Sunday, March 28, 2010

Bubble Trouble - Sunday Musing

My editor has been "gently reminding" me of the lack of regular updates lately. She has a point - The Hype is starting to look more barren than David Frum's blog over at AEI (BA-ZING!!). With the sincerest respect for my fellow Canadian Mr. Frum, who showed me nothing but utmost kindness in our brief correspondence years ago, I am beginning to suspect that since his adoption of the term RINO as a badge of honor, he is on a fast track to becoming a daily columnist over at the Huffpo. I don't think he's reached the level of sharing elbow space with Andrew Sullivan and David Gergen yet, but he certainly is one of the loudest cheerleaders on the sidelines of those holding the ridiculous notion that the GOP's opposition to bloated government is "outrageous", "dangerous" and "ineffective". Colin Powell may have liked the idea of a "Big Tent GOP" during his dud of a speech at the 1996 Republican National Convention, but right now the tent is filled with free market conservatives who champion the idea of limited government. Frum and Powell are welcome to squeeze into the tent, but no one is buying into their vision of a soft socialist nanny state, so they don't get dibs on the megaphone - not that the Wolf Blitzers and Chris Matthews' of the world aren't more than willing to oblige their favourite pastime of playing whack-a-mole with fellow conservatives.

Hey, remember last week when we talked about how the President created another housing bubble that's going to burst? Well the bubble is a-burstin' (again) and the Treasury is deciding where 50 billion dollars of your tax money under TARP should go. On Friday, the US Treasury announced they want to "modify" the existing plan - that's Washington speak for "take out your wallet". What the President and the Treasury want to do is so monumentally stupid it defies reason. Let me break it down for you.

In the waning years of the Clinton administration, the government decided that banks should grant home loans to people who couldn't afford them, or who had such bad credit not even my cousin Knuckles the loan shark would give them $20. Doesn't make much sense, does it? If you have bad credit and your monthly income is lower than what your monthly loan payments are, you can't afford a loan, and you're going to lose your home while the bank gets stiffed. Still with me? People like President Clinton and Congressman Barney Frank didn't seem too bothered by this, and pressured banks to hand out loans to people who didn't have the money to pay the loans back.They even pressured banks to allow people who had already defaulted on their loans a chance to renegotiate the terms of their mortgage - kind of like a do-over for grown-ups. If you don't eat things off the floor of public washrooms, you probably have trouble imagining how anyone could be so stupid. Well, never underestimate the power of government when it comes to being moronic.

The government felt that owning a home was a right - a right that banks were obliged to provide to poor people and those with bad credit. That sounds nice. Most people like the idea of a poor family having a nice roof over their heads instead of an apartment in a bad part of town. The problem is that by dangling a magic carrot in front of them, you are dooming them to financial ruin, and putting them on the road to homelessness - and that's exactly what happened. People envision fat cat banks preying on struggling low income families, but a closer examination can be very revealing. My friend and fellow blogger, the talented Ace Smith, discovered just such a case in his own backyard in June of 2008. A lady living across the street was regaling the neighbourhood with tales of the predatory bank coming to take her house. When Ace dug a little deeper, this is what he discovered:

"Two months after closing on the mortgage, she secured a $20,000 home equity line of credit on the home. A month after that, she somehow was able to get another line of credit for an additional $30,000. Based on my recollection, this is roughly around the same time she started driving a spiffy, new BMW 335. Retail price: $40,000. I also noticed several big ticket items appeared around this time, including a top-of-the-line 56” television that was clearly visible through the living room window from the street, and the delivery of various furniture and new appliances."

To top it off, during the same time, the average American household owned 13 credit cards. By October of that year, 936 439 American homes had completed forecloser, and the housing "crisis" began (I've quibbled over how much of an actual crisis this was in the past, but that's a debate for bean counters much smarter than I).

You would think that everyone would have learned their lesson by now, but you'd be wrong. What the government had once considered a fair shake for every American to own a home was now being referred to as "predatory loan practices". The same banks that had been pressured by the government to "help" the poor were now being accused of taking advantage of them. Let's ignore the fact that most of the so-called "poor" had stacks of plastic credit the size of a deck of cards and some snazzy wheels in the driveway and entertain the false notion that the banks were the sole culprits in the bubble burst. Logic would dictate that this was a bad idea, that the government had made a terrible mistake, and we should never allow banks to engage in this sort of tomfoolery again. You would think that government had learned their lesson. Again, you would be wrong.

President Obama rolled out his massive TARP scheme, thinking he could do the same thing all over again and expect different results. Despite a projected foreclosure rate of over 60%, the administration decided to throw billions of dollars of your tax money into the exact same scheme, only this time they allowed even more people to make the same mistake, and gave yet another chance to the idiots that had already screwed up under the provisions from over a decade ago the opportunity to screw up again. The gas was thrown onto the fire, and we're still smelling the smoke.

Which brings me back to the Treasury's announcement, if you're still with me and haven't surfed over to Youtube to watch "epic fail" videos - The President wants to "restructure" the TARP bailout to decide which of the 4 million Americans currently on the rocks with their mortgages (again) qualify for help. The Treasury says they're not going to give any of the 50 billion smackaroos to those who have been irresponsible, but this is the exact wording of the what the guidelines are:

"Homeowners must live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship.”

That sounds like the definition of irresponsibility to me. If someone bought a 3/4 of a million dollar house, with mortgage payments equaling about a third of their income, and they can demonstrate the vague provision of having "financial hardship", everyone else (that's you, by the way) has to fork out 50 billion dollars of tax money to let some idiot keep his sweet pad. The talk about 'modification' is troubling because many suspect the Treasury intends to allow those who bought even more expensive houses and can't afford them to be able to put their snouts in the trough as well.

Hollywood likes to portray the banks as heartless scrooges and the families an inch from losing their homes as victimized saints. In the recent movie "Armored" the main character is trying to take care of his younger brother after the death of their parents, begging for double shifts from his boss and bumming rides to work to keep his no-frills home. It tugs at your heart strings, because we like to romanticize those in need as being victims of forces beyond their control. This is because Americans are good people. They see the best in everything and everyone. It's why I think the United States is so wonderful, but if you stop the movie projectors and take a closer look at reality you'll discover that the supposed "down and out" are living beyond their means, drowning in credit card debt, and buying flat screen TV's, IPOD's and big shiny trucks.

As hard as it may be, and as counter-intuitive as it is to our nature, we have to let people be idiots and suffer the consequences, or they keep on being idiots. President Obama - health care aside - is on the verge of creating another crisis, only this time he's making the people who aren't wearing dunce caps pay a stupidity tax.

No matter how hard it tries, government can't magically make the house you can't afford available to you by strong-arming the bank into giving you a loan you can't repay. The problem trickles down to responsible citizens because the money has to come from somewhere to make all this magic happen - and magic is just an illusion pulled off by a clever slight of hand.



Sunday, March 21, 2010

Kittles 'n Bits - Blogging By Numbers

When I was a kid my next door neighbour ran over his cat Kittles while backing up in his driveway. Had I been the investigating officer for the cat police, my report would have listed several contributing factors that led to the incident. The first thing I would have noted was that the victim enjoyed sleeping under the shade of the car's back tire - not exactly a smart life plan for Kittles. Another factor would have been age, both of Mr. Pierce, an 89 year old British ex-pat who made Mr. Magoo look like the poster boy of vehicular vigilance, and of Kittles, whom I suspect may have been 124 in cat years. Mr. Pierce would have fiercely contested my findings, as he blamed my brother - who had been reading an Archie comic book on our front porch over 60 feet away - for having intentionally distracted him, a bizarre claim to which he held steadfastly until the Church of England laid his tired bones to rest.

I bring this up because, like Mr. Pierce, the Obama administration has "run over the cat" politically, and, also like poor old Mr. Pierce, Robert Gibbs and the President are placing blame where it doesn’t belong, which brings us to our favourite feature of the Hype - It's blogging by numbers time!!!

1- Now that my brother has hopefully recovered from reliving the traumatic berating of our posthumous childhood neighbour, let's get back to the blame game on Capitol Hill. With the Democratic party in both Houses and the President at record low approval ratings, it seems the administration is in full finger-pointing mode. The White House has blamed everyone from President Bush to Glenn Beck to the tea parties for their woes. It all rings a bit hollow. The President promised to bring a new tone to Washington, to rise above partisan politics, and of course to bring lots of "hope" and "change". He also promised job creation, tax breaks for the middle class, and a new direction in foreign policy that would repair America's supposedly tattered image abroad.

Well, President Obama got his stimulus package, and a chance to play the foreign appeasement game as well. Over a year later we now have double digit unemployment (10.4% as of February 2010), threats of tax hikes on the lower middle class, an Iran that has gone nuclear, an emboldened Kim Jong Il (who has gone nuclear in more ways than one), and the contempt of not only the Arab world but of the sycophants in Europe who were once so entranced with the young senator from Illinois.

It was the President who decided to throw billions of dollars in seemingly aimless directions under the misguided Chomskyesque belief that government can create jobs. It was the President who provided a provision to allow those who had already defaulted on their sub-prime mortgages to renegotiate the terms of their loans, despite a projected default rate of almost 68%. Appeasement has led to an emboldened Iran and attempted terrorist attacks on American soil for the first time since 9/11. Robert Gibbs likes to complain that the Reid/Pelosi legislative juggernaut has come to a grinding halt because of an "obstructionist Republican party". I believe a more honest assessment shows that all fingers point to an arrogant Democratic administration.

2 - In James Bowman's review of Burn After Reading, he draws attention to a curious bit of banter between the Coen brothers near the end of a New York Times interview. In an exchange that had no relevance to the discussion at hand, Joel quipped ‘didn’t Karl Popper go after Wittgenstein with a poker?" This is a very telling remark, not only because it's false (it was Wittgenstein who had the poker), but - like their movies - it was forced and contrived, as if it's only purpose was to showcase the towering intellect they seem to believe they possess.

There is no denying the Coens are filmmakers of incredible talent, but as I've noted before, the well of their talent is running rather dry as of late. Their latest film, A Serious Man, like No Country For Old Men, is another banal romp in mindless nihilism that seems to be all the rage in Hollywood lately. A Serious Man is a retelling of the story of Job set in the mid-1960's, but unlike the biblical God of the Old Testament’s story, the Coens' Deity is one who seems to revel at the misfortunes he hurls in the way of Larry Gopnik, played by the talented Michael Stuhlbarg. The sufferings of poor Larry are meant to serve no other purpose than to amuse us (and presumably, the Coens’ "god"). That's not to say that the misfortunes of others can't be funny, but in order for the audience not too take the subject matter too seriously, we must get the sense that the filmmakers don't take themselves too seriously. As of late, that seems to be an almost Job-like pox to expect the Coens to endure.

3 - If you are above the age of 18 and still use the expression "helloooooo", or even worse, "It's like...hellloooo", you may not be an idiot, but you sure do sound like one.

4 - President Obama and Secretary of State Clinton have waged a war of words on Israel that has left no ambiguity as to the hostile nature the administration has chosen to take in its diplomatic relations with the embattled nation. On March 11th, in a statement approved by the President, Secretary of State Godzill...I mean, Clinton spewed forth a 45 minute condemnation of Israel, claiming it was not showing a serious commitment to the peace process.

This is utter nonsense.

In today's Washington Post, Charles Krauthammer reminds us that Israelis have been

"...dying for peace since 1947, when they accepted the U.N. partition of Palestine into a Jewish and Arab state. (The Arabs refused and declared war. They lost.) In these long and bloody 63 years, the Palestinians have not once accepted an Israeli offer of permanent peace, or ever countered with anything short of terms that would destroy Israel."

President Obama continues to fawn over tin pot dictators like his "amigo" Hugo Chavez, and make conciliatory gestures towards the leaders of brutal Islamic theocracies, but spits in the face of a steadfast ally. What could possibly be the motivation behind such a heavy-handed and unwarranted Carter-like approach to Israeli diplomacy? The Jerusalem Post's Caroline Glick may have the answer:

"The final explanation for Obama’s behaviour is that he is using his manufactured crisis to justify adopting an overtly anti-Israel position vis-à-vis the Palestinians. On Thursday, The New York Times reported that administration officials are considering having Obama present his own “peace plan.” Given the administration’s denial of Israel’s right to Jerusalem, an “Obama plan,” would doubtless require Israel to withdraw to the indefensible 1949 armistice lines and expel some 700,000 Jews from their homes."

With friends like this....

5 - This blog started out with a story about a dead cat. No cats were harmed in the writing of this blog...except the one I stuffed in a bag and threw over a bridge.



Thursday, March 04, 2010

From The Archives - The Folly of Youth and the Simple Truth

The following appeared in the July 2009 edition of The Straight Hype

While having coffee with two very bright and thoughtful young friends, one of them said something which could only be referred to as "whiplash-inducing". After briefly describing the bizarre plot line of the fun but incredibly hair-brained movie The International, he took a sip of his French roast and wondered aloud how such a movie could have ever been made in Hollywood. What was disconcerting about this statement is that it wasn't an attempt at sarcasm. He was actually surprised that Hollywood was finally speaking truth to power - that such a film would not usually get the green light under the watchful eyes of the financial puppeteers who are part of a larger international network of duplicity and greed.

Truth is, these types of movies - in which America, the media, world banks, and the CIA are entangled in a web of deception - have been Hollywood's bread and butter for the last 20 years. Think Syriana, State of Play, The Corporation, The Bourne movies, Lord of War, W., Orwell Rolls in his Grave, The Conversation...well, just look up at the marquee and 4 times out 5, the bad guys won't be crazed Jihadists or jilted lovers. Oh no, your villains these days will more often than not be the international cabal of evil, the military-industrial complex, or the "Christian Right".

My young friend is by no means some uninformed, knee jerk liberal. In fact he is educated, charming, and very well spoken. The problem is that he's yet to realize that like an audience member at a magic show who is desperately trying to see how Marvin the Magnificent is pulling the rabbit out of the hat, he's been duped by misdirection, and still hasn't figured out the trick.

It's the ever eternal "folly of youth", and even we ardent conservatives were probably of a similar mindset before we hit our twenties. It's a curious phenomenon. People believe with great sincerity that Rupert Murdoch's media empire is controlling the flow of news for the Cheney/Rumsfeld/Bush/Christan right brigade while soulless companies are anaesthetising the populace into buying things they don't need. Most of us have heard all of this before, but those who really buy into this particular school of thought think they are in possession of a great secret - like they've just received the shiny ring from Bilbo Baggins and must hurry to Mount Doom to dispose of it in the fires of Mordor.

Here's the great irony - Watch any thriller at the multiplex, or tune into CNN or MSNBC for less than an hour, and you'll find out they're shoveling out this very same nonsense at a quicker pace than the Shamwow guy mops up those nasty spills. They've missed the bait and switch, and failed to realize they've been as easily duped as the guy they believe has somehow been subtly coerced into buying that exploding Prius he can't afford.

At the heart of the discussion was the BCCI, the now defunct bank whose questionable financial dealings eventually led to their downfall. Many people believe that the bank was caught red handed undermining the financial and governmental workings of third world countries in a Machiavellian scheme to secure absolute control over their development. The BCCI became the most scrutinized bank in financial history, and it was the focus of an intense investigation by American and British agencies, including Manhattan's district Attorney's Office. The third world financing scheme is utter fantasy, but like the 9/11 "Truthers" who believe the attacks on the World Trade Center was the work of "The Jews" and "The Neocons", they demonstrate that a conspiracy theory is like a wildfire - hard to put out once started, and leaving nothing but destruction in its wake.

The truth about BCCI is far less sexy than we would like to believe. They cooked the books, used false identities to open accounts (and even banks) for questionable clients, and there were charges of tax evasion brought against former partners in the bank. They certainly were dirty, but the more outrageous claims, like The International, are pure fiction. In fact, most of the more credible evidence points to the BCCI acting as a agent to finance anti-American, and anti-Israeli operations. A conspiracy can be twisted to fit the whims of anyone's particular political leanings. Even my own.

So what are we to conclude once we wade through the mess of international intrigue, media conglomerates, and unabated capitalism? Well, when the government pressures banks to make loans to people who can't afford them, those people are going to default 68% of the time. The pretty lady on TV can't force you to buy that flat screen plasma TV on your nearly maxed credit card. Detention of enemy combatants has been a practice of every armed conflict in history, and if the Bush administration really wanted to bilk middle eastern oil that badly, wouldn't it have been a lot easier just to re-negotiate the oil deals they struck in the mid-eighties? Why are rational people so eager to believe their government conspired with Israel to slaughter thousands of it's own citizens for a few Haliburton contracts?

Did the US deal with some shady middle eastern characters in the past? Yes, but as NR sagely noted, should they have continued to do so for consistency's sake?

It's a short walk down the road to Lochness, and the path is filled with bogeymen, creepy crawlies, and things that go bump in the night - but by engaging in these fantasies, we turn our heads away from the real dangers of this world. There have been dozens of honor killings in the past 2 years in the US, the UK and Canada, and like it or not, there are people who live by an ancient and barbaric honour code who want to kill Americans and wipe Israel off the face of the earth - Not because of something so trivial as middle eastern domestic policy, but because radical Jihadists believe Westerners are infidels for being tolerant of women's and gay rights, coupled with a sincere belief that Jews are descended from apes and rats. It is proclaimed daily on Palestinian TV shows, the most disturbing being children's shows.

There is an old latin expression; "Libenter id hominus quod volunt credunt". It means people believe what they most desire to be true. Yes, the world is sometimes an ugly place, but not for the reasons many well intentioned people believe.