Time for a Reality Check

Thanks to Bush's soaring budget deficits, neither McCain or Obama will be able to do half what they now propose or promise. See, Washington Post, When Life Hands You Deficits . . .

Time to implement GRAC, the Government Reform and Realignment Committee, to reform government. Wipe the slate clean of all government departments and agencies and add back only essential departments and agencies (the key work here is essential), honestly estimate the cost and reform the tax code to fund the entire cost of government, then implement over a ten year period. Presto, government reform.

Of course, someone with a little back bone will have to tell the public that we don't live in a fake world with false wealth, and you can't have your house and spend it too.

Blowback

Blowback is a term used to describe the unintended consequences of an operation, usually in the context of covert espionage ops. But I think it appropriate here. I tried to warn Republi-cons that McCain mudpies would dirty him more than Obama. Just as I predicted, the personal attacks on Obama appear to have backfired.

The latest New York Times/CBS News poll found that "if the election were held today, 53 percent of those determined to be probable voters said that they would vote for Mr. Obama and 39 percent said they would vote for Mr. McCain. . . [and] roughly seven in 10 voters said that Mr. Obama had the right kind of temperament and personality to be president; just over half said the same of Mr. McCain."

Don't like the New York Times/CBS News poll, the New York Times has an interactive graph that allows you to select from a number of state and national polls that asked people which candidate they would vote for in the presidential race, even FOX (AKA the Republi-con spin machine).

Bottom line, it ain't lookin good for McCain.

Again, review my suggestion for McCain.

Who is Better With Your Money

Republi-cons hurt the bottom line. See New York Times, Bulls, Bears, Donkeys and Elephants, which states:

"Since 1929, Republicans and Democrats have each controlled the presidency for nearly 40 years. So which party has been better for American pocketbooks and capitalism as a whole? Well, here’s an experiment: imagine that during these years you had to invest exclusively under either Democratic or Republican administrations. How would you have fared?

As of Friday, a $10,000 investment in the S.& P. stock market index* would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years."

The article includes a nice graph the Obama campaign should run in an ad.

Listen to the Experts

Paul Krugman won the Nobel Prize for Economics this week. He is also a Princeton economist and a New York Times columnist. (I'm curious, does anyone know how many Nobel Prize winners work for FOX?)

You might want to read his column from September 22, "Cash for Trash," in which Krugman wrote that Paulson was demanding extraordinary power for himself to deploy taxpayers’ money on behalf of a plan that, "as far as I can see, doesn’t make sense." Instead, he called for the government to provide capital to financial firms and get a share in ownership in return.

"Among the first to push the idea of injecting money into banks in exchange for an equity stake was Rep. Spencer Bachus (R-Ala.), who proposed the idea at a Sept. 18 night meeting on Capitol Hill that included legislators as well as Paulson and Bernanke."

How much time was lost before Bush adopted the idea? Of course, Paulson had to help his former firm Goldman Sacks first.

Bush Will Be Missed

Less than 100 days until a new president is inaugurated. And already the honors roll in.

See Jim Morin on fear itself, Pat Bagley on how Bush happens, J.D. Crowe on Bush's pep talks, Steve Sack on Bush's retirement plan, David Horsey on Team Bush, Dwane Powell on Bushland, and Mike Keefe on going back to the Rovian barrel.

Won't you miss Bush?

Suggestion for McCain

William Kristol wrote in the New York times that McCain should fire the campaign. Kristol states that McCain needs to reposition himself as a serious but cheerful candidate for times that need a serious but upbeat leader.

I agree. As noted below, one option for McCain is to focus on the "racial resistance among white voters" but that sounds too much like playing the race card. If McCain does that he would probably lose the election and his honor. So how can he fire the campaign and win.

He should give a speech that acknowledges that some have suggested that he focus on the "racial resistance among white voters." He could then categorically renounce the suggestion and instead say that henceforth he will campaign as serious but cheerful candidate. Further, because the country is so deeply partisanly divided, McCain should announce that if elected that he would ask Palin to step aside so that he (McCain) could nominate Obama as VP.

Another brilliant NBB solution, don't you think.

P.S. Yes, I realize that he might alienate some rabid Republi-cons, but I think McCain would rather lose with honor than win by focusing on the "racial resistance among white voters," which in my opinion would be dishonorable. If you think there is another way McCain can win, let's hear it.

UPDATE: An alternative strategy would be to focus solely on the 'split government is better government' argument. That is, government works better when one party doesn't control both the executive and legislative branches. In any case, McCain needs to do something.

Others are making suggestions. See Washington Post, What Could Change the Election? The Post asked John Podesta, Newt Gingrich, Mary Beth Cahill, Peter J. Wallison and Stuart E. Eizenstat what would be an election game-changer.

Is McCain's Only Chance 'Racial Resistance Among White Voters'

Is it too late for McCain? Read this article: New York Times, History Suggests McCain Faces an Uphill Battle, which concludes that history suggests that McCain has fallen too far behind, too late in the campaign, to overtake Obama. The final part of the article states:

Since 1948, front-running candidates have typically preserved three-fourths of their October leads, said Larry M. Bartels, a political scientist at Princeton. Applying statistical theory to current polls, he pegged Mr. Obama’s chance of winning the popular vote at “a little over 90 percent.”

Mr. Bartels noted three factors that might skew the results. Two of them, a potential surge in voter turnout and the tendency of undecided voters to punish the party holding the White House during an economic downturn, appear to favor Mr. Obama. The third, racial resistance among white voters, favors Mr. McCain.

Focus on White Voters

Ahead in once-reliably red states like Colorado, Florida, Ohio and Virginia, Mr. Obama need not win any new voters. If he holds his 50 percent share in Gallup’s survey, and third-party candidates like Bob Barr and Ralph Nader draw 3 percent collectively, Mr. McCain can pull no closer than 47 percent.

The McCain campaign sees scant opportunity to erode Mr. Obama’s strong support among blacks and his two-to-one edge among Hispanics. But Mr. McCain’s strategists think that one in five white voters — roughly 15 percent of the electorate — remains open to persuasion.

The campaign says that those voters tend to be younger, single, less educated and female, and that they also include senior citizens distressed over sagging investments. Those voters are the target audience for Mr. McCain’s recent attacks on Mr. Obama’s ties to William Ayers, a founder of the Weather Underground.

If one-third of those voters shift allegiance from Mr. Obama to Mr. McCain, they will produce a 10-percentage-point swing, wiping out Mr. Obama’s lead. Mr. Obama’s strategists say voter preferences have hardened enough to make that difficult.

Mr. McCain’s assessment of whether it is possible may influence his campaign’s efforts to assail Mr. Obama’s character. Facing heavy criticism, Mr. McCain late last week turned ambivalent."

Is the suggestion to focus on the "racial resistance among white voters" the same as playing the race card?

And if McCain focuses on the "racial resistance among white voters," will it do more harm than good for McCain and the country?

If so, then it is lose - lose for McCain.

This Guy Should Be Treasury Secretary

Another great post about the economic mess by Barry Ritholtz. From his latest post, Goal: Increase Minority Homeowners by 5.5 Million in a Decade:

Guess who's goal this was? You might be surprised:

"More and more people own their homes in America today. Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That's a home ownership gap. It's a -- it's a gap that we've got to work together to close for the good of our country, for the sake of a more hopeful future. We've got to work to knock down the barriers that have created a home ownership gap.

I set an ambitious goal. It's one that I believe we can achieve. It's a clear goal, that by the end of this decade we'll increase the number of minority homeowners by at least 5.5 million families . . .

Home ownership is also an important part of our economic vitality. If -- when we meet this project, this goal, according to our Secretary of Housing and Urban Development, we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America; the activity -- the economic activity stimulated with the additional purchasers, the additional buyers, the additional demand will be upwards of $256 billion. And that's important because it will help people find work."

- George W. Bush, U.S. President, October 15, 2002 1:55 P.M.

And Ritholtz argues again:

"As a mortgage salesman, you only lose your a fee if a borrower defaults within 3 or 6 months. What do you do to maximize your returns? The best way to do that -- to put people in houses that would not default in 90 days -- was the 2/28 ARM mortgages. Cheap teaser rates for 24 months, then the big reset. By then, it was no longer your problem.

Can you grasp what a monumental change this was? Instead of making sure that borrowers could pay back ALL OF THE 30 YEAR FIXED MORTGAGE, you only had to find people who could afford the teaser rate for a a few months. THIS WAS AN ENORMOUS AND UNPRECEDENTED SHIFT IN LENDING.

This is the key to the hosuing boom and bust, anbd ultimately underlies the entire credit freeze. And, it would not have been possible without the Greenspan ultra-low rates, which made the teaser portion (the "2" of the 2/28) of these mortgages so attractive.

~~~

Those who continue to blame the CRA, Fannie Mae, etc. reveal their fundamental misunderstanding of how credit operates in general, what the financing process was like from 2002-07, and how this situation came to pass. Or worse, they understand it, and choose to lie about it anyway for partisan political purposes.

You either understand these simple facts, or you don't. If you cannot comprehend this, well, then, I am at a loss as to what that says about your cognitive functioning. But if you understand this, but spit out the nonsense anyway, then you are merely a partisan with no respect for the truth.

And that seems to be the main people blaming the CRA and Fannie/Freddie for the credit/housing crisis -- those folks who either can't think -- or wont.

Is Joe Roberts Having a Meltdown

Joe Roberts went from being the Democrat candidate for U.S. Representative, House District 1 in Florida, to being an independent wondering what he should do next in his quest for elected office, to losing as a Republican in the Florida House of Representatives, District 2 race -- all in one year.

Quite an accomplishment. Now he seems to be having a meltdown of sorts, ranting about conspiracies. See Rick's Blog, Joe Roberts on meltdown.

Did he get bitten by some rabid Republi-con?

This Man is a Republi-con

Tim Mahoney, the Democrat who succeeded Mark Foley after he resigned because of a sex scandal, is now embroiled in a sex scandal of his own. See New York Times, Sex Scandal Shakes Race for Congress in Florida.

In a January 20 telephone call that was recorded and played for his employees (what was he thinking) Mahoney told the woman:

"You work at my pleasure, if you do the job that I think you should do, you get to keep your job. Whenever I don’t feel like you’re doing your job, then you lose your job. And guess what: The only person that matters is guess who? Me."

While it might seem funny, 'she works for his pleasure and does the job he wants,' it sounds like he was coercing her for sex. If so, he should be charged with rape, extortion, whatever. He shouldn't be allowed to just resign like Foley.

Republi-con BS on Government Regulations

We've all heard the Republi-con BS on less government regulation. See this graph, New York Times, Regulatory Spending, by Administration, and let's talk about who favors more government control.

Republi-cons also hurt the bottom line, profit. See New York Times, Bulls, Bears, Donkeys and Elephants, which states:

"Since 1929, Republicans and Democrats have each controlled the presidency for nearly 40 years. So which party has been better for American pocketbooks and capitalism as a whole? Well, here’s an experiment: imagine that during these years you had to invest exclusively under either Democratic or Republican administrations. How would you have fared?

As of Friday, a $10,000 investment in the S.& P. stock market index* would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years."

The article includes a nice graph the Obama campaign should run in an ad.

Republi-con Fear, Anger, and Hatred

More about the Republi-con strategy of fear, anger, and hatred. Read Washington Post, McCain and the Raging Right.

Profile of a Republi-con Operative

Interesting read about another one of Sheeeepish Haaannity's 'Great Americans.'

Too Early to Be Countin the Chickens

Some are now talking of an Obama landslide, with "larger Democratic majorities in both the House of Representatives and the Senate — and perhaps a filibuster-proof margin there."

As the old saying goes, there is a risk counting your chickens before the eggs hatch, but perhaps not in this election, given the state of affairs in the McCain campaign (see below).

McCain Endorses Obama

Not quite, but "John McCain likes Barack Obama. He admires and respects Obama. He believes Obama is "very impressive, he's thoughtful, he's centrist." Obama has "probably got a great future." He is "a very honest and fine person" -- "absolutely" qualified to be president."

Fear, Anger, and Hatred

Without fear, anger and hatred, where would the Republi-cons be.

At a rally in Lakeville, Minnesota McCain found himself struggling to control the fear, anger and hatred some of his rabid supports have been promoting. His running mate Sarah Palin stepped up her own attacks against Obama, often inspiring outbursts complete with cries of "terrorist" and "off with his head." Even an older woman said that that Obama could not be trusted because he is an 'Arab.'

In Northwest Florida, one of the finer members (presumably) of the Republi-con party, "decided to illustrate [to his seventh grade civils class] the concept of 'change' by writing 'Come Help A N----r Get Elected' on the white board in front of his class.

Then there are the officially sanctioned comparisons to OBL.

I'm sure Sheeepish Haaannity considers them all 'Great American.'

But consider what John Lewis said this weekend:

"As one who was a victim of violence and hate during the height of the Civil Rights Movement, I am deeply disturbed by the negative tone of the McCain-Palin campaign. What I am seeing today reminds me too much of another destructive period in American history. Sen. McCain and Gov. Palin are sowing the seeds of hatred and division, and there is no need for this hostility in our political discourse.

During another period, in the not too distant past, there was a governor of the state of Alabama named George Wallace who also became a presidential candidate. George Wallace never threw a bomb. He never fired a gun, but he created the climate and the conditions that encouraged vicious attacks against innocent Americans who only desired to exercise their constitutional rights. Because of this atmosphere of hate, four little girls were killed one Sunday morning when a church was bombed in Birmingham, Alabama.

As public figures with the power to influence and persuade, Sen. McCain and Governor Palin are playing with fire, and if they are not careful, that fire will consume us all. They are playing a very dangerous game that disregards the value of the political process and cheapens our entire democracy. We can do better. The American people deserve better."

It is true, we can do better. Thankfully, even McCain finds the attacks over the top. McCain responded to the lady in Lakeville, saying "No, ma'am, he's a decent family man, a citizen, who I just happen to have disagreements with on fundamental issues. And that's what this campaign is all about."

But the Republi-cons don't think that is the way to win an election, so it will fear, anger, and hatred, from now until the election. McCain won't win many independents with that strategy.

Republi-con Lies

So many lies, so little time to respond:

• McClatchy Newspapers, Private sector loans, not Fannie or Freddie, triggered crisis, which states in part:
  
  

  "Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

• Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

• Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

  Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
• 
  
• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
• 
  
• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.
  
  

  The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

• Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

• "I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News."
  

• ACORN Press Release, ACORN Response to Senator McCain’s Smear Ad
  
  "ACORN President Maude Hurd released the following statement today in response to the McCain campaign’s new ad claiming that, among other things, ACORN is responsible for the mortgage crisis:
  
  ”For almost a decade, ACORN, a community organization of 400,000 families in neighborhoods across the country, has been fighting against the predatory lending practices that have robbed our members of their homes, destabilized neighborhoods, and roiled the global economy.”
  
  “In his newest ad, John McCain’s campaign bizarrely claims, “ACORN forced banks to issue risky home loans, the same types of loans that caused the financial crisis we’re in today.” Nothing could be further from the truth. In fact, ACORN has worked successfully to help working class families get good home loans on fair terms from legitimate banks and has fought vigorously against predatory lenders who have ripped off families in our communities. These predatory loans caused the crisis.”
  
  “For more than a decade, ACORN members have held protests, released reports, and advocated for regulations to protect homeowners from predatory lenders. ACORN organizers and volunteers have been working day and night to help victims of the GOP economic meltdown to save their
  homes from foreclosure. In fact, ACORN has brought class action lawsuits against several predatory lenders, and has lobbied the Federal Reserve and Congress in support of regulations against predatory lending. ACORN has even been successful in convincing many lenders to treat homeowners more fairly and help families be able to make their mortgage payments and save their homes.”
  
  “Unfortunately, the Bush administration and Congressional Republicans like John McCain have blocked the sensible regulations that ACORN and others proposed that would have averted the mortgage meltdown. If John McCain thinks that community organizers caused the foreclosure crisis, he knows even less about the economy than previously thought.”
  
  ”John McCain and the Republicans are desperately trying to shift the blame for the economic crisis they caused with a philosophy of deregulation and indifference to homeowners. All the grainy footage and creepy music in the world can’t cancel out some simple, basic facts, and the facts about the economy are not on John McCain’s side.”"
  

Without the lies, the American public would see the Republi-cons for what they are, largely responsible for the current economic mess. Without the lies, the Republi-cons would be swamped in this election.

Don't listen to the Republi-con lies!

Sounds Like Something Palin and Her Husband Might Do

Someone should be fired. Read New York Times, Citizen Terrorists Deleted, which highlights the abuse of power in the so-called 'war on terror.'

If you think OBL wants to take away our freedom and liberties, he's getting us doing the job for him.

More on the Economic Mess

Another great article, New York Times, Taking Hard New Look at a Greenspan Legacy, which examines the 'legacy' Federal Reserve Chairman Alan Greenspan.

Five years ago, Warren E. Buffett warned that derivatives, complex financial instruments designed to hedge against risk, were "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." George Soros avoids using derivatives "because we don’t really understand how they work." And Felix G. Rohatyn described derivatives as potential "hydrogen bombs." It turns out that derivatives are the crux of the current economic mess, and and Greenspan supported and promoted their use.

The article includes a great graphic, Growth of a Complex Market,which shows the growth of the derivative market from $106 trillion in 2002 to $531.2 trillion in 2008 and credit default swaps from $2.2 trillion in 2002 to $54.6 trillion in 2008. Yikes!!

What a mess.

New Stock Market Terms

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.

BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

CASH FLOW-- The movement your money makes as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in use.