The Wallison dissent

February 16th, 2011

Steve Sailor, is as always great reading, and he issues some comments that on the Wallison dissent that everyone who wants to understand the financial crisis should pay attention to.

Peter Wallison tells us

Profit had nothing to do with the motivations of these firms; they were responding to government direction.

Rather than direction, they were responding to government pressure and persuasion.  Basel gave government not so much the power and authority to dispense off budget funds to friends and voter blocks, but rather to heavily influence and pressure banks to dispense off budget funds to friends and voter blocks.  Since government, or those authorized by government, decide what is risky and what is not, rather than those actually making the loans, any loan that is politically correct is unlikely to be deemed risky.

Steve Sailer tells us:

Among profit-seeking lenders there will always be optimists and pessimists about the ability of marginal borrowers to pay back their home loans. Government policy from 1991 onward was heavily biased toward being nice to optimist lenders and not nice to pessimists lenders This nurtured a climate in which the businesses of the optimists grew and people in the middle shifted toward optimism, while pessimists moved toward other lines of work.

Consider Angelo Mozilo of Countrywide, who on January 13, 2005 catastrophically pledged $1,000,000,000,000.00 in mortgages by 2010 to minority and lower income borrowers. The government can’t force anybody to lend a trillion bucks to bad risks. A billion dollars, sure. But a trillion? The lender has to want to do it.

That doesn’t mean that politicians weren’t intimately involved in cultivating Mozilo’s delusional state of mind where he thought he was doing well by doing good and vice-versa.

There’s no question that Mozilo was first prodded down this path by the hoopla over the stupid early 1990s Boston Fed “study” of discrimination in mortgage lending. Crucially, the Clinton Administration’s threat in 1994 to extend the Community Reinvestment Act paperwork requirements to nonbanks like Countrywide led Mozilo to sign a treaty with Clinton’s HUD secretary Henry Cisneros promising to lend like Countrywide was covered by the CRA.

But, Mozilo became infatuated with Cisneros’s “vision” and put Cisneros on Countrywide’s board. They both became convinced that lending vastly more to Hispanics was a great business idea.

If you didn’t believe that, well, you’d better keep your mouth shut because you could be sued for discrimination, and regulators could make your life hell. So, the government helped change the culture of mortgage lending in part by selecting more credulous people like Mozilo for favorable attention and giving more skeptical people a hard time.

Another example is Kerry Killinger of Washington Mutual. He survived 29 Community Reinvestment Act reviews as he bought up other lenders by making huge pledges of minority and lower income lending , up to $375,000,000,000 for the acquisition of Dime Bank. So, there is a selection effect. The government gave the thumbs up to optimists expanding and the thumbs down to pessimists. So, the culture of lending shifted toward credulity.

On Steve Sailer’s blog you can find much useful research you cannot find anywhere else, because it is just too horribly politically incorrect, but he does suffer from the fallacy of seeing jooz everywhere, and therefore believing the market is rigged by jooz against people like Steve Sailer. I hope some day to debate him on this topic – I argue that Jews are converts to progressivism, rather than progressivism being a sect of Judaism, (the Mencius Moldbug theory that progressivism is crypto calvinism) and that progressives were ruling the system and stealing all the money back when progressives were still nominally Christians, and did not allow any Jews to get in on the vig.

Posted in economics | No Comments »

The new Egypt

February 15th, 2011

Earlier I argued that no Muslims should be allowed to vote anywhere in the world, least of all in Muslim majority countries.

Brutally honest has some interesting survey results on what the Egyptian majority will vote for:

• 84% favor the death penalty for people who leave the Muslim faith.

Now 84% is an interesting number, considering that something like ten or fifteen percent of Egyptians are Christians (the number is rapidly diminishing due to rape, murder, and flight). So, supposing that no Christians support the death penalty for those that leave the Muslim faith, looks mighty close to 100% of Egyptian Muslims support the death penalty for those that leave the Muslim faith.

The survey neglected to ask how many supported Egypt going to war with the nearest infidels, but since 54% favor suicide bombings of civilian targets, chances are a considerable majority favor war.

Posted in war | 3 Comments »

The origins of multicultural rule

February 13th, 2011

Hbd Chick has been discussing the origins of multicultural rule.

I have been reading old books.  The ideology that races, ethnicities, and genders, are the same in mean and distribution, and if they are not it is because of oppression and someone must be punished, is several hundred years old.  It first exercised sufficient power to intimidate its enemies and reward its friends in Britain in 1890, as illustrated by the pressure applied to James Anthony Froude, and by the elevation to the heights of the none too bright John Jacob Thomas.

Affirmative action for women had the whip hand in Europe in 1910 – consider for example Marie Curie getting not one but two Nobel prizes for work that was entirely routine when men did it.  Can you remember anyone who discovered any of the other hundred odd elements?  You cannot, because all the other elements were discovered by men.  She got Nobel prizes not for doing exceptional science, but for doing science that was exceptional for a woman, just as when people praise Obama’s speaking skills, which are far inferior to Sarah Palin’s, they mean he speaks well for a black man.

As early as 1904, academics are tiptoeing around the fact that the great Zimbabwe in Africa was built by Hebrews, and that as these Hebrew settlers interbred with local blacks, their workmanship deteriorated.  (The tribe that claim to have built it recall that they are Hebrew descended, recall their journey from the middle east, have a religion that much resembles Judaism, look significantly less black than their neighbors, and were, in the twenty first century, gene tested revealing substantial Hebrew blood)  The fact that the builders were of a visibly different race to their neighbors and claimed to have immigrated from the middle east is only mentioned by the indelicate, even in 1906.  It was not something a proper academic would mention, since it might suggest that black people just cannot build or maintain cities.

From about 1880 to 1940, the ideology is clearly and overwhelmingly Christian, in particular Protestant Christian socialist, though these Christians were somewhat embarrassed by the bible, due to its reactionary views on family, marriage, women, divorce, adultery, homosexuality, and so forth, and were in the process of discarding it.

From 1920 to 1940, we see the center of power in this ideology, the holy church of multiculturalism and environment, shifting from Europe to the US.  After World War II, the US was wholly dominant, and Harvard the high Cathedral of the religion.  Since the holy doctrine must be taught in government schools, what little Christianity remained in the doctrine was ruthlessly suppressed, in order to superficially appear to comply with the first amendment, though arguably the doctrine was being taught in government schools with a more explicitly Christian tinge before the war.  Jews only show up in the multicultural ruling elite after the remnants of Christianity are purged from the doctrine – fifty or sixty years after it first exercised theocratic power.

Posted in culture, politics | 17 Comments »

Mainstream media backs Romneycare for GOP presidential candidate

February 12th, 2011

Supposedly Romney, the creator of Romneycare, the medical system that inspired Obamacare, is the GOP’s best hope for defeating Obama.  So the mainstream media unanimously tells us.

Probably true, but there seems little point to such a “victory”.

At CPAC, Presidential Candidate Romneycare upbraids Obama for high unemployment, and all the press, the same press that worships Obama, the same press that goes weak at the knees at the sight of the great Obamessiah, cheers Presidential Candidate Romneycare to an echo.  Suddenly the press, who whom any truth about the great Obamessiah used to be the most vicious and depraved racism, thinks it is wonderfully inspiring for Presidential Candidate Romneycare to blame the great Obamessiah for unemployment.

So what would Presidential Candidate Romneycare have done about unemployment that differs from what Obama did?  Somehow he neglects to tell us.

You can tell who has the real power by whose job is permanent, and who can lose his job.  The public servants cannot lose their jobs.  Politicians are competing to be the Public Relations department of the permanent government.  This was most evident in the pitch made to CPAC by would-be Presidential Candidate Grinch: Gingrich calls for eliminating EPA, expanding domestic energy production

But, of course, he does not propose to eliminate the Environmental Protection Agency.  He proposes to convert it into an agency that focuses on “science, technology, markets and incentives.”

Not that there is any danger of a presidential candidate Grinch.  The Republican Party hates him for endorsing Scozzafava, from which act of treachery he can never recover, and the permanent government fears he is not sufficiently enthusiastic in his support for the permanent government.  Of the available enemies of the Republican Party, the permanent government has clearly and unambiguously decided it wants Presidential Candidate Romneycare, the Republican President that could best defend the most recent big expansion of government, Obamacare.

But suppose the universally despised Grinch, hated by both left and right, somehow got to implement his plan:  Trouble is that the Environmental Protection Agency  is composed entirely of anti capitalism environmentalist activists who think factories are simply sinful in themselves, that destroying jobs, any jobs, is an act of Godliness.  The Environmental Protection Agency is jobs for the lefty boys. Leftist activists got rewarded with permanent government jobs. You cannot remake it into a pro market organization. You have to shut down lefty government organizations, and if righty government organizations are to be created, they have to be created from scratch with  jobs for the rightists.    The fact that Grinch proposes conversion, rather than abolition, tells us that a President Grinch would be handing out even more jobs for the left wing boys, not jobs for the right wing boys, more rewards for left wing activists in the revolving door between government and activism.

If the president was the boss, or the president and congress was the boss, he could lay off agencies that were not performing, or were not going along with his agenda, the way  Chief Executive Officer, or Chief Executive Officer and the Board of a company can, and frequently does, lay off divisions that are not performing, or are merely not part of the Chief Executive Officer’s vision of what the company should be doing.

That this never happens, cannot happen, is just unthinkable, no matter how dreadfully an agency screws up, tells us who has the real power.

What would happen if the public elected officials that actually tried to exercise power?

President Reagan is often praised for overthrowing the Soviet Union, or contributing substantially to the overthrow of the Soviet Union, but most of what he did to overthrow the Soviet Union was moral pressure, threats, and inspiration, and much of what he actually did militarily to bleed the Soviet Union, to tie it down in more wars than it could afford, thereby depriving it of the power to intimidate its subjects, was illegal, and very nearly got him impeached, even though foreign policy is generally regarded as the one area where a president is actually allowed to do stuff.  His efforts to change things internally, to put an end to unpopular and expensive federal bureaucracies , simply had no effect, and if there was any danger of them having effect, then, since he was damn near impeached for attempting to implement the policy he was elected on against the Soviet Union, he surely would have been impeached had he implemented the internal policy he was elected on, of cutting unpopular government expenditures.

Posted in party politics | No Comments »

Losing in Afghanistan

February 9th, 2011

When the US accepted the Karzai government it snatched defeat from jaws of victory.

There is not point in continuing the war in Afghanistan unless we start by killing Karzai and everyone near him.

A government that executes people for converting to Christianity is always going to be a safe place for people to organize terror against infidels.

Posted in war | 2 Comments »

Egypt a test case for war with Islam

February 7th, 2011

Is there a difference between “Islamic extremism”, and Islam?

The British prime minster proposes Egypt as a test case:

This highlights, I think, a significant problem when discussing the terrorist threat that we face.  There is so much muddled thinking about this whole issue.  On the one hand, those on the hard right ignore this distinction between Islam and Islamist extremism, and just say that Islam and the West are irreconcilable – that there is a clash of civilizations.  So, it follows: we should cut ourselves off from this religion, whether that is through forced repatriation, favoured by some fascists, or the banning of new mosques, as is suggested in some parts of Europe .  These people fuel Islamophobia, and I completely reject their argument.  If they want an example of how Western values and Islam can be entirely compatible, they should look at what’s happened in the past few weeks on the streets of Tunis and Cairo : hundreds of thousands of people demanding the universal right to free elections and democracy.

The point is this: the ideology of extremism is the problem; Islam emphatically is not.  Picking a fight with the latter will do nothing to help us to confront the former.

It looks to me that those hundreds of thousands of people are demanding free elections, democracy, guaranteed government jobs, government subsidized food, war with Israel, and the right to rape infidel women.

Those who want to believe there is a difference between Islam and Islamic extremism, and that we are at war with one but not the other, are going to wind up telling themselves that Jews need killing, infidels need raping, and the masses need government jobs and government food.

Posted in war | No Comments »

Muslim democracy is dangerous

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.

Posted in war | 1 Comment »

The financial crisis inquiry report

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.

Tags: , ,
Posted in economics | No Comments »

Ambac argues fraud committed for profit caused the crisis

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.

Tags: , ,
Posted in economics | No Comments »

Who called the financial crisis before it happened?

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.

Tags: , ,
Posted in economics, party politics | No Comments »

« Older Entries
Newer Entries »