Econ-Recon: July 2008: Archives

July 17, 2008

The Colbert Report: Solving America's Problems With A Placebo genre: Econ-Recon & Tongue-In-Cheek & Video-Philes

Stephen Colbert expands upon the twenty percent of Americans who think everything is going well and suggests that we need a placebo to change the negative psychology of the other eighty percent who just can't see the pot of gold that sits at the end of the rainbow.

In the following segment of The Word, Colbert implores George Bush and John McCain to intervene in order to correct this psychological deficiency...and he thinks a sugar pill is just what the doctor ordered. Yes, Colbert contends that if those people losing their homes to foreclosure would just change their mind set, they would see that all is well in their world.

Colbert has only one problem with the strategy of the president and John McCain. He insists that they avoid telling us that the placebo won't really solve our problems. As Colbert notes, if we're going to buy into the benefits of a sugar pill, we should at least be told that it's the best thing to come along since sliced bread.

Tagged as: Gas Prices, George W. Bush, Home Foreclosures, John McCain, Placebo, Stephen Colbert, The Colbert Report

Daniel DiRito | July 17, 2008 | 12:43 PM | link | Comments (0)
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July 11, 2008

Putting The Fannie Mae & Freddie Mac Situation In Context genre: Econ-Recon

TickingTimeBomb.jpg

Today, the stock market reacted negatively to speculation that the U.S. government could be forced to bail out the nations two largest sources of mortgage funding, Fannie Mae and Freddie Mac. Of the 12 trillion in mortgage debt, the two giants account for slightly less than 50 percent...a full 5 plus trillion dollars. Put into context, that number is equal to half of the entire accumulated debt of the United States.

From CNN:

NEW YORK (CNNMoney.com) -- The anxiety over Fannie Mae and Freddie Mac, crucial to a recovery of the battered housing market and the economy as a whole, reached a fever pitch on Friday and took shares of the companies and the broader markets on a wild ride.

They play a central role in the U.S. housing market, providing a crucial source of funding for banks and other home lenders, especially since a credit market crisis last summer left them the only major players in packaging pools of mortgage loans into securities for sale to investors.

If they were unable to do so, it would significantly raise the cost and restrict the availability of mortgage loans, causing significantly more problems for already battered housing prices and sales. That in turn would be another significant problem for the overall U.S. economy, as well as global credit markets.

The New York Times reported Friday that senior Bush administration officials are considering a plan to have the government take over one or both of the companies if their problems worsen.

But Paulson said Friday that the government's primary focus is making sure that Fannie and Freddie remain "in their current form."

"Fannie Mae and Freddie Mac have lost investor confidence evidenced by the rapid brutal sell-off in their stocks, which could dramatically hinder their ability to raise any additional capital going forward," wrote Richard Hofmann of research firm CreditSights in a note Friday.

Hoffmann added that the firms' ability to function normally "remain at the core of government efforts to stabilize the mortgage markets."

If any of this sounds familiar, allow me to remind readers of the source. Back in the late 1980's, the Savings and Loan industry experienced a meltdown that resulted in the seizure of numerous financial institutions by the government and the subsequent creation of the Resolution Trust Corporation (RTC) in order to liquidate the assets and allow the government to tally up the price tag taxpayers would have to cover.

With that said, the next step is to attempt to draw some comparisons between what happened during the S & L scandal and what could happen if Fannie Mae and Freddie Mac were to fail. To appreciate the gravity of today's situation, it's important to look at the numbers and the impact of the S & L scandal. The following excerpts are from the FDIC's summary report.

From FDIC:

As of December 31, 1999, total direct costs attributable to the closing of insolvent thrift institutions over the 1986-1995 period amounted to $145.7 billion. Indirect costs due to the loss of Treasury revenue because of the tax benefits that accrued to acquirers of failed institutions under past FSLIC resolutions amounted to $6.3 billion. An additional $1.0 billion of indirect costs was incurred because interest expenses were higher with the use of REFCORP bonds than with Treasury financing. Thus, the combined total for all direct and indirect losses of FSLIC and RTC resolutions was an estimated $152.9 billion. Of this amount, U.S. taxpayer losses amounted to $123.8 billion, or 81 percent of the total costs. The thrift industry losses amounted to $29.1 billion, or 19 percent of the total.

The accumulated losses of $152.9 billion were higher than the official and private forecasts of the late1980s but lower than those made by the government and others during the early to mid-1990s. As mentioned above, during the late 1980s the full extent ofthe problem was unknown until the cleanup began; thus, many early forecasts underestimated the size of the problem.

The savings and loan crisis of the 1980s and early1990s produced the greatest collapse of U.S. financial institutions since the Great Depression. Over the1986-1995 period, 1,043 thrifts with total assets of over $500 billion failed. The large number of failures overwhelmed the resources of the FSLIC, so U.S. taxpayers were required to back up the commitment extended to insured depositors of the failed institutions.

As we see from the report, the financial risk for the S & L fiasco never exceeded 500 billion dollars in assets...which is one tenth of the five trillion that is at risk should the government be forced to step in and resolve the feared Fannie Mae and Freddie Mac insolvency. I repeat, one tenth.

Now that you've started to breathe again, let's try this again...this time by extracting the FDIC's closing statement from the above excerpt. The report concluded, "The savings and loan crisis of the 1980s and early1990s produced the greatest collapse of U.S. financial institutions since the Great Depression". I repeat, since the Great Depression.

To understand the full impact of a collapse by these two financial giants, one must realize that single family residences, by and large, were not the type of assets at play in the S & L crisis. The distinction is significant. Yes, taxpayers ultimately footed the bill for the S & L scandal, but their own well-being was never in serious jeopardy.

While home values weren't spared by the S & L meltdown, this current crisis would be a direct hit to homeowners. Essentially, the government would either be forced to establish an entity to liquidate the assets (single family homes) or elect to forgive huge amounts of debt and allow homeowners to retain their properties. Either way, the welfare of individual families would hang in the balance.

At the same time, whatever action the government would take would adversely affect home values and the ability to sell one's residence. The market would be flooded with repossessed properties, at discount prices, as the government attempted to recoup the debt it would have assumed with the takeover. Looking at current predictions, the general consensus is that the housing market isn't apt to recover any time soon. Unfortunately, those predictions do not take into account the possibility of government intervention and the impact it would have on the market. In my estimation, were that to happen, we would be a number of years away from any meaningful recovery of home values.

Now toss in the residual economic impact of such a crisis and one can easily imagine the downward spiral that could ensue. Every sector of the economy would be drawn into the mess and the pieces would begin to fall like dominoes. Until that process were played out, the prospect of a recovery would be out of the question.

I want to close with one final observation. The Bush administration has argued for years, as part and parcel of its grandiose vision of an "ownership society", that more and more Americans have been able to join the ranks of home ownership. They failed to note that it was being accomplished through artificially low interest rates, gimmick mortgages, and non-existent lending restraint. So much for George Bush's "ownership society" now that the bubble has burst, eh?

Tagged as: Economy, Fannie Mae, FDIC, Foreclosures, Freddie Mac, Mortgage Lending, Resolution Trust Corporation, RTC, S & L Scandal

Daniel DiRito | July 11, 2008 | 4:25 PM | link | Comments (2)
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Fundy Watch: FOF & FRC All Atwitter Over Gay Marriage genre: Econ-Recon & Gaylingual & Hip-Gnosis & Polispeak

As we approach the November election, the effort to utilize the wedge issue of same-sex marriage to sway voters is in full bloom. It's also an opportunity for fundy groups to implore their followers to cut loose some of their cash to support the cause. One thing is for sure, these folks intend to ride the same-sex is sinful gravy train until it falls off the rails.

On of the items garnering the attention of the religious right is a report that the state of Massachusetts may consider repealing a 1913 law that prevents the marriage of gay couples from out of state.

From The Boston Globe:

State lawmakers are expected to vote next week on repealing a 1913 law that prevents out-of-state gay and lesbian couples from getting married in Massachusetts, reigniting a divisive debate on an issue that has stirred passions and put the state in the national spotlight.

The Senate is expected to take up the legislation Tuesday, and the House will follow shortly afterward, according to several lawmakers. House Speaker Salvatore F. DiMasi and Senate President Therese Murray favor the repeal, but their support on such a hot-button social issue does not guarantee that rank-and-file lawmakers will follow.

Advocates of same-sex marriage rights said they are hopeful the repeal will pass, given the support from the legislative leadership and from Governor Deval Patrick, whose position is much more sympathetic than that of Governor Mitt Romney, a Republican who was a staunch opponent of gay marriage.

"This is extraordinarily significant," said Arline Isaacson, cochairwoman of the Massachusetts Gay and Lesbian Political Caucus. "If we get the 1913 law repealed, it brings us one very important step closer to full equality."

The 1913 statute prevents Massachusetts from sanctioning marriages that are not legal in the state where the couple lives. The law was enacted in part to prevent interracial couples from evading their own state's ban by traveling to Massachusetts to marry. It was a little-used and rarely enforced law until opponents used it to prevent out-of-state gay couples from getting married in Massachusetts after the state legalized same-sex marriage in 2004.

The following video, from Focus on the Family, is their attempt to highlight the potential repeal in Massachusetts, and to make their followers aware of the importance of battling the proponents of same-sex equality in the upcoming election. In other words, the repeal of an antiquated law, designed to address interracial marriage, is being portrayed as part and parcel of the homosexual agenda.

Another tactic employed by these rabidly anti-gay groups includes the commissioning of polling designed to build momentum amongst those who are inclined to oppose measures granting marriage equality to gays. Yes, polling involves a level of statistical rigor, but the manner in which questions are asked can be geared to elicit a preferred response.

This week, the Family Research Council released data from their latest survey. Let me be clear. While I realize that a majority of Americans are likely opposed to same-sex marriage, I don't believe it is a litmus test issue for a majority of voters. The FRC survey asked the following question.

As you may know, several states have measures on the November ballot that would amend their state constitutions to define marriage as the union of one man and one woman. Would you be more or less likely to vote for a presidential candidate who supports those amendments?

As with most wedge issues, I suspect there is a segment of the population that would make this, as well as other issues, a determining factor in the ballot box. However, I suspect that the number of voters who see same-sex marriage as non-negotiable is far short of a majority. Clearly, there will always be single issue voters. However, I suspect that 2008 will find most voters concerned about a number of issues.

In order to determine which issues will hold the most swing, one would need to look at which issues are of greatest import to voters in any given election cycle. A poll by Franklin & Marshall College provides some relevant insight into the 2008 election...and the survey points out that social issues, while important to a significant number of voters, are not the primary factors influencing voter sentiment.

From Yahoo News:

McCain is cleaning up more than 3 to 1 among voters who think the country is headed in the right direction, he's ahead 20 points among voters whose personal finances are better off compared to last year, he's clobbering Obama 4 to 1 among voters who think family values are the top issue of the campaign, he's hammering him by 25 points among voters who say foreign policy is the biggest issue, he's beating him 5 to 1 among voters who list illegal immigration as the top issue, and he's winning by more than 20 points among voters who rank taxes as the most important issue.

Good news for McCain? Maybe not! Winning only matters if what you're winning matters too. And in McCain's case, it largely doesn't. In fact as the Franklin & Marshall College Poll also reveals, despite losing on a wide range of usually salient issues, Barack Obama leads John McCain nationally by six percentage points.

McCain is winning the issue battles but losing the electoral war, because the issues he is winning are not the issues most voters care about. Family values, immigration, foreign policy, country on the right track, and better off finances--count McCain a winner. But on the issues voters say are most important to their vote choice this year--the economy, Iraq, and health care--McCain is a big loser.

n sharp contrast, the issues McCain is losing, he is losing big: the economy (20 points), Iraq (24 points), and health care (45 points). Worse for him, these three are the critical issues of the campaign--two of every three voters list one of them as the most important issue this year. And McCain is losing all three of them to Obama.

In the political algebra of 2008 presidential politics, McCain is winning where it matters least while losing where it matters most.

While we're still months from the election, there are many reasons to believe that these kitchen table issues will continue to be the dominant concerns for a significant majority of voters concerns. In fact, there are indications that the economy may become an even larger determinant as we approach November. Gas prices aren't apt to decline any time soon, unemployment is likely to rise, the stock market continues to struggle, and the government may soon find itself in the mortgage business to the tune of 5 trillion dollars if Fannie Mae and Freddie Mac fail.

As I see it, there just aren't that many Americans who have the luxury to weight same-sex marriage above their own economic self-interest. Besides, the last time I checked, groups like FOF and FRC were asking for money from the flock; not offering to fill their tanks with gas or put food on their table.

I suspect we're approaching the point at which many of these holy heterosexual families will have to face the reality that the economic well-being of their family has very little to do with the same-sex couple down the block. Perhaps they'll finally be forced to focus on their own families for a change.

UPDATE:

Not to be outdone, American Family Association's Don Wildmon is chiming in on the evils of same-sex marriage.

Dr. Donald Wildmon is founder of the American Family Association and an organizer of the Arlington Group. He says passage of the California marriage amendment is critical.

"If we lose California, if they defeat the marriage amendment, I'm afraid that the culture war is over and Christians have lost," says Wildmon, a 30-year veteran of the culture war. "I've never said that publicly until now -- but that's just the reality of the fact.

"If the homosexuals are able to defeat the marriage amendment defining marriage as between a man and a woman, then the culture war is over and we've lost -- and gradually, secularism will replace Christianity as the foundation of our society," he adds.

The vote in California, Wildmon explains, will affect the entire nation. "California is a big dam, holding back the flood -- and if you take down the dam in California, it's going to flood 49 other states," he illustrates. "It will destroy marriage as it has been known for thousands of years, and with that the cultural decline that normally would follow."

Well there you have it...if California allows gay marriage to proceed, we can all put on our best duds, pack our bags, and prepare for the rapture party. Does anyone know if there will be an after hours party? I'm thinking that's the place to be. After all, by then all the wingnuts should be standing at the pearly gates waiting to see if their admission pass gets validated.

Tagged as: 2008 Election, Barack Obama, Economy, Family Research Council, Fannie Mae, Focus On The Family, FOF, FRC, Freddie Mac, John McCain, LGBT, Marriage Amendments, Massachusetts, Religion, Same-Sex Marriage, Unemployment, Values Voters

Daniel DiRito | July 11, 2008 | 9:58 AM | link | Comments (0)
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July 9, 2008

Serving Masters, Serving Notice, & Serving Ourselves genre: Econ-Recon & Hip-Gnosis & Polispeak

Have you ever wondered what a modern day slave would look like and how he or she might behave? Ever consider who might be the owners of plantations, staffed by these slaves, if they were "permitted" to exist today? Has it ever crossed your mind that the only thing that's changed since the emancipation proclamation is that it simply became unacceptable to speak of slavery...but by no means prohibitive to seek the virtual enslavement of those who can be so manipulated?

Whether you have or haven't pondered these questions, I'm of the opinion that the following video provides some insight into who might aspire to implement and maintain such a world.

Here's the thing. The actions of those who are intent upon portraying Michelle Obama as the epitome of black rage...a condition predicated upon the notion that the unfortunate mistreatment that was permitted to persist for many years has left "them" permanently hostile to the country that enabled their enslavement...may well be an attempt to invoke the oppression necessary to enact more of the same. We rarely discuss the real motivations of those who put forth these "angry black woman" hypotheses...and who it is they seek to enlist in promoting their unspoken objective to regain and/or retain their role as the noblesse oblige...discretionary as it would undoubtedly be.

Spoken in simple terms, those who seek to undermine the likes of the Obama's do so by pitting those of an economic stature commensurate with that of the slaves or yore (poor uneducated, and economically immobile whites) against those who might be on the precipice of catapulting themselves (educated and economically mobile blacks or their sympathizers) to a status that would afford them the wherewithal to make economic emancipation more than a proclamation.

Wealth and the means to accumulate it remain the core point of contention between those who believe that opportunity is already an equally distributed resource and those who believe that existing wealth is an advantage that makes for a playing field that isn't level. The former cite the occasional "nuevo riche" individual, who has overcome the institutional obstacles, as evidence to cling to the status quo...while the latter ascribe to the belief that the generational perpetuation of wealth is ample evidence that government must be the benevolent agent in light of the false notion that a social conscience is a naturally occurring condition.

One quotation stands out above all others in validating my contention. It comes from the late Jerry Falwell and it cuts through all of the faith-based noise that has been wrapped around the message proffered by the mouthpieces at Fox News and other conservative critics of the Obama candidacy...or should I say character...since that is what they seek to assassinate.

"The whole (global warming) thing is created to destroy America's free enterprise system and our economic stability."

Yes, those who espouse the sanctity of God's creations...and the certainty that his existence offers us an unparalleled opportunity to join him in eternal bliss...are apparently more concerned with preserving our "free enterprise" system and all the opportunities they personally derive from its propagation. You see, in stating as much, Falwell, a frequent purveyor of prejudicial proclamations designed to serve two purposes, reveals the core concerns that are at the heart of the efforts to eviscerate the Obama candidacy.

Those two purposes comprise the essence of modern day slavery. The first is the establishment of an enslavement to religious ideology as defined by those in positions of power...those who craft the constituent wedge issues ( guns, god, & gays to name a few) which are designed to insure the second purpose. That second purpose, the perpetuation of power, and therefore the ongoing retention and accumulation of wealth, is facilitated by the votes of the enslaved faithful...votes they've been convinced will serve in their attainment of the promised riches that accompany an afterlife with the divine master...votes that serve to insure the certainty of power and wealth in this life for their surrogate mortal masters.

In the end, the goal is to sell the elusive and the ethereal to the masses while insuring the tangible and the touchable for the few. We voters can succumb to the bait and switch sophistry that has sustained the insufficient status quo for far too long or we can crush the surreptitious shells that have been used to divide us, one from the other...and emerge from the confines of the conch that continues to whisper sweet nothings in our eternally ensnared ears.

Like children stranded on a deserted island in Lord of the Flies...lost in the erosion of an order which has always been created for us...intrigued by...and on the verge of...a new order...perhaps it's time for us to realize..."Maybe there is a beast....maybe it's only us".

Tagged as: 2008 Election, Economic Opportunity, Economics, Fox News, Heaven, Jerry Falwell, Lord of the Flies, Michelle Malkin, Michelle Obama, Poverty, Race, Religion, Slavery, Wealth

Daniel DiRito | July 9, 2008 | 2:35 PM | link | Comments (0)
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July 2, 2008

Economic "Stimulus" Checks Effective? genre: Econ-Recon & Hip-Gnosis & Tongue-In-Cheek

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Some stories are too good to be true. It appears that the tax rebate checks which were part of the Bush administration's economic stimulus package have been effective...in stimulating the porn industry. An industry research firm reports an increase in revenues closely matches the distribution of the 173 billion dollar handout.

From PR Newswire:

An unforeseen and surprising beneficiary of the Economic Stimulus Plan, a plan that George Bush contends will "boost our economy and encourage job creation," has surfaced this week. An independent market-research firm, AIMRCo (Adult Internet Market Research Company), has discovered that many websites focused on adult or erotic material have experienced an upswing in sales in the recent weeks since checks have appeared in millions of Americans' mailboxes across the country.

According to Kirk Mishkin, Head Research Consultant for AIMRCo, "Many of the sites we surveyed have reported 20-30% growth in membership rates since mid-May when the checks were first sent out, and typically the summer is a slow period for this market."

Jillian Fox, spokeswoman for LSGmodels.com, one of the sites reporting figures to AIMRCo, added, "In a June 15, 2008 survey to our members, thirty two percent of respondents referenced the recent stimulus package as part of their decision to either become a new member, or renew an existing membership."

Perhaps this will lead the American Family Association to ask taxpayers to refuse their checks and call for a boycott of the government since one of their primary areas of focus is pornography.

Do you suppose that any of this money being spent on pornography is coming from upstanding Christian households? I can't help but imagine the Ted Haggard types lurking around on the down low to take full advantage of the extra dollars...if you know what I mean.

This could also be an opportunity for xxxchurch.com to jump in and push their program to put an end to the pornography obsession that they believe plagues many Christian men. Then again, maybe the AFA should forego the boycott and apply for funding through the Bush administration's faith-based initiatives and commence an outreach program to promote better family values.

Tagged as: AFA, American Family Association, Economy, Humor, Pornography, Stimulus Package

Daniel DiRito | July 2, 2008 | 10:04 AM | link | Comments (0)
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