Archive for January, 2011

Muslim democracy is dangerous

Sunday, January 30th, 2011

The reason there are so few Islamic democracies is that the majority of Muslims vote for war, rape, murder, and terror, with the result that democracies with substantial Muslim populations tend to be short lived.  Muslim democracy is dangerous because Muslim voters are dangerous, and should not be permitted.

Egypt looks like it will produce more of the same – the winners will likely be the Muslim Brotherhood, which will unleash terrorism and rape against the Christian minority, and resume war against Israel as a first step towards war against all infidels everywhere. The Stratasphere calls US policy “Jimmy Carter Diplomacy”.  The vast majority of Egyptians will vote for the Muslim Brotherhood, which organization assures our gullible ruling elite that they are moderates, while everywhere pursuing a policy of terrorism.

At best, Islamic democracies produce governments that look the other way on terrorism, and go easy on terrorists, for example Indonesia.  At worst they elect regimes that propose to murder everyone everywhere who is not as passionately Muslim as those elected, as for example Algeria, where the Algerians freely and fairly elected a party, the Islamic Salvation Front, that thought that very few Algerians were sufficiently Muslim to be allowed to live.

Usually, however, they elect merely terrorist regimes, like Hamas.  The Hamas regime has merely executed a few hundred Gazans for witchcraft, and few thousand for apostasy, but has applied most of its energies to terrorism against its neighbors, so it is pretty much in the middle as Islamic elected regimes go, though more extreme than is typical for long lived Islamic elected regimes.

The financial crisis inquiry report

Saturday, January 29th, 2011

The government has investigated the “2008” financial crisis and released a detailed report.   (Actually it was the 2005 crisis, in that the panic set in towards the end of 2005 , but the government successfully covered things up and managed to get all the major players to pretend that everything was normal until 2008.)

The summary and conclusions are of course, piles of lies, intended to divert attention from those actually guilty.

Overall, it sticks to the cover story that hardly anyone noticed anything out of the ordinary until 2007.  It correctly observes that regulators failed to use the authority that they had, and to the extent that they used their authority, used it corruptly in ways that worsened the crisis – from which it concludes that the regulators need more power and to exercise that power more forcefully.

It correctly observes that

The kings of leverage were Fannie Mae and Freddie Mac, the two behemoth government-sponsored enterprises (GSEs). For example, by the end of 2007, Fannie’s and Freddie’s combined leverage ratio, including loans they owned and guaranteed, stood at 75 to 1.

So the next time you hear someone say that leverage caused the crisis, that is actually a euphemism for saying that government-sponsored enterprises were the major players causing the crisis, not an explanation of the crisis. After all, as the Republicans on the committee point out, leverage only produces bad results if you lose money, and the question therefore is how such large amounts of money were lost. So what, then, did Fannie and Freddie do to piss away large amounts of money?

It also tells us that

As early as September 2004, Countrywide executives recognized that many of the loans they were originating
could result in “catastrophic consequences.”

Yet fails to quote that testimony or document in full.   Surely those who saw the crisis coming, knew what was causing the crisis, yet we don’t hear what they said back then.

The report is overcooked, presenting conclusions without the data from which those conclusions were drawn.

Crabtree testifies to large numbers of abandoned houses in 2006, of entire neighborhoods collapsing, of the lawns unmowed, the houses empty except for homeless people squatting. If the mortgages were busted in 2006, surely the crisis was in full swing in 2006? Why then is every commissioner telling a story that has the crisis suddenly manifesting in 2007/2008?

In November 2005 I said “Now is the time to panic”, and it appeared to me that everyone did panic, within a few days of me saying it. People gave the commission the same testimony.

Warren Peterson, a home builder in Bakersfield, felt that he could pinpoint when the world changed to the day. Peterson built homes in an upscale neighborhood, and each Monday morning, he would arrive at the office to find a bevy of real estate agents, sales contracts in hand, vying to be the ones chosen to purchase the new homes he was building. The stream of traffic was constant. On one Saturday in November 2005, he was at the sales office and noticed that not a single purchaser had entered the building. He called a friend, also in the home-building business, who said he had noticed the same thing, and asked him what he thought about it. “It’s over,” his friend told Peterson.

Why then does the commission stick to the story that this crisis happened in 2008?

Bad loans were made. The money was lost in bad loans. Why were those bad loans made?

The Democrats on the commission conclude that bad loans were made for profit:

We find that the risky practices of Fannie Mae—the Commission’s case study in this area—particularly from 2005 on, led to its fall: practices undertaken to meet Wall Street’s expectations for growth, to regain market share, and to ensure generous compensation for its employees. Affordable housing goals imposed by the Department of Housing and Urban Development (HUD) did contribute marginally to these practices.

Peter J. Wallison argues that affirmative action and affordable housing contributed massively to these practices, in particular the HUD “Best practices initiative”

If a financial entity was failed to follow HUD “best practices” it was likely to be sued for racism, redlining, and any number of vague crimes that can never be disproven, so everyone had to follow “best practices” and if a company followed HUD “best practices” it was bound to make huge numbers of bad loans.

“Best practices” required that the lender accept “non traditional” evidence of ability to pay – and the reason such evidence was non traditional is that it is not evidence.  If a mortgage business followed HUD “best practices”, as in practice it had to do, best practices meant in practice that they were allowing borrowers or their loan officers to make $#!% up.

Ambac argues fraud committed for profit caused the crisis

Thursday, January 27th, 2011

I of course, argue that government pressure to make mortgage loans caused the crisis.  After all, the specific examples bad loans that Ambac lists in its lawsuit against Bear Stearns, are all loans that were made to poor people, though Ambac provides no information that would identify the race of these poor people.  Ambac, however, argues that Bear Stearn made bad loans, lied that the loans were fine, and sold them on to the next sucker in order to collect fees.  Ambac in its lawsuit against Bear Stearns explains the global financial crisis as caused by fraud conducted for profit, rather than caused by government policy.

It is, however, apparent that Bear Stearns kept a lot of bad loans, and took losses on them, even though it unloaded most of the bad loans onto various suckers by means of fraudulent warranties and representations.  I argue therefore that Bear Stearns was under pressure to please regulators by lending to the supposedly poor and oppressed, which poor and oppressed are notoriously unable and unwilling to repay loans, and finding itself with a pile of bad loans, proceeded to unload as many of them as it could, by fair means and foul, many of them onto Ambac.

If, in the end, the government winds up compensating Ambac, and the Bear Stearns boys who made these fraudulent warranties and representations to Ambac go unpunished as individuals, we should conclude that Bear Stearns was carrying out government policy, that this fraud, like so many others, was committed out of political correctness.  If, on the other hand, those who committed these massive frauds are themselves individually punished, for committing lucrative frauds that sank the world economy, then this will be evidence for the fraud was committed for profit.

Against the theory that the fraud was conducted for profit, is the fact that this is a civil lawsuit, even though fraud, and fraud that cost the taxpayer trillions, is a criminal offense.  That there is not the slightest suggestion that any of these many acts of fraud will be punished criminally, suggests that these frauds were committed not for gain, but for political correctness.

Who called the financial crisis before it happened?

Tuesday, January 25th, 2011

Among others, Ron Paul, in his speech to the house, proposing amendments to the laws that caused the crisis

… the government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.

The connection between the GSEs and the government helps isolate the GSEs’ managements from market discipline. This isolation from market discipline is the root cause of the mismanagement occurring at Fannie and Freddie …

I hope my colleagues join me in protecting taxpayers from having to bail out Fannie Mae and Freddie Mac when the housing bubble bursts.

… The flip side of regulatory capture is that mangers and owners of highly subsidized and regulated industries are more concerned with pleasing the regulators than with pleasing consumers or investors, since the industries know that investors will believe all is well if the regulator is happy. Thus, the regulator and the regulated industry may form a symbiosis where each looks out for the other’s interests while ignoring the concerns of investors. …

… the government increases the likelihood of a painful crash in the housing market. …

Needless to say, there was only one vote for addressing the looming financial crisis.  Looking at the tea party candidates, I think if the Tea party did a clean sweep, if every single congressman had belonged to the tea party, I think there would have been two or three votes for addressing the looming financial crisis.

Brad De Long explains he was wrong

Thursday, January 20th, 2011

Wrong, that is in that he failed to appreciate his own his immense genius, and wrong in that he failed to appreciate that the progressive left wing account of economics was ever more staggeringly true than he thought it was:

According to him, he was wrong to think that:

highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry’s experience at quantitative analysis, with all the knowledge of economic history that the large investment and commercial banks of the United States had, that their bosses understood the importance of walking the trading floor, of understanding what their underlings were doing, of managing risk institution by institution. I thought that they were pretty good at doing that.

Funny about that. What those not under the thumb of Cathedral, such as the Israeli Central Bank and the Chinese seem to think is that he was wrong about was to imagine that the state could direct great barrels of mortgage money deadbeat borrowers with any prospect of the money being paid back.

According to him, he was wrong to think that:

that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP.

that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment. In Germany and France with their lavish safety nets it was possible to run an economy for 10 years with 10% unemployment without political crisis. But I did not think that was possible in the United States.

Which is a roundabout way of saying he was not wrong to think that the government could cure unemployment by printing lots of money and spending it, and the fact that it has printed vast amounts of money and spent it, causing only inflation and not restoring employment, is proof that the government is not spending enough money. The treatment, he tells us, is just fine, just needs to applied more vigorously.

And he was also wrong to think that other economists were as smart as he was:

I did not think that there were any economists who would look at a 10% shortfall of nominal GDP relative to its trend growth path and say that the government is being too stimulative.

It seems that all these other silly economists were so silly that they accurately predicted what the results of the governments policy would be – stagflation.

Official government inflation is still near zero, but the inflation people see when they do their shopping is quite shocking.

Europe crosses the Rubicon

Thursday, January 20th, 2011

Ireland has started to issue its own Euros, or rather counterfeit its own Euros, since it has no legal authority to issue Euros – not that anyone worries about legal authority these days.

If any one country of Europe can get away with issuing Euros, then the political benefit is captured by the one country issuing Euros, while the inflationary effect is experience by all of Europe.  This guarantees over issue of Euros.

The proposed cure for this problem is more central authority, a United States of Europe – but there was already central authority to stop people from issuing their own Euros.  Irish issue of Euros is illegal, but the European Central Bank lacks the balls to say so, and forming a United States Of Europe would not give the European central bank a testosterone infusion.

The two most powerful democratically elected people in Europe, Ms. Merkel and Mr. Sarkozy, have, under pressure from their voters, prescribed a solution:  The Deauville pact.

The Deauville pact if implemented would mean that Greece and Ireland would  go broke.  Irishmen would go the ATM, attempt to withdraw cash from their bank accounts, and no cash would come out.  Pensions and doles issued by the Irish and Greek governments would bounce – that is to say, solvent banks would turn them down, and while insolvent banks would cheerfully accept them, the insolvent banks would be unable to give cash for them.

The European Central Bank is, however, reluctant to go along with this plan.  But if they are reluctant to stop people spending Euros they do not have, or unable to stop people spending Euros they do not have, Euros will, in the end, be worthless.

The more solvent countries of Europe could save themselves from this shipwreck by issuing their own currencies – franks and marks.  Of course, that would be easier if they actually were solvent.  That Europe is drifting into a system that makes financial collapse unavoidable is more of a symptom than a cause.  Genuinely solvent nations would unhesitatingly cut the wastrels off without a penny, to teach them thrift, which is what the the Deauville pact proposed.  The problem is that every bureaucrat fears that if one government goes broke, people will doubt the next.  Big spending governments fear to let bigger spending governments go broke, lest their own solvency be doubted.

The Deauville pact was more the politicians of France and Germany assuring each other and the voters that they were indeed solvent and could act in the macho manner that solvent enterprises can act, than it was any real intent to act.

The New Civility

Tuesday, January 18th, 2011

View from the right” spots the fine print in a buried news story:

James Eric Fuller, 63, who was shot in the knee, had told The Post on Friday, the day before his arrest, that top Republican figures should be tortured — and their ears severed.

“There would be torture and then an ear necklace, with [Minnesota US Rep.] Michelle Bachmann and Sarah Palin’s ears toward the end, because they’re small, female ears, and then Limbaugh, Hannity and the biggest ears of all, Cheney’s, in the center,” Fuller said.

Also on Friday, Fuller stopped by the home of gunman Jared Lee Loughner and told a neighbor he was going to forgive the shooter, The Associated Press said.

A leftist has no enemies to the left, and no friends to the right, so if  shot by someone lefter than thou, the shooter cannot be an enemy.

Creeping progressivism

Monday, January 17th, 2011

Mc Cain is horrified when a bunch of progressive lawyers demand that banks have their paperwork in order before foreclosing. He does not realize that he has implicitly conceded everything that matters to those progressive lawyers.

He complains that this will have a detrimental effect on the availability of credit:

this action could have a catastrophic impact on home values and mortgage lending …

… lenders are discouraged from offering mortgages except to the most affluent and credit-worthy buyers.

Surely, after recent events, lenders should not be offering mortgages except to the most affluent and credit-worthy buyers.

The problem is not that a bunch of lefty liberal lawyers demand that banks have their paperwork in order. The problem is that the government intervened to make mortgages easily available any deadbeat, and that this necessitated taking a few short cuts with the paperwork, indeed necessitated taking a lot of quite drastic shortcuts with the paperwork.

And now the government is demanding both that mortgages continue to be easily available to any drunken unemployed deadbeat wetback, and that the banks keep their paperwork in order.

The remedy is not that the government should refrain from demanding clear, simple, straightforward and accurate paperwork before foreclosure. The remedy is that the government refrain from demanding that mortgages continue to be easily available to any drunken unemployed broke deadbeat wetback,

No enemies to the left, no friends to the right

Sunday, January 16th, 2011

A leftist has no enemies to the left, and no friends to the right.  Thus everyone that he is a friend to, is an enemy to him, and everyone who is a friend to him, he is an enemy to.

Back in the day of the Soviet Union, we regularly saw this dynamic with the “popular front”.  The popular front, a coalition between moderates and radicals, would seemingly be dominated and led by moderate bourgeois, which moderates would be swiftly dumped once the front took over.  But not only would the radicals think they had it coming for not being left enough, the moderates themselves seemed to feel they had it coming for not being left enough.

We also saw this dynamic in the Soviet Union during the purges.  An influential Soviet officer and/or party member, a long way from Moscow, surrounded by armed people personally loyal to him, would be summoned to Moscow to face torture and death.  Instead of looting the armory and fleeing for the hills, off he would dutifully go to Moscow.

And today, we once again see this dynamic in the Tucson murders.  Jared Lee Loughner murdered a bunch of leftists.  Naturally, many people, myself among them, figured Loughner for a Tea Partier, but it soon became apparent that Loughner was a leftist killing them for insufficient leftism.

And so, naturally and predictably, Loughner was forgiven, but the Tea Party was not. J Eric Fuller, who was shot in the knee by Loughner, announced his forgiveness of Loughner, but threatened to kill Tea Partier Trent Humpries.

Here is a word of advice for any leftists planning to die in blaze of glory killing those who commit themselves insufficiently to the one true faith: Practice on a shooting range first.  Get them in the head or torso, not the knee.  Remember: torso.

The blood libel against Sarah Palin

Thursday, January 13th, 2011

What is a “blood libel”?  It is an irresponsible and frivolous accusation of murder, like the one made against Sarah Palin, made with the intent of justifying real murders.

The left have long been issuing exterminationist rhetoric, and this blood libel has led to an explosion of calls for the murder of alleged rightists. x

This blood libel looks to me like preparation for the real murders that the left hopes to commit during the coming Cloward–Piven crisis.

The left is, of course, outraged at the term “blood libel”.  It perceives only the right as using violent rhetoric.  It sees nothing violent and menacing about its own rhetoric, because, after all, supposedly everyone knows rightists need killing, hence supposedly nothing controversial about saying so.  And so, the use of the term by Sarah Palin and numerous bloggers and commentators seems to them ludicrously inappropriate.

Since Sarah Palin supposedly knows how peaceful and benevolent the left is, the fact that she used such a term supposedly proves she cannot possibly know what it means. That she implies that the wonderfully peaceful left is violent and murderous is surely an accident, and proves how stupid she must be.

To progressives, who can see no violence or threats coming from anyone progressive, the term seems obviously inappropriate.  Sometimes they say it is inappropriate in mild, civilized, and reasonable language, sometimes in language so incendiary as to prove the term is entirely appropriate.

In considering the entire screaming match, one must keep in mind that we are approaching a crisis in the next decade or two in which political violence is possible, likely, and may well be necessary.  Someone is going to get defunded, and they will likely resist it.

So, as Sarah Palin said, keep your powder dry.