| Thursday,
October 9, 2008 Observations on the
collapse
Jerry,
While I don't often comment, I am always glad to hear
that you continue your recovery from cancer and from the consequences, and
are now working through the aftermath to full recovery and production as a
writer.
There may not be much new here, but I'm trying to
build a summary from my perspective.
Observations on the collapse:
1. Anyone who believes that this collapse was a
surprise hasn't been watching. There have been news stories for years about
sub-prime mortgages and interest-only mortgages throughout the housing
bubble, and warnings that the house of cards was headed for collapse. This
was only possible by collusion between "Wall Street" -- which is being used
as a convenient shorthand for the financial community, not without precedent
-- and the government.
2. Wall Street is not in the business of losing money,
and Wall Street managers know when they are playing a shell game -- and if
they didn't, see point one above; they don't ignore the financial news. Wall
Street managers -- at least most of them -- realize that the negative
consequences of losing money start with losing their jobs and proceed on a
short path therefrom either to jail or to one-way trips through upper-story
Manhattan windows. These are powerful counter-incentives against greed as a
short-term motivator. They don't always work, but
3. Consequently, if decisions were made that were
assured of losing money -- that is, of taking risks that were not
compensated by the obvious rewards -- it is because there was false
information in the system.
4. The obvious sources of false information are: (a)
"community organizations" such as ACORN which demanded risky mortgage
investments as one of the costs of allowing banks to expand into their
communities, using the strength of the Carter / Clinton era Community
Reinvestment Acts as their motivators; (b) "signals" from Fannie Mae and
Freddie Mac that the government would insure the risk; and most of all (c)
Congress and the Senate refusing several requests to investigate the
practices of FM2, lead by members who received substantial contributions
from FM2. Conversely, the Administration does have oversight responsibility
-- why did they refuse to exercise it despite Congressional inaction. It
sounds like there is plenty of bipartisan blame to go around.
5. The "rescue" or "bailout" bill has become a
necessity precisely because nothing has been done for years despite
warnings. Democratic obstruction has been a major factor in that delay. But
again, where was the Administration; the current financial crisis is much
bigger than the money spent in Iraq; was the "Bush brand" was so damaged in
pursuing the war (which I still believe was a good decision based on what
was known at the time, though perhaps not the best possible decision in
retrospect) that the Administration couldn't provide a proper level of
financial oversight and had to look the other way?
7. Last, but not least, our economic system has come
to rely on short selling, hedge funds, investment reinsurance, and other
"schemes" which are designed to "spread" risk and to profit from failure.
We've just had a massive failure; who profited?
Note this current NYT article:
http://www.nytimes.com/2008/08/22/
business/worldbusiness/22regulator.html
Then this one:
http://www.nytimes.com/2008/04/11/
business/11soros.html?pagewanted=all#
"Alarmed by the unfolding crisis in the financial
markets, (George Soros) once again began trading for his giant hedge fund —
and won big while so many others lost."
The August story ignores that Soros was instrumental
in fomenting -- and profited immensely from -- the British financial crisis
of the early 1990's that it blames on Thatcher's policies. Note which party
Soros is publicly and expensively backing. It's much easier to see him as a
representative of the Wall Street fraud that politicians are railing
against, than as the magnanimous figure he is portrayed by the NYT.
J
==
Confidence For Life Essential Utilities
Dear Jerry,
Duke Energy is now reported to be having trouble
rolling over its short term debt. Here indeed is cause for panic.
Perhaps some passing politician, bureaucrat or coup
plotter will take note of the priority need to ensure continuous functioning
of the electricity, natural gas, water and sewage utilities. Other life
essential services like fire departments, police, ambulances, hospitals,
pharmaceuticals and food distribution networks should get a nod.
I realize these are trivial items compared to
restoring the confidence of Goldman Sachs, Warren Buffett and George Soros.
None the less, it deserves 10-15 minutes attention from the beak wetters in
between catering to the whims of multi-billionaires and shopping for
Gulfstream Vs.
Best Wishes,
Mark
==
Retirement Accounts Have Lost Two Trillion Dollars
Doctor Pournelle,
For those who chant the Mantra "Don't Worry, All The
Factories And Farms And Other Stuff Is Still There, The Houses Aren't
Shrinking!"
"Americans' retirement plans have lost as much as $2
trillion in the past 15 months, Congress' top budget analyst estimated
Tuesday. The upheaval that has engulfed the financial industry and sent the
stock market plummeting is devastating workers' savings, forcing people to
hold off on major purchases and consider delaying their retirement, said
Peter Orszag, the head of the Congressional Budget Office."
http://news.yahoo.com/s/ap/20081007
/ap_on_bi_ge/meltdown_retirement
Sure, all that stuff is still there. It's just now
owned by Sovereign Investment Funds, George Soros, the Federal Government
and other "enemies" of those people of the United States who built and
maintained all "That Stuff" over the past half century, and now seek to
enjoy the fruits of that labor. Said fruits having been stolen by the above
laundry list of malefactors working in a loose, ad hoc coalition to keep the
Ponzi Scheme AKA.Housing Bubble going.
If you pull a fast one, and buy my house from the bank
out from under me, and I am thrown out on the street by the sheriff, do I
feel better because my house is still there, and not shrinking?
Really?
Petronius
There is more to it than that, of course.
Incidentally, during the Depression there were sheriff auctions in Iowa on
foreclosed properties; there would typically be on very low bid, no more,
and when it was concluded the winner sold the property back to the original
owner who was about to be evicted. Anyone else attempting to bid was
suppressed by the crowd while the sheriff's people looked the other way. I
do not suppose it will come to that now.
=============
Obama's Tax increase -
Hi Jerry,
There's a dirty little secret to Obama's tax plan (one
that McCain tries to make, but not very well). While it's true that income
tax won't go up if you make less than $250K, he doesn't consider Social
Security or Medicare to be 'taxes'. He plans to eliminate the cap on Social
Security Tax. That means that everyone who makes more than $102,000 (in
2008) will see a 7.65% tax increase on every dollar above that limit. Plus
businesses will also see their 'share' of the tax rise as well. That impacts
far more people than the $250K benchmark he talks about.
If you make $125,000 a year, your income taxes will
increase $1759.50. Your employer will also have to pay the same additional
amount in taxes (which will be passed on as an increase in the price of
their goods). I don't know about you, but that's real money to me - and the
lower threshold blows a hole in Obama's argument that most small businesses
don't make $250K. They sure as heck make $100K.
Your benefits won't increase, just your tax. Soak the
rich, redistribute wealth, etc, etc.
And that doesn't even address the Medicare tax, which
must increase to pay for his healthcare plans. But again, that's not a tax.
He's very good at dancing on the edge of an outright lie.
Regards,
Doug
The only way I know of to give a tax cut to those
who at the moment pay no income taxes would be to send them a check; and
nothing I have seen from Obama denies that this is his intention, while some
of his followers have told meetings that is is exactly what will happen. I
don't have time to follow this up.
The Obama scheme is to soak the rich. California
has pretty well showed that this is a great way to drive the rich out of the
state.
============
Some Blunt talk on Truth Squads, economic growth
http://hotair.com/archives/2008/10/09/
some-blunt-talk-on-truth-squads-economic-growth/
"With the crisis, many states have found themselves in
trouble. California, for instance, needs a $7 billion loan to make payroll,
and its estimated $15 billion deficit will undoubtedly skyrocket as revenues
decline. Missouri, though, doesn't have those problems. I asked Blunt why,
and he said, "By and large, states are in trouble because they spent too
much money." During his term, Blunt cut spending, lowered taxes and promoted
economic growth, reformed workers-comp laws, and built an environment for
business so attractive that Missouri now leads the nation in manufacturing.
Had other states shown the same discipline and put money aside as Missouri
did, they wouldn't need short-term credit at all and would be able to ride
out the storm. Common-sense governing put Missouri in a position of
strength."
Now there's an interesting prescription.
Graves
==============
Criminals targeted in U.S. kidnap capital,
Jerry
Criminals who deal in drugs have money, right? So in
Phoenix other criminals are kidnapping them:
http://www.reuters.com/article/
topNews/idUSTRE4979VW20081008
You hardly know who to root for . . .
Ed
==============
Leif Erikson Day From
Wikipedia, the free encyclopedia <http://en.wikipedia.org/wiki/Image:Viking_at_MN_Capitol.jpg>
Picture (Metafile)
A statue of Leif Erikson near the Minnesota State
Capitol in St. Paul dedicated on October 9, 1949. Leif Erikson Day is an
American observance occurring on October 9. It honors Leif Ericson, who
brought the first Europeans known to have set foot on North American soil.
In 1964, Congress authorized and requested the President to create the
observance through an annual proclamation. Lyndon B. Johnson and each
President since have done so. Presidents have used the proclamation to
praise the contributions of Americans of Nordic descent generally and the
spirit of discovery.
In addition to the federal observance, some states
officially commemorate Leif Erikson Day, particularly in the Upper
Midwest, where large numbers of people from the Nordic countries settled.
In 1930, Wisconsin became the first state to officially adopt this
holiday, thanks to efforts by the Norwegian-American initiator, Rasmus B.
Anderson. A year later Minnesota followed suit. In 1963, the U.S.
Representative from Duluth, John Blatnik, introduced a bill to observe it
nationwide. The following year Congress adopted this unanimously.
October 9 is not associated with any particular
event in Leif Erikson's life. The date was chosen because the ship
Restauration <http://en.wikipedia.org/wiki/Restauration_(ship)>
coming from Stavanger, Norway, arrived in New York Harbor on October 9,
1825 at the start of the first organized immigration from Norway to the
United States.
"America was discovered accidentally by a great
seaman who was looking for something else; when discovered it was not
wanted; and most of the exploration for the next fifty years was done in
the hope of getting through or around it. America was named after a man
who discovered no part of the New World. History is like that, very
chancy."
Samuel Elliot Morrison
Steven
Leif the Lucky also founded the Greenland colonies.
That was in the Medieval Warm period. Now they are coming out from under the
ice.
===========
Subject: Teaching for Social Justice
http://neoneocon.com/2008/10/09/
misunderstanding-the-ayers-connection
-the-coverup-of-the-coverup/
"Misunderstanding" the Ayers connection: the coverup
of the coverup
"Ayers's philosophy can be encapsulated in the phrase
"teaching for social justice." One of his books, for example, is entitled
Teaching for Social Justice
According to a review in Library Journal:
"Teaching for social justice" is teaching what one
believes ought to be in terms of material arrangements for people in all
spheres of society, i.e., reflective experiential responses leading to
action."
Silly me, I thought education was about teaching the
students what they needed to know in order to figure out the universe and
their place in it, rather than teaching them what their place in the
universe was and what they should do to make the universe more like they
were taught it should be. So much for free will in the modern education
system.
Graves
=This is what becomes of "professional" education;
when local school boards hired a local school marm and set the conditions
for employment, parents had some control over what was taught to their
children. They also paid for it. This is as it should be.
Now the gatekeepers are Professors of Education,
few of whom have actually taught any children, but all of whom are graduates
of pretty liberal course work that has the Ayers attitude. Indeed, Ayers
himself is one of those who teach professors of education.
The intellectual class thinks it know what is best
for everyone; and parents are clearly not qualified to decide for their
children. This attitude is spreading. After all, we're the smartest people
around, aren't we? Why shouldn't we decide these things? So we do. You will
see more of that.
The answer in my judgment is to abolish the
Department of Education, entirely; and abolish the State departments of
Education as well. Leave it to parents and local school boards. Yes, some
will muck things up entirely. Some will do things that horrify others (and
vice versa). But by and large this is better than "professionalism" which
study after study doesn't improve education at all.
============
Unintended Consequences
Nebraska's safe-haven law works — too well
http://hotair.com/archives/2008/10/09/
nebraskas-safe-haven-law-works-too-well/
"All 50 states now have safe-haven laws, but only the
Nebraska legislature didn't put an age limit on the mechanism. Now, the law
intended to save infants has never been used for that purpose. Instead, most
of the children abandoned are troubled teenagers, and the state has a big
problem on its hands."
It seemed reasonable, a law intended to allow babies
that might be left to die to be turned over, no questions asked, to
hospitals for the state to care for. Funny what happens when you don't put
an upper limit on the age of the baby though.
Graves
The surprise to me is that parents will abandon
their teen age children. There are incorrigibility laws in most states,
aren't there? But think of this as a way to build an army of Janissaries.
Take the best of those abandoned and put them into training camps to become
Legionnaires. Take the worst for training in the Auxiliaries.... Let the
training sergeants decide which is which.
=============
Subject: ACORN
Jerry,
Rachel Lucas has some interesting info on Acorn:
http://www.rachellucas.com/
Phil
=============
Privately-funded SETI message
Jerry:
The link headline to this was "First Interstellar
Spam"
http://news.bbc.co.uk/2/hi/
science/nature/7660449.stm
Steve
=============
TaxPayers who don't pay tax?
> His "tax cuts" involve sending checks to
the 40% of the taxpayers who don't pay any income taxes
Eh? Something about that just does not parse well in
my head. How can you have a taxpayer who doesn't pay any taxes?
The current administration has been known to favor
sending checks to the segment of the population that, at least in
proportion, pays the least taxes. :)
-Paul
It is my understanding that anyone who files income
tax returns is a "taxpayer" even if the tax "paid" is negative. Potentially
it might be positive.
============
In re: "How allies of George Soros helped bring down
Wachovia Bank"
So what is new?
"You don't understand the class structure of American
society," said X [a European dining with Henry Luce], "or you would not ask
such a question. In the United States, the working class are Democrats. The
middle class are Republicans. The upper class are Communists."
-Whittaker Chambers, "Witness"
x
==============
Dear Dr. Pournelle:
My congratulations on your son's promotion. And on the
USNI Proceedings article.
V/R: Mike McDaniel
We are rather proud of Commander Phillip Pournelle.
And his article was on operations of super fast ships.
TOP
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