and funded refinance) they can carry it this way if it is held to maturity. This of course makes their books look much better than they really are when you've got $500,000 in cash out against collateral that the market values at $150,000!

Then there is the Option ARM inventory and, most troublesome, the HELOC's (mostly seconds used for purchase and cash-out transactions) behind them.

There have been opinions floated that the "ARM" decimation is mostly a nothing, since short-term rates are so low and will remain that way for a reasonable amount of time.

This is true but misleading - with Option ARMs the nuclear destruction does not come from a reset of the interest rate but rather the recast when the loan ages or reaches (typically) 110% of the original principal value.

At that point what was either an interest-only (or even not a full interest) payment is forced to a fully-amortizing payment on the balance of the original time. For many of these loans this is set to happen at either three or five years post-issue, which means we're just starting to see the loans written in 2006 turn into many-headed hydra about now.

The importance of this event is that the increase in payment is absolutely insane - it is not at all unusual for payments to double, and there are few if any of these loans where the jump will not be at least 50%.

The IMF says there's roughly double the embedded loss in the system compared to what has been recognized and written down. I think they're conservative - my original estimate for housing market losses was somewhere around $2.5-3 trillion for residential alone.

So far the tally is up in the high hundreds of billions, meaning that there are a lot more cockroaches still to be found in the banking system - and they're doing their best to hide from the light.

Can that succeed? Not a prayer in Hell.

Those Option ARMs and any seconds behind them are doomed. There is no possible way to refinance them as most are over $100,000 underwater. The seconds written on top to get around conforming limits or avoid PMI are in fact worth nothing as the first has priority in a foreclosure action and there's not enough there to even satisfy the first!


Great photo:

Lifted from here.

Cracked Foundations

Good Charles Hugh Smith piece.

It begins:

Homeownership and Wealth Accumulation/Destruction (May 5, 2009)

The nature of "homeownership is the foundation of middle class wealth" has changed from accumulating wealth by paying off a mortgage to speculating in housing by taking on more debt.

Once upon a time people spent decades paying off their home mortgages. That reduction in debt to zero left them equity. Those who paid rent for 30 years may have had lower costs of living (no maintenance costs or property taxes) but unless they saved religiously then they did not end up with the equivalent wealth of a typical homeowner who paid off the mortgage.

Throughout the 1950s and 60s, homes prices and mortgage rates were remarkably stable. The idea that one's house could double in value in a few years was as nonsensical as the price falling in half. Houses cost about two or three times' average income, and over time they drifted higher (adjusted for the era's low inflation) at about 1% a year.

As a result, speculation was nonexistent. Some enterprising handyperson might buy a rundown house for say $22,000, invest some money and sweat equity, and then be delighted to sell it for $25,000 some time later.

The key to housing being the foundation of middle class wealth was not the rise in value--it was the reduction of debt to zero. Removing equity from one's home was unheard of--there were no HELOCs (home equity lines of credit) and second mortgages were modest; people took a second mortgage out to pay for major home improvements or a new roof, not for vacations, new cars, college, etc.

Needless to say, the entire concept of "homes as the foundation of middle class wealth" has been radically modifed--and perhaps refuted. What was once rare--aging homeowners nearing retirement still holding large mortgages and modest equity--is now commonplace.

The inconceivable has happened to homeowners in locales such as Detroit: paying off the mortgage did not build wealth, as the value of the home diminished to near-zero.

In left and right coast locales, the inconceivable also happened: simple bungalows tripled in value in less than a decade, creating leveraged wealth far beyond any historical precedent.

Under the influence of sharply rising inflation and the massive Baby Boom generation entering its prime homebuying years, housing shot up in the late 70s. This rapid rise in value was repeated in the late 80s as well, further priming the expectation that housing had changed from a rising-at-1%-per-year asset of slowly accumulated equity to a speculative vehicle in which a 20% down payment could be leveraged into 100% or even 200% gains in a few years.

This changing character of "housing as wealth accumulation" thus set the psychological stage for the Great Housing Bubble of the 2000s, in which even the 20% down payment vanished and leverage approached infinity as "no down payment, no document verification" loans flourished.

The "rational" response to low interest rates, easy credit and wildly climbing housing prices was to increase one's debt to the maximum and throw it all into real estate speculation. Thus we saw low-income households buying one or two McMansions to flip for quick profits, speculators putting a few thousand down on homes which had yet to be built and then selling the right to the house for stunning profits, and so on: a full speculative mania.

This change in the nature of wealth accumulation from home ownership was profound. With interest rates low and real estate skyrocketing in value, paying down one's mortgage was considered backward and foolish; the rewarding strategy was to extract all of the new equity and use it for fun or further speculation in real estate (or collectibles, cars, stocks, etc.)

But once housing prices began falling to earth, the perverse consequences of leveraged debt became evident...

Monday, May 04, 2009

Well Said

MKH quoted at Instapundit:

MARY KATHARINE HAM: Our Genius President: ‘Happy Cuatro de Cinco!’ “I like to note these little incidents when they happen, not because I think it makes Obama an idiot because he occasionally stumbles over his words, but because his somewhat overblown reputation as the most cerebral, eloquent, utterly erudite president of all time could really use a pricking every now and then. Also, because if Bush had made such a blunder, it would have been the basis of a four-part MSNBC investigative series on the malapropism’s deleterious effects on the Republican Party’s attempts to woo Hispanic voters, Mexican-American relations, and our ‘place in the world.’”

21 Accents

Kind of fun:

H/T RegularThoughts.

The Nature Of Torture

Something just occurred to me. Would I agree to be waterboarded if the result was that the left lost all political power in this country?

Hell, yeah.

Would I agree to actually be tortured?


Blatantly Illegal

Evidence that Obama's Chrysler maneuverings will not survive Court scrutiny. But maybe all it takes to payback the UAW is a "well, we tried".


If the Obama administration expected the senior creditors of Chrysler to fold their tents under political pressure, they may have gotten a rude shock today. Thomas Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy. Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.

The heart of the argument starts on page 8...

[lengthy excerpt from the motion]

One might think that a Constitutional scholar like Barack Obama would have already known that, but either this precedent escaped him or he doesn’t care about it at all. Brandeis acted to uphold contract law, especially in the face of a government interest in paying off politically-connected unsecured creditors ahead of the senior creditors. There is no other reason for Brandeis to make that decision, as only government could insert itself into the contractual relationship during a bankruptcy proceeding — just as Obama has done with Chrysler.

Lauria’s argument seems very compelling here, especially given Brandeis’ rather clear assertion that bankruptcy proceedings have to fall within the 5th Amendment — and that government can’t implement a taking to satisfy its own arbitrary aims by ignoring the relationship of the creditors to the default. We’ll see whether the court rebukes Obama.

Quips one commenter:

The Constitution is above Obama’s pay grade.

Just Following Instructions


H/T Peeve Farm.

Clarence Thomas Does Not Pass RINO's Racial Purity Test


On "Meet the Press," David Gregory questioned Arlen Specter about who President Obama should pick to replace David Souter on the Supreme Court:

SEN. SPECTER: He should be looking for someone with a strong academic and professional background. It would be my hope that he would choose someone with diversity. Women are underrepresented on the court. We don't have an Hispanic. African-Americans are underrepresented. I would hope that he would look beyond the circuit courts of appeals which now populate the Supreme Court and pick someone with greater world experience and diversity.

African-Americans are underrepresented on the Supreme Court? There is 1 African-American on the Supreme Court, which has 9 Justices. 1 is 11.1111 percent of 9. 2 is 22.2222 percent of 9. African-Americans make up 13.4% of the U.S. population. Is Arlen Specter ignorant of these facts, or does he mean to say that Clarence Thomas doesn't count as a black person?

Also be sure to check out the discussion in the comments to the linked post. Some lefty chimes in that he doesn't think Thomas counts as black and gets schooled for it.

And one of the commenters makes this observation:

Maybe Sen Specter meant Justice Thomas counts as 3/5ths of anyone else.

Another says:

The views of Blacks (13% of the population) are only under-represented on the court if they are on the LOSING end of an 8-1 or 9-0 decision. If they are on the losing end of 7-2, 6-3, or 5-4 decisions, or on the winning side of any decision, they are over-represented.

The views of whites (60% of the population,) on the other hand, are under-represented if they are on the LOSING end of ANY decision.

Therefore, to be fair, all supreme court cases should be decided by a nationwide poll of white people.

Il Duce Only Asks For Simple Cooperation

Irwin Stelzer:

I'm saying that when the president does it that means it's not illegal," shouts Frank Langella's Richard Nixon at Michael Sheen's David Frost in "Frost/ Nixon."

He was wrong, and so was President Obama when he said last week that he'd override the contractual and legal rights of Chrysler's senior lenders and carve up the company between the government and the United Auto Workers.

Typically, lenders who make money available to a company in return for a first claim on the company's assets get about 80 cents back for every dollar they lend should it hit the rocks. Others to whom the company owes money, but who have no claim on the assets -- workers, suppliers, junior lenders -- get much less.

Yet Obama forced the senior lenders to take something like 30 cents for every dollar they'd lent Chrysler. Many lenders -- the big banks who'd taken federal bailout money -- rolled over. But some hedge-fund managers pointed out that they have a legal, fiduciary responsibility to do the best they can for their investors (which include pension funds) and decided to take their chances with a bankruptcy judge.

Never mind that this is their long-established legal right. Obama is furious with these "speculators," and hinted that he knows where they live and will get even when the new financial-industry regulations are drafted.

Unfortunately for the president, the ball is now in Judge Arthur Gonzalez's court, literally. This former New York City school teacher, shaved-head, in-the-office at 6 A.M. jurist sits on Manhattan's federal bankruptcy court, and already has the nasty and complicated Enron and WorldCom bankruptcies under his belt.

I'm no lawyer, and so have no idea how Judge Gonzalez will decide to distribute what remains of Chrysler. He might auction off parts of the company; he might decide that the claims of the senior creditors take precedence over the unions and the government; he might decide that the president's solution is in the best interests of all the creditors.

But one thing is certain: Even as Obama wants a quick decision, Judge Gonzalez, known as a careful jurist, will decide on a schedule long enough to give everyone a fair hearing but not so long as to threaten a further devaluation of Chrysler.

Obama is pressuring the some 20 "speculators" who are holding out to accept the crumbs that he's offering. But there is more here at stake than the money immediately involved. As George Schultze, managing member of Schultze Asset Management, a hedge fund, told The Wall Street Journal, "This is about contract and bankruptcy law, and upholding agreements -- which is important in the grand scheme of things."

It certainly is...

For Them, Quality Is Not Just A Slogan. It's Their Motto!

Charles Hugh Smith:

3. The durability of Big Three-manufactured cars was simply not competitive. The Big Three chose to tout the J.D. Powers reports on the number of defects found per new vehicle as the proper metric for their improved quality; as a low-income marginalized consumer my metric was more demanding: can this car run for 12+ years with almost no maintenance or repair bills?

Unfortunately, I do not personally know of any Big Three-manufactured vehicle which lasted past five or six years without incurring major maintenance or repair bills--often in the thousands of dollars. The Big Three trucks have a pretty good record of lasting 10+ years with low costs of ownership, but the rest of the fleets have poor records of long-term durability and ownership costs.

This lack of durability of the Big Three vehicles receives almost no visibility. The fact that a car made by American workers with largely American-made parts in Tennesee lasts a decade or more with virtually no repairs or maintenance required while the 10-year old Big Three vehicle is either junked or a problem-riddled "beater" is the 800-pound gorilla in the room few have cared to discuss.

My Dad surrendered his devotion to Ford's Lincoln Continental only after the company broke his decades-long loyalty by refusing to repair a transmission which failed a few months after the warranty expired. How can a transmission in the company's luxury car fail? How could the company not see the wisdom of repairing their topline vehicle for a customer who bought and owned their cars for decades?

In my view, this incident sums up why the Big Three are collapsing: poor quality, poor customer service, and a high cost of ownership. It's simply too expensive to buy and own a Big Three car unless you sell it at a hugely depreciated price within the warranty period-- at which point you've already lost thousands of dollars.

So the last car my Dad bought (new) was a Chrysler 300, that company's topline vehicle. Now six years later it is riddled with electrical problems which have cost thousands of dollars to fix. This is also not unusual.

Meanwhile, the car I bought used that was made by American workers with mostly American parts (a 1998 Honda Civic) is in its 11th year of service with virtually no repairs except a faulty sensor we replaced in a few minutes with a tool borrowed from a Kragen Auto Supply.

My experience of European-made cars is also poor when measured in durability and the cost of ownership over 12 years (10,000 miles a year for 12 years, as any modern vehicle should be able to last 120,000 miles without costly repairs.) My Dad's one foray into the Mercedes line ended like all other Mercedes I know of personally: with a $4,000 repair bill around year 8-10.

If you walk around any large parking lot in California and tally up the brands of the vehicles, you would find the vast majority are Japanese brands made in the U.S. American trucks are in evidence but there are very few Big Three sedans or even minivans. The reason is not disloyalty, it's simple economics: the depreciation of value and long-term ownership costs of Big Three and European brand vehicles are so much higher than the Japanese-brand vehicles that few can afford the Big Three or European brands.

The transmission in my brother's topline Alfa Romeo just failed after four years, requiring $6,000 in repair bills. Atypical? Let's put it this way: how many times have you personally known a transmission in a U.S.-made Toyota or Honda to fail, ever? I drove my 1985 Honda Accord to the wrecking yard after 20 years of service because it no longer passed California's strict smog tests. Someone could have pulled the tranny and probably gotten another 20 years out of it. That trannies in Lincolns and Alfas fail after a few years is incomprehensible. And don't even ask about electrical systems.

A Losing Platform

The GOP platform (in practice) seems to amount to not much more than:

"We promise to be more sober, practical, pious, and adult than the other guys as we ram the ship into the iceberg."

Sunday, May 03, 2009

Another Brilliant Whittle Takedown


One Of The Causes Of The Moral Decline Of Our Society

Is the lack of visible and public signs of total devotion to God. The Anchoress:

In the late 1970’s I heard a teaching sister say that the shedding of religious habits was a good thing, because it emphasized that sisters were “nothing special; that we are all special in God’s eyes.”

I recall thinking “that’s wrong reasoning,” but I didn’t understand why. Now, I do.

This sister gave an example: “when we were in our habits, a fellow with an Italian Ice barrow would always insist on giving us free ices, but why should he? Why shouldn’t we pay like anyone else? Why should we deprive him of his living because we were in a costume?”

Putting aside how unlikely it might be for an Italian Ice seller to go broke because of a few free scoops of sugar-water, what is clear, now, is the sister’s horizontal and earthbound thinking, which had some breadth but neither height nor depth. As with the “horizontally-focused” masses and hymns that over-emphasize the human part of church, Sister was embracing the beam of the cross without considering that the vertical post is necessary if anyone is to be raised up.

The Horizontal beam is us; humanity and the world, necessarily reaching out toward each other. The Vertical post is our reaching up together from the earth to the heavens, to the Eternal. Also necessary. That’s the part Sister had forgotten.

Sister had a delusion; she justified forsaking the habit with themes of solidarity, compassion and humility but in truth her story illustrated egoism and presumption. She bemoaned a possibility of cheating a man from his wages. In fact, she was cheating that man, but not in the way she imagined. She was cheating God, too.

The Ice-barrow man was not giving Sister a free ice because she wore a habit, but because a man who loved (or at least respected) God saw an opportunity to demonstrate that love in a small, simple way. Her habit gave silent witness to the community of faith, a reminder that there are people out there giving up everything for Christ and ultimately for us. Sister might say correctly that she was “nobody special.” but her habit identified her as one mysteriously espoused to the man-God wholly worthy of praise, honor and adoration; not she, not sister, but the Christ represented by what we used to call her “wedding clothes.”

The habit, in fact, was voluntarily undertaken as a means of self-effacement. It was paradoxically meant to make Sister, “nobody special” to the world; to obliterate her individuality and make her one of many, one part of the same body, one part of the collective hive, because religious life is socialism on a small-and-voluntary scale - which is the only way socialism can truly work. Taking off the habit may have helped sisters “celebrate their individuality,” and that is not a terrible thing, in and of itself; we are each fearfully, wonderfully made.

But the “ordinary” clothes also made the ordinary world more ordinary. Suddenly, there were no outward indications that anyone was praying at all, no reminders that we could and should pray, too. Suddenly, there was no one to make a man think of Jesus for a moment, and scoop up some frozen sugar-water.

The Italian Ice was for God, not for Sister. When she took off the habit, the Ice-man stopped noticing and responding to God at random moments in his day, and finding ways to say “thank you,” to Him.

Perhaps clearing an additional dollar a day, the Ice-man was substantially poorer, for it.

So, in the end, even with the best of intentions, Sister “Nobody Special,” in her need to feel fellow-kinship, humility and “unspecialness,” served her own satisfied ego, when it would have been much more humble of her simply to say “thank you” to a free cup of ice, given and accepted in the love of Christ.

Rather like Holy Communion.

She never cheated the man from his living. But she cheated God of a small devotion. She cheated a man of his chance to demonstrate that devotion. She cheated herself of the privilege of reminding the world -by her mere presence- that all creation is extraordinary and beloved. She cheated the rest of us, because we loved being reminded of that.

It meant we were each special, after all.

Habits are not necessary to the life of a religious; that is absolutely true. They may well be necessary for the life of the world.