Sunday, December 28, 2008

The raw truth comes out

The Raw Story has recently been validating my posts from the early months of The Progressive Zone. Back in 2005, I posted about the fascist elements of the USA PATRIOT Act. Section 501 of the Act seems to be contrary to everything this country stands for. It prevents someone accused of terrorist activity from being informed of the evidence against him or her, no matter how flimsy it be. It's no surprise then that a federal appeals court has finally invalidated the section of the Act which permitted "national security letters" to create blanket gag orders.

Also in 2005, I tried to reconcile president Bush's claim that "we do not torture" with vice president Cheney's insistence that the CIA should be permitted to torture detainees. Why would it need this permit if we do not torture? Well, now we know why. The Raw Story also reported this month that Cheney admits authorizing detainee's torture. He had the gall to say on national television that he supports water-boarding, an act for which Japanese soldiers were tried and convicted of war crimes after World War II.

Although I'm pleased that the truth is coming to light and the judiciary is beginning to restore civil liberties, I still wonder why it's taken so long.

Sunday, December 21, 2008

The role of the government in an economic recovery

I've mentioned that I take my cue from Peter Schiff when it comes to forecasting the economy. It turns out that he was not the only one who many years ago forecasted the economic problems we're experiencing now. Martin Weiss also saw the housing bust coming back in 2005.

So last week, Esquire magazine asked Weiss what he forecast for the housing market over the next few years. In his response, Weiss had some insights regarding the role the government should play in the economy. I agree with him that "the debt problem is far too big for the government to be able to address with its limited resources, so they should back off and let the marketplace resolve the two big problems our economy faces -- too much debt, and prices that are too high." As we all know, the government has instead chosen to do the opposite by trying to fix the economic decline through increasing the debt load on our nation. Weiss said:
I believe we should give up the war we can't win, which is the war against the economic decline. Instead we should fight the battle we must not lose, and that's the battle to protect the health and well-being of the citizens of the country. Right now, for example, hospitals are going broke and the states are running out of money to pay unemployment benefits -- we have already 19 states that are in the red with respect to their unemployment benefit funds, and it could grow to 30 or 40 states very quickly. That's where the government's role has always traditionally been since the New Deal, and that's where our resources need to go.
This viewpoint is not far off from president-elect Obama's position on the right way to recover the economy.

Friday, December 19, 2008

Remortgage America

Yes, I know I've been blogging about the folly of the bailouts lately. I haven't stopped being a free market economist. But I recently discovered a bailout proposal that actually makes a lot of sense. In a nutshell, the plan is that the US government offers every US citizen a 30-year mortgage at a 1½% fixed rate of interest. How this works and why it makes sense I'll leave up to the author to explain.

Given a choice between no federal intervention in private business or this plan, I'd choose no intervention. But our government is hell bent on spending trillions of taxpayer dollars on financial bailouts in spite of the fact that most Americans oppose it. So if secretary Paulson is going to empty our treasury on bailouts whether we like it or not, I think the Remortgage America plan is far superior to any of Paulson's hair-brained "economic recovery" schemes. Plus, the treasury would get paid back the outlay for the plan with interest.

Friday, December 12, 2008

Congress folds on yet another wasteful bailout

Congress is abdicating its authority to president Bush again. As always, they are laying down the law then looking the other way when Bush ignores their legislation. This time it's the Emergency Economic Stabilization Act, the bill that established the $700-billion Troubled Assets Relief Program (TARP). The terms are very specific that "the program will be available to qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged only in financial activities that elect to participate before 5:00 pm (EDT) on November 14, 2008." Note that there's no mention of automobile manufacturers in that qualifier and that it's now almost a month past the application deadline.

Congress has already betrayed its constituents' trust by authorizing the Emergency Economic Stabilization Act in the first place. Americans overwhelmingly -- almost to unanimity -- opposed a bailout of the financial services sector. Yet congress passed the bill anyway. If congress doesn't rescind the bill, then congress is obligated to ensure that the TARP funds are used as designated in the bill. There is no way that the Act could be construed as to permit TARP funds to be allocated to automobile manufacturers or that it is now before November 14, 2008.

Secretary Paulson insisted that the funds are needed to provide liquidity to financial services firms when he first requested them. He claimed that if the TARP were not immediately implemented, the economy would precipitously collapse. His logic was that the TARP funds would increase availability of credit. But now the Bush administration is talking about bailing out General Motors and Chrysler with TARP funds.

Detroit's Big Three are claiming that a big part of their problem is that potential car buyers are not receiving the credit they need to buy automobiles. If the Bush administration redirects TARP funds from financial institutions to automobile manufacturers, then according to Secretary Paulson's logic, there will be even less credit available for banks to loan to car buyers. That would not only exacerbate the Big Three's problem but it would also enable them to perpetuate their failed business models, thereby only delaying their inevitable position in the market (and risking the collapse of the economy, according to Secretary Paulson's original position).

The Department of the Treasury has already been an abysmal failure at managing the TARP, vacillating wildly from one ineffectual tactic to another. Now it will continue to do so in direct contradiction to what congress has authorized the Treasury to do. No one in congress has voiced any recognition that the Bush administration is yet again acting in contempt of congress.

Sunday, December 07, 2008

Recovering the economy the right way

I heard President-Elect Obama address the nation yesterday. I was relieved to hear an economic recovery plan that wasn't just another bailout for a change. He spoke about a recovery that would put 2.5-million Americans back to work. He laid out a plan to invest in America's future rather than filling the coffers of failed corporations. I was so inspired by his plan that I wrote him the following letter:
Mr. President-Elect,

I support your economic recovery plan. This is the direction the Bush administration should've taken two months ago when Secretary Paulson first proposed his $700-billion bailout. If we're going to spend American tax dollars in a time of deficit, it should be investing in the future of this country. After all, it's the future generation that will have to pay for it.

So let's recover the economy by building our infrastructure, both physical and information systems. Let's rescue our power grid and supply it with renewable sources of energy. Let's renovate our medical system so that all Americans can get the health care they need. Let's advance our educational system to educate the next generation.

But let's stop with the bailouts. Enough already! We don't need to bailout the failing financial institutions. There are plenty of responsible, conservative, and sound financial institutions who will step up to serve the customers of the failed banks. We don't need to bailout Detroit's Big Three. Maybe one or two of them might go bankrupt but that would make the other one or two stronger as GM customers start driving Fords. And we don't need to bailout all of the home owners who bought homes they wouldn't be able to afford because they assumed the values would only go up. They'll get along just fine as renters, which is what they should've been all along, anyway, if they couldn't afford to buy a home. I'm sure the economic forces will straighten everything out there.

I will contact my congressmen and ask them to pass an economic recovery bill fashioned as you proposed in your address yesterday. I'll ask them to be sure to include the "use it or lose it" provision. I'll ask them to invest in America today by having that bill ready for you to sign as soon as you take office tomorrow. That will be the best use of tax dollars to quickly turn around this recession that might otherwise last for years and get millions of Americans back to work.

The Progressive
American citizen

Saturday, November 15, 2008

Making myself at home – but not in The Zone

This Progressive has taken a long time off of blogging. I just bought my own home for the first time and it’s consumed me for the past couple of months. Between escrow, moving, unpacking, and painting, I’ve had no time for blogging … until now.

I’ve been struck by a couple of interesting things going through this process. I opened escrow concurrent with the final meltdown that led Treasury Secretary Paulson to foist his $700-billion bailout plan on congress and the President (no matter that it was resoundingly rejected by the American people). My mortgage was funded weeks after Paulson’s insistence that the credit markets were dried up and no one could get a loan anymore. This was right on the heels of me also getting a very large vehicle loan. How did I manage to get all this credit—at very favorable rates, I might add—when no one is lending money right now?

It’s also interesting where the real estate valuations that I bought into are at right now. There have been many foreclosures lately, so prices have dropped at least 30% off their peak just over a year ago. How much further might they drop before the bottom of this cycle is reached?

I’m prepared for the possibility for the value of my condo to drop to significantly less than the outstanding principal on my mortgage in the next year or two. However, there is one strong indicator that the market in my neighborhood is near the bottom of the cycle. My total cost of ownership for the condo is significantly less than what it would be to rent comparable housing around here.

So I wonder how wise a move it was for me to buy this home at this time. The wisest investors say the best time to buy is when the market looks very negative and everyone else is getting out. It will be interesting to see if the market conditions a year or two from now would even support me being able to buy a home had I instead waited until then to buy.

The minimum down payment for an FHA loan to a first-time home buyer was 3% when I bought but it’s already 3.5% now. There’s even talk of it going up to 5% soon. If the credit market is as dry as Paulson claims, could the minimum down payment get to ten or twenty percent in a year or two? Could I be looking at a 10% APR, or even more, in a year or two rather than the 5.5% rate I got? How high would my FICO score need to be to even qualify for a mortgage in a year or two? Even if the price of a comparable condo next year turns out to be ten or twenty percent lower than what I just paid, it might still be unaffordable to me under the market conditions we’ll have in the near future.

All things considered, I feel pretty good about becoming a homeowner so far. The walls are finally painted and the condo is looking great. Even if my mortgage goes underwater in the next year, I can afford to make my payments. I’m sure five years from now, I’ll have some equity. Most importantly, I’ll have more time to blog in the near future.

A man's home is his castle.

Sunday, October 12, 2008

Economic forecaster

Lately, I've been taking my cue on the economy from a man named Peter Schiff. Specifically when he talks about the negative impact the $700-billion bailout will have on our economy -- creating rampant inflation and lengthening the impact of the deep recession which is inevitable -- I listen.

Schiff is a securities broker, so why would I listen to him? You'd think he'd say whatever would benefit the industry, right? So why would he oppose the bailout plan?

The only reason I could think of is because he thinks it will be bad for the nation. He should know. In November of 2006 -- almost two years ago -- Peter Schiff told the Western Regional mortgage Bankers Association that, in a couple of years, they would be facing the exact economic environment they are facing now.

He was probably not a very popular speaker that day, telling a group of over 1,000 mortgage brokers that they were about to be out of jobs. Of course, no one believed him then, with the real estate market booming and the brokers getting wealthy selling Alt-A and subprime loans hand over fist. It didn't matter whether or not home buyers who qualified for their loans based on their word about the income they claimed they were making could actually afford the home. After all, homes would forever more appreciate endlessly, right?

In the spirit of the bailout, we're adopting a stockbroker!
To be specific, I'm adopting Peter Schiff as my economic forecaster. If Schiff could make an economic forecast that turned out to be right on target in spite of how unpopular that forecast was, he's the man I'll listen to about what's going to happen next.

Sunday, September 28, 2008

Letter to the leadership

I've become convinced that the Fed is going about this "rescue" of our economy all wrong. So I decided to send the following message to the Senate Leader, the Speaker of the House, and the chairmen of the Joint Economic Committee and the Banking, Housing, and Urban Affairs committee, as well as my own senators and congressman:
I am writing to express my opposition to the $700-billion bailout of the financial services firms. All it would do is postpone the inevitable by artificially sustaining the valuations of real estate and mortgage-backed securities above their intrinsic values.

If we didn't bailout the financial services sector, there would be economic repercussions. But it would be mostly localized to those sectors with values that are currently artificially inflated. It would not lead to the collapse of the entire economy.

It seems that secretaries Paulson and Cox forgot everything they learned in economics class. Otherwise, they'd realize that what would actually happen in the economy without the bailout is a redistribution of assets and debt to where they would be put to their highest and best use. This is what we should want to happen in our economy because it would actually lead to the strengthening of our economy in the long run, not the destruction of it.

If you want to put $700-billion dollars to use stimulating our economy, do it from the bottom up. Imagine the boost the economy would realize if we suddenly injected $700-billion dollars into it for things like rebuilding our infrastructure, developing alternative forms of energy, and providing healthcare to the uninsured. With that amount of money being injected into social good, the advancements and benefits the American society and economy would realize would far outweigh and counterbalance the drag that would be created on them from the retraction of the financial services sector.

Even the financial services sector would end up healthier in the long run. Sure, fiscally irresponsible firms would go under if we didn't bail them out. But there are plenty of firms that have put their assets to good use and neither greedily provided subprime loans nor loaded up their balance sheet with mortgage-backed securities. These are the firms that would end up dominating the financial services sector when the others go bankrupt, and Wall Street would be better off for it in the long run.

I ask that, if you must support some kind of economic rescue package, don't make it the one that secretary Paulson and president Bush have presented to you. It simply creates a moral hazard and encourages future irresponsible behavior by Wall Street fat cats. Make it one that will create long-run benefits to the future of the American people.
The media has been reporting that they're being deluged with such messages, with those opposing the bailout ten times as many as those supporting it. It seems the American people are dead-set against bailing out the greedy financial services firms. I hope congress listens to us when it comes time for them to vote. Unfortunately, as of now, it seems the congressional leadership has their collective foot on the gas and they're headed straight at the cliff of this bailout.

Sunday, September 21, 2008

Putting out fire with gasoline

The US treasury secretary, Henry Paulson, was on FOX News Sunday today. He was trying to justify his proposed $700-billion bailout of financial institutions. His justification was anything but comforting.

For example, he said that the intent of the bailout is to "minimize risk" to the American taxpayer. Yet his approach to doing so is to purchase only what he called "illiquid assets" from the financial institutions who hold them. "Illiquid assets" is just another way of saying "worthless securities." How could there be anything of higher risk from a fiscal perspective than this?

He went on to say that he's taking this action to "avoid failure." Yet Paulson's approach to avoiding failure is to buy $700-billion worth of failed mortgages. That doesn't sound like avoiding failure. It sounds more like charting a course directly to failure and turning up the screws to full speed.

If Paulson wants to instill confidence in the American people about how he's handling this financial situation, he's going about it all wrong.

Taxpayer + Money Pump = Bailout

Saturday, September 20, 2008

Super-Fed to the rescue?

In the wake of the recent upheavals in the financial sector, president Bush has come to the rescue. He and his economic advisors have come up with a Legislative Proposal for Treasury Authority to Purchase Mortgage-Related Assets. Not willing to rely on the media's descriptions of it, I read the complete text of the actual proposal myself. It strikes me as a unidimensional, monolithic solution to a complex, multidimensional problem.

It's clear to me how this proposal would artificially inflate the valuations of mortgage-backed securities that otherwise lack a foundation of intrinsic value. I can see how this would benefit institutions and investors who own these securities. However, I fail to understand how the proposal rescues the two remaining members of the investment banking oligopoly or how it helps distressed homeowners who purchased homes they could not afford.

This Progressive is no economist but I do grasp economic concepts well enough to understand explanations about the economy. So I invite you to post comments to help me out. Please explain to me how bailing out AIG prevents the collapse of our financial system. I've heard a lot of economists claim that the bankruptcy of AIG would have led to the downfall of the financial system but none of them says why or how.

Bush's proposal permits the purchase of mortgage-related assets only from financial institutions. I understand how this benefits the fat cats on Wall Street who manage firms like AIG that irresponsibly speculated on such securities and how it pays off individual speculators who can now divest their REITs which would otherwise be worthless. But can you explain to me how it alleviates the pain felt by homeowners who irresponsibly obligated themselves to trust deeds that they knew they couldn't possibly afford to pay off when their interest rates reset?

It seems to me that the proposal does nothing for those responsible homeowners who only purchased a home when they knew they could afford to service the loan rather than betting on perpetual appreciation. It does nothing for those renters who recognize that they cannot afford to purchase their own home with an ARM and a leg. It does nothing for middle-class Americans who diversified their retirement accounts rather than investing them purely in REITs, even though they paid substantial returns early in this century. And it does nothing for the small businesses on Main Street that responsibly plow their retained earnings back into assets that they use in operations rather than in risky securities.

When I pull back and take a broad look at this proposal, I simply don't understand the positive macroeconomic impact it would have. I can see an elite cohort that will make out from it but I only see the proposal wreaking further damage on the economy at large. Somehow I can't see how piling an additional $700-billion onto our national debt will rescue us from economic collapse.

Saturday, September 13, 2008

McCain now resorting to flat out lies

Did you see John McCain's ad about Senator Obama's comment regarding "lipstick on a pig"? It's completely disingenuous on its face. I heard Obama's entire statement in context, and he was explicitly talking about a couple of specific McCain positions, not Governor Sarah Palin. Yet McCain outright states that Obama was talking about Palin.

You should have seen Hardball the other night. Chris Matthews completely owned the McCain Mouthpiece who came on his show to talk about the issue. The guy got himself so twisted up in the facts that not even he could support the contention that Obama was calling Palin a pig. It's a must see!

Then McCain released an ad that says, "Obama's one accomplishment: legislation to teach comprehensive sex education to kindergarteners." The truth is that when he was in the Illinois legislature, Obama favored (but did not sponsor) a bill to provide "age and developmentally appropriate" material for older students. It also allowed parents to opt-out of the education. The only education that it allowed for children in kindergarten was to teach them to avoid sexual predators.

Furthermore, it wasn't his only accomplishment regarding education:
In reality, Mr. Obama not only helped administer a $49 million education project in Chicago in the 1990s, but also sponsored or co-sponsored measures that increased the number of charter schools in Illinois, and expanded federal grants to summer school programs and to historically black colleges.

Tuesday, August 19, 2008

Hands off the housing market

Whatever happened to the value of personal (or corporate, for that matter) responsibility in the United States? Since when must the federal government bail out every citizen and every corporation for everything?

The federal government is not obligated to bail out either those losing from the deflation of the housing bubble or those going bankrupt from the meltdown of the subprime mortgage market. It should definitely not be doing so with tax dollars. To do so takes taxpayer dollars to reward irresponsible fiscal activity and encourage such activity in the future.

Obviously, anyone who is a victim of predatory lending should be redeemed. The federal government guaranteeing a refinance for the victim, which they wouldn't be any more able to afford, is not the way to do it. Instead, the victim should be exempted from making payments greater than they can afford to the predatory lender or the holder of the fraudulent note. However, before qualifying for exemption, there needs to be an objective, quantitative, and consistent set of criteria established to validate predation.

The federal government should not be bailing out any other defaulting borrowers. They were irresponsible people who got greedy during the inflation of the housing bubble and purchased a home they knew they wouldn't be able to afford. They did so based on the assumption that real estate always appreciates and that they could resell their homes for a profit when their interest rates reset. Fiscally responsible Americans should not have to pay to bail out those financially damaged by that faulty assumption.

The Fed should not be bailing out the lenders of the defaulting loans either. As previously stated, that would reward making loans to people who cannot pay them back, thereby stimulating more such activity in the future. The American economy is not going to collapse if the lenders who made too many risky loans go out of business. On the contrary, it will be bolstered by becoming dominated by the responsible lenders who declined to make loans that the borrower could not afford to repay.

It's true that many lenders won't lose out because they already resold the risky mortgages on the secondary market. The funds and trusts that bought those notes should no more be bailed out than the lenders should. The owners of the funds and trusts should have read the prospectuses before buying shares so they knew the risk they were getting in to. Taxpayers who invest wisely should not have to pay for the losses of ignorant or greedy investors. The economic system would be churning along just as it is now had Bear Stearns not been bailed out.

People need to take personal responsibility for their actions. Defaulted loans should be foreclosed on, not rescued with tax dollars. The homeowners will lose their homes but they should be renting their homes anyway because they cannot afford to buy. Failing lenders should go bankrupt, not be bailed out by the Fed. There are plenty other responsible lenders to provide mortgages to responsible borrowers. When this happens, property values will drop back to intrinsic levels. Those who are now renting their homes because housing values have been artificially inflated by low interest rates and irresponsible real estate speculators will finally be able to buy their own homes.

Sunday, July 27, 2008

The audacity of hype

Last week, Senator Barack Obama made an international tour. Senator John McCain is the very one who goaded Obama into doing so by belittling Obama's foreign policy experience. Now McCain has the audacity to spin hype about how presumptuous Obama was to give a speech at the Tiergarten in Germany. The media have been just as relentless at trying to trip Obama up. Even the sweetheart anchor, Katie Couric, tried relentlessly but unsuccessfully to weave Obama into a catch-22 on the 'surge' while he was visiting Jordan.

Meanwhile, as Obama was addressing 200,000 spectators in Germany, McCain showed him up by visiting a grocery store in Pennsylvania where the local Republican party was able to funnel an entire shopper to meet him and drive home the message about the rising prices of food. As if he did not wreak enough damage on Obama with that move, McCain followed it up by drawing a throng of six small business owners to the Sausage Haus in Ohio. At the Haus, McCain said:
McCain at the Fudge Haus
Well I’d love to give a speech in Germany to -- a political speech -- or a speech that maybe the German people would be interested in but I would much prefer to do it as president of the United States rather than as a candidate for the office of the presidency.
Translation: "I would love for the German people to be interested enough in me to draw a crowd of even 200 people (let alone 200,000). Maybe then it would be worthwhile for me to visit there as a candidate instead of waiting to be President." This is what makes the media's hype about Obama's trip being presumptuous so audacious. McCain had just finished an international trip of his own, meeting with American generals and foreign leaders. Yet the press never asked him if perhaps he should have waited to be elected President before making his trip.

Granted, 200,000 Germans attended Obama's speech, which could have been seen by some as over the top. But it's not as if he put a gun to their heads and forced them to attend. They wanted to hear Obama speak to them. Isn't that 200,000 reasons enough for Obama to make his international tour, whether he be President or just a candidate?


Sunday, July 20, 2008

An al-Maliki endorsement of Obama's candidacy?

This week, Nuri al-Maliki, the prime minister of Iraq, said he wanted US troops to withdraw from Iraq as soon as possible. He said that "US presidential candidate Barack Obama talks about 16 months. That, we think, would be the right timeframe for a withdrawal, with the possibility of slight changes." That's the sound of the US occupation of Iraq wearing out its welcome.

It makes you wonder what al-Maliki's position might be on Senator John McCain's candidacy. He was much less candid about that, saying that he did not want to recommend who American's should vote for. He did say of the two candidates, however, that "whoever is thinking about the shorter term is closer to reality. Artificially extending the stay of US troops would cause problems.

Should we consider that an endorsement of Senator Barack Obama's candidacy by al-Maliki?

Sunday, June 29, 2008

The Senate reports on Bush's deceit of the American people

Last month, the Senate released a report on whether public statements regarding Iraq by U.S. officials were substantiated by intelligence information. Is this really news? I was connecting the dots on the Bush administration's campaign of deceit back in August of 2005. I'm returning to the topic now because the evidence of this keeps piling on.

In 2002, Bush was unequivocal about Iraq "seeking nuclear weapons." He stated on October 7 that "the evidence indicates that Iraq is reconstituting its nuclear weapons program." The de facto President, Dick Cheney, was even more adamant when he said on August 26 of the same year that, "They continue to pursue the nuclear program they began so many years ago … we now know that Saddam has resumed his efforts to acquire nuclear weapons."

Yet the intelligence of the time evidenced that Saddam Hussein's nuclear weapons program had been destroyed years earlier by American military strikes. The only evidence that Hussein was "reconstituting" his nuclear weapons program was the supposed uranium shopping in Africa and the aluminum tubes which were supposedly for weaponizing uranium. The uranium shopping was discounted by former Ambassador Joseph Wilson and the aluminum tubes had already been determined to not meet the tolerances required for centrifuging uranium.

Even then defense secretary Donald Rumsfeld, who was noted for speaking in riddles and contorting his responses, was remarkably clear when he asserted that Hussein's weapons of mass destruction facilities were underground. He told the House Armed Services Committee of those facilities on September 18, 2002, that "a good many are underground and deeply buried" and so "not … vulnerable to attack from the air." The truth of the matter, the Senate report found, was that there was no intelligence-community report that supported Rumsfeld's claim.

In spite of the report's substantial evidence that the Bush administration twisted and hyped intelligence regarding the threat Iraq posed to the U.S. before Bush invaded her, Republican Senators stonewalled the public release of the report for years. Only two of the seven Republicans on the fifteen-member Senate panel supported the report. When the five dissenting Republicans failed to prevent the release of the report, they then tried to delete most of its conclusions. The GOP clearly does not feel that Bush should be held accountable for intentionally deceiving the American people into an illegitimate, disastrous war.

Sunday, June 22, 2008

Obama's foundation of sincerity

As you can see by reviewing the history of this blog, I've reserved judgment on Senator Barack Obama's candidacy. I knew very little about him to base a judgment on early in the primary elections. I learned more and more about him as his campaign progressed and I became very impressed with Obama by the end of the primary elections.

One of the top two factors that I liked about him is that he struck me as being sincere in his politics. There was no double-talk and spin in his words. When questioned, he would respond head-on rather than trying to dodge the questions, as is altogether too common among candidates. I could sense his commitment to his stances on the issues. Obama seemed to be the most authentic candidate I've seen in some time.

Unfortunately, cracks have recently begun to show in this foundation. Many months ago -- before it became evident that he would raise so much funds for his campaign privately -- Obama said he would use public financing for his campaign. Now that it looks like he will likely surpass half a billion dollars of fund raising for this campaign, Obama decided to opt out of public financing.

I have no problem with this decision; it would've been political malpractice to stick with his original position. It's Obama's justification for the change in his position on public financing that I find weak. If the public financing system is broken, why did he originally support it? Obama would've seemed much more sincere had he instead simply said, "I changed my mind; it would've been unfair to my supporters to not fully leverage their contributions."

To add to that, Obama stated his support for the update of the Foreign Intelligence Surveillance Act (FISA) that is currently before the House of Representatives. It's bad enough that President Bush considers himself above the law when it comes to the FISA. Now Obama favors law that removes more of the right to privacy that the Bill of Rights gave us.

Yet he also claims that he will fight to strip a provision granting immunity to telecommunication companies when the bill comes to a vote in the Senate next week. If Obama opposes the terms of the bill, why would he state his support for it? I'm having difficulty finding the sincerity of this seeming contradiction.

These two issues alone are not enough for me to denounce Obama. However, if this is a trend that continues, it will certainly lead me to question my support for his candidacy. I hope the future brings us consistent stances from Obama that reinforce his persona of sincerity.

Obama - Iraq withdrawal

Monday, June 09, 2008

McCain denounces the separation of church and state

By saying "the Constitution established the United States of America as a Christian nation," Senator John McCain made it clear last fall that he doesn't understand what the Establishment Clause means. The First Amendment of the Bill of Rights says, "Congress shall make no law respecting an establishment of religion." Yet McCain ignorantly goes on to claim of our Founding Fathers that "they didn't mean, in my view, separation of church and state." It's as if McCain lives in a parallel universe to W's Backwards World.

2008 Primaries

Saturday, June 07, 2008

Pulling the puppet strings

Unfortunately, the Blogspot column is too narrow to display a funny poster I saw. Using the power of PhotoShop, it explains the one problem that prevents McCain from being the perfect president. If you're up for a laugh, it's worth the click to check out the Weekend at McCain's poster.

Saturday, May 31, 2008

This just in...

CNN is reporting that Senator Barack Obama is resigning from his church. I didn't know you have to "resign" from a church. If so, I owe someone a letter of resignation. I thought you just stop attending. Who would I address that letter to -- the church's HR department?

Saturday, May 24, 2008

The impending end of the war in Iraq

In this campaign season, one of the questions on voters' minds is how much longer will the Iraq war continue? Senator John McCain has voiced support for the possibility of maintaining military troops in Iraq for as long as a century. Both Senators Obama and Clinton would withdraw our troops as rapidly as prudence allows after taking the Oval Office, with some minor variations of what that means between the two of them. What none of them are talking about is that the time is actually much more cut and dried than any of them would want you to know.

President Bush acquired his authority to invade Iraq under the Joint Resolution to Authorize the Use of United States Armed Forces Against Iraq. Remember it? That's the one both Senators Clinton and McCain voted in favor of in 2002.

What the resolution says is that congress supports the president to "strictly enforce through the United Nations Security Council all relevant Security Council resolutions applicable to Iraq and encourages him in those efforts." It's not as though Bush needed any encouragement but he does need the relevant Security Council resolution. There is a series of them which approves the United Nations Assistance Mission for Iraq (UNAMI), the last of which was the Security Council resolution dated December 18, 2007. With it, the council "decides to extend the [UNAMI] mandate as set forth in that resolution until 31 December 2008." Finally it decides to remain "seized of the matter."

Whether the council remains seized or not, the administration is not requesting an extension of the resolution for 2009. That leaves the UN multinational forces, led by the US military, less than seven months to wrap up the war in Iraq. Considering Bush makes it crystal clear that the American forces will not be withdrawn from Iraq while he's commander in chief, it's unclear what authority he will use to perpetuate the war into 2009. If he follows his standard operating procedures, his authority is certain to be some grotesque contortion of US and international law.

Thank you! Now get out. Iraq

Sunday, April 20, 2008

Measured in blood and treasure

"Measured in blood and treasure, the war in Iraq has achieved the status of a major war and a major debacle." This is a claim you'd expect to hear from a critic of Bush's foreign policy. But this was written by a former senior department of defense official, Joseph J. Collins. In the paper, Choosing War: The Decision to Invade Iraq and Its Aftermath, he goes on to say, "Our status as a moral leader has been damaged by the war, the subsequent occupation of a Muslim nation, and various issues concerning the treatment of detainees."

The latest of the Institute for National Strategic Studies' occasional papers published by the National Defense University Press, this one was released this month. The paper notes that the biggest cost of the war to the treasury is yet to come. "No one as yet has calculated the costs of long-term veterans' benefits or the total impact on service personnel and materiel," Collins wrote. And contrary to Bush's justification du jour for invading Iraq, he reports that our efforts in Iraq have caused it to become an "incubator for terrorism and have emboldened Iran to expand its influence throughout the Middle East."

Americans are in agreement that until recently, things have gone very poorly in Iraq. But since the 'surge,' the situation in Iraq appears to be improving. Does that mean there's light at the end of the tunnel? Unfortunately, Collins believes that "despite impressive progress in security during the surge, the outcome of the war is in doubt." He states that, "It is arguable whether the Iraqis will develop the wherewithal to create ethnic reconciliation and build a coherent national government." For many analysts, the war looks like a 'can't win.'
The central finding of this study is that U.S. efforts in Iraq were hobbled by a set of faulty assumptions, a flawed planning effort, and a continuing inability to create security conditions in Iraq that could have fostered meaningful advances in stabilization, reconstruction, and governance.
Collins lays the blame at the feet of the President for the impact made by "senior U.S. national security officials" when they "exhibited in many instances an imperious attitude, exerting power and pressure where diplomacy and bargaining might have had a better effect." They not only treated our allies this way but they even treated our own Congress autocratically.

Collins has substantial credibility to make such claims. He has a Ph.D. in Political Science from Columbia University. He retired in 1998 as a Colonel in the United States Army after 28 years of service. He was also a Special Assistant to the Chairman, Joint Chiefs of Staff. He makes Bush's claims that the war in Iraq is not a debacle ring hollow. Hopefully America now recognizes the folly of choosing war.

Saturday, March 29, 2008

Obama's economic plan

Senator Barack Obama has developed a comprehensive economic plan for America. It's more detailed than the plans offered by the other major candidates, albeit not that different from senator Hillary Clinton's plan insofar as you can tell considering that hers is less specific. Senator John McCain's economic plan seems to be the perpetuation of president George W. Bush's failed economic policies -- cut taxes and reform Social Security.

Obama details six principles for modernizing the financial regulatory system:
  1. Provide the Federal Reserve with basic supervisory authority over any financial institution to which it may make credit available as a lender of last resort.
  2. Capital, liquidity and disclosure requirements should be developed and strengthened for all financial institutions.
  3. End our balkanized framework of overlapping and competing regulatory agencies.
  4. Regulate financial institutions for what they do, rather than who they are.
  5. Crack down on trading activity that crosses the line to market manipulation.
  6. Identify systemic risks to the financial system, no matter where they arise.
These are sound principles and Obama elaborated on them in his recent speech on Renewing the American Economy.

Obama also has a plan for Protecting Homeownership & Cracking Down On Mortgage Fraud (PDF). It too is detailed and has some good ideas that could be effective for dealing with the home mortgage crisis at hand. However, there are a couple of questionable components to this plan. He bases his plan to help homeowners facing foreclosure on the claim that:
One of the biggest problems associated with the crisis in the housing market is the decline in house values, which is putting people's mortgages underwater, meaning that their mortgage is worth more than their houses. Many people who find themselves in this situation simply walk away, worsening the foreclosure problem.
There is a basic weakness to this precept. The reason homeowners are facing foreclosure is predominantly because they bought homes they could not really afford using the creative financing instruments that were the hallmark of the real estate bubble. Then when their APR increases, they simply can't afford the new monthly installments, regardless of whether they have equity or not.

It doesn't make sense that homeowners would go into foreclosure simply because their mortgage is "underwater." They would still need a place to live even after foreclosure. They also understand the importance of maintaining a strong credit rating. If they could afford the payments, homeowners would keep their homes even were their valuations less than their outstanding principal. Unfortunately, some of the tactics Obama proposes would not be effective since they're based on the invalid assumption that people face foreclosures because they have negative equity.

Obama also proposes refinancing ARMs with fixed-rate mortgages as a solution to those facing foreclosure. But the reason people got ARMs in the first place is because they couldn't afford the monthly payments on a fixed-rate mortgage with the inflated property valuations that existed at the peak of the housing bubble. The only way to afford a mortgage was using negative amortization loans, and the like, which started out with monthly payments at artificially low rates. These homeowners assumed when the rates got high enough that they could no longer afford the payments, they'd simply flip their house for a big gain that they could use on a down payment for a new home. But with negative equity, how could a financially distressed homeowner be expected to make the payments on a fixed-rate mortgage even if they could refinance?

In spite of these criticisms, Obama's economic plan is fairly good on the whole. There are many good ideas in it. With the next presidential administration still almost a year away, Obama has time to shore up the weaknesses in it before occupying the Oval Office. Besides, most of the unaffordable mortgages could already be foreclosed on by that time.

Monday, March 17, 2008

The real milestone of Paterson's inauguration

All the buzz in the press lately has been about David Paterson becoming the first black governor of New York. That is somewhat significant since there have only been a handful of black governors in US history, although the first one was way back in 1872.

However, I don't think that is the most significant milestone of Paterson's ascension to the governor's office. The real milestone is that Paterson is the first blind governor in US history (actually, there was one other, but he only held the office for eleven days).

Paterson's accomplishment is inspirational to those of us with substantial disabilities. It raises awareness of the capabilities of persons with disabilities to be vocationally successful. If the press were to more widely acknowledge this milestone, it would likely cause more employers to think favorably about hiring persons with disabilities in the future.

Granted, racism is still widespread in America. However, the high unemployment rate of persons with disabilities indicate that they face more discrimination than African Americans do.

Sunday, March 09, 2008

A hearing without a crime

President Bush is waging a war in Iraq that some say will cost our treasury $2-trillion when all is said and done. Meanwhile the economy is tanking here at home. Yet our congress can find nothing better to do than to stifle free enterprise.

The oversight and government committee from the House called a hearing on CEO compensation packages Friday. The chairman of the committee, Henry Waxman (D), clearly appeared convinced that he had a criminal lineup in front of him: Angelo Mozilo, founder and CEO of Countrywide Financial; Stan O'Neal, the former CEO of Merrill Lynch; and Chuck Prince, former CEO of Citigroup. Waxman's problem was that it is not unlawful for a CEO to be compensated with an income many times greater than that of their lowest paid employees.

Nonetheless, that did not stop him from asking questions like, "When companies fail to perform, should they give millions of dollars to their senior executives?" Stan O'Neal easily explained this away with assertions like "The reality is that I received no severance package. I received no bonus for 2007, no severance pay, no golden parachute. The amount discussed in the press consisted mainly of deferred compensation, stock and options that I earned during the years prior to 2007."

The committee also wanted to know why Angelo Mozilo sold many of his shares in Countrywide shortly before their values plummeted. Mozilo responded that, "The goal was to reduce my holdings because of my retirement ... almost all my net worth was in Countrywide." He was following the most basic rule of investing: diversify your portfolio. Mozilo made it clear that he was completely transparent about his divestiture so shareholders new that he was selling Countrywide stock -- they were free to use that information as a warning that they should be selling theirs at the same time if they wanted to.

As would be expected in this political environment, the hearing was partisan in that it was the Democrats trying to find something to pin on the CEOs. But there was no allegation of predatory lending practices by any of their firms. In fact, in all of the acts that the left side of the committee claimed the CEOs had perpetrated to try and shame them, not one was illegal.

At least the GOP members of the committee showed some sense. Representative Darryl Issa from California wrapped up the hearings nicely when he stated to chairman Waxman, "Mr. chairman, I look forward to finding if something is wrong here. So far you haven't found it."

Sunday, February 24, 2008

Height of hypocrisy

The Mexican-American border dispute has reached a new height of hypocrisy. Arizona passed a law, that took effect on the New Year, which punishes employers who knowingly hire workers without valid legal documents to work in the US. In response, a delegation of nine state legislators from Sonora was in Tucson saying that Arizona's new employer sanctions law will have a devastating effect on the Mexican state.

For Mexican officials to point their fingers across the border without acknowledging their own responsibility in this economic situation is not only hypocritical but also arrogant. Their first duty is to create an economic infrastructure in Mexico which would give the Mexican people a decent standard of living. But Mexico, as my friend so aptly put it, is a kleptocratic oligarchy. That would mean the Mexican elite would have to stop hoarding all of Mexico's vast wealth for themselves and invest it instead in their people and their country's future. If they did that, the Mexican people would not want to come to the US in the first place.

America owes the same duty to her people that Mexico owes to hers. That includes maximizing the opportunity of employment for American people. Arizona's move could only serve to reduce the rate of unemployment in the state. The Arizona people should be proud of this legislation, regardless of Mexico's response.

Everyone thought there were WMDs

President George W. Bush has repeatedly maintained that everyone thought there were WMDs in Iraq before he invaded her. But even back in 2005, I wasn't the only one connecting the dots to discover there was widespread disagreement before the invasion regarding the existence of the supposed WMDs. The arms inspectors were already coming up empty-handed in their inspections for WMDs in Iraq around the 2003 New Year.

A recent study found that Bush made 232 false statements about Iraq and former leader Saddam Hussein's possessing weapons of mass destruction, and 28 false statements about Iraq's links to al Qaeda. Conducted by the Center for Public Integrity and its affiliated group, the Fund for Independence in Journalism, the study states unequivocally that, following 9/11, President Bush and seven top officials of his administration waged a carefully orchestrated campaign of misinformation about the threat posed by Saddam Hussein's Iraq.

The study was based on a searchable database compiled of primary sources, such as official government transcripts and speeches, and secondary sources -- mainly quotes from major media organizations. It found that president Bush and his top seven aides publicly made 935 false statements about the security risk posed by Iraq in the two years following September 11, 2001. The study concluded, "In short, the Bush administration led the nation to war on the basis of erroneous information that it methodically propagated and that culminated in military action against Iraq on March 19, 2003."

It was not important to Bush what the intelligence community thought or even what he thought, it was important to Bush that the American people believed Iraq had WMDs. To make them believe this without any evidence by conducting a campaign of deceit should be grounds for impeachment.

Sunday, February 03, 2008

Federal budget deficit

President Bush is touting his plan to eliminate the budget deficit by 2012. Sure, he'll have to cut many programs to do so, but Bush wants to keep America focused on the end result in 2012.

Why does Bush stay focused on 2012? Perhaps because he'd prefer America doesn't know about what his budget will do in the next fiscal year. Under his plan, the budget deficit will increase almost 150% to $400-billion.

That's just shy of the record $413-billion deficit Bush racked up in 2004. Nonetheless, it seems that with such a substantial increase over last fiscal year, the budget deficit is heading in the wrong direction. With a record like this, how can anyone take the GOP presidential candidates seriously when they talk about the "tax and spend" Democrats?