10/31/07 (After the cuts)
This is just what we need at this crucial juncture for our economy…a Fed Chairman who judges his performance by the volume of the cheers emanating from Wall Street.
Wednesday, October 31, 2007
MOTHER BEN
10/31/07—After the fed funds and discount rates were reduced 25 basis points.
Well, it’s official, folks….
We have a Bernanke put!
We have a WPA for Wall Street!
No hedge fund manager will be left behind!
No trading desk can miss!
No asinine financial decision will go unpardoned!
No one on Wall Street need sleep fitfully!
No more singing “Brother can you spare me a billion?”!
No more need to assess risks and exercise prudence!
No reason to avoid taking the most outrageous risks—the rewards are officially privatized and the risks are officially socialized!
Sleep well, Wall Street—your Mother Ben has gathered you under his wings. After all, he can’t bear to see his children experience any degree of discomfort. Why, you are the financial titans, the rugged American individualists on whom our economy depends! And Mommy is never far away!
So, no need to worry, Wall Street wise men…
…until the fox comes along. Then you have to start worrying. But, what the hell, Mother Ben can always…voila…CUT RATES!!!
But what will you do when that doesn’t work any more? Then there will be even more hell to pay, no?
Aw, stop being such a killjoy! Eat, drink, and be merry, for tomorrow we shall die.
Well, it’s official, folks….
We have a Bernanke put!
We have a WPA for Wall Street!
No hedge fund manager will be left behind!
No trading desk can miss!
No asinine financial decision will go unpardoned!
No one on Wall Street need sleep fitfully!
No more singing “Brother can you spare me a billion?”!
No more need to assess risks and exercise prudence!
No reason to avoid taking the most outrageous risks—the rewards are officially privatized and the risks are officially socialized!
Sleep well, Wall Street—your Mother Ben has gathered you under his wings. After all, he can’t bear to see his children experience any degree of discomfort. Why, you are the financial titans, the rugged American individualists on whom our economy depends! And Mommy is never far away!
So, no need to worry, Wall Street wise men…
…until the fox comes along. Then you have to start worrying. But, what the hell, Mother Ben can always…voila…CUT RATES!!!
But what will you do when that doesn’t work any more? Then there will be even more hell to pay, no?
Aw, stop being such a killjoy! Eat, drink, and be merry, for tomorrow we shall die.
Tuesday, October 30, 2007
“IT’S OVER…OVER..”
10/30/07
Maybe Stan O’Neal didn’t blow up Merrill Lynch. Maybe he merely didn’t do his job while the kids on the trading desk lost Merrill $7.9 billion, at last count. So what does Merrill’s ever vigilant Board do? Fires O’Neal. Good. Then what does it do? Negotiates an exit (not severance…no, no, no) package for the bumbling (at best) Mr. O’Neal that could total $160 million!!!
Okay, some of that consoling going away present is the result of restricted stock and stock options (the most lucrative of which, by the way, were conveniently dated 9/24/01). But, still, $160 million? For going ahead with major merger negotiations without the consent of the Board, as if the firm were called “Stan O’Neal” rather than “Merrill Lynch,” and crippling, or conniving while others crippled, a venerable U.S. business icon? It is not a question of whether, but rather when, the Merrill Board had taken leave of its senses.
This post is not designed so much to lambaste Merrill. I’m not a Merrill shareholder, and if the Merrill board wants to betray its shareholders and make a laughingstock out of itself, that is the problem of the Merrill shareholders. I bring up the case of Mr. O’Neal to point out that this is yet another example of how far we have strayed from the free enterprise system that made this country the economic juggernaut it once was.
Free enterprise, you see, includes the possibility of failure. This tempers wild risk taking and counsels prudence. Not excessive prudence, but measured risk taking. But now as capitalism is being replaced with corporatism, there is no accountability. There is no price to pay for failure. There is no reckoning for taking wild hindquartered risks with other people’s money. There is no way to lose once one finds himself in the corporate club.
This used to be a country of innovators and people who took risks fully mindful that there would be a price to be paid for failure and willing to pay that price in order to get rich. It also used to be composed of people with morals and principles, people who could think, read, and reason. Now we have an economy run by corporate titans who know nothing of personal risk, who are already rich and seek only to get richer by gambling with other people’s money, and have no sense of accountability. Capitalism, free markets, and accountability are being replaced with corporatism, tilted playing fields, and buck-passing. Meanwhile, the citizenry laughs and consoles itself with tacky trinkets, cotton candy for the mind, and endless self-congratulation. It injects its collective brain and soul with healthy doses of novocain while indulging in one of the classic definitions of decadence: spending money it doesn’t have on things it doesn’t need, that, indeed, contain the seeds of its destruction. The citizenry is thoroughly anesthetized while being sodomized by the forces that are steering our economy and society toward ruin.
It is indeed over. This is a hopelessly decadent society and economy living through its final death throes. The good news is that Marcus Tullius Cicero, one of the Pontificator’s idols, warned of the decadence of Roman society even before the Republic was thrown over the side for the Empire. It took almost another 500 years for Rome to rot from within. Further, the last 100 or so years of this decay were, by and large, thoroughly enjoyable. Squandering the stored up treasures of one’s forbearers can be quite pleasurable for those doing the squandering, provided they have no sense of history, no sense of responsibility, no principles, no consciences, and no genuine concern for the generations that will follow. So the present American society may be in for a hundred year party. Whoopee!!! Or not. Things move much more quickly than they did 2000 years ago.
Maybe Stan O’Neal didn’t blow up Merrill Lynch. Maybe he merely didn’t do his job while the kids on the trading desk lost Merrill $7.9 billion, at last count. So what does Merrill’s ever vigilant Board do? Fires O’Neal. Good. Then what does it do? Negotiates an exit (not severance…no, no, no) package for the bumbling (at best) Mr. O’Neal that could total $160 million!!!
Okay, some of that consoling going away present is the result of restricted stock and stock options (the most lucrative of which, by the way, were conveniently dated 9/24/01). But, still, $160 million? For going ahead with major merger negotiations without the consent of the Board, as if the firm were called “Stan O’Neal” rather than “Merrill Lynch,” and crippling, or conniving while others crippled, a venerable U.S. business icon? It is not a question of whether, but rather when, the Merrill Board had taken leave of its senses.
This post is not designed so much to lambaste Merrill. I’m not a Merrill shareholder, and if the Merrill board wants to betray its shareholders and make a laughingstock out of itself, that is the problem of the Merrill shareholders. I bring up the case of Mr. O’Neal to point out that this is yet another example of how far we have strayed from the free enterprise system that made this country the economic juggernaut it once was.
Free enterprise, you see, includes the possibility of failure. This tempers wild risk taking and counsels prudence. Not excessive prudence, but measured risk taking. But now as capitalism is being replaced with corporatism, there is no accountability. There is no price to pay for failure. There is no reckoning for taking wild hindquartered risks with other people’s money. There is no way to lose once one finds himself in the corporate club.
This used to be a country of innovators and people who took risks fully mindful that there would be a price to be paid for failure and willing to pay that price in order to get rich. It also used to be composed of people with morals and principles, people who could think, read, and reason. Now we have an economy run by corporate titans who know nothing of personal risk, who are already rich and seek only to get richer by gambling with other people’s money, and have no sense of accountability. Capitalism, free markets, and accountability are being replaced with corporatism, tilted playing fields, and buck-passing. Meanwhile, the citizenry laughs and consoles itself with tacky trinkets, cotton candy for the mind, and endless self-congratulation. It injects its collective brain and soul with healthy doses of novocain while indulging in one of the classic definitions of decadence: spending money it doesn’t have on things it doesn’t need, that, indeed, contain the seeds of its destruction. The citizenry is thoroughly anesthetized while being sodomized by the forces that are steering our economy and society toward ruin.
It is indeed over. This is a hopelessly decadent society and economy living through its final death throes. The good news is that Marcus Tullius Cicero, one of the Pontificator’s idols, warned of the decadence of Roman society even before the Republic was thrown over the side for the Empire. It took almost another 500 years for Rome to rot from within. Further, the last 100 or so years of this decay were, by and large, thoroughly enjoyable. Squandering the stored up treasures of one’s forbearers can be quite pleasurable for those doing the squandering, provided they have no sense of history, no sense of responsibility, no principles, no consciences, and no genuine concern for the generations that will follow. So the present American society may be in for a hundred year party. Whoopee!!! Or not. Things move much more quickly than they did 2000 years ago.
THE STREET VS. THE VOLCANO
10/30/07
At Mass this morning, the Gospel included the parable of the mustard seed. Jesus started the parable by asking “To what shall I liken the kingdom of heaven?” My mind was wandering, as it too often does, during the Gospel, and, at the risk of sounding profane or sacrilegious, I conjured up a similar parable for our economy.
To what shall I liken our economy and our stock market? It is like small children playing on the side of the volcano, pointing out the beauty of the surrounding plants and trees while dismissing as a mere inconvenience the massive lava cap that is about to explode and rain destruction upon them. We get a good earnings report here, a favorable economic statistic there, and, most delightful to the economic experts, a Fed “rate cut” now and then, and the pundits and cheerleaders declare everything is fine. They don’t ignore the debt problem; they see it. But they opine that the underlying economy is strong enough, as evidenced by a scattered healthy earnings or economic report, to withstand a temporary credit setback. Soon the lava will come cascading down the side of the mountain and engulf them, and these notables will never know what hit them.
One of the arguments that we often hear is that the job market and wage growth are fine, or at least decent, so the consumer should be in good shape even if he can’t “tap the equity” in his home due to a complete absence of equity in his home. What those who make this argument are missing is that this economy, the whole worldwide economic shell game, really, has only been sustained because the American consumer has been able to spend well beyond his pay check. If the consumer is forced to spend within his means, even if those means are as healthy as some claim, the whole system gets gummed up. If he is forced to actually service his debt with his paycheck, the whole system collapses. In fact, that the world economy has depended for years on Americans’ living well beyond their means shows how overextended the typical American is. The bills are starting to come due. Further, as I have said in the past, this isn’t a “sub-prime” problem. Angelo Mozilo, Chairman of Countrywide Credit, admitted last week what the Pontificator was telling you months ago: the problem has reached into the prime mortgage market. But this debt problem isn’t only a mortgage problem. Levels of all forms of consumer debt have reached astronomical heights. And it isn’t only a consumer debt problem. Corporate balance sheets, for years bastions of sanity in an otherwise debt-crazed world, are becoming increasingly saddled with debt for stock buybacks and leveraged buyouts. And it isn’t even a private sector problem. After seven years of George Bush and a (until 2006) Republican Congress with all the fiscal restraint of Juan Peron, federal debt is virtually incalculable.
Another argument we hear from the experts is that the debt level is manageable, and therefore the economy and stocks should do fine, because household balance sheets are in good shape. But household balance sheets are in good shape only because cheap debt has enabled investors to grossly inflate the prices of stocks and (until recently, and, in historical context, even now) houses. So this argument is tantamount to saying that the debt level is manageable because we have created so much debt, and that stock prices should be fine because they are so high. This is much like the argument that the same experts used to make (but now have somehow forgotten they ever made) that house prices should remain healthy because they were so high. After all, homeowners’ balance sheets were in fine shape!
A third argument with which the experts comfort themselves is that the economy might be “slow” over here, but that things are going gangbusters overseas. But these are the same guys who trumpet the interconnectedness of the world economy. Can’t they see that the health of the world economy depends on the inebriated mariner spending habits of the American consumer? Eventually, when the emerging nations develop a larger middle class that can sustain growing production levels in developing countries, the American consumer will no longer be as vital a cog in the world economy. But such developments will involve a long and traumatic adjustment period, and, when they are completed, what will America have to bring to the table? That is a long run horror, though. Sufficient for today is today’s horror.
Back in 1988, Lloyd Bentsen, Texas senator and Democratic candidate for Vice-President, uttered a famous line in his debate with his Republican rival, Indiana Senator Dan Quayle. I am not referring to the “…you’re no John Kennedy” line, but rather to Bentsen’s reply to Quayle’s trumpeting the success of the “Reagan” economy (as if any politician can claim credit for the success of the economy; note Bill Clinton’s frequently repeated canard “I (sometimes we) created (some outrageously high number) jobs.” The private sector, not the bloodsucking leaches in Washington, creates jobs, but that is another matter.) that he (Bentsen) could have created such a great economy, too, “if I could write hundreds of billions of dollars of hot checks.” That particular gem from Senator Bentsen, who was given to such gems, was quickly overshadowed by the Kennedy comment and soon forgotten. However, it resonates today. We have written trillions of dollars of hot checks, and the world is growing more hesitant about taking our post-dated rubber. The day of reckoning is upon us.
At Mass this morning, the Gospel included the parable of the mustard seed. Jesus started the parable by asking “To what shall I liken the kingdom of heaven?” My mind was wandering, as it too often does, during the Gospel, and, at the risk of sounding profane or sacrilegious, I conjured up a similar parable for our economy.
To what shall I liken our economy and our stock market? It is like small children playing on the side of the volcano, pointing out the beauty of the surrounding plants and trees while dismissing as a mere inconvenience the massive lava cap that is about to explode and rain destruction upon them. We get a good earnings report here, a favorable economic statistic there, and, most delightful to the economic experts, a Fed “rate cut” now and then, and the pundits and cheerleaders declare everything is fine. They don’t ignore the debt problem; they see it. But they opine that the underlying economy is strong enough, as evidenced by a scattered healthy earnings or economic report, to withstand a temporary credit setback. Soon the lava will come cascading down the side of the mountain and engulf them, and these notables will never know what hit them.
One of the arguments that we often hear is that the job market and wage growth are fine, or at least decent, so the consumer should be in good shape even if he can’t “tap the equity” in his home due to a complete absence of equity in his home. What those who make this argument are missing is that this economy, the whole worldwide economic shell game, really, has only been sustained because the American consumer has been able to spend well beyond his pay check. If the consumer is forced to spend within his means, even if those means are as healthy as some claim, the whole system gets gummed up. If he is forced to actually service his debt with his paycheck, the whole system collapses. In fact, that the world economy has depended for years on Americans’ living well beyond their means shows how overextended the typical American is. The bills are starting to come due. Further, as I have said in the past, this isn’t a “sub-prime” problem. Angelo Mozilo, Chairman of Countrywide Credit, admitted last week what the Pontificator was telling you months ago: the problem has reached into the prime mortgage market. But this debt problem isn’t only a mortgage problem. Levels of all forms of consumer debt have reached astronomical heights. And it isn’t only a consumer debt problem. Corporate balance sheets, for years bastions of sanity in an otherwise debt-crazed world, are becoming increasingly saddled with debt for stock buybacks and leveraged buyouts. And it isn’t even a private sector problem. After seven years of George Bush and a (until 2006) Republican Congress with all the fiscal restraint of Juan Peron, federal debt is virtually incalculable.
Another argument we hear from the experts is that the debt level is manageable, and therefore the economy and stocks should do fine, because household balance sheets are in good shape. But household balance sheets are in good shape only because cheap debt has enabled investors to grossly inflate the prices of stocks and (until recently, and, in historical context, even now) houses. So this argument is tantamount to saying that the debt level is manageable because we have created so much debt, and that stock prices should be fine because they are so high. This is much like the argument that the same experts used to make (but now have somehow forgotten they ever made) that house prices should remain healthy because they were so high. After all, homeowners’ balance sheets were in fine shape!
A third argument with which the experts comfort themselves is that the economy might be “slow” over here, but that things are going gangbusters overseas. But these are the same guys who trumpet the interconnectedness of the world economy. Can’t they see that the health of the world economy depends on the inebriated mariner spending habits of the American consumer? Eventually, when the emerging nations develop a larger middle class that can sustain growing production levels in developing countries, the American consumer will no longer be as vital a cog in the world economy. But such developments will involve a long and traumatic adjustment period, and, when they are completed, what will America have to bring to the table? That is a long run horror, though. Sufficient for today is today’s horror.
Back in 1988, Lloyd Bentsen, Texas senator and Democratic candidate for Vice-President, uttered a famous line in his debate with his Republican rival, Indiana Senator Dan Quayle. I am not referring to the “…you’re no John Kennedy” line, but rather to Bentsen’s reply to Quayle’s trumpeting the success of the “Reagan” economy (as if any politician can claim credit for the success of the economy; note Bill Clinton’s frequently repeated canard “I (sometimes we) created (some outrageously high number) jobs.” The private sector, not the bloodsucking leaches in Washington, creates jobs, but that is another matter.) that he (Bentsen) could have created such a great economy, too, “if I could write hundreds of billions of dollars of hot checks.” That particular gem from Senator Bentsen, who was given to such gems, was quickly overshadowed by the Kennedy comment and soon forgotten. However, it resonates today. We have written trillions of dollars of hot checks, and the world is growing more hesitant about taking our post-dated rubber. The day of reckoning is upon us.
Thursday, October 18, 2007
Will this man speak of nothing else?
This is a letter I sent to the Wall Street Journal today concerning the (Surprise!) superconduit.
10/18/07
In his 10/18/07 Opinion piece, Peter J. Wallison, expressing support for the “superconduit,” argues that “…without a liquid market for the assets they created, originators of mortgages, credit-card loans and other loan facilities would reduce the availability of credit, raise their rates, or both. The economy might enter a recession.”
Several points merit making:
First, Mr. Wallison presupposes that the superconduit will create a liquid market. It’s easy to agree that liquidity will be created, or at least provided. However, that the superconduit will create a market, in the sense of buyers and sellers freely coming together of their own volition with their own money is a harder argument to make.
Second, the reason that we are in the midst of these difficulties is that credit was too widely available at rates that were too low. Would a reduction in the availability of credit and/or higher rates be such a bad thing? Some might argue that a little more prudence on the credit side would have spared the economy its current travails. As they used to tell recovering alcoholics, it’s never too late to reform.
Third, when did avoiding recession become the chief goal of all monetary and fiscal policy? Some of us are old enough to remember when a recession was a normal part of the business cycle that could be expected every five to ten years. While painful, recessions served to wring excesses and imbalances out of the economy and were a natural mechanism for getting the economy back on its normal growth path. Where did we develop such hubris to think that we can, and should, avoid recession altogether? Such an attitude indeed helped put us in the midst of the difficulties we are now confronting.
Mark Quinn
Naperville, IL
10/18/07
In his 10/18/07 Opinion piece, Peter J. Wallison, expressing support for the “superconduit,” argues that “…without a liquid market for the assets they created, originators of mortgages, credit-card loans and other loan facilities would reduce the availability of credit, raise their rates, or both. The economy might enter a recession.”
Several points merit making:
First, Mr. Wallison presupposes that the superconduit will create a liquid market. It’s easy to agree that liquidity will be created, or at least provided. However, that the superconduit will create a market, in the sense of buyers and sellers freely coming together of their own volition with their own money is a harder argument to make.
Second, the reason that we are in the midst of these difficulties is that credit was too widely available at rates that were too low. Would a reduction in the availability of credit and/or higher rates be such a bad thing? Some might argue that a little more prudence on the credit side would have spared the economy its current travails. As they used to tell recovering alcoholics, it’s never too late to reform.
Third, when did avoiding recession become the chief goal of all monetary and fiscal policy? Some of us are old enough to remember when a recession was a normal part of the business cycle that could be expected every five to ten years. While painful, recessions served to wring excesses and imbalances out of the economy and were a natural mechanism for getting the economy back on its normal growth path. Where did we develop such hubris to think that we can, and should, avoid recession altogether? Such an attitude indeed helped put us in the midst of the difficulties we are now confronting.
Mark Quinn
Naperville, IL
Monday, October 15, 2007
“AND ALL AT NO COST* TO YOU!!!”
10/15/07
Over the weekend, a consortium of banks, at the prodding of Treasury Secretary Hank Paulson, finalized plans for the Master-Liquidity Enhancement Conduit, a “super conduit” set up to buy troubled assets, primarily assets backed by sub-prime mortgages and other less than stellar credits, from bank affiliates known as structured investment vehicles, or SIVs. (This is separate from the “Hope Fund” discussed in the previous post.) This Rube Goldberg contraption was put together out of fear that, with the commercial paper of the SIVs rolling and unlikely to find buyers for paper issued to refinance it, the SIVs will be forced to unload their risky assets at, to quote the Wall Street Journal “new, lower market prices.” This would lead to big losses at the SIVs and, indirectly, at their bank sponsors and the distinct possibility that their bank affiliates would have to put the SIVs on their own books, forcing the banks to set aside the sizable reserves that the SIVs were set up to avoid. In other words, banks (horrors!) would have to face the downside of making bad financial bets.
Several things are malodorous about this arrangement:
--Hank Paulson and the others who knocked heads to get this arrangement done insist that there will be no government money involved in the bailout. Let’s suspend disbelief here and take Mr. Paulson, and the government for which he works, at his word; after all, there is precedent here: no government money was involved in the LTCM bailout. But even if we assume that there will be no taxpayer money involved here, there had to be an element of government coercion in forming the superconduit. Citibank needed no persuasion to enter into the superconduit arrangement; it is by far the most heavily exposed to SIVs, accounting for 25% of the global SIV market. However, other participants in the Master-Liquidity Enhancement Conduit, such as JP Morgan and Bank of America, have no SIVs. They are saying that the lure for them is the fees they will generate for setting up the conduit and the business their broker-dealer arms will generate from it. So the managements of these institutions are putting the banks’ credit, and profitability, on the line to back risky securities at above market prices (See the next bullet point.) in order to save a competitor that they both would like to displace as the largest bank in the world. “Yeah, that’s the way it was. Honest.”
--The superconduit is supposed to pay market prices for the securities it will buy. But the whole arrangement is designed to allow the SIVs to avoid selling the securities at, as the Wall Street Journal put it, “new, lower market prices” that would result from a panic sale. So the conduit will pay market prices in order to save the SIVs from having to sell at market prices. Uh huh. In the absence of the supposedly market price bid from the conduit, put together for the very purpose of making that bid, the market price of the securities in question would be far lower. Sounds logical…to the Mad Hatter.
--Besides the SIVs who hold this dicey paper, and Citicorp, who benefits here? Of course: hedge funds and other holders of this funny paper, who eschew government interference in the market place until the market place begins to make them feel uncomfortable. And who invests in hedge funds? Could it possibly be Hank Paulson’s Wall Street friends, or George Bush’s Wall Street friends, or the mucky-mucks, pooh-bahs, and suzerains of the banks that will become contributors to the superconduit, along with their pals at the yacht and country clubs in Greenwich? Hmm…Perhaps healthy dollops of government coercion were not all that necessary to get these captains of finance to use their shareholders’ money to effectively bail out some of their investments. Is that too cynical?
--Shareholders ought to start asking questions, but from different perspectives. Citi shareholders ought to be delighted by the bailout, but ought to be asking Mr. Prince and his minions why in the world the bank got so heavily involved in SIVs in the first place. What, besides seeming gross incompetence, was the bank trying to hide? Shareholders of JP Morgan and Bank of America ought to ask why their banks’ credit, and profitability and hence the investments of the holders, should be put on the line to bail out a careless competitor and, perhaps, the investments of the people who run their banks. Can the fees involved be that good? Or is this a case of these banks’ not being able to say no the federal government, perhaps for fear that, because of some idiotic adventure on the part of their managements, they will be next in line, hat in hand, to see Mr. Paulson.
--Taxpayers ought to keep a close eye on these developments. The government is already deeply involved in this. Why? When will government money have to be employed? Why? Should taxpayers be forced to bail people, usually people with a lot more money than they, out of the consequences of their own financial folly?
Over the weekend, a consortium of banks, at the prodding of Treasury Secretary Hank Paulson, finalized plans for the Master-Liquidity Enhancement Conduit, a “super conduit” set up to buy troubled assets, primarily assets backed by sub-prime mortgages and other less than stellar credits, from bank affiliates known as structured investment vehicles, or SIVs. (This is separate from the “Hope Fund” discussed in the previous post.) This Rube Goldberg contraption was put together out of fear that, with the commercial paper of the SIVs rolling and unlikely to find buyers for paper issued to refinance it, the SIVs will be forced to unload their risky assets at, to quote the Wall Street Journal “new, lower market prices.” This would lead to big losses at the SIVs and, indirectly, at their bank sponsors and the distinct possibility that their bank affiliates would have to put the SIVs on their own books, forcing the banks to set aside the sizable reserves that the SIVs were set up to avoid. In other words, banks (horrors!) would have to face the downside of making bad financial bets.
Several things are malodorous about this arrangement:
--Hank Paulson and the others who knocked heads to get this arrangement done insist that there will be no government money involved in the bailout. Let’s suspend disbelief here and take Mr. Paulson, and the government for which he works, at his word; after all, there is precedent here: no government money was involved in the LTCM bailout. But even if we assume that there will be no taxpayer money involved here, there had to be an element of government coercion in forming the superconduit. Citibank needed no persuasion to enter into the superconduit arrangement; it is by far the most heavily exposed to SIVs, accounting for 25% of the global SIV market. However, other participants in the Master-Liquidity Enhancement Conduit, such as JP Morgan and Bank of America, have no SIVs. They are saying that the lure for them is the fees they will generate for setting up the conduit and the business their broker-dealer arms will generate from it. So the managements of these institutions are putting the banks’ credit, and profitability, on the line to back risky securities at above market prices (See the next bullet point.) in order to save a competitor that they both would like to displace as the largest bank in the world. “Yeah, that’s the way it was. Honest.”
--The superconduit is supposed to pay market prices for the securities it will buy. But the whole arrangement is designed to allow the SIVs to avoid selling the securities at, as the Wall Street Journal put it, “new, lower market prices” that would result from a panic sale. So the conduit will pay market prices in order to save the SIVs from having to sell at market prices. Uh huh. In the absence of the supposedly market price bid from the conduit, put together for the very purpose of making that bid, the market price of the securities in question would be far lower. Sounds logical…to the Mad Hatter.
--Besides the SIVs who hold this dicey paper, and Citicorp, who benefits here? Of course: hedge funds and other holders of this funny paper, who eschew government interference in the market place until the market place begins to make them feel uncomfortable. And who invests in hedge funds? Could it possibly be Hank Paulson’s Wall Street friends, or George Bush’s Wall Street friends, or the mucky-mucks, pooh-bahs, and suzerains of the banks that will become contributors to the superconduit, along with their pals at the yacht and country clubs in Greenwich? Hmm…Perhaps healthy dollops of government coercion were not all that necessary to get these captains of finance to use their shareholders’ money to effectively bail out some of their investments. Is that too cynical?
--Shareholders ought to start asking questions, but from different perspectives. Citi shareholders ought to be delighted by the bailout, but ought to be asking Mr. Prince and his minions why in the world the bank got so heavily involved in SIVs in the first place. What, besides seeming gross incompetence, was the bank trying to hide? Shareholders of JP Morgan and Bank of America ought to ask why their banks’ credit, and profitability and hence the investments of the holders, should be put on the line to bail out a careless competitor and, perhaps, the investments of the people who run their banks. Can the fees involved be that good? Or is this a case of these banks’ not being able to say no the federal government, perhaps for fear that, because of some idiotic adventure on the part of their managements, they will be next in line, hat in hand, to see Mr. Paulson.
--Taxpayers ought to keep a close eye on these developments. The government is already deeply involved in this. Why? When will government money have to be employed? Why? Should taxpayers be forced to bail people, usually people with a lot more money than they, out of the consequences of their own financial folly?
Sunday, October 14, 2007
“I’M FROM THE GOVERNMENT, AND I’M HERE TO HELP YOU!”
10/14/07
Last week, the Bush Administration, with Treasury Secretary Hank Paulson leading the charge, announced with great fanfare something called the Hope Fund (or something like that), yet another scheme to bail out people who bought too much house and are now asking the rest of us to bail them out. The plan, of course, does not involve any taxpayer funds, but merely asks mortgage servicers and holders, along with the FHA (remember, no taxpayer money…hmm) to find ways to help homeowners avoid foreclosure.
To hear Hank Paulson and his various hangers-on and toadies promoting this program, one conjures up images of suddenly poverty stricken homeowners who, through no fault of their own, are about to be tossed into the street by ravenous financial slicksters. The truth, of course, is far from the picture painted by the politicians. On Thursday, the Wall Street Journal revealed the results of an analysis of more than 130mm home loans nationwide. The analysis focused on “high-rate” loans, which do not precisely coincide with subprime loans; focusing on high rate loans understates the problem. As the Journal article pointed out, “some subprime teaser loans do no show up as having high rates.” So the problem is actually greater than the study indicates.
Some of the findings of the study were as follows:
--Among white borrowers with incomes exceeding $300,000, the number of high rate loans jumped 74% last year.
--The amount of the average high rate loan grew 10% to $158,000 last year. Lest you think this is not all that high a number, second mortgages were included in the analysis.
--Last year, 13% of all high rate loans were made for properties not occupied by the borrowers.
--Among the geographic areas with the highest proportions of high rate loans (taken as a percentage of all mortgages made) in 2004-2006 were the poverty stricken areas of Miami-Miami Beach-Kendall, FL, Bakersfield, CA, Ocala, FL, Cape Coral-Ft. Meyers. FL, and Las Vegas.
--Lee County, FL, home of that bastion of poverty and hard luck Ft. Meyers, has the second highest rate of mortgage defaults in the U.S. so far this year.
The Journal went on to report the heart rending tale of Kristine McMahon, a (You guessed it.) mortgage broker with a “six figure income” who chose a sub-prime mortgage when it came time to refinance her $2.7mm home in the Hamptons because a conventional lender would not allow her to take out as much cash.
These are the types of people the “free market” Bush Administration is scrambling to help avoid default.
One cannot single out the Administration for criticism on this score; this half-hindquartered program was trotted out in response to even more grandiose plans by the Democrats to force the frugal to bail out the profligate. This is in the normal course of our government’s workings: The Democrats come up with some asinine plan to remedy some problem, real or imagined, with your money. The Republicans respond with a slightly less asinine plan to attack the problem, also with your money, making sure that the primary beneficiaries of the program are among the GOP’s favored constituencies. That is how the world works. But at least the Democrats don’t fall all over themselves bragging about their belief in “the free market” and “the private sector.” Their Party, at least in its modern guise, is built on suspicion of the free market. The Republicans are guilty of rank hypocrisy in this instance; while piously proclaiming their confidence in free enterprise and their distrust of big government, their Party exists merely to make sure that government grows in a direction that will enrich them and their favored constituencies. A real cynic (like the Pontificator) might go so far as to say that the Paulson plan emerged not in response to even more bloated Democratic plans but, rather, because the typical rock-ribbed, I pulled myself up by the bootstraps, why can’t those lazy louts with their hands ever extended, it’s all the fault of the poor, I love the free markets as long as the game is played on a field tilted in my direction GOPer is beginning to feel some heat from the free interplay of the markets, and will feel even more heat if the market is allowed to play itself out in the case of the mortgage mess. After all, there is nothing a “conservative” GOPer hates more than the free market when it isn’t making him rich. When that happens, “extraordinary circumstances” demand government action. But I digress.
The point, however, is not that the people who face financial ruin when their floating rate loans reset are wealthy, not so wealthy, or even poor. The point is that they bought more house than they could afford. They knew that a reset was coming that would render their mortgage payment unaffordable but thought they could somehow avoid the day of reckoning, perhaps because they thought that real estate can only go in one direction. Some might try to blame unscrupulous mortgage brokers (many of whom were selling shoes, hardware, gasoline, or fast food before becoming “mortgage consultants), and there is plenty of culpability there. However, as the old saying goes, you only fall for lies and stories when you really want to. People simply convinced themselves that they could have everything they wanted without having to pay for it. Now they are facing the day of reckoning. Why is that a problem of those of us who learned something of self-control, delaying of gratification, thrift, prudence, or simply waiting to get what we wanted until we were able to afford it? Or, better yet, why should those of us who have come to realize that life does not consist of possessions, that happiness and peace come not from getting what one wants but being satisfied with what one has be forced to indulge the deep seated insecurities of those who are desperately trying to fill the holes in their lives with, to put it bluntly, crap that they can’t afford?
Oh, yes, we are all being assured by both the Democrats and the Administration that no one wants the taxpayers to bail out profligate homeowners. Such assurances serve only to confirm that such a coerced transfer from the frugal to the profligate is exactly what’s coming. After all, which is the larger constituency? To which group do you think the average politician belongs? These are people who spend millions for offices that pay, at most, a couple hundred grand a year.
Last week, the Bush Administration, with Treasury Secretary Hank Paulson leading the charge, announced with great fanfare something called the Hope Fund (or something like that), yet another scheme to bail out people who bought too much house and are now asking the rest of us to bail them out. The plan, of course, does not involve any taxpayer funds, but merely asks mortgage servicers and holders, along with the FHA (remember, no taxpayer money…hmm) to find ways to help homeowners avoid foreclosure.
To hear Hank Paulson and his various hangers-on and toadies promoting this program, one conjures up images of suddenly poverty stricken homeowners who, through no fault of their own, are about to be tossed into the street by ravenous financial slicksters. The truth, of course, is far from the picture painted by the politicians. On Thursday, the Wall Street Journal revealed the results of an analysis of more than 130mm home loans nationwide. The analysis focused on “high-rate” loans, which do not precisely coincide with subprime loans; focusing on high rate loans understates the problem. As the Journal article pointed out, “some subprime teaser loans do no show up as having high rates.” So the problem is actually greater than the study indicates.
Some of the findings of the study were as follows:
--Among white borrowers with incomes exceeding $300,000, the number of high rate loans jumped 74% last year.
--The amount of the average high rate loan grew 10% to $158,000 last year. Lest you think this is not all that high a number, second mortgages were included in the analysis.
--Last year, 13% of all high rate loans were made for properties not occupied by the borrowers.
--Among the geographic areas with the highest proportions of high rate loans (taken as a percentage of all mortgages made) in 2004-2006 were the poverty stricken areas of Miami-Miami Beach-Kendall, FL, Bakersfield, CA, Ocala, FL, Cape Coral-Ft. Meyers. FL, and Las Vegas.
--Lee County, FL, home of that bastion of poverty and hard luck Ft. Meyers, has the second highest rate of mortgage defaults in the U.S. so far this year.
The Journal went on to report the heart rending tale of Kristine McMahon, a (You guessed it.) mortgage broker with a “six figure income” who chose a sub-prime mortgage when it came time to refinance her $2.7mm home in the Hamptons because a conventional lender would not allow her to take out as much cash.
These are the types of people the “free market” Bush Administration is scrambling to help avoid default.
One cannot single out the Administration for criticism on this score; this half-hindquartered program was trotted out in response to even more grandiose plans by the Democrats to force the frugal to bail out the profligate. This is in the normal course of our government’s workings: The Democrats come up with some asinine plan to remedy some problem, real or imagined, with your money. The Republicans respond with a slightly less asinine plan to attack the problem, also with your money, making sure that the primary beneficiaries of the program are among the GOP’s favored constituencies. That is how the world works. But at least the Democrats don’t fall all over themselves bragging about their belief in “the free market” and “the private sector.” Their Party, at least in its modern guise, is built on suspicion of the free market. The Republicans are guilty of rank hypocrisy in this instance; while piously proclaiming their confidence in free enterprise and their distrust of big government, their Party exists merely to make sure that government grows in a direction that will enrich them and their favored constituencies. A real cynic (like the Pontificator) might go so far as to say that the Paulson plan emerged not in response to even more bloated Democratic plans but, rather, because the typical rock-ribbed, I pulled myself up by the bootstraps, why can’t those lazy louts with their hands ever extended, it’s all the fault of the poor, I love the free markets as long as the game is played on a field tilted in my direction GOPer is beginning to feel some heat from the free interplay of the markets, and will feel even more heat if the market is allowed to play itself out in the case of the mortgage mess. After all, there is nothing a “conservative” GOPer hates more than the free market when it isn’t making him rich. When that happens, “extraordinary circumstances” demand government action. But I digress.
The point, however, is not that the people who face financial ruin when their floating rate loans reset are wealthy, not so wealthy, or even poor. The point is that they bought more house than they could afford. They knew that a reset was coming that would render their mortgage payment unaffordable but thought they could somehow avoid the day of reckoning, perhaps because they thought that real estate can only go in one direction. Some might try to blame unscrupulous mortgage brokers (many of whom were selling shoes, hardware, gasoline, or fast food before becoming “mortgage consultants), and there is plenty of culpability there. However, as the old saying goes, you only fall for lies and stories when you really want to. People simply convinced themselves that they could have everything they wanted without having to pay for it. Now they are facing the day of reckoning. Why is that a problem of those of us who learned something of self-control, delaying of gratification, thrift, prudence, or simply waiting to get what we wanted until we were able to afford it? Or, better yet, why should those of us who have come to realize that life does not consist of possessions, that happiness and peace come not from getting what one wants but being satisfied with what one has be forced to indulge the deep seated insecurities of those who are desperately trying to fill the holes in their lives with, to put it bluntly, crap that they can’t afford?
Oh, yes, we are all being assured by both the Democrats and the Administration that no one wants the taxpayers to bail out profligate homeowners. Such assurances serve only to confirm that such a coerced transfer from the frugal to the profligate is exactly what’s coming. After all, which is the larger constituency? To which group do you think the average politician belongs? These are people who spend millions for offices that pay, at most, a couple hundred grand a year.
THE HOME FRONT IN THE WAR ON TERROR
10/14/07
The following is a short story I wrote for a short story writing contest sponsored by a writers’ magazine. The story got absolutely nowhere in the contest, probably because it reflects the world view of the writer, which some would describe as cynical but which the insightful would describe as realistic:
He reached for the phone to call his best friend Jimmy.
“Hey, Jimmy, I’m watchin’ our favorite talk show guy. Yeah, watchin’ him! He’s got a TV show now. Yeah. We can watch him at night, too. Yeah, four hours is never enough. Anyway, he’s makin’ another good point. You know, Americans are the toughest sons-of-bitches in the world. No one should ever mess with us, man. We're so bad! We’ll show those damn troublemakers in the Middle East.”
Jimmy agreed. “You know, Billy, I was thinking about that yesterday. I started watching football at noon didn’t stop until 8:00 at night. Two full games and most of a third. I was thinking that any damn terrorist thinking of screwing with the U.S. ought to sit down and watch a few hours of NFL football. Then they’d see how tough we are and run away like scared little girls.”
Billy laughed. “You are so right, my friend. Hey, I gotta pick up a lawn mower tomorrow. You wanna come with me? I don’t like to go to the mall alone. You never know what people might think. What kind of man goes to the mall alone?”
“Yeah, I’ll go with ya. I’m not doing anything else. What time you wanna pick me up?”
“I guess around 11:00. I don’t wanna get up too early, but I don’t wanna be out in the afternoon. It’s too damn hot, and, anyway, I like to be in the car when our guy’s on the radio, even if it’s only for a few minutes.”
Billy, late as usual, picked up Jimmy at 11:20, even though he lived only a few doors down the block. Billy honked the horn, not wanting to have to get out of the air- conditioned car, and not wanting to miss a minute of his favorite talk show host. Jimmy jumped in the car and started to talk, but before he could get two words out, Billy gave him a big “SHHH!!! He’s on!” Jimmy fell silent, almost reverent.
“Yes, my friends, we Americans are indeed the toughest, most resourceful people on the entire planet. Any terrorist better think long and hard about attacking our country, because he will rue the day he picks a fight with us. More after these messages.”
“As usual, Jimmy, he’s got it right. I don’t know where the guy gets such insight. Probably right from God.”
“Wouldn’t surprise me.”
Since the mall was only a few blocks from Jimmy’s house, there wasn’t time for further conversation. They were in the parking lot in a few minutes. Billy pulled into a parking spot about halfway down the row nearest one of the mall’s entrance doors.
“What the hell are you doin', Billy? There has to be a closer space!”
“We can walk a little.”
“Are you crazy? It’s hot out there. I’m not gonna walk any farther than I have to in this heat.”
“You’re right, Jimmy…I’m sorry.” Billy restarted the car and drove around the lot for awhile, but couldn’t find a space. Finally, he decided to park in the handicapped space right next to an entrance. “There can’t be that many gimps shopping in the middle of the day. We shouldn’t have to walk in this heat when there are spaces like this that no one’s going to use.”
Jimmy nodded in agreement. “Just another government handout, and most people who use them aren’t even crippled.”
They hustled into the air conditioned mall. A line had formed for the escalator so Jimmy headed for the stairs. “Are you nuts, Jimmy?” Billy asked. “That’s a lot of stairs. I’m not gonna climb ‘em.”
“What do you want to do, wait in that long line for the escalator?”
“Hell, no. I can’t waste my time. Let’s take the elevator.”
As the friends rode the elevator, Billy asked Jimmy “Do you suppose a terrorist could ever take out a mall like this one? Imagine…this mall is so typical, there’s one like it around every town in America.”
“Billy, you talk about that like it’s a bad thing. I like things to be the same. It feels more comfortable that way.”
“No, Jimmy, that’s not my point. My point is that, since every mall is basically the same, taking one out would make everyone feel vulnerable. It would spread fear throughout the county.”
“They wouldn’t try it. Remember, this is middle America, where real Americans live. We’re tough and resourceful, not like those namby-pambies on the coasts. The terrorists will never pull something in this part of the country because then they’d be messing with real Americans. Isn’t that what our guy says?”
“You’re right, Billy, and so is he, as always. Too bad we’re stuck in this mall during his show. I hate to miss a minute. Maybe we should get I-pods or something like that so we can listen to him when we can’t be near a radio.”
“Not a bad idea, but let’s just get this lawn mower and get home to listen.”
By that time, they had reached the garden center of the anchor department store and proceeded right to the riding mowers. Billy swooned over what he saw.” Look at these babies! I’d like to see those damn terrorists try to make somethin’ this tough!”
“Don’t make me laugh. They’re not resourceful. They’re not clever. Mostly, they’re not tough enough. I thought that you wanted to buy a lawn mower in a hurry, though, Billy. Why waste time looking at the riding mowers?”
“You think I’m actually gonna to walk behind a lawn mower in the summer heat? What are you, nuts? I’m gonna get a riding mower!”
“A riding mower? You only got a quarter acre!”
“And you’re point is? If I’m gonna cut my own grass, I’m cuttin’ it in comfort.”
After a short talk with a salesman, Billy decided on a particular model. After Billy paid for it, the salesman added “I assume you guys will be taking this home.”
Billy looked at him like he had suggested brain surgery without an anesthetic. “Take it home? That box is heavy!”
“We could get someone to cart it to your car. Since there are two of you guys, you could probably ease it out of the car when you get home. There’s almost no assembly required, so you could just take it out the car, put gas and oil in it, fire it up, and drive it into your garage.”
“That’s too much work, especially in the heat. Just deliver it.”
“We’ll be happy to deliver it, but there’s a charge for that, and it will take about a week to get it to you.”
“A week? I only live a few blocks away!”
“Not to be rude, sir, but if you’re only a few blocks away, that would make taking it home even easier. We could even have a few of our guys ride with you and help you unload it at your home…”
“Then I’d have to drive them home. No, it’s too much work. Just deliver it. I’ll pay for the delivery.”
“Are you sure? There would be no charge for having the guys go to your house with you, and they could walk back.”
“It’s too much hassle. Just deliver it.”
As they drove back, Billy asked Jimmy if he’d like to come over to watch the game that night.
“I don’t know, Billy…”
Billy shot Jimmy a raised eyebrow. “You mean you don’t wanna watch the game? What kind of guy doesn’t wanna watch the game? What, aren’t you tough enough to take the NFL action?”
“No, no…nothin' like that, Billy. I figured, though, that with our guy on TV now, we’d wanna watch him. He’s doing a follow-up show on terrorists and how they lack the toughness and resourcefulness to take on America and how if all real Americans got behind the war on terrorism, the terrorists wouldn’t stand a chance. You wouldn’t want to miss that, would you?”
Billy and Jimmy were faced with a quandary. How could they miss a football game? What would people think if they found out they missed a Monday night game? Yet, how could they miss their man? Didn’t all real Americans, hard, tough, patriotic Americans, watch and listen to his every show? If they missed one, people might question their patriotism, or even think they were pro-terrorist.
“I guess we could put one of my other TVs in the TV room; I have six televisions. Then we could watch both.”
“That’d be too much work. All that lifting and going up and down stairs.”
“Yeah. Let’s just make heavy use of the remote and go back and forth between the game and our guy. That should be alright.”
“Good idea. Those damn terrorists don’t have that kind of resourcefulness. They can’t improvise like we can.”
“Yeah. They’d be in big trouble if they ever messed with us.”
The following is a short story I wrote for a short story writing contest sponsored by a writers’ magazine. The story got absolutely nowhere in the contest, probably because it reflects the world view of the writer, which some would describe as cynical but which the insightful would describe as realistic:
He reached for the phone to call his best friend Jimmy.
“Hey, Jimmy, I’m watchin’ our favorite talk show guy. Yeah, watchin’ him! He’s got a TV show now. Yeah. We can watch him at night, too. Yeah, four hours is never enough. Anyway, he’s makin’ another good point. You know, Americans are the toughest sons-of-bitches in the world. No one should ever mess with us, man. We're so bad! We’ll show those damn troublemakers in the Middle East.”
Jimmy agreed. “You know, Billy, I was thinking about that yesterday. I started watching football at noon didn’t stop until 8:00 at night. Two full games and most of a third. I was thinking that any damn terrorist thinking of screwing with the U.S. ought to sit down and watch a few hours of NFL football. Then they’d see how tough we are and run away like scared little girls.”
Billy laughed. “You are so right, my friend. Hey, I gotta pick up a lawn mower tomorrow. You wanna come with me? I don’t like to go to the mall alone. You never know what people might think. What kind of man goes to the mall alone?”
“Yeah, I’ll go with ya. I’m not doing anything else. What time you wanna pick me up?”
“I guess around 11:00. I don’t wanna get up too early, but I don’t wanna be out in the afternoon. It’s too damn hot, and, anyway, I like to be in the car when our guy’s on the radio, even if it’s only for a few minutes.”
Billy, late as usual, picked up Jimmy at 11:20, even though he lived only a few doors down the block. Billy honked the horn, not wanting to have to get out of the air- conditioned car, and not wanting to miss a minute of his favorite talk show host. Jimmy jumped in the car and started to talk, but before he could get two words out, Billy gave him a big “SHHH!!! He’s on!” Jimmy fell silent, almost reverent.
“Yes, my friends, we Americans are indeed the toughest, most resourceful people on the entire planet. Any terrorist better think long and hard about attacking our country, because he will rue the day he picks a fight with us. More after these messages.”
“As usual, Jimmy, he’s got it right. I don’t know where the guy gets such insight. Probably right from God.”
“Wouldn’t surprise me.”
Since the mall was only a few blocks from Jimmy’s house, there wasn’t time for further conversation. They were in the parking lot in a few minutes. Billy pulled into a parking spot about halfway down the row nearest one of the mall’s entrance doors.
“What the hell are you doin', Billy? There has to be a closer space!”
“We can walk a little.”
“Are you crazy? It’s hot out there. I’m not gonna walk any farther than I have to in this heat.”
“You’re right, Jimmy…I’m sorry.” Billy restarted the car and drove around the lot for awhile, but couldn’t find a space. Finally, he decided to park in the handicapped space right next to an entrance. “There can’t be that many gimps shopping in the middle of the day. We shouldn’t have to walk in this heat when there are spaces like this that no one’s going to use.”
Jimmy nodded in agreement. “Just another government handout, and most people who use them aren’t even crippled.”
They hustled into the air conditioned mall. A line had formed for the escalator so Jimmy headed for the stairs. “Are you nuts, Jimmy?” Billy asked. “That’s a lot of stairs. I’m not gonna climb ‘em.”
“What do you want to do, wait in that long line for the escalator?”
“Hell, no. I can’t waste my time. Let’s take the elevator.”
As the friends rode the elevator, Billy asked Jimmy “Do you suppose a terrorist could ever take out a mall like this one? Imagine…this mall is so typical, there’s one like it around every town in America.”
“Billy, you talk about that like it’s a bad thing. I like things to be the same. It feels more comfortable that way.”
“No, Jimmy, that’s not my point. My point is that, since every mall is basically the same, taking one out would make everyone feel vulnerable. It would spread fear throughout the county.”
“They wouldn’t try it. Remember, this is middle America, where real Americans live. We’re tough and resourceful, not like those namby-pambies on the coasts. The terrorists will never pull something in this part of the country because then they’d be messing with real Americans. Isn’t that what our guy says?”
“You’re right, Billy, and so is he, as always. Too bad we’re stuck in this mall during his show. I hate to miss a minute. Maybe we should get I-pods or something like that so we can listen to him when we can’t be near a radio.”
“Not a bad idea, but let’s just get this lawn mower and get home to listen.”
By that time, they had reached the garden center of the anchor department store and proceeded right to the riding mowers. Billy swooned over what he saw.” Look at these babies! I’d like to see those damn terrorists try to make somethin’ this tough!”
“Don’t make me laugh. They’re not resourceful. They’re not clever. Mostly, they’re not tough enough. I thought that you wanted to buy a lawn mower in a hurry, though, Billy. Why waste time looking at the riding mowers?”
“You think I’m actually gonna to walk behind a lawn mower in the summer heat? What are you, nuts? I’m gonna get a riding mower!”
“A riding mower? You only got a quarter acre!”
“And you’re point is? If I’m gonna cut my own grass, I’m cuttin’ it in comfort.”
After a short talk with a salesman, Billy decided on a particular model. After Billy paid for it, the salesman added “I assume you guys will be taking this home.”
Billy looked at him like he had suggested brain surgery without an anesthetic. “Take it home? That box is heavy!”
“We could get someone to cart it to your car. Since there are two of you guys, you could probably ease it out of the car when you get home. There’s almost no assembly required, so you could just take it out the car, put gas and oil in it, fire it up, and drive it into your garage.”
“That’s too much work, especially in the heat. Just deliver it.”
“We’ll be happy to deliver it, but there’s a charge for that, and it will take about a week to get it to you.”
“A week? I only live a few blocks away!”
“Not to be rude, sir, but if you’re only a few blocks away, that would make taking it home even easier. We could even have a few of our guys ride with you and help you unload it at your home…”
“Then I’d have to drive them home. No, it’s too much work. Just deliver it. I’ll pay for the delivery.”
“Are you sure? There would be no charge for having the guys go to your house with you, and they could walk back.”
“It’s too much hassle. Just deliver it.”
As they drove back, Billy asked Jimmy if he’d like to come over to watch the game that night.
“I don’t know, Billy…”
Billy shot Jimmy a raised eyebrow. “You mean you don’t wanna watch the game? What kind of guy doesn’t wanna watch the game? What, aren’t you tough enough to take the NFL action?”
“No, no…nothin' like that, Billy. I figured, though, that with our guy on TV now, we’d wanna watch him. He’s doing a follow-up show on terrorists and how they lack the toughness and resourcefulness to take on America and how if all real Americans got behind the war on terrorism, the terrorists wouldn’t stand a chance. You wouldn’t want to miss that, would you?”
Billy and Jimmy were faced with a quandary. How could they miss a football game? What would people think if they found out they missed a Monday night game? Yet, how could they miss their man? Didn’t all real Americans, hard, tough, patriotic Americans, watch and listen to his every show? If they missed one, people might question their patriotism, or even think they were pro-terrorist.
“I guess we could put one of my other TVs in the TV room; I have six televisions. Then we could watch both.”
“That’d be too much work. All that lifting and going up and down stairs.”
“Yeah. Let’s just make heavy use of the remote and go back and forth between the game and our guy. That should be alright.”
“Good idea. Those damn terrorists don’t have that kind of resourcefulness. They can’t improvise like we can.”
“Yeah. They’d be in big trouble if they ever messed with us.”
Friday, October 5, 2007
That's right...make those sisters pay!!!
10/5/07
Today I sent a letter to the Archdiocese of Los Angeles voicing my opinion on its closing of a convent in order to sell the property to raise money for the settlement of sexual abuse cases. I have reproduced it below for readers of the Insightful Pontificator:
10/5/07
The Chicago Tribune today re-ran an article by Karl Vick of the Washington Post describing the plight of three Sisters of Bethany who live in a convent on Nopal Street in Santa Barbara. The sisters are being evicted so that the Archdiocese can sell the property (for a relative pittance of $700,000) to help pay for settlements in clergy sex abuse cases in the Diocese of Los Angeles.
Those who blindly follow the dictates of the Church and its episcopate might say that this story, as told by Mr. Vick, was just another heart-rending tale designed to denigrate our Church, or, as Father Ludo DeClippel, a diocesan priest quoted in the article might put it, to create “an (sic) hostile public opinion.” But despite the slant of the article, unless it is completely off-base, one cannot deny the facts:
--Priests, many priests, committed some abominable acts.
--The Archdiocese was, at the very least, lax in its supervision of these priests.
--The Archdiocese finally got called to account in the civil courts by victims and their supporters no longer cowed by the social, political, and financial power of the Church.
--The Archdiocese has arrogated (not too strong a word) the Nopal Street convent, leaving the Sisters who lived there out of their long time residence, despite their complete innocence in the aforementioned acts and their long years of service to the Church.
This leads faithful, but not quiescent, Catholics like my wife and I, to ask some questions:
--How many rectories have been sold and how many priests have been made homeless to help pay this settlement?
--Why isn’t Cardinal Mahony’s residence, surely a more opulent structure than the simple home occupied by these innocent sisters, being sold to help cover the costs of the settlement?
--Why, indeed, does Cardinal Mahony still have his job? Even in the increasingly unaccountable worlds of business and politics, anyone who presided over such a costly and shameful scandal would have been out of a job…quickly.
--Why are the sisters being forced to pay for the sins of the fathers?
You might counter this letter by saying these questions are too simplistic, but such claims are generally naked ruses for an inability, or a disinclination, to answer such questions. You might also counter by saying that I do not have what the lawyers would call “standing.” I don’t live in the LA Archdiocese, have never lived in the LA Archdiocese, and probably will never live in the LA Archdiocese. However, these problems, and these stupefying “solutions,” are not unique to LA. I am a lifelong Catholic, educated by Dominican Sisters and Jesuit Fathers. I attend Mass at least three times a week. I believe in the sacraments and most of the teachings of the Church. In fact, my belief that the Church is indeed Christ’s consecrated bride is reaffirmed by the Church’s having survived for 2,000 years, and especially over the last 20 or so, despite its vacuous, scrofulous, and solipsistic leadership. And, no, before you try to use this counter, I am not attacking John Paul II, though even he in his later years made some serious errors; note his treatment of the abominable Cardinal Law.
The Church is looking less and less like Christ’s representative on earth and more like a worldly institution desperately trying to defend its earthly prerogatives. It is getting harder to defend our Church and virtually impossible to convince non-Catholics that our Church has something that they could possibly want. Yes, I know that we have the sacraments, but the outsider considering a church has not yet bought in to the doctrine and the rituals that we as Catholics hold dear. He or she has to be attracted first. In order to keep existing Catholics in the Church, let alone attract new Catholics, our Church would be wise to follow, and to take warning from, St. Francis’s admonition to preach Christ’s word, using words if necessary. The Church is indeed preaching by its actions, but the preaching it is doing in the Nopal Street convent incident does not bear much resemblance to the good news of our Lord and Savior Jesus Christ.
Mark Quinn
Today I sent a letter to the Archdiocese of Los Angeles voicing my opinion on its closing of a convent in order to sell the property to raise money for the settlement of sexual abuse cases. I have reproduced it below for readers of the Insightful Pontificator:
10/5/07
The Chicago Tribune today re-ran an article by Karl Vick of the Washington Post describing the plight of three Sisters of Bethany who live in a convent on Nopal Street in Santa Barbara. The sisters are being evicted so that the Archdiocese can sell the property (for a relative pittance of $700,000) to help pay for settlements in clergy sex abuse cases in the Diocese of Los Angeles.
Those who blindly follow the dictates of the Church and its episcopate might say that this story, as told by Mr. Vick, was just another heart-rending tale designed to denigrate our Church, or, as Father Ludo DeClippel, a diocesan priest quoted in the article might put it, to create “an (sic) hostile public opinion.” But despite the slant of the article, unless it is completely off-base, one cannot deny the facts:
--Priests, many priests, committed some abominable acts.
--The Archdiocese was, at the very least, lax in its supervision of these priests.
--The Archdiocese finally got called to account in the civil courts by victims and their supporters no longer cowed by the social, political, and financial power of the Church.
--The Archdiocese has arrogated (not too strong a word) the Nopal Street convent, leaving the Sisters who lived there out of their long time residence, despite their complete innocence in the aforementioned acts and their long years of service to the Church.
This leads faithful, but not quiescent, Catholics like my wife and I, to ask some questions:
--How many rectories have been sold and how many priests have been made homeless to help pay this settlement?
--Why isn’t Cardinal Mahony’s residence, surely a more opulent structure than the simple home occupied by these innocent sisters, being sold to help cover the costs of the settlement?
--Why, indeed, does Cardinal Mahony still have his job? Even in the increasingly unaccountable worlds of business and politics, anyone who presided over such a costly and shameful scandal would have been out of a job…quickly.
--Why are the sisters being forced to pay for the sins of the fathers?
You might counter this letter by saying these questions are too simplistic, but such claims are generally naked ruses for an inability, or a disinclination, to answer such questions. You might also counter by saying that I do not have what the lawyers would call “standing.” I don’t live in the LA Archdiocese, have never lived in the LA Archdiocese, and probably will never live in the LA Archdiocese. However, these problems, and these stupefying “solutions,” are not unique to LA. I am a lifelong Catholic, educated by Dominican Sisters and Jesuit Fathers. I attend Mass at least three times a week. I believe in the sacraments and most of the teachings of the Church. In fact, my belief that the Church is indeed Christ’s consecrated bride is reaffirmed by the Church’s having survived for 2,000 years, and especially over the last 20 or so, despite its vacuous, scrofulous, and solipsistic leadership. And, no, before you try to use this counter, I am not attacking John Paul II, though even he in his later years made some serious errors; note his treatment of the abominable Cardinal Law.
The Church is looking less and less like Christ’s representative on earth and more like a worldly institution desperately trying to defend its earthly prerogatives. It is getting harder to defend our Church and virtually impossible to convince non-Catholics that our Church has something that they could possibly want. Yes, I know that we have the sacraments, but the outsider considering a church has not yet bought in to the doctrine and the rituals that we as Catholics hold dear. He or she has to be attracted first. In order to keep existing Catholics in the Church, let alone attract new Catholics, our Church would be wise to follow, and to take warning from, St. Francis’s admonition to preach Christ’s word, using words if necessary. The Church is indeed preaching by its actions, but the preaching it is doing in the Nopal Street convent incident does not bear much resemblance to the good news of our Lord and Savior Jesus Christ.
Mark Quinn
Monday, October 1, 2007
WHAT WILL WE DO NOW FOR MORAL LEADERSHIP?
10/1/07
Newt Gingrich said last week that he will not be seeking the presidency in 2008. He gave as a reason his desire to spend more time with one of those half-hindquartered “education projects” politicians concoct in order to avoid getting real jobs while waiting for the next taxpayer-provided sinecure to pop up. This tendency to set up “education projects” and think tanks is growing especially common among “conservative” politicians whose enthusiasm for the private sector seems to dull rapidly when they are faced with the prospect of having to actually work in the private sector, but I digress.
One would like to credit Mr. Gingrich for not falling back on the banal “wanting to spend more time with my family” excuse for taking a (very) brief sabbatical from the Washington his ilk claims to so despise but somehow can’t seem to leave. However, such credit quickly evaporates when one realizes that if Mr. Gingrich were to use such an excuse, the most salient question would be “Which family, Newt? You’ve abandoned so many.” So perhaps his not falling back on that whopper was more a matter of expediency than originality. Again, though, I digress.
So Mr. Gingrich, whose most notable feature for his entire adult life has been his political ambition, and who has made no secret of his desire for The Big Job, suddenly finds some Rube Goldberg vehicle for self-aggrandizement more compelling than the presidency. Uh-huh. The really amazing thing about this absurd contention is that he expects us to believe it, but perhaps this is not amazing at all but merely a reflection of the politician’s tendency to lie because doing so comes more naturally than telling the truth.
Newt Gingrich is a scoundrel, a moral pygmy, a hypocrite, an opportunist, a solipsist, a popinjay, and a poltroon, among other things. But he is not stupid. The reason he is not running is that he realizes that a Republican has about as much chance of winning the presidency in 2008 as you and I have of winning the Lottery. Why waste time, energy, and money? Besides, if Mr. Gingrich can resist the temptation to abandon another wife when staying with her becomes inconvenient, or merely cramps his relentless lecherous pursuits with staff member and other political groupies, maybe the short-memoried American voter will forget all about Mr. Gingrich’s ghastly personal life and join his crusade for a moral makeover of America.
Newt Gingrich said last week that he will not be seeking the presidency in 2008. He gave as a reason his desire to spend more time with one of those half-hindquartered “education projects” politicians concoct in order to avoid getting real jobs while waiting for the next taxpayer-provided sinecure to pop up. This tendency to set up “education projects” and think tanks is growing especially common among “conservative” politicians whose enthusiasm for the private sector seems to dull rapidly when they are faced with the prospect of having to actually work in the private sector, but I digress.
One would like to credit Mr. Gingrich for not falling back on the banal “wanting to spend more time with my family” excuse for taking a (very) brief sabbatical from the Washington his ilk claims to so despise but somehow can’t seem to leave. However, such credit quickly evaporates when one realizes that if Mr. Gingrich were to use such an excuse, the most salient question would be “Which family, Newt? You’ve abandoned so many.” So perhaps his not falling back on that whopper was more a matter of expediency than originality. Again, though, I digress.
So Mr. Gingrich, whose most notable feature for his entire adult life has been his political ambition, and who has made no secret of his desire for The Big Job, suddenly finds some Rube Goldberg vehicle for self-aggrandizement more compelling than the presidency. Uh-huh. The really amazing thing about this absurd contention is that he expects us to believe it, but perhaps this is not amazing at all but merely a reflection of the politician’s tendency to lie because doing so comes more naturally than telling the truth.
Newt Gingrich is a scoundrel, a moral pygmy, a hypocrite, an opportunist, a solipsist, a popinjay, and a poltroon, among other things. But he is not stupid. The reason he is not running is that he realizes that a Republican has about as much chance of winning the presidency in 2008 as you and I have of winning the Lottery. Why waste time, energy, and money? Besides, if Mr. Gingrich can resist the temptation to abandon another wife when staying with her becomes inconvenient, or merely cramps his relentless lecherous pursuits with staff member and other political groupies, maybe the short-memoried American voter will forget all about Mr. Gingrich’s ghastly personal life and join his crusade for a moral makeover of America.
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