It’s hard to know why Yankees are always so disparaging about southerners but I’ll bet none of them ever thought of this [from Bud, who I'm certain has already tried this].
Friday, September 30, 2011
AARP Fraud
N and I joined AARP 15 years ago to take advantage of hotel discounts and the like. Since then, in our view, the AARP have become advocates for a progressive political agenda with which we do not agree. We resigned with prejudice, many years ago for that reason.
Despite our resignation, AARP has continued to send us marketing materials for their growing number of for-profit businesses. These materials often tout their political agenda. We have been completely unable to opt out of these mailings.
Recently, AARP have returned to mailing us their magazine and ever more blatant political declarations. The mailings routinely ask for donations in order to help AARP continue its political agenda and propaganda campaign. We have no proof but we absolutely believe that the AARP represents us – and millions like us – as members of their awful organization when nothing could be further from the truth. We also suspect that the AARP represents that all of their members support their political point of view which we know is not the case.
Their latest outrage is a mailing that urges citizens to sign and mail “petition” coupons to SC Senators Lindsey Graham and Jim DeMint as well as Representative Joe Wilson. We imagine similar campaigns against other Republicans in other states. The petition demands that there be no cuts whatsoever to either Social Security or Medicare. There are no petition coupons addressed to any Democrat.
There’s nothing wrong with sending your opinions to your legislators but the letter to AARP members completely misrepresents the role of AARP, the fiscal problems facing the nation, the affordability of current entitlement programs and the impact on existing retirees of current legislative proposals. You can read the letter below.
The AARP is the new Acorn with the added cynicism of being a profit making organization in support of a single political party while pretending to be an independent, nonpartisan advocacy group. Don’t drink the kool-aid.
[Don’t forget, the documents below can be read by pointing at any one. It will expand for easy reading. To return to the post, use the back button of your browser in the upper left hand corner.]
Tuesday, September 27, 2011
Don’t be a Damn Democrat or Republican
I’m rooting for a wave election aimed at all of the bums. Take the time to read this excellent column by David Brooks.
The Lost Decade?
By David Brooks - NYT
September 26, 2011
Brooks wants big stuff but I think certain smaller things should stay on the list as well. The trade agreements, payroll tax exclusion, a short but firm moratorium on all new regulations, a short but firm moratorium on all new things within Obamacare and an immediate, short term hiring freeze on all government bureaus, to name a few.
I would hope that even Democrats will agree that this President has to go. Not because we want or need a Republican – please Democrats, run a primary contest against Obama. The reason President Obama has to go is that he cannot be the bridge he promised to be and we simply must try someone else – no matter whom.
Monday, September 26, 2011
Big Financial Trouble in Europe
If you follow the Sunday political shows, you saw the most dire doom and gloom this week regarding the European financial crisis – it came from all sides of the expert spectrum, literally left, right and center.
Monday, Sep. 26, 2011
Repeating mistakes of the 1930s?
By Robert J. Samuelson - Washington Post
Euro Zone Death Trip
By Paul Krugman - NYT
September 25, 2011
Europe may face a financial meltdown worse than ours as countries default and then banks fail. European leaders recognize the threat but refuse to buck the popular political resistance to properly scaled bailouts – Greece has to be allowed to fail, it cannot be saved anymore. Europe is doing the wrong thing and telling not just us but everyone including the BRICs to take a hike regarding joint pressure for proper action before it’s too late.
George Will, along with many economists, says that the Euro experiment begun in 1999 was set up for failure with no central banking authority and no enforceable rules or regulation. At this point, nobody knows what the debt situation actually is except that it is certainly worse than countries admit. Experts tell us that individual currencies by country would solve the problem; that the failure of the Euro would be a disaster; that saving the Euro now is possible but unlikely; that the longer leaders wait to decide, the worse the consequences. What are ordinary mortals supposed to make of that?
Everyone asks the experts what all this will mean to Americans. The answer is always one or another version of: “I don’t know but it won’t be good.”
In my view, we Americans should learn at least three things from Europe's troubles:
1. Profligate government spending leads to dependency and an insatiable appetite for more.
Greece is broke and after two years of “austerity” programs, not one government employee has been fired. The Greek population demands that the government simply refuse to pay its debts with no understanding that the government would still have no money to provide the services to which Greeks have become accustomed.
2. National debt seriously impairs the ability of government to act in emergencies. There should be deficit spending in bad times but not in good times. [Do we still teach school kids about the ant and the grasshopper?]
All of Europe is basically maxed out on debt – the healthiest economy in Europe owes 83% of GDP. They cannot borrow enough money to bailout a half dozen nations who cannot even balance their budgets let alone pay off debt. The rainy days are here but we forgot to do the saving part; well OK, we’ll borrow; oops we’ve already done that. Lefties tell us government debt doesn’t matter but it does.
3. Leadership is everything.
Populism, government by referendum, direct democracy, doing away with the Electoral College and replacing the three branches of American government with a parliamentary system are all paths to decline. We need leaders who tell us the simple truth and do the right thing. Leaders/legislators must represent our interests, not our whims or appetites and certainly not some political party or popular cult.
And we expect our leaders to represent all of us. Do all of your friends, family and neighbors agree with you about everything? Of course not. Do you expect your legislators to represent all of those folks or just you? Do you really want to use government to force those around you to do things your way? Should we tolerate government doing that even when we agree with the action?
America has “wave” elections from time to time; that’s where the incumbent party legislators are voted out of office regardless of merit. It happens when large numbers of voters are angry. No one can remember a wave election where all incumbents were targeted. This would be a very good time to set a new precedent.
Friday, September 23, 2011
The Death Penalty Debate
I’m a Parker fan – I’m a little put off by her sentimentality but we have to support our home-girls. Logic was never her long suit but I agree with her 1993 H.L. Mencken Writing Award which notes that she reliably attacks “ignorance and stupidity with vividness and originality". Usually she eschews vitriolic rhetoric – though this time, not so much.
Friday, Sep. 23, 2011
Countdown to death
By KATHLEEN PARKER - Washington Post Writers Group
I think most ordinary folks have been on both sides of the death penalty issue and have probably changed their minds more than once. Those that have no doubt about their choice are not thinkers – maybe some are saints or sadists but mostly I think this kind of certainty is connected to ignorance.
The death of an innocent person is as repugnant as it gets. Thus our outrage grows as the cause moves from illness through accident to murder. It’s a natural fact that our outrage also grows with the innocence of the lost.
Just as certainly as we must not kill an innocent person, some crimes demand death as the penalty. No one I know is anything but satisfied with the death of Osama bin Laden, which of course was a government execution. No one I know wanted that man to even be brought to trial. We wanted that man to suffer justice directly and immediately.
No one I know has any problem with putting down a man-killing animal. There are people who have no humanity.
Sometimes our argument is about cruel and unusual punishment which is strictly forbidden in our Constitution and in our value system. For some, life in prison without any hope would be worse than death; to me it is more cruel than death. Even worse is the statistically false hope given those who remain on death row for decades – that must be torture. In fact, the folks who maneuver those delays want to use them as an argument for eliminating the penalty – I find that incredibly offensive.
If we wish to make moral arguments then we must deal with the innocent who are executed and with the victims but even more important than that, we must deal with our concept of justice.
The idea that the moral outrage of the execution of an innocent man should eliminate the death penalty is to deny humanity and common sense. Doctors kill people every day while trying to save their lives or repair their health. We kill 33,000 people a year with our cars. Humans and their systems have flaws.
I hope it is not necessary for me to remind anyone of the many crimes that are so heinous as to be beneath humanity; blowing up a day care center along with the rest of a building and its innocent occupants because you’re angry with the FBI; taking money from a woman who hands it over peacefully as demanded and then shooting her in the face a couple times for no reason whatsoever. These perpetrators must be removed from the planet.
We use impartial juries to determine guilt and punishment in order to ensure that moral outrage comes from our sense of justice and not a need for revenge. Kathleen Parker says it herself: justice requires closure and in some cases, the criminal just cannot be allowed to continue breathing the same air as the rest of us.
Since our justice system will always be flawed, we must pay constant attention to improving it. There are two things in capital cases that need immediate reform. The first is that “eye witness” testimony – especially that which is given by criminals in exchange for advantages – must be better scrutinized and in some cases must eliminate the possibility of a death sentence altogether. Second, the death penalty sentence must be applied swiftly. Automatic appeal is certainly necessary but there should be a special court with the expertise to either confirm the sentence or overturn it [to life without parole] very rapidly. Requiring retrial should be more rare than the death penalty itself or else the removal of judges should become more common.
In the case of Troy Davis, I don’t know whether he was guilty or whether he would still receive the ultimate sentence under a reformed system. His case certainly saddens me. His defenders have absolutely won the public relations battle. Correctly? How can we ever know? The travesty is that his fate should have been decided and carried out long ago, immediately after appeal and the hard work of courts and juries. Retrying his case in the press, two decades later is not justice.
Tuesday, September 20, 2011
Best and Worst States for Business
According to Development Counsellors International, South Carolina has the third best business climate in the nation. Illinois ranked 48th.
2011 Winning Strategies
By Ryan on September 15, 2011in
Best and Worst States for Business
Development Counsellors forms their view by surveying more than 300 corporate executives with site selection responsibilities. The fact that DCI makes a living marketing localities and companies may make their methods and survey suspect but the results are close to those developed each year by CNBC which uses 40 different metrics in ten categories of competitiveness to do their rankings.
In the DCI survey, Texas got 49% of the votes for best business climate while California got 70% of the votes for worst.
After that, things are less decisive; North Carolina is second with 28% and South Carolina third with 14%; Tennessee and Florida got 14% too.
New York got 47% of the vote for 49th and Illinois captured 48th with 24% of the vote; New Jersey got 24% too.
Michigan got only 16% of the votes for 46th place. How in the world could any state be a worse place for business than Michigan? Oh, I remember; under the current Administration, Michigan is too big to fail – no risk, unless you’re a bond holder.
See the full results here: http://www.cmta.net/archive/DCIs_Winning_Strategies_2002.pdf.
[Don’t forget, left click on any image in any post to see it without background clutter.]
Monday, September 19, 2011
Jimmy Carter's "Malaise" Speech with Obama Remix
Bud sent me this video link and I really like almost all of it.
32nd Anniversary of Jimmy Carter's "Malaise" Speech with Obama Remix
July 2011 – 1:31 minutes
In my view Jimmy Carter was rejected by the voters because he was too far left of the nation. Price controls and the demonization of business are red meat to progressives but class warfare to the rest of the nation. Energy conservation is good but it is not a panacea that eliminates the need for energy independence. The competence we expected by electing a business man disappeared into evangelical nonsense, progressive anathema and managerial incompetence.
Progressives and Barack Obama have shed religion but otherwise President Obama has shown the same indecisiveness, lack of leadership, appeasement foreign policy, progressive domestic policy and class warfare as President Carter. This video cleverly makes the point.
Until the end. Why do partisans insist on diminishing themselves and making their factual arguments moot by gratuitously invoking the farcical and offensive? It’s stupid.
Thursday, September 15, 2011
Seventy-five Percent of Young Americans Are Unfit to Serve in the Military
“Seventy-five percent of young Americans, between the ages of 17 to 24, are unable to enlist in the military today because they have failed to graduate from high school, have a criminal record or are physically unfit.”
- from the Pentagon via Arne Duncan
Does America Have a Future?
By DAVID FRUM
September 8, 2011
New York Times Sunday Book Review
Wednesday, September 14, 2011
Stimulus that Didn’t – the Solyndra Debacle
The stimulus bill of February 2009 included a ton of money to press high speed rail and green energy more so than to create jobs. Why waste a crisis?
On the solar energy side, the government awarded $1.56 billion in loan guarantees to companies making solar panels. You may be aware that western panel makers are going out of business everywhere. The cause for failures is lack of demand in a down economy coupled with a flood of far cheaper panels made in China with equipment manufactured in the west.
The largest investment of taxpayer money made by the U.S. Department of energy was $535 million to Solyndra in March of 2009 – that was more than half of the $1 billion in total capital the company was able to raise from investors anywhere. Bloomberg News says that the company was in serious trouble before the original investment. Today, people are asking what the rush was and finding emails that suggest the DOE had its doubts about the company. Solyndra was owned by a Democrat and major Party campaign contributor.
A year after the taxpayer investment, the company had built a new plant and hired 1,100 workers. President Obama visited the plant saying, “The promise of clean energy isn’t just an article of faith.” Two months before Obama’s visit PricewaterhouseCoopers warned that Solyndra had troubles deep enough to “raise substantial doubt about its ability to continue as a going concern.”
In January of 2010 – less than a year after the investment – the Energy Department accepted a new investment of $75 million but as senior debt, ahead of all but $150 million of the taxpayer’s money. On Aug. 31 Solyndra announced it would file for bankruptcy reorganization in a week. All the jobs are gone. The FBI, likely at the insistence of House Republicans, has raided the place and is investigating for fraud.
The main issue for me is neither fraud nor cronyism; if those exist, the truth will out. The key issue for me is Keynesian government policy and “stimulus” in general:
· Government cannot do anything well – we ignore this at our peril.
· Guaranteeing loans to businesses is absolutely “picking winners” and something the American government should very rarely do.
· When Congress decides to support a major project with loan guarantees, engineers and scientists should select the best plans and technologies. The Treasury should evaluate the financials and set the terms.
· “Stimulus” should be about creating and preserving jobs immediately not someplace in the distant future but equally important is the cost of each job created.
· The Solyndra investment was a good idea because it was truly “shovel ready” and created 1,100 new jobs in a year.
· But the Solyndra investment was a very bad idea because the DOE is no judge of financial risk and $484,000 per job is too much even if those jobs lasted more than a year.
· “Infrastructure” spending is seductive but mostly a mirage. Such projects cannot be shovel ready and should be part of growth activities not stimulus. If there is a big project underway but about to shut down for lack of funds, keeping that going would be stimulus.
· Government investment in a project such as high speed rail – a bad idea at anytime – is not stimulus; it’s not shovel ready, the costs are unknowable and the project carries an after completion, ongoing taxpayer obligation of unknowable dimensions. As with dams and nuclear power plants, get the lawyers, regulations and tree huggers out of the way; let the market decide whether the investment is sound. But either way, these projects are not stimulus.
· “Stimulus” is cutting taxes to little people, extending payments to the unemployed and handing out money to states if they will keep government employees a little longer.
· The WPA et al is not stimulus; that is communitarian interference with the free market which will absolutely slow economic growth.
We need a lot more common sense in government.
Solyndra Bankruptcy Was Disaster Waiting To Happen
By: Martin LaMonica
September 6, 2011
Taxpayers Rank behind Solyndra Investors under Obama’s Refinancing Deal
By William McQuillen - Sep 3, 2011
Obama Team Backed Solyndra Aid As Auditors Were Wary
September 12, 2011 by Bloomberg
Tuesday, September 13, 2011
More Central Management from the Obama Feds
The President has repeatedly said that if there are federal regulations interfering with business and employment then we should just let him know and he will correct the situation. He has beat that drum ever more loudly as he now redoubles his campaigning efforts for 2012.
This Presidential offer has always been a lie. You may remember the NLRB suing Boeing in an attempt to tell the company where it can operate. For every regulation the President delays, his appointees in the bureaucracy are issuing hundreds of new ones that take effect now.
The latest outrage is a combination of lefty regulators abetted by a lefty judge.
La. Business Owners Sue over New Rules for Guest Workers
By Julia Preston
September 11, 2011
In Louisiana, seasonal workers cut alligators into steaks, peel crawfish, shuck oysters, shell crabs and process shrimp. They are paid on a piecework system – the more you produce, the more you are paid. If there is anything more evil in the minds of union leaders than basic capitalism, it’s piecework – anything even remotely related to individual merit is anathema in the labor movement. They call it “involuntary servitude”.
In a time of major unemployment and a President who claims to be Ronald Reagan moving government regulations out of the way, his Labor Secretary has undertaken a wide critical review of Bush administration rules and published a 77-page proposal of changes.
Louisiana seafood employers use local and foreign workers. The work is hard and the pay is low so it is only attractive to the folks on the bottom rungs, those that can earn above average wages in piecework systems and Mexicans who can earn enough seasonally to support themselves all year at home. Many Americans cannot afford to lose year-round government benefits if they take seasonal, piece-rate jobs – how does that statement taste? So the industry depends upon Mexicans who come here legally and regularly, often in family groups, on H-2B work permits.
As with every industry, this one is important not only to the Americans who work there but also for the American workers in the many industries and jobs supported by this one. After decades of complaints from industry about the inefficiencies of the H-2B program and general outrage regarding illegal foreign workers, President George W. Bush streamlined the application process. Farmworker unions sued the Labor Department to reverse them and the Department is cooperating in spades.
In August 2010, a federal court in Pennsylvania ordered Labor Department officials to issue new rules on how employers should determine wages for H-2B workers. The new wage rules were issued in January the court ordered them kept secret until last month – they go into effect September 30. According to a Labor Department officer, “More of these jobs could be filled by U.S. workers if they were aware of the opportunity and paid prevailing wages.”
Get it? There is nothing illegal about the pay system and Americans will be able to continue to work this way. But for foreigners, whom the Labor Department can control, we plan to make this traditional pay scheme illegal. Our “central managers” intend to employ more American workers in some utopia but the immediate result will be bankrupt businesses and many more unemployed American workers across the country.
Meanwhile, the industry is suing to prevent the new rules from putting all of them out of business. The fishermen, restaurants, local landlords, et al, across the nation anxiously await the outcome and small businesses everywhere wonder if they are next.
· We should note that the Louisiana food associations must sue both the Labor Department and the Department of Homeland Security which jointly administer the H-2B program. How good do you think that is for the nation?
· How true do you think it is that entry level employment will ever be accepted by the majority of people on welfare, no matter what it pays?
· Do you think it is the job of government agencies to determine employment compensation?
· What do you think of a Pennsylvania court ruling on employment issues in Louisiana?
· Do you think that wages and employment practices should be identical across the nation? Whatever the practices, should they be the business of the federal government?
I believe in federal government regulation but this nation has gone significantly too far and needs deep reform of not just current rules but of what the feds have authority over. And finally, this President is an outrageous liar even when measured by the standard of American national politics.
Sunday, September 11, 2011
Cherokees Expel Descendants of Slaves from Tribe
Here’s an interesting story that isn’t getting much play.
Friday, Sep. 09, 2011
Cherokees Expel Descendants of Slaves from Tribe
By JUSTIN JUOZAPAVICIUS - Associated Press
Cherokees Expel Descendants of Slaves from Tribe
By The Associated Press
September 11, 2011, NPR
http://www.npr.org/2011/09/11/140379225/cherokees-expel-descendants-of-slaves-from-tribe?ft=1&f=1001
The Cherokee Nation fought with the Confederacy during the Civil War. Some Cherokees owned African slaves; the tribe did not. Some will remember that taking slaves was once a common practice amongst Native American tribes.
At the end of the war, Cherokees freed their slaves. An 1866 treaty between the tribe and the federal government gave the freedmen and their descendants "all the rights of native Cherokees."
In 2007 special vote was held and more than 76 percent of Cherokees voted to amend the Cherokee constitution and remove the slaves' descendants and other non-Indians from tribal rolls. The 300,000-member tribe is the biggest in Oklahoma, although many of its members live elsewhere, including the Carolinas. This week, the Cherokee Supreme Court upheld the results of that election.
The tribe has sent letters to 2,800 descendants of slaves once owned by members, revoking their citizenship and cutting their medical care, food stipends, low-income homeowners' assistance and other services. Those affected say it's a red man, black man issue just like it's a white man, black man issue, while the tribe says, “We don't care what you look like, as long as you've got Cherokee blood. It's about identity and self-governance.”
Some in Congress have called this discrimination and asked government agencies to cut off funding to the tribe – big surprise there. The U.S. Department of Housing and Urban Development temporarily froze $33 million in funds while it studies the issue. I guess they aren’t an independent sovereign nation.
Anyway, a community on the dole has an internal community on the dole. Who knew?
The Failing 4th Estate
If you were disgusted by media overreaction to Hurricane Irene how about this misguided celebration of the 9/11 attack? Read this George Will reaction:
Sunday, Sep. 11, 2011
Salve for our wounds
By George F. Will - Washington Post
“The most interesting question is not how America in 2011 is unlike America in 2001, but how it is unlike it was in 1951.”
We are suddenly Facebook America – me, me, me; gimme, gimme, gimme. No real reflection; no common sense; no historical perspective. N points out that no less than three 9/11 family members have written books about their loss. Really?
Thursday, September 8, 2011
Jobs, Jobs, Jobs and the Persecution of Gibson Guitar
Here is another example of truly bizarre behavior by the Obama administration as well as the incredible incompetence and over-reach of the federal government in general.
The Lacey Act of 1900 prohibits trade in wildlife, fish, and plants that have been illegally taken, transported or sold. In 1900, illegal commercial hunting threatened many game species in the United States so the original Act was directed at the preservation of game and wild birds by making it a federal crime to poach game in one state with the purpose of selling the bounty in another.
Today the law is primarily used to prevent the importation or spread of potentially dangerous non-native species but also to protect endangered plants and animals in foreign countries. In 2008, Congress expanded its protection to a broader range of plants and plant products including wood. The law’s expanded protections include especially vaguely written references to obeying murky foreign laws. [Imagine writing an American law requiring compliance with foreign laws you have not read and others that have not yet have been written. Only lawyers and do-gooders would venture here.]
In case you didn’t know, all guitars have finger boards made from small pieces of rare woods.
This brings us to the persecution of the Gibson Guitar Corporation which enjoys the enthusiastic appreciation of the tree-hugger community, even Greenpeace, for its "great work" in preserving forests.
In two separate raids of Gibson – 2009 and now – the feds have confiscated $millions in materials and instruments. The alleged offenses are these:
· In 2009, U.S. officials said Madagascar officials were "defrauded" by a local exporter about the nature of the product. In the government’s alternative reality, this makes Gibson guilty under the Lacey Act as revised in 2008.
· As for last week's raid, it’s the same story, same wood but different country – India. The government said it had evidence that Indian ebony was "fraudulently" labeled in an attempt to evade an Indian ban on exports of unfinished wood.
· In both cases, the issue is not the illegal harvesting of rare or endangered trees; the issue is the American government trying to respect foreign laws banning “exports of unfinished wood”.
Guitar makers get local nationals to cut trees into strips of specific size and quality which are then shipped to America and made into finger boards for guitars.
American officials are imposing their view on both the intent of the foreign laws and on whether foreigners are complying with those foreign laws.
In a time of huge unemployment, the government is sowing extra anxiety and uncertainty. Gibson employs 2,000 people and ships its guitars worldwide. The feds seem to be encouraging the movement of those jobs offshore. The raids threaten a vast range of American manufacturers and even musicians themselves – one law professor and a blues guitarist, says he no longer goes “out of the country with a wooden guitar."
What are they thinking?
Fox News points out that Henry Juszkiewicz, chief executive officer of the closely held, nonunion company, is a major Republican contributor in an industry that is unsurprisingly mostly Democratic and unionized. Juszkiewicz feels the same. How despicable would it be if politicians start using the government to punish their opposition? That’s Chavez territory.
And another thing, what better argument might there be regarding government over-reach? Should the feds really be trying to enforce foreign laws? Even if the answer is yes, shouldn’t we expect our legislators to write laws with clear language, intent and consequences? Shouldn’t we expect basic competence?
September 1, 2011
Gibson Guitar Wails on Federal Raid over Wood
By James R. Hagerty and Kris Maher
Wall Street Journal
August 26, 2011
Guitar Frets: Environmental Enforcement Leaves Musicians in Fear
By Eric Felten
Wall Street Journal
Aug 31, 2011
By Michael Billy
CEO of Gibson Guitar says Fed raid cost company up to $3 million
Digital Journal
Monday, September 5, 2011
Labor Day Blues
Here’s a column by Samuelson that lays out a very pessimistic view regarding unemployment, the economy and the American Dream. I wish I could find fault with it.
A liberal think tank has calculated that in order to bring unemployment down to 5% within 5 years, we will need to produce an average of 282,000 new jobs per month. Currently, we have averaged 105,000 new jobs per month since early 2010. During our boom period of 1993 through 2000, we produced a monthly average of 240,000 new jobs.
If that is not bad enough news both for the unemployed and the economy stymied by lack of demand, an important part of the American dream – getting ahead – may be absent for a generation.
Samuelson says there are two employment business models: the "career system" as practiced by our employers [we learned on the job and became a valuable commodity our employers protected] and the parallel "churn system" as practiced by McDonalds or Walmart [pay low wages and replace the attrition with more entry level workers]. Due to tough times, lack of growth and the declining caliber of the workforce, the churn system is now winning out. The majority of our kids will be less well off than we were and we cannot know what populist consequences that might bring.
My grandchildren must leave school with skills that remain in demand. That will mean nothing less than advanced degrees in something other than the humanities.
Monday, Sep. 05, 2011
Labor Day blues
By ROBERT J. SAMUELSON - Washington Post
Saturday, September 3, 2011
Another Step in Government’s Continuing Failure in the Financial Crisis
The government has sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.
Government Sues Banks over Risky Mortgages
by The Associated Press
September 2, 2011
The government says:
· The securities were sold with registration statements and prospectuses that "contained materially false or misleading statements and omissions."
· Banks and mortgage lenders also falsely represented that the mortgage loans in the securities complied with underwriting guidelines and standards.
· They also included representations "that significantly overstated the ability of the borrower to repay their mortgage loans."
All true and all outrageous. But here’s the thing:
· The cost to bring these suits was enormous.
· The cost to pursue these suits through the courts will be time consuming and very expensive for both sides.
· When the defendants lose, they will pay billions to the government.
But every penny of these costs will be paid for by us and absolutely no behavior will be changed – neither on Wall Street nor in Washington. We pay government costs through taxes and we pay the banks through fees – no officer, director, bureaucrat or investor will be affected in any way. We all just pay more – mostly to lawyers – for the same old services.
The real fraud – after the rating agencies – was by the brokers, little specialty banks established for the purpose and home buyers – see, it’s OK to cheat and lie if some guy tells you it’s OK and anyway, it’s wrong to hold any person responsible for their bad decisions.
All these culprits are either long gone or basically broke. We only sue folks with money. Except for a few homeowners, none of these opportunists will suffer even inconvenience. We have already given the rating agencies a free pass under Dodd/Frank and bailed out the banks with no repercussions for the previously and richly compensated execs. Congress remains exempt. So the bureaucracy weighs in by finding a way to achieve nothing beyond a little very expensive grandstanding.
If we want change, individuals must be held accountable. If we can’t jail a guy, we need to be able to fire them at least. Folks who get rich doing wrong – or doing nothing – have to be made to give back the money. The old adage that stupidity is not illegal needs modification and we need to enforce fiduciary responsibility again from corporate officers through the boardroom.
Dodd/Frank is an embarrassment doing little about capitalization and nothing about the rating agencies, securities regulators, Fannie and Freddie or the fiduciary responsibilities of corporate officers and directors. Its focus was a new $360 million a year agency to “protect” consumers from banks, without eliminating any of the existing agencies that already do that. You and I could knock the banks in line at the kitchen table in a few months.
Now this lawsuit; it’s pathetic.
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