Yesterday we all received the news that Rick Wagoner, a man who knows as much about the car business as anyone except, perhaps, his soon to retire deputy Bob Lutz, was effectively fired as CEO of GM by Steve Rattner, Preppy Timmy Geithner, and Barack Obama, who, collectively, know nothing about the car business. As one of Mr. Wagoner’s fans, I was dismayed but, of course, not surprised by this development. Mr. Wagoner had accomplished much in turning around GM, perhaps nothing so much as hiring Bob Lutz as product czar. While Ford has always been my favorite among the Big 3, as loyal readers know, Mr. Wagoner has brought GM to a point at which it is certainly fully competitive with Ford and, by most measures, fully competitive with anyone, including Toyota. In terms of styling, “quality” (whatever that means), durability, fuel economy, drivability, and myriad other factors, GM is now as good as anyone, and a large measure of the credit belongs to Mr. Wagoner and his star hire Mr. Lutz. Even the decision for which Mr. Wagoner gets the most abuse, laying a large bet on mammoth, gas guzzling SUVs and pickup trucks, doesn’t look so bad as gas prices have fallen, small car sales have dropped off the table, and the only things moving seems to be big SUVs and pickup trucks. The man knew his market, certainly far better than the Obamacrats who are striving mightily to force Americans into cars they don’t want. And Mr. Wagoner’s emphasis on overseas growth, primarily in China, will prove to be the ultimate savior of the General. But Mr. Wagoner was unable to do anything about the collapse of the economy and the credit markets.
All that having been said, I would be the first to contend that the above is a hard argument to make. How does one justify keeping a CEO who has seen his stock price fall from almost $80 when he got the big job to a warrant on the beneficence of the government? One can argue until one is blue in the face that such a CEO did a good job, but, in the face of the devastation that has been wrought on GM stockholders, bondholders, employees, and retirees during his tenure as boss, a responsible board (Note the emphasis; it will become important later in this screed.) would have little choice but to let the big guy go.
Two things came immediately to my mind, and to many other observers’ minds, as well:
--So when is the government going to fire the heads of all the banks it has bailed out, many of whom were closer to collapse than was GM when the Bush/Obama administration rode to the rescue? So far, only the heads of Fannie, Freddie, and AIG have been shown the door. How about Pandit and Lewis? One cannot help but think that the draconian terms demanded of GM and Chrysler for their share of the bailout bonanza have their origins in the utter disdain the yupocrats who inhabit the Obama administration (and most of official Washington) have for people who work with their hands, and even for people who don’t even personally work with their hands but merely work in those old, stodgy industries that seemingly repel anyone who went to an Ivy League school after Mr. Wagoner graduated from Harvard. The car industry, or any metal bending industry not located on one of the coasts are, as our betters would say, is “so yesterday.” The people who work in Washington do not aspire to go to work in, say, Detroit or Cleveland when they want to cash in the influence they have amassed in Washington; they want to go to work in Washington or New York.
--The rationale that our oh so tomorrow President gave for firing Mr. Wagoner was laughable. This morning, Mr. Obama said that we needed “new vision, a new way of looking at things” in the auto industry. So he installs Fritz Henderson, who has worked for GM (and nowhere else, I believe) for the last 25 years? To call Mr. Henderson a protégé of Mr. Wagoner may be overstating the case a bit, but just a bit. And this is not to denigrate Mr. Henderson; he, too, was part of the team that was indeed leading GM out of the pit until the economy and the credit markets fell apart. Clearly, Mr. Obama was talking through his hat, if he ever wore a hat, another one of those at least venial sins for men of tomorrow. He just wanted Mr. Wagoner’s head and Mr. Henderson, who represents no change at all (again, probably not a bad thing) was next in line. One wonders how long he will keep his job.
But the larger point is that none of the above matters. We are no longer dealing, in GM and Chrysler’s cases, with a responsible board. Once one takes the man’s money, one plays by the man’s rules. Since GM and Chrysler took the government’s money, they put the government in charge. And the Obama administration has put a cast of characters with little or no experience in the auto industry in charge of that industry. The utter absurdity of this arrangement boggles the minds even of those of us who harbor deep skepticism of anything the government does. I realize that GM and Chrysler had little choice in this matter, but they, and their stakeholders, had better realize that Big Brother is now completely in charge.
And, on a larger scale, what we are seeing here are the opening salvoes of a massive realignment in our economy toward greater, if not nearly complete, government control.
Monday, March 30, 2009
Sunday, March 29, 2009
CHANGE WE CAN BELIEVE IN
3/29/09
--The Obama administration’s plan for Iraq consists of removing U.S. troops by 2011…maybe; i.e., if the Awakening Councils (a.k.a. “Sons of Iraq”) continue to take our bribes in exchange for keeping violence down to an acceptable level, if a workable, stable government is in place (which presupposes an agreement for distributing oil revenues can be achieved), if our exit would not result in the slaughter of the stooges we have installed to head the “government” at the time of our exit, etc., etc.
--Mr. Obama plans to send an additional 21,000 troops to Afghanistan, further sinking us into the quagmire that is that unwinnable war, a war that we lost years ago when George Bush couldn’t keep his focus, in a country that has contributed so mightily to the dissolution of both the British and the Soviet empires. This Afghanistan “strategy,” along with staying the course in Iraq, is all part of a policy of using a vague, ill-defined “war on terror” to justify massive U.S. expenditures in blood and treasure on the other side of the world in order to realize some nebulous goals the achievement of which can neither be realized nor substantiated.
--The great agent of change has appointed Nancy-Ann DeParle as his health care czar. Ms. DeParle has served on the boards of Medco Health Solutions, Inc., Cerner Corp., Boston Scientific, and DaVita, Inc., all major players in the health care business, effectively selling the influence she had garnered as President Clinton’s director of Medicare and Medicaid. Her appointment is being cheered by the industry. No conflicts of interest here, no sir.
--President Obama’s plans to spend 2% more on defense in FY 2010 than President Bush had planned to spend, not counting the wars for which our dashing young president has suddenly developed such an enthusiasm. This despite the fact that we spend more on defense than the entire rest of the world combined at a time when, in spite of the military-industrial complex’s desperate efforts to find a new bogeyman in Russia and/or China, we face no military threat other than those, like Iraq, that we made military threats by our offensive actions.
--The bailouts of the financial industry, started under Honest Hank Paulson, Obsequious Ben Bernanke, and Gormless George Bush, continue under Changeling Barack Obama and his henchman, Preppy Timmy Geithner, only with larger price tags and more Rube Goldbergian structures designed to hide the cost from the taxpayers.
--Vice-President Joe “Hedgie” Biden (See my 2/24/09 post.) declared in Chile yesterday that the U.S. economic embargo of Cuba, an embargo that has contributed mightily to the Castro Brothers’ remaining in power since 1959, will continue under the agent of change we elected in 2008.
Aren’t you glad there is such a clear choice between the two major parties in this country?
--The Obama administration’s plan for Iraq consists of removing U.S. troops by 2011…maybe; i.e., if the Awakening Councils (a.k.a. “Sons of Iraq”) continue to take our bribes in exchange for keeping violence down to an acceptable level, if a workable, stable government is in place (which presupposes an agreement for distributing oil revenues can be achieved), if our exit would not result in the slaughter of the stooges we have installed to head the “government” at the time of our exit, etc., etc.
--Mr. Obama plans to send an additional 21,000 troops to Afghanistan, further sinking us into the quagmire that is that unwinnable war, a war that we lost years ago when George Bush couldn’t keep his focus, in a country that has contributed so mightily to the dissolution of both the British and the Soviet empires. This Afghanistan “strategy,” along with staying the course in Iraq, is all part of a policy of using a vague, ill-defined “war on terror” to justify massive U.S. expenditures in blood and treasure on the other side of the world in order to realize some nebulous goals the achievement of which can neither be realized nor substantiated.
--The great agent of change has appointed Nancy-Ann DeParle as his health care czar. Ms. DeParle has served on the boards of Medco Health Solutions, Inc., Cerner Corp., Boston Scientific, and DaVita, Inc., all major players in the health care business, effectively selling the influence she had garnered as President Clinton’s director of Medicare and Medicaid. Her appointment is being cheered by the industry. No conflicts of interest here, no sir.
--President Obama’s plans to spend 2% more on defense in FY 2010 than President Bush had planned to spend, not counting the wars for which our dashing young president has suddenly developed such an enthusiasm. This despite the fact that we spend more on defense than the entire rest of the world combined at a time when, in spite of the military-industrial complex’s desperate efforts to find a new bogeyman in Russia and/or China, we face no military threat other than those, like Iraq, that we made military threats by our offensive actions.
--The bailouts of the financial industry, started under Honest Hank Paulson, Obsequious Ben Bernanke, and Gormless George Bush, continue under Changeling Barack Obama and his henchman, Preppy Timmy Geithner, only with larger price tags and more Rube Goldbergian structures designed to hide the cost from the taxpayers.
--Vice-President Joe “Hedgie” Biden (See my 2/24/09 post.) declared in Chile yesterday that the U.S. economic embargo of Cuba, an embargo that has contributed mightily to the Castro Brothers’ remaining in power since 1959, will continue under the agent of change we elected in 2008.
Aren’t you glad there is such a clear choice between the two major parties in this country?
Friday, March 27, 2009
IRISH EYES HAVE A REASON TO SMILE
The South Side Irish Parade, which had degenerated over its thirty year history from a march around one block in my old neighborhood on Chicago’s south side into what the Chicago Tribune described as “a massive street party filled with drunken brawlers and underage drinkers,” was finally, mercifully suspended indefinitely by its organizers after an especially raucous 2009 rendition of this yearly spectacle. Faux Irish Americans, with or without the appropriate surnames but with a fuzzy, at best, notion of what lies behind their heritage, decried the decision to effectively end what had become little more than a massive debauch. Proud Irish-Americans, ashamed and appalled at what the celebration of their mother country’s patron saint had become, and the residents of the neighborhood in which this abomination took place annually on the Sunday before St. Patrick’s Day, thanked God that this seemingly endless source of embarrassment had finally been terminated.
The ostensible reason for suspending the Parade was overcrowding and lawlessness. Beverly/Morgan Park, the neighborhood that is bisected by Western Avenue, the street that forms the Parade’s route, is a quiet residential neighborhood, similar to many found throughout Chicago. It is far removed from downtown both geographically and in its sense of proportion. Downtown Chicago features tall buildings, wide streets, and spacious sidewalks. Beverly/Morgan Park features single family homes, narrow streets, and tight sidewalks. Even Western Avenue, the neighborhood’s main thoroughfare, is small by comparison to, say, State Street or Michigan Avenue downtown. But the crowds at the South Side Irish Parade rival, and often surpass, those at the downtown St. Patrick’s Day Parade. The neighborhood and its infrastructure were never designed to handle the 300,000 revelers that descended on it for this year’s Parade. The results of such a massive influx of revelers were predictable—traffic, both vehicular and foot, was gridlocked. Restroom facilities were in short supply, with predictable consequences. The neighborhood, and those surrounding it, was effectively shut down for the entire day of the Parade.
Even worse than the overcrowding was the general lawlessness that prevails on the day of the Parade. Perhaps lawlessness is too strong a word; no one gets killed, there aren’t any holdups or muggings per se, and people in the neighborhood are not physically threatened unless they willingly participate in one of the fights that break out along and adjoining the Parade’s route. But, this year, a not atypical year, several police officers were assaulted, local emergency rooms were occupied with minor injuries, such as broken teeth and concussions, and fifty three arrests were made, mostly for disorderly conduct, battery, public drinking, and underage drinking. At a church brunch the week following this year’s Parade, my wife and I were told by several residents of my old neighborhood tales of revelers’, many apparently underage, passing out on neighborhood front yards, kids’, and adults’, urinating, vomiting, or worse, in residents’ bushes or right out on their lawns, fights breaking out on the street or the sidewalk directly in front of people’s homes, and kids’ simply walking into fenced backyards and walking off with coolers filled with beer pop, and other essentials for the family picnics and gatherings that are a regular feature of what has become known as “Parade Day” in the neighborhood. Please be aware that Beverly/Morgan Park is not a prudish neighborhood that looks askance at drinking per se; its residents are, er, known to take a drink on occasion and beer is always a prominent, expected, and much indulged in feature at most family gatherings. The west side of Western Avenue (The east side of the street, in one of the most ironic manifestations of home rule in the history of municipal governance, is dry.) is probably more densely packed with bars and taverns than any neighborhood in the city. But the general consensus of neighborhood residents is that the Parade was descending deeper into debauchery each year and that they had simply had enough. The effective cancellation of the Parade was met with heavy sighs of relief, if not cheers, by the residents of Beverly/Morgan Park who have had to put up with the raucous, crude, and outright disgusting behavior, largely of outsiders, for years now.
There is something larger, though, that makes the end of the South Side Irish Parade such a happy outcome for my fellow Irish-Americans, and true South Side Irish, and it has to do with the way we have come to celebrate St. Patrick’s Day, and our “Irishness,” in this country.
One reveler at the Parade, who hailed from Mt. Greenwood, a neighborhood just west of Beverly/Morgan Park, and at least as Irish-American, when told that organizers were considering canceling the Parade, stated, as quoted in the Chicago Sun-Times, “I know some people complain about the drinking, but it’s a great celebration of being Irish. That’s what it’s all about.” Such woefully misinformed sentiments could not more perfectly encapsulate the problem manifested and symbolized by the Parade. At its beginnings some thirty years ago, the Parade was indeed a great celebration of being Irish, with a group of kids and their parents, led by a boy dressed as St. Patrick, marching around the block, dressed in their Celtic finery and pulling, or riding in, wagons festooned with green, orange, and white. But now the Parade has degenerated into a great celebration not of being Irish but of being a jackass. Television coverage and newspaper pictures of the Parade, while occasionally showing the pipe bands or the floats filled with waving, dancing children, feature primarily pictures of beer addled, loutish kids and, even more sadly, adults who should know better, hoisting beer cans, chugging beers, wearing idiotic hats designed to comically facilitate drinking, and sporting tee-shirts with inane phrases such as “I like beer.” Very clever.
None of these activities surrounding the parade requires any effort, exertion, or any activity of which one could justly be proud. As my father, as Irish-American as anyone but who wisely refrained from wearing his ethnicity on his sleeve, used to tell me, “Anyone can act like an a—hole. It doesn’t take any special talent and only shows people only one thing: that you’re an a—hole.” He usually made this observation while observing his fellow Irish-Americans, including his youngest son, reveling in what came to be misunderstood, even years ago, their “Irishness.” As an Irish-American who came from nothing, worked hard, provided a better future for his kids, and made the mother country proud, the celebration of St. Patrick’s Day had come to sicken him. Though, in my youth, I shrugged off his observations as those of a guy who simply didn’t understand how to have a good time or how to be Irish (as if I somehow knew either better than he), as I have grown older, raised my own family, and become more aware of my Irish heritage and what constitutes true pride and achievement, I understand the wisdom of his observations. They come to mind whenever I am confronted with images of a group of “Irishmen” celebrating their “Irishness” in what has become the accepted American way of manifesting what they falsely regard as Celtic culture.
The South Side Irish Parade had become merely the most glaring example of the defamation of the greatness of Ireland that has ironically come to constitute my ethnic group’s demonstration of its ethnic “pride.” What these revelers do not seem to understand, or willfully choose to ignore, is that being Irish-American and celebrating one’s Irishness does not mean getting drunk and acting like an idiot. While the stereotypical Irish-American is an earnest but besotted sort, drinking well beyond his limits at night and battling the shakes with Jameson’s in the morning before heading off to his blue collar job on the city payroll, the typical Irish-American is, or at least should be, nothing of the sort. The typical Irish-American is a hardworking, God-fearing, church-going family man (or woman) who works hard (often, but not always, at a blue collar job with the city), supports his family, and is proud of his old country but damn happy to be living on this side of the Atlantic. The Irish-American hero is not the besotted, obstreperous drunk bragging of the number of beers he had last night and his gargantuan hangover today. The Irish-American heroes are people like John Kennedy, Ronald Reagan, Gene Kelly, Georgia O’Keefe, Pat O’Brien, Jimmy Cagney, Michael Flatley, Herb Kelleher, Jack Ford, William Brennan, Patrick Fitzgerald, Fulton, Sheen, Eugene O’Neill, Tom Clancy, Jimmy Breslin, Tim Russert, Bill Buckley, John Barry, Cardinal O’Connor, Audie Murphy, George M. Cohan, Bing Crosby, Richard J. Daley, Jack Dempsey, Louis Sullivan, and, yes, Dick Quinn and the millions like him who, though not recorded in history, worked hard, behaved like gentlemen, and realized the American dream. Many, if not most, of the aforementioned enjoyed or enjoy a drink now and then, but they didn’t achieve what they achieved by equating the degree of their Irishness with the prodigiousness of their alcohol consumption.
It is especially ironic that we Irish-Americans have come to identify ourselves by the very activity that has wreaked such havoc on our mother country. As a straight from central casting Irish-American priest in my old neighborhood often said in his sermons some thirty years ago, before the Irish resurgence that has caused some to dub it the “Celtic Tiger,” (I will have to paraphrase here because thirty years clouds the memory), it is fashionable to argue that the British ruined Ireland, but, while the British certainly did their part, it wasn’t the British who ruined Ireland; it was the bottle that ruined Ireland. Yet, in our country, the descendants of Irish immigrants, many of whom came here to escape the tyranny of both the British and the bottle, equate the very thing that had so decimated their mother country with their ethnic identity. This is beyond strange; it is a perversion of Irish pride and identity.
One final irony of the St. Patrick’s Day is that St. Patrick himself, who was probably Welsh, may have been French, but definitely was not Irish, was an abstemious, serious, some might even say stern man who would have had no part of the silliness and shallowness that has come to characterize his feast day. I can’t put it any better than did Father Dan Brandt of Nativity of Our Lord Parish in Bridgeport, the ancestral parish of the Daley family, who said “I think St. Patrick would be rolling over in his grave if he saw the way his feast day was being bastardized.” One should remind the revelers on St. Patrick’s Day and at the South Side Irish Parade that the holiday they are ostensibly celebrating is SAINT Patrick’s Day, a day on the liturgical calendar of the Catholic Church. While no one expects the day to be celebrated strictly with fasting, prayer, and contemplation, would it hurt to at least pay some small tribute to the true nature of the holiday? Going to Mass on St. Patrick’s Day, and on the day of the Parade (The Parade did take place on Sunday, after all!), was once a big part of these annual celebrations, and remains a small part of both. But if even a quarter of the Parade attendees attended the special pre-Parade Mass at St. Cajetan, Morgan Park’s largest and most prominent parish, every parish in the neighborhood, and on the whole south side of Chicago, would have to have a special Mass to accommodate the crowds. That, of course, has never happened. Getting into any Mass on Parade morning, even the special pre-Parade Mass at St. Cajetan, is no problem. Getting into one of the bars on Western Avenue, however, takes a great deal of effort.
The residents of Beverly/Morgan Park, and all proud Irish-Americans, are not shedding tears at the passing of the South Side Irish Parade. We have finally made a small step toward not having to endure the embarrassment of the annual display of foolish, sloppy, shameless drunkenness that the Parade had become. And perhaps the day will come when we no longer have to explain to people that such displays of manifest ignorance and irresponsibility are not proper reflections of either our neighborhood or our Irish-American heritage.
The ostensible reason for suspending the Parade was overcrowding and lawlessness. Beverly/Morgan Park, the neighborhood that is bisected by Western Avenue, the street that forms the Parade’s route, is a quiet residential neighborhood, similar to many found throughout Chicago. It is far removed from downtown both geographically and in its sense of proportion. Downtown Chicago features tall buildings, wide streets, and spacious sidewalks. Beverly/Morgan Park features single family homes, narrow streets, and tight sidewalks. Even Western Avenue, the neighborhood’s main thoroughfare, is small by comparison to, say, State Street or Michigan Avenue downtown. But the crowds at the South Side Irish Parade rival, and often surpass, those at the downtown St. Patrick’s Day Parade. The neighborhood and its infrastructure were never designed to handle the 300,000 revelers that descended on it for this year’s Parade. The results of such a massive influx of revelers were predictable—traffic, both vehicular and foot, was gridlocked. Restroom facilities were in short supply, with predictable consequences. The neighborhood, and those surrounding it, was effectively shut down for the entire day of the Parade.
Even worse than the overcrowding was the general lawlessness that prevails on the day of the Parade. Perhaps lawlessness is too strong a word; no one gets killed, there aren’t any holdups or muggings per se, and people in the neighborhood are not physically threatened unless they willingly participate in one of the fights that break out along and adjoining the Parade’s route. But, this year, a not atypical year, several police officers were assaulted, local emergency rooms were occupied with minor injuries, such as broken teeth and concussions, and fifty three arrests were made, mostly for disorderly conduct, battery, public drinking, and underage drinking. At a church brunch the week following this year’s Parade, my wife and I were told by several residents of my old neighborhood tales of revelers’, many apparently underage, passing out on neighborhood front yards, kids’, and adults’, urinating, vomiting, or worse, in residents’ bushes or right out on their lawns, fights breaking out on the street or the sidewalk directly in front of people’s homes, and kids’ simply walking into fenced backyards and walking off with coolers filled with beer pop, and other essentials for the family picnics and gatherings that are a regular feature of what has become known as “Parade Day” in the neighborhood. Please be aware that Beverly/Morgan Park is not a prudish neighborhood that looks askance at drinking per se; its residents are, er, known to take a drink on occasion and beer is always a prominent, expected, and much indulged in feature at most family gatherings. The west side of Western Avenue (The east side of the street, in one of the most ironic manifestations of home rule in the history of municipal governance, is dry.) is probably more densely packed with bars and taverns than any neighborhood in the city. But the general consensus of neighborhood residents is that the Parade was descending deeper into debauchery each year and that they had simply had enough. The effective cancellation of the Parade was met with heavy sighs of relief, if not cheers, by the residents of Beverly/Morgan Park who have had to put up with the raucous, crude, and outright disgusting behavior, largely of outsiders, for years now.
There is something larger, though, that makes the end of the South Side Irish Parade such a happy outcome for my fellow Irish-Americans, and true South Side Irish, and it has to do with the way we have come to celebrate St. Patrick’s Day, and our “Irishness,” in this country.
One reveler at the Parade, who hailed from Mt. Greenwood, a neighborhood just west of Beverly/Morgan Park, and at least as Irish-American, when told that organizers were considering canceling the Parade, stated, as quoted in the Chicago Sun-Times, “I know some people complain about the drinking, but it’s a great celebration of being Irish. That’s what it’s all about.” Such woefully misinformed sentiments could not more perfectly encapsulate the problem manifested and symbolized by the Parade. At its beginnings some thirty years ago, the Parade was indeed a great celebration of being Irish, with a group of kids and their parents, led by a boy dressed as St. Patrick, marching around the block, dressed in their Celtic finery and pulling, or riding in, wagons festooned with green, orange, and white. But now the Parade has degenerated into a great celebration not of being Irish but of being a jackass. Television coverage and newspaper pictures of the Parade, while occasionally showing the pipe bands or the floats filled with waving, dancing children, feature primarily pictures of beer addled, loutish kids and, even more sadly, adults who should know better, hoisting beer cans, chugging beers, wearing idiotic hats designed to comically facilitate drinking, and sporting tee-shirts with inane phrases such as “I like beer.” Very clever.
None of these activities surrounding the parade requires any effort, exertion, or any activity of which one could justly be proud. As my father, as Irish-American as anyone but who wisely refrained from wearing his ethnicity on his sleeve, used to tell me, “Anyone can act like an a—hole. It doesn’t take any special talent and only shows people only one thing: that you’re an a—hole.” He usually made this observation while observing his fellow Irish-Americans, including his youngest son, reveling in what came to be misunderstood, even years ago, their “Irishness.” As an Irish-American who came from nothing, worked hard, provided a better future for his kids, and made the mother country proud, the celebration of St. Patrick’s Day had come to sicken him. Though, in my youth, I shrugged off his observations as those of a guy who simply didn’t understand how to have a good time or how to be Irish (as if I somehow knew either better than he), as I have grown older, raised my own family, and become more aware of my Irish heritage and what constitutes true pride and achievement, I understand the wisdom of his observations. They come to mind whenever I am confronted with images of a group of “Irishmen” celebrating their “Irishness” in what has become the accepted American way of manifesting what they falsely regard as Celtic culture.
The South Side Irish Parade had become merely the most glaring example of the defamation of the greatness of Ireland that has ironically come to constitute my ethnic group’s demonstration of its ethnic “pride.” What these revelers do not seem to understand, or willfully choose to ignore, is that being Irish-American and celebrating one’s Irishness does not mean getting drunk and acting like an idiot. While the stereotypical Irish-American is an earnest but besotted sort, drinking well beyond his limits at night and battling the shakes with Jameson’s in the morning before heading off to his blue collar job on the city payroll, the typical Irish-American is, or at least should be, nothing of the sort. The typical Irish-American is a hardworking, God-fearing, church-going family man (or woman) who works hard (often, but not always, at a blue collar job with the city), supports his family, and is proud of his old country but damn happy to be living on this side of the Atlantic. The Irish-American hero is not the besotted, obstreperous drunk bragging of the number of beers he had last night and his gargantuan hangover today. The Irish-American heroes are people like John Kennedy, Ronald Reagan, Gene Kelly, Georgia O’Keefe, Pat O’Brien, Jimmy Cagney, Michael Flatley, Herb Kelleher, Jack Ford, William Brennan, Patrick Fitzgerald, Fulton, Sheen, Eugene O’Neill, Tom Clancy, Jimmy Breslin, Tim Russert, Bill Buckley, John Barry, Cardinal O’Connor, Audie Murphy, George M. Cohan, Bing Crosby, Richard J. Daley, Jack Dempsey, Louis Sullivan, and, yes, Dick Quinn and the millions like him who, though not recorded in history, worked hard, behaved like gentlemen, and realized the American dream. Many, if not most, of the aforementioned enjoyed or enjoy a drink now and then, but they didn’t achieve what they achieved by equating the degree of their Irishness with the prodigiousness of their alcohol consumption.
It is especially ironic that we Irish-Americans have come to identify ourselves by the very activity that has wreaked such havoc on our mother country. As a straight from central casting Irish-American priest in my old neighborhood often said in his sermons some thirty years ago, before the Irish resurgence that has caused some to dub it the “Celtic Tiger,” (I will have to paraphrase here because thirty years clouds the memory), it is fashionable to argue that the British ruined Ireland, but, while the British certainly did their part, it wasn’t the British who ruined Ireland; it was the bottle that ruined Ireland. Yet, in our country, the descendants of Irish immigrants, many of whom came here to escape the tyranny of both the British and the bottle, equate the very thing that had so decimated their mother country with their ethnic identity. This is beyond strange; it is a perversion of Irish pride and identity.
One final irony of the St. Patrick’s Day is that St. Patrick himself, who was probably Welsh, may have been French, but definitely was not Irish, was an abstemious, serious, some might even say stern man who would have had no part of the silliness and shallowness that has come to characterize his feast day. I can’t put it any better than did Father Dan Brandt of Nativity of Our Lord Parish in Bridgeport, the ancestral parish of the Daley family, who said “I think St. Patrick would be rolling over in his grave if he saw the way his feast day was being bastardized.” One should remind the revelers on St. Patrick’s Day and at the South Side Irish Parade that the holiday they are ostensibly celebrating is SAINT Patrick’s Day, a day on the liturgical calendar of the Catholic Church. While no one expects the day to be celebrated strictly with fasting, prayer, and contemplation, would it hurt to at least pay some small tribute to the true nature of the holiday? Going to Mass on St. Patrick’s Day, and on the day of the Parade (The Parade did take place on Sunday, after all!), was once a big part of these annual celebrations, and remains a small part of both. But if even a quarter of the Parade attendees attended the special pre-Parade Mass at St. Cajetan, Morgan Park’s largest and most prominent parish, every parish in the neighborhood, and on the whole south side of Chicago, would have to have a special Mass to accommodate the crowds. That, of course, has never happened. Getting into any Mass on Parade morning, even the special pre-Parade Mass at St. Cajetan, is no problem. Getting into one of the bars on Western Avenue, however, takes a great deal of effort.
The residents of Beverly/Morgan Park, and all proud Irish-Americans, are not shedding tears at the passing of the South Side Irish Parade. We have finally made a small step toward not having to endure the embarrassment of the annual display of foolish, sloppy, shameless drunkenness that the Parade had become. And perhaps the day will come when we no longer have to explain to people that such displays of manifest ignorance and irresponsibility are not proper reflections of either our neighborhood or our Irish-American heritage.
Monday, March 23, 2009
THE WASHINGTON TALENT POOL CONTINUES TO DRAIN
3/23/09
Last night on “60 Minutes,” Barack Obama uttered the most frightening words of his presidency, if not his entire life. Most viewers, caught up in the puffy hagiography that passes for coverage of our new president, doubtless did not catch this terrifying utterance. I am almost equally sure that President Obama himself did not realize what a blood-curdling horror he was uttering when he said that Treasury Secretary Preppy Timmy Geithner was “as sharp and as skilled a public servant as we have.”
Saints preserve us! It’s worse than even I thought!
Last night on “60 Minutes,” Barack Obama uttered the most frightening words of his presidency, if not his entire life. Most viewers, caught up in the puffy hagiography that passes for coverage of our new president, doubtless did not catch this terrifying utterance. I am almost equally sure that President Obama himself did not realize what a blood-curdling horror he was uttering when he said that Treasury Secretary Preppy Timmy Geithner was “as sharp and as skilled a public servant as we have.”
Saints preserve us! It’s worse than even I thought!
I THINK WE’RE GOING TO NEED THE HELP OF MATTHEW, LUKE, AND JOHN, TOO
3/23/09
As many observers have pointed out, one of the problems with the incipient multi-pronged program to take bad assets off the books of banks and other financial institutions by forming a series of public-private partnerships and/or providing federal non-recourse loans for private players to buy distressed mortgages is the that of the marks that will result from such an endeavor if these contraptions actually work.
Several observers have pointed out that banks that have aggressively marked down their malodorous assets, such as Morgan Stanley and Goldman Sachs, may benefit if actual market prices are established by these Barack Goldberg contraptions; they could sell their bad assets at a book profit. But other institutions, primarily deposit taking institutions, have not been aggressive in marking down their fetid financings. Should they sell these stinkers into the new program, the experts point out, they will have to take a loss.
However, I have heard no one address a larger problem. Even if the banks that are carrying their assets at generous, or perhaps gullible, prices do not sell their bad assets, “mark to market” accounting will force the banks to mark those assets down to the new, lower prices established by the working of the Barack Goldberg financial mechanisms being cooked up in Washington. This should further impair their capital and thus might lead to the necessity of more federal aid.
“Mark to market,” as currently practiced, is, of course, a fraud. Since there is no market in these assets, a true mark to market, if we define market price as the highest price a willing, ready, and able buyer will pay, would be zero on many of these assets. These assets are not carried at zero, but, rather, some value based on discounted cash flows, “intrinsic” value, etc. One does not have to be too much of a cynic to contend that many of the assumptions behind the “market” marks are optimistic. So when a true “market” price, or at least as true a “market” price that can be gleaned from a bid that his heavily financed with taxpayer cash, is established, these assets, which currently do not reflect anything like market prices (zero, currently) will have to be marked down.
This latest attempt to have the taxpayers wipe the sniveling noses of the free market tough guys on Wall Street will thus do more harm than good unless “mark to market” is abandoned. So it looks like this whole program is either another in a series of not very well thought out plans from the Bush/Obama braintrust that is destined for failure and well deserved ridicule or simply a Machiavellian attempt to ditch “mark to market,” such as it is, and return to the halcyon days of not very long ago when we could simply ignore our problems and just pretend everything is wonderful; i.e., carry these bad assets at cost.
As many observers have pointed out, one of the problems with the incipient multi-pronged program to take bad assets off the books of banks and other financial institutions by forming a series of public-private partnerships and/or providing federal non-recourse loans for private players to buy distressed mortgages is the that of the marks that will result from such an endeavor if these contraptions actually work.
Several observers have pointed out that banks that have aggressively marked down their malodorous assets, such as Morgan Stanley and Goldman Sachs, may benefit if actual market prices are established by these Barack Goldberg contraptions; they could sell their bad assets at a book profit. But other institutions, primarily deposit taking institutions, have not been aggressive in marking down their fetid financings. Should they sell these stinkers into the new program, the experts point out, they will have to take a loss.
However, I have heard no one address a larger problem. Even if the banks that are carrying their assets at generous, or perhaps gullible, prices do not sell their bad assets, “mark to market” accounting will force the banks to mark those assets down to the new, lower prices established by the working of the Barack Goldberg financial mechanisms being cooked up in Washington. This should further impair their capital and thus might lead to the necessity of more federal aid.
“Mark to market,” as currently practiced, is, of course, a fraud. Since there is no market in these assets, a true mark to market, if we define market price as the highest price a willing, ready, and able buyer will pay, would be zero on many of these assets. These assets are not carried at zero, but, rather, some value based on discounted cash flows, “intrinsic” value, etc. One does not have to be too much of a cynic to contend that many of the assumptions behind the “market” marks are optimistic. So when a true “market” price, or at least as true a “market” price that can be gleaned from a bid that his heavily financed with taxpayer cash, is established, these assets, which currently do not reflect anything like market prices (zero, currently) will have to be marked down.
This latest attempt to have the taxpayers wipe the sniveling noses of the free market tough guys on Wall Street will thus do more harm than good unless “mark to market” is abandoned. So it looks like this whole program is either another in a series of not very well thought out plans from the Bush/Obama braintrust that is destined for failure and well deserved ridicule or simply a Machiavellian attempt to ditch “mark to market,” such as it is, and return to the halcyon days of not very long ago when we could simply ignore our problems and just pretend everything is wonderful; i.e., carry these bad assets at cost.
Tuesday, March 17, 2009
AIGN’T LIFE GRAND?
3/17/09
All of Washington, and all of America, for that matter, is apoplectic about the $450mm in bonuses being paid to key employees of ward of the state, mother of all welfare queens AIG. (The much trumpeted $165 million that is the target of the latest burst of outrage is only one installment of the $450mm boodle, but is perhaps the most inflammatory because that particular bundle is going to employees of AIG’s financial products division, or the very people who got Hank Greenberg’s insurance company into so much trouble.) This is only the latest of the outrages perpetrated by AIG, which now has received $173 billion in federal largesse.
President Obama yesterday afternoon, displaying his usual feigned outrage, swore to “pursue every legal avenue to block” the $165mm in bonuses. Later in the afternoon, the White House pusillanimously retreated from that statement, saying that there really wasn’t anything it could do to recoup the $165m in payments that were made Friday. Instead, it served up the usual pabulum about seeking to ensure that taxpayers will somehow recoup the bonus money, insuring that no federal money goes to pay bonuses (as if money were somehow not a fungible asset), and to tighten up restrictions of further bonuses at AIG. Wow. Now that’s change we can believe in. One might have to be excessively cynical to suspect that checks from former AIG employees may have reached the DNC sometime between Obama’s (by now tiresome) display of righteous and phony outrage and the White House’s determination that nothing could be done about the AIG bonuses, but, as that great philosopher Lily Tomlin once said, “No matter how cynical you become, it’s never enough to keep up.”
One of the arguments used to justify these bonuses is that they are necessary to retain talent. Just as AIG and the other Wall Street Welfare Queens continue to push and shove for the most advantageous positions at the trough in order, of course, to protect us from “systemic risk,” they continue to use this laughable canard about retaining talent. The “securities” that AIG is attempting to “unwind” are bafflingly complex; outsiders could not possibly understand these enigmas wrapped in puzzles wrapped in riddles, and thus, we are told, if AIG is to save the taxpayers from further financial emasculation, it must retain the employees who got AIG into this mess with these horrendously complicated instruments.
Hmm…
I have no doubt that outsiders could not understand the time bombs that blew up in AIG’s face. But I also have no doubt that those who designed these financial Frankenstein’s monsters, those to whom we must pay huge bonuses to keep on board the financial equivalent of the Titanic’s sister ship, do not understand them either. Think about it; if these financial wunderkinds really understood these instruments, these very instruments they designed (slopped together really, with large doses of barnyard detritus for which their never to be perceived as obtuse managers fell in their overwhelming greed and emotional insecurity), so well, why the disastrous consequences for AIG, the financial system, and the taxpayers?
But let’s assume I am wrong and that these are valuable, indeed indispensable, employees. And let’s further assume that if they are not paid they will walk out the door, presumably because employers are just dying to hire the types of people who can land them on the financial rocks in no time with only a minimum of effort because their powers are obviously beyond those of mortal men. And let’s assume that the departure of these vital, much sought after geniuses does lead to the end of AIG. Oh, well. Lots of people, primarily overseas investors, will be upset (One does not have to be more than minimally cynical to suppose that the AIG bailout was designed to placate foreign investors, primarily the Chinese, but I digress.), but these are big boys who are well paid, were supposed to be familiar with the concept of counter-party risk, and presumably can take care of themselves. The taxpayers will finally be relieved of the water torture that AIG’s incessant demands for fatter and more frequent welfare checks have become. And what would you like to bet that the haunting specter of “systemic risk,” a concept cooked up by Wall Street, the Bush/Obama administration, and Obsequious Ben Bernanke in order to give their Wall Street bursars more leverage as they reach into the taxpayers’ pockets, is not all that horrifying a prospect after all? The economy will only recover when it no longer has to bear the burden of supporting the outrageous, silly, and shallow “lifestyles” of the Wall Street self-imagined thugs who baselessly deem themselves so special, so exceptional, and so positively wonderful that they are entitled to extract money from the ordinary taxpayer in order to pursue a lifestyle that makes decent people, the people who are presented with the tab for such extravagance, wretch.
The more plausible line of argument as to why nothing could be done about the AIG bonuses, and the one the White House was in all likelihood focusing on as it grasped at straws to hide its manifest cowardice and/or utter indistinguishability from the Bush administration, is that these bonuses are a matter of contract, and contracts can’t be broken.
Hmm…
The government has had no compunction whatsoever about demanding that the Big 3 auto companies find some way to abrogate their contracts with the UAW as a condition for federal money, even after the money was dispensed, as in the case of AIG. And the government has had no problem with asking banks to abrogate mortgage contracts as a condition for federal money, again, even after the money has been dispensed. What makes AIG so different, other than the lily livers, or the ulterior motives, of Barack Obama, Preppy Timmy Geithner, and the other patheticos who inhabit this new administration?
Another justification for the poltroonish Obama/Geithner “Well, I guess there’s nothing we can do, so all you taxpayers should just move along, shut up, and pay” policy is that, since these bonuses are matters of contract, it would cost more to fight the bonuses in court than it would cost to actually pay the bonuses. It’s amusing how quickly this assessment of the costs of fighting these contracts was made, in a matter of mere hours, when the government normally can’t estimate the price of a lunch at White Castle in less than fifteen months. But even if these estimates are right and the government would be financially better off paying these bonuses than fighting them, isn’t there a principle involved here? Isn’t it worth a bit more money in the short run to establish the principle that, in a free market economy, people shouldn’t be rewarded for failure?
Oh, wait; I forgot. This isn’t a free market economy. This is an economy in which big time success depends not on one’s efforts or hard work but, rather, on one’s connections to and standing in the big government/big business nexus that has strangled our once great nation in its never ending, ever more voracious thirst for power and money.
In the Bush/Obama era, there is no longer any principle to uphold.
All of Washington, and all of America, for that matter, is apoplectic about the $450mm in bonuses being paid to key employees of ward of the state, mother of all welfare queens AIG. (The much trumpeted $165 million that is the target of the latest burst of outrage is only one installment of the $450mm boodle, but is perhaps the most inflammatory because that particular bundle is going to employees of AIG’s financial products division, or the very people who got Hank Greenberg’s insurance company into so much trouble.) This is only the latest of the outrages perpetrated by AIG, which now has received $173 billion in federal largesse.
President Obama yesterday afternoon, displaying his usual feigned outrage, swore to “pursue every legal avenue to block” the $165mm in bonuses. Later in the afternoon, the White House pusillanimously retreated from that statement, saying that there really wasn’t anything it could do to recoup the $165m in payments that were made Friday. Instead, it served up the usual pabulum about seeking to ensure that taxpayers will somehow recoup the bonus money, insuring that no federal money goes to pay bonuses (as if money were somehow not a fungible asset), and to tighten up restrictions of further bonuses at AIG. Wow. Now that’s change we can believe in. One might have to be excessively cynical to suspect that checks from former AIG employees may have reached the DNC sometime between Obama’s (by now tiresome) display of righteous and phony outrage and the White House’s determination that nothing could be done about the AIG bonuses, but, as that great philosopher Lily Tomlin once said, “No matter how cynical you become, it’s never enough to keep up.”
One of the arguments used to justify these bonuses is that they are necessary to retain talent. Just as AIG and the other Wall Street Welfare Queens continue to push and shove for the most advantageous positions at the trough in order, of course, to protect us from “systemic risk,” they continue to use this laughable canard about retaining talent. The “securities” that AIG is attempting to “unwind” are bafflingly complex; outsiders could not possibly understand these enigmas wrapped in puzzles wrapped in riddles, and thus, we are told, if AIG is to save the taxpayers from further financial emasculation, it must retain the employees who got AIG into this mess with these horrendously complicated instruments.
Hmm…
I have no doubt that outsiders could not understand the time bombs that blew up in AIG’s face. But I also have no doubt that those who designed these financial Frankenstein’s monsters, those to whom we must pay huge bonuses to keep on board the financial equivalent of the Titanic’s sister ship, do not understand them either. Think about it; if these financial wunderkinds really understood these instruments, these very instruments they designed (slopped together really, with large doses of barnyard detritus for which their never to be perceived as obtuse managers fell in their overwhelming greed and emotional insecurity), so well, why the disastrous consequences for AIG, the financial system, and the taxpayers?
But let’s assume I am wrong and that these are valuable, indeed indispensable, employees. And let’s further assume that if they are not paid they will walk out the door, presumably because employers are just dying to hire the types of people who can land them on the financial rocks in no time with only a minimum of effort because their powers are obviously beyond those of mortal men. And let’s assume that the departure of these vital, much sought after geniuses does lead to the end of AIG. Oh, well. Lots of people, primarily overseas investors, will be upset (One does not have to be more than minimally cynical to suppose that the AIG bailout was designed to placate foreign investors, primarily the Chinese, but I digress.), but these are big boys who are well paid, were supposed to be familiar with the concept of counter-party risk, and presumably can take care of themselves. The taxpayers will finally be relieved of the water torture that AIG’s incessant demands for fatter and more frequent welfare checks have become. And what would you like to bet that the haunting specter of “systemic risk,” a concept cooked up by Wall Street, the Bush/Obama administration, and Obsequious Ben Bernanke in order to give their Wall Street bursars more leverage as they reach into the taxpayers’ pockets, is not all that horrifying a prospect after all? The economy will only recover when it no longer has to bear the burden of supporting the outrageous, silly, and shallow “lifestyles” of the Wall Street self-imagined thugs who baselessly deem themselves so special, so exceptional, and so positively wonderful that they are entitled to extract money from the ordinary taxpayer in order to pursue a lifestyle that makes decent people, the people who are presented with the tab for such extravagance, wretch.
The more plausible line of argument as to why nothing could be done about the AIG bonuses, and the one the White House was in all likelihood focusing on as it grasped at straws to hide its manifest cowardice and/or utter indistinguishability from the Bush administration, is that these bonuses are a matter of contract, and contracts can’t be broken.
Hmm…
The government has had no compunction whatsoever about demanding that the Big 3 auto companies find some way to abrogate their contracts with the UAW as a condition for federal money, even after the money was dispensed, as in the case of AIG. And the government has had no problem with asking banks to abrogate mortgage contracts as a condition for federal money, again, even after the money has been dispensed. What makes AIG so different, other than the lily livers, or the ulterior motives, of Barack Obama, Preppy Timmy Geithner, and the other patheticos who inhabit this new administration?
Another justification for the poltroonish Obama/Geithner “Well, I guess there’s nothing we can do, so all you taxpayers should just move along, shut up, and pay” policy is that, since these bonuses are matters of contract, it would cost more to fight the bonuses in court than it would cost to actually pay the bonuses. It’s amusing how quickly this assessment of the costs of fighting these contracts was made, in a matter of mere hours, when the government normally can’t estimate the price of a lunch at White Castle in less than fifteen months. But even if these estimates are right and the government would be financially better off paying these bonuses than fighting them, isn’t there a principle involved here? Isn’t it worth a bit more money in the short run to establish the principle that, in a free market economy, people shouldn’t be rewarded for failure?
Oh, wait; I forgot. This isn’t a free market economy. This is an economy in which big time success depends not on one’s efforts or hard work but, rather, on one’s connections to and standing in the big government/big business nexus that has strangled our once great nation in its never ending, ever more voracious thirst for power and money.
In the Bush/Obama era, there is no longer any principle to uphold.
Saturday, March 14, 2009
A FINANCIAL MAGINOT LINE?
3/14/09
Yesterday, Chinese Premier Wen Jiabao, when asked to comment on his country’s considerable trove of U.S. treasuries and other dollar denominated assets (According to the U.S. Treasury, as of December, 2008, China held $727.4 billion of Treasuries, a 52% increase from December, 2007, a holding that during 2008 eclipsed Japan’s stash as the largest foreign holding of U.S. Treasury debt. Many experts, including the Council on Foreign Relations, consider the Treasury’s $724.7 billion estimate to be low by at least $100 billion.), uttered the following:
“We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. Frankly speaking, I do have some worries.”
The first reaction of insightful observers was “Uh-oh.” The reaction of the same Wall Street sheep who got us into this mess was, paraphrasing, We have nothing to worry about; the Chinese have nowhere else to go.
Hmm…
First of all, at this precise moment, the Chinese may have “nowhere else to go” with the enormous mountain of U.S. dollars we have sent them. However, that situation may change more quickly than the flock thinks. Even now, the Chinese are investing billions upon billions of dollars in local infrastructure, part of their stimulus plan but also something that would have had to be done, regardless of China’s current cyclical condition, in order to accommodate the rapid growth and modernization of their economy. So domestic investment in somewhere else that the Chinese can go with all those dollars. The Chinese are smart and patient people; doubtless they will find other places to go. Notice, by the way, that the Europeans are hesitant, despite bullying by the Obama administration, to spend with the same reckless, carefree abandon that characterizes the approach of the ever vigilant fiscal watchdogs in the Pelosi Congress. Might Europe be vying for a little of that Chinese pot of gold?
Second, and both more important and more general, I will spare the sports, business, political, et. al. analogies, but the attitude being displayed by the somnambulists on Wall Streets, i.e., “We don’t have to do any better because our opponents are so far behind us” has never in history been a winner.
We are rapidly decimating our fiscal house and enfeebling our currency to the point of utter debilitation. The same “experts” who cheer at such irresponsibility as somehow being the answer to the crisis wrought by our irresponsibility are insouciantly telling us not to fear the obvious consequences of this insanity because we are so secure in our might fiscal fortress that no one can challenge us.
If I were holding $700 billion plus in U.S. assets, I’d be looking for somewhere else to put my money.
Yesterday, Chinese Premier Wen Jiabao, when asked to comment on his country’s considerable trove of U.S. treasuries and other dollar denominated assets (According to the U.S. Treasury, as of December, 2008, China held $727.4 billion of Treasuries, a 52% increase from December, 2007, a holding that during 2008 eclipsed Japan’s stash as the largest foreign holding of U.S. Treasury debt. Many experts, including the Council on Foreign Relations, consider the Treasury’s $724.7 billion estimate to be low by at least $100 billion.), uttered the following:
“We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. Frankly speaking, I do have some worries.”
The first reaction of insightful observers was “Uh-oh.” The reaction of the same Wall Street sheep who got us into this mess was, paraphrasing, We have nothing to worry about; the Chinese have nowhere else to go.
Hmm…
First of all, at this precise moment, the Chinese may have “nowhere else to go” with the enormous mountain of U.S. dollars we have sent them. However, that situation may change more quickly than the flock thinks. Even now, the Chinese are investing billions upon billions of dollars in local infrastructure, part of their stimulus plan but also something that would have had to be done, regardless of China’s current cyclical condition, in order to accommodate the rapid growth and modernization of their economy. So domestic investment in somewhere else that the Chinese can go with all those dollars. The Chinese are smart and patient people; doubtless they will find other places to go. Notice, by the way, that the Europeans are hesitant, despite bullying by the Obama administration, to spend with the same reckless, carefree abandon that characterizes the approach of the ever vigilant fiscal watchdogs in the Pelosi Congress. Might Europe be vying for a little of that Chinese pot of gold?
Second, and both more important and more general, I will spare the sports, business, political, et. al. analogies, but the attitude being displayed by the somnambulists on Wall Streets, i.e., “We don’t have to do any better because our opponents are so far behind us” has never in history been a winner.
We are rapidly decimating our fiscal house and enfeebling our currency to the point of utter debilitation. The same “experts” who cheer at such irresponsibility as somehow being the answer to the crisis wrought by our irresponsibility are insouciantly telling us not to fear the obvious consequences of this insanity because we are so secure in our might fiscal fortress that no one can challenge us.
If I were holding $700 billion plus in U.S. assets, I’d be looking for somewhere else to put my money.
Wednesday, March 11, 2009
“BUT I SERVE AN UPSCALE, RECESSION PROOF CLIENTELE…”
3/11/09
As I’ve been saying for months (years, really), those experts who contend that the root of our financial problems lies in the housing crisis have it wrong. Housing is more a manifestation of our larger problem, i.e., far too much debt at all levels, but primarily at the household level, that has fueled a Potemkin economy that must be allowed to unwind. Housing is only one of the vehicles used to secure and thus amass such debt and also one of the “beneficiaries” of consumers’ access to debt that they would never have been granted under more normal, sober circumstances. The unwinding of the easy, what the hell, it’s not my money debt fueled Potemkin economy will be long and painful, and any attempts, especially the ham-handed attempts that characterize the Bush/Obama economic approach, to ease the discomfort will only prolong the agony.
One of the manifestations of the overall debt problem is the behavior of businesses in response to the reckless flow of consumer debt. To put it simply, firms really believed that consumers actually had the money they were spending. However, those consumers never had the money they were spending; what they had was access to liability creation. Businesses, however, having drunken the kool-aid (How frequently have you heard such drivel as “Oh, these people are really well-heeled.” “My customers have deep pockets.”?), priced their products and services and expanded their businesses as if they had customers with big bank accounts and high, stable incomes rather than large credit lines, either unsecured in the form of credit card payables or secured in the form of home equity lines of credit. When those “wealthy, upscale” consumers no longer had access to liability creation, business imploded.
This is indeed, if not a tragedy, an utter abashment for such businesses. But that is how a free market economy is supposed to work: if one behaves more like a sheep than a reasonable, thinking, critical business person, one should pay the price. The best will learn from such lessons, pick themselves up, and prosper once more. Those who had no business running a business will find some other type of work. Unfortunately, it is highly unlikely in the Bush/Obama era, in which the responsible are made to pay for the irresponsible, that such a free market outcome will be the result. Instead, large businesses will be propped up and, if things go far enough, even some politically favored small businesses will also be kept alive by the application of generous amounts of federal succor, courtesy, ultimately, of those who behaved responsibly and took the time to open their eyes rather than repeat the happy talk cant that has substituted for sound economic observation for the last twenty years or so. And the mistakes and garbled thinking that got us into this mess will be repeated…again and again and again.
As I’ve been saying for months (years, really), those experts who contend that the root of our financial problems lies in the housing crisis have it wrong. Housing is more a manifestation of our larger problem, i.e., far too much debt at all levels, but primarily at the household level, that has fueled a Potemkin economy that must be allowed to unwind. Housing is only one of the vehicles used to secure and thus amass such debt and also one of the “beneficiaries” of consumers’ access to debt that they would never have been granted under more normal, sober circumstances. The unwinding of the easy, what the hell, it’s not my money debt fueled Potemkin economy will be long and painful, and any attempts, especially the ham-handed attempts that characterize the Bush/Obama economic approach, to ease the discomfort will only prolong the agony.
One of the manifestations of the overall debt problem is the behavior of businesses in response to the reckless flow of consumer debt. To put it simply, firms really believed that consumers actually had the money they were spending. However, those consumers never had the money they were spending; what they had was access to liability creation. Businesses, however, having drunken the kool-aid (How frequently have you heard such drivel as “Oh, these people are really well-heeled.” “My customers have deep pockets.”?), priced their products and services and expanded their businesses as if they had customers with big bank accounts and high, stable incomes rather than large credit lines, either unsecured in the form of credit card payables or secured in the form of home equity lines of credit. When those “wealthy, upscale” consumers no longer had access to liability creation, business imploded.
This is indeed, if not a tragedy, an utter abashment for such businesses. But that is how a free market economy is supposed to work: if one behaves more like a sheep than a reasonable, thinking, critical business person, one should pay the price. The best will learn from such lessons, pick themselves up, and prosper once more. Those who had no business running a business will find some other type of work. Unfortunately, it is highly unlikely in the Bush/Obama era, in which the responsible are made to pay for the irresponsible, that such a free market outcome will be the result. Instead, large businesses will be propped up and, if things go far enough, even some politically favored small businesses will also be kept alive by the application of generous amounts of federal succor, courtesy, ultimately, of those who behaved responsibly and took the time to open their eyes rather than repeat the happy talk cant that has substituted for sound economic observation for the last twenty years or so. And the mistakes and garbled thinking that got us into this mess will be repeated…again and again and again.
Tuesday, March 10, 2009
“EXPRESSWAY…TO YOUR (WALLET)…”
3/10/09
Those of you who watch CNBC regularly are doubtless familiar with the series of Ameriprise commercials featuring an aging hipster doofus trying to accomplish the impossible task of convincing members of my generation that they are not only cool, but erudite, attractive, worldly, and sophisticated while a headache inducing sound track pounds away in the background. All of these commercials are laughably ridiculous for a number of reasons, but the latest perfectly encapsulates the source of at least one of my generation’s financial troubles.
In this particular ad, the self-appointed arbiter of all things cool, doubtless in response to the evaporation of my generation’s sure thing IRAs, 401Ks, etc., asks
“Did you think the road to retirement was an expressway?”
This expert then says the viewers “need a plan” and recommends seeing an Ameriprise “financial advisor,” presumably to resume their trek on the road to riches, or at least away from abject poverty.
Hmm…
People are responsible for their own actions, and, most saliently, for their financial decisions, as the Pontificator ceaselessly argues. That having been said, can anyone blame my fabulous generation for thinking that the road to retirement was an expressway when financial firms, most notably and least credibly Ameriprise, have been spending scores, if not hundreds, of millions of dollars convincing people of just that? For years, “financial planners” have twisted and perverted one study by Ibbotson on historical returns of the stock market to convince people that, given enough time, the stock market is a sure thing and if one just religiously puts money into stocks, the market works like a bank account on gorilla biscuits. Using compounding rates of anywhere from 10% to 15% (depending on how desperately they need the sale), such “financial professionals” have convinced millions of apparently gullible Americans (Just look at our public officials and the flotsam and jetsam on which we blow money we don’t have if you have any doubts concerning the gullibility and sheep-like instincts of the American public.) that if they put everything in the stock market (in, of course, the funds that pay the highest commissions to the “planner”),they, like the Soviet defense forces in Dr. Strangelove, can’t possibly miss. Those of you familiar with the outcome of such a strategy in that classic 1964 Kubrick film are not at all surprised that a similar approach to investing has yielded similar consequences.
Ameriprise is only being singled out in this particular post because of the aforementioned most inane of a long line of excerebrose commercials featuring perhaps the least credible dispenser of financial advice in the long and sordid history of the “financial planning” business. While there are many good and valuable people in the brokerage and financial consulting and planning businesses (some of whom doubtless work for Ameriprise), they are hopelessly outnumbered by the charlatans and mountebanks that have been attracted to that profession by the twin prospects of quick and abundant cash and a near complete absence of accountability. Millions of people whose former careers involved selling shoes or fast food go around calling themselves “financial planners” and the results have been predictable. Now, the same people whose dearth of anything resembling financial knowledge and background is matched only by their dearth of shame are offering plans to get their witless “investors” out of the trouble into which they were plunged by the same “financial planners.”
The sad thing is that Ameriprise and many others (like the local real estate expert, whose expertise in finance hopefully, but probably doesn’t, exceeds his expertise with English diction, who once counseled levering up to buy investment property, including now valueless hotel rooms (“Those who focus only on eliminating debt, rather than building wealth, will never get wealthy.”), and who, most recently, has been promoting his sure fire “get out of debt” formula) have prospered with such a strategy, and I, for one, am betting that they will continue to do so.
After all, they are targeting the always vigilant and thoughtful American public.
Those of you who watch CNBC regularly are doubtless familiar with the series of Ameriprise commercials featuring an aging hipster doofus trying to accomplish the impossible task of convincing members of my generation that they are not only cool, but erudite, attractive, worldly, and sophisticated while a headache inducing sound track pounds away in the background. All of these commercials are laughably ridiculous for a number of reasons, but the latest perfectly encapsulates the source of at least one of my generation’s financial troubles.
In this particular ad, the self-appointed arbiter of all things cool, doubtless in response to the evaporation of my generation’s sure thing IRAs, 401Ks, etc., asks
“Did you think the road to retirement was an expressway?”
This expert then says the viewers “need a plan” and recommends seeing an Ameriprise “financial advisor,” presumably to resume their trek on the road to riches, or at least away from abject poverty.
Hmm…
People are responsible for their own actions, and, most saliently, for their financial decisions, as the Pontificator ceaselessly argues. That having been said, can anyone blame my fabulous generation for thinking that the road to retirement was an expressway when financial firms, most notably and least credibly Ameriprise, have been spending scores, if not hundreds, of millions of dollars convincing people of just that? For years, “financial planners” have twisted and perverted one study by Ibbotson on historical returns of the stock market to convince people that, given enough time, the stock market is a sure thing and if one just religiously puts money into stocks, the market works like a bank account on gorilla biscuits. Using compounding rates of anywhere from 10% to 15% (depending on how desperately they need the sale), such “financial professionals” have convinced millions of apparently gullible Americans (Just look at our public officials and the flotsam and jetsam on which we blow money we don’t have if you have any doubts concerning the gullibility and sheep-like instincts of the American public.) that if they put everything in the stock market (in, of course, the funds that pay the highest commissions to the “planner”),they, like the Soviet defense forces in Dr. Strangelove, can’t possibly miss. Those of you familiar with the outcome of such a strategy in that classic 1964 Kubrick film are not at all surprised that a similar approach to investing has yielded similar consequences.
Ameriprise is only being singled out in this particular post because of the aforementioned most inane of a long line of excerebrose commercials featuring perhaps the least credible dispenser of financial advice in the long and sordid history of the “financial planning” business. While there are many good and valuable people in the brokerage and financial consulting and planning businesses (some of whom doubtless work for Ameriprise), they are hopelessly outnumbered by the charlatans and mountebanks that have been attracted to that profession by the twin prospects of quick and abundant cash and a near complete absence of accountability. Millions of people whose former careers involved selling shoes or fast food go around calling themselves “financial planners” and the results have been predictable. Now, the same people whose dearth of anything resembling financial knowledge and background is matched only by their dearth of shame are offering plans to get their witless “investors” out of the trouble into which they were plunged by the same “financial planners.”
The sad thing is that Ameriprise and many others (like the local real estate expert, whose expertise in finance hopefully, but probably doesn’t, exceeds his expertise with English diction, who once counseled levering up to buy investment property, including now valueless hotel rooms (“Those who focus only on eliminating debt, rather than building wealth, will never get wealthy.”), and who, most recently, has been promoting his sure fire “get out of debt” formula) have prospered with such a strategy, and I, for one, am betting that they will continue to do so.
After all, they are targeting the always vigilant and thoughtful American public.
Friday, March 6, 2009
“…UP FROM THE GROUND COME A BUBBLIN’ CRUDE…”
3/6/09
I don’t often like to put up posts dealing with pure investment or trading strategies; I don’t like to talk my positions and see the first parenthetical remark in the third paragraph of this post. However, more general observations that metamorphosize into specific trades might be of interest to my readers, so I’ve put up this post. These are not recommendations, only thoughts.
I’m liking oil at these levels for several reasons:
First, either the economy is going to recover (Loyal readers know that I think such a recovery is highly unlikely in any but the longest of terms, but, unlike my (usually) younger, much more highly paid, far more expert, and obviously more sagacious colleagues who ply their trade as financial geniuses on Wall Street or its more far geographically far flung approximations, I recognize that my, or anyone’s, chances of being right on any macro call approximate my chances of being wrong on that call.) or the dollar is going to get trashed as part of the ill-fated government efforts to revive the moribund economy and capital markets. (Loyal readers know that I think this outcome is the far more likely one, with the same caveats featured in my earlier parenthetical digression.) Either way, oil, priced in dollars, benefits.
Second, oil has fallen a long way in a short time. This is, of course, no reason to buy anything. Remember the experts (not this one) who told people to buy GM at $15, $10, and $5 for the very same reason. I also know that oil has been much lower, around $10, in relatively recent memory. However, such lows were reached before China was a factor in the world oil markets. In fact, when oil was at $10, most “experts” thought that China would be a next exporter of oil in the 21st century. Now that China and India are in the market, their secular bid, even considering the poor state of their cyclical bid at present, should prevent the return of such cheap oil. We have to be near the floor here.
Third, a bullish bet on oil could serve as a hedge against my continuing overall bearish outlook on the stock market, manifested by my continuing, but shrinking, position in QQQQ puts.
USO=27.96 at this writing.
I don’t often like to put up posts dealing with pure investment or trading strategies; I don’t like to talk my positions and see the first parenthetical remark in the third paragraph of this post. However, more general observations that metamorphosize into specific trades might be of interest to my readers, so I’ve put up this post. These are not recommendations, only thoughts.
I’m liking oil at these levels for several reasons:
First, either the economy is going to recover (Loyal readers know that I think such a recovery is highly unlikely in any but the longest of terms, but, unlike my (usually) younger, much more highly paid, far more expert, and obviously more sagacious colleagues who ply their trade as financial geniuses on Wall Street or its more far geographically far flung approximations, I recognize that my, or anyone’s, chances of being right on any macro call approximate my chances of being wrong on that call.) or the dollar is going to get trashed as part of the ill-fated government efforts to revive the moribund economy and capital markets. (Loyal readers know that I think this outcome is the far more likely one, with the same caveats featured in my earlier parenthetical digression.) Either way, oil, priced in dollars, benefits.
Second, oil has fallen a long way in a short time. This is, of course, no reason to buy anything. Remember the experts (not this one) who told people to buy GM at $15, $10, and $5 for the very same reason. I also know that oil has been much lower, around $10, in relatively recent memory. However, such lows were reached before China was a factor in the world oil markets. In fact, when oil was at $10, most “experts” thought that China would be a next exporter of oil in the 21st century. Now that China and India are in the market, their secular bid, even considering the poor state of their cyclical bid at present, should prevent the return of such cheap oil. We have to be near the floor here.
Third, a bullish bet on oil could serve as a hedge against my continuing overall bearish outlook on the stock market, manifested by my continuing, but shrinking, position in QQQQ puts.
USO=27.96 at this writing.
Wednesday, March 4, 2009
“YEAH, I’LL ADMIT IT’S GOT ON SOME MILES ON IT, BUT IT STILL RUNS GOOD…”
3/4/09
I sent the following letter to the Chicago Sun-Times in response to Carol Marin’s piece on the 5th District Congressional primary:
3/4/09
In her 3/4/09 piece on the 5th District Congressional primary, Carol Marin concludes by writing “But they (the ward bosses in the 5th District) would be wise to tremble just a little. Because the earth under their feet just moved” with the nomination of Machine functionary turned independent County Board member Mike Quigley as the Democratic candidate for that Congressional seat.
The Machine may have some reasons to tremble, but the outcome of this primary is not one of them. First, how will Mike Quigley’s agenda in Washington be any different from that of a candidate sent to Washington with the blessing of the Machine in the primary? Quigley will surely get the Organization’s blessing in the general election, and he will just as surely push the same agenda either John Fritchey or Pat O’Connor, the two candidates in the race who best approximated “Machine candidates,” would have pushed: staunch support for President Obama’s agenda and, more importantly, plenty of federal money for the 5th District and for Chicago.
Second, while Mike Quigley “beat the Machine,” with a 22% plurality, the combined votes of Fritchey (18%) and O’Connor (12%) indicate that if the Organization could have decided on one of those two, it would have easily taken advantage of the low turnout and trounced Quigley and nominated its candidate, even in the 5th district that includes some of the most independent wards in the city.
If the Machine has anything to fear coming out of this primary, it is not so much Mike Quigley’s nomination as the lack of someone capable of enforcing party discipline and getting the ward organizations to unite behind one candidate in this disparate and somewhat difficult to control north side and north suburban district.
I sent the following letter to the Chicago Sun-Times in response to Carol Marin’s piece on the 5th District Congressional primary:
3/4/09
In her 3/4/09 piece on the 5th District Congressional primary, Carol Marin concludes by writing “But they (the ward bosses in the 5th District) would be wise to tremble just a little. Because the earth under their feet just moved” with the nomination of Machine functionary turned independent County Board member Mike Quigley as the Democratic candidate for that Congressional seat.
The Machine may have some reasons to tremble, but the outcome of this primary is not one of them. First, how will Mike Quigley’s agenda in Washington be any different from that of a candidate sent to Washington with the blessing of the Machine in the primary? Quigley will surely get the Organization’s blessing in the general election, and he will just as surely push the same agenda either John Fritchey or Pat O’Connor, the two candidates in the race who best approximated “Machine candidates,” would have pushed: staunch support for President Obama’s agenda and, more importantly, plenty of federal money for the 5th District and for Chicago.
Second, while Mike Quigley “beat the Machine,” with a 22% plurality, the combined votes of Fritchey (18%) and O’Connor (12%) indicate that if the Organization could have decided on one of those two, it would have easily taken advantage of the low turnout and trounced Quigley and nominated its candidate, even in the 5th district that includes some of the most independent wards in the city.
If the Machine has anything to fear coming out of this primary, it is not so much Mike Quigley’s nomination as the lack of someone capable of enforcing party discipline and getting the ward organizations to unite behind one candidate in this disparate and somewhat difficult to control north side and north suburban district.
THE BOLD FREE MARKETEERS ARE AT IT AGAIN
3/4/09
I sent the following letter to the Wall Street Journal in response to an article on the Fannie and Freddie bailout. The naked hypocrisy of those rugged capitalists at the Journal never ceases to amaze me:
3/4/09
In his 3/4/09 Opinion piece entitled “Rethinking the Fan and Fred Takeover,” in which he argues that the value of the common equity in Fannie and Freddie should have somehow been preserved rather than wiped out in the federal takeover of those ill-fated institutions, Holman W. Jenkins, Jr. concludes:
“Nothing was inevitable about the collapse of equity values that has made the banking problem so much more difficult.”
No, nothing was inevitable about the collapse of equity values in the financial sector…until managements squandered their shareholders’ capital on addle-brained “investments” to the point at which the taxpayers were forced to step in to save the creditors and the counterparties who also should have known better, but that is another issue.
Repeating arguments employed by Bill Miller and Edward Lampert, two money managers who made astronomical long bets on Fannie and Freddie and lost huge (and now, as is common with big time money managers who talk free market when times are good and beg for federal succor when things don’t go perfectly, are whining like petulant teenagers), Mr. Jenkins echoes the plaint that the government ought to encourage private investment in the financial sector. The idea, however, is not for the government to encourage investment for the sake of investment, and certainly not to encourage investment in poorly conceived, mismanaged institutions. In fact, the government ought to encourage very little, other than the free functioning of markets. And it is the function of the markets to encourage not just wholesale investment but, rather, investment in profitable enterprises, thus channeling capital to its most productive, rather than the most politically favored, uses. As those of us who still remember free markets know, that is how they once worked.
I sent the following letter to the Wall Street Journal in response to an article on the Fannie and Freddie bailout. The naked hypocrisy of those rugged capitalists at the Journal never ceases to amaze me:
3/4/09
In his 3/4/09 Opinion piece entitled “Rethinking the Fan and Fred Takeover,” in which he argues that the value of the common equity in Fannie and Freddie should have somehow been preserved rather than wiped out in the federal takeover of those ill-fated institutions, Holman W. Jenkins, Jr. concludes:
“Nothing was inevitable about the collapse of equity values that has made the banking problem so much more difficult.”
No, nothing was inevitable about the collapse of equity values in the financial sector…until managements squandered their shareholders’ capital on addle-brained “investments” to the point at which the taxpayers were forced to step in to save the creditors and the counterparties who also should have known better, but that is another issue.
Repeating arguments employed by Bill Miller and Edward Lampert, two money managers who made astronomical long bets on Fannie and Freddie and lost huge (and now, as is common with big time money managers who talk free market when times are good and beg for federal succor when things don’t go perfectly, are whining like petulant teenagers), Mr. Jenkins echoes the plaint that the government ought to encourage private investment in the financial sector. The idea, however, is not for the government to encourage investment for the sake of investment, and certainly not to encourage investment in poorly conceived, mismanaged institutions. In fact, the government ought to encourage very little, other than the free functioning of markets. And it is the function of the markets to encourage not just wholesale investment but, rather, investment in profitable enterprises, thus channeling capital to its most productive, rather than the most politically favored, uses. As those of us who still remember free markets know, that is how they once worked.
Sunday, March 1, 2009
DEFENDING CNBC’S RESIDENT CASSANDRA
3/1/09
In a 3/1/09 Chicago Tribune commentary piece, Mike Zucker, a stockbroker who resides in South Lake Tahoe, California, excoriates CNBC futures reporter Rick Santelli for Mr. Santelli’s expression of exasperation at the government’s plan to bail out millions of underwater and/or behind on their payments “homeowners.” Mr. Santelli, making perfect sense, said of the Obama administration’s plan “The government is promoting bad behavior!” Then Mr. Santelli went on to ask if “we really want to subsidize the losers’ mortgage.” While the word “loser” was poorly chosen, and one suspects Mr. Santelli regrets using it, Mr. Santelli’s major point was absolutely right; the Obama administration’s proposal is yet another in a long line of government schemes designed to punish the responsible to bail out the irresponsible.
Mr. Zucker disagrees, but his arguments are specious. He says that
“Nobody’s suggesting paying for neighbors’ mortgages or extra bathrooms. The proposal deals with a shared government/lender concept of moderating some mortgage rates and possibly some minor principal.”
Who exactly does Mr. Zucker think the “government” is in a “shared government/lender concept”? The government is indeed the taxpayer, the responsible taxpayer who pays his or her mortgage on time because he or she didn’t feel the need to look down his nose at others by an ostentatious display of wealth s/he did not have in the form of a house s/he could not afford.
Mr. Zucker, while castigating Mr. Santelli for not having read the Obama plan, is apparently a little short himself on the plan’s details. One component is a refinance plan, allowing Fannie Mae and Freddie Mac, both now wards of the state, to lend up to 105% of the value of home, up from the previous 80% of a home’s value. Who is on the hook for the $200 billion the government will put up to back these risky mortgages? The taxpayer. The second major component, of the plan, with a price tag of $75 billion, is to persuade lenders (if they can be identified, but that is another issue) to reduce the monthly principal and interest payment on a mortgage to 38% of borrower’s income. If the lenders do that, the government (i.e., the taxpayer) will provide a further subsidy to bring down the P&I to 31% of a homeowner’s income. The first component of the Obama plan puts the taxpayer on the hook for untold liabilities, the second goes right into the taxpayer’s pocket to, indeed, bail out his neighbor’s extra bathrooms and outrageous spending.
Mr. Zucker argues that not all lenders are in trouble because they bought too much house. This argument is ridiculous. If you can’t afford your mortgage payment, you bought too much house, and/or borrowed too much against your house, by definition. Even outside the most outrageous cases (e.g., the (perhaps, but probably not, apocryphal) guy who makes $50,000 and has $350,000 (or more) in mortgage debt and a home equity financed Lexus or two in the driveway), even those few people whom Mr. Zucker cites who actually put down 20% on a conventional mortgage and are now in default are, by definition, in more house than they can afford. When one buys a house, one does not spend to the absolute limit of one’s income and assume everything will at least stay the same, or, in most cases, improve, financially. A prudent buyer buys less house than s/he can afford and puts money aside just in case things take a turn for the worse on the financial and economic front. I’m sure those in favor of bailing out the irresponsible can find a few people who applied such quaint logic to their home purchases and subsequent spending habits but who still find themselves in danger of default, but I’d be willing to bet a very few. If this program were designed only to help out such responsible borrowers, it would be so small it would escape all but the most ardent political junkie’s notice.
Mr. Zucker, who apparently doesn’t watch CNBC and thus doesn’t know Rick Santelli’s position on the overall bailout mania in Washington, comes up with the following:
“Rick, rewarding bad behavior is giving huge subsidies to financial institutions that use them to buy other companies, or to treat their incapable executives to expensive junkets…”etc., etc.
Perhaps to Mr. Zucker’s surprise, this is a point on which he, I, and Mr. Santelli agree. Rick Santelli has consistently opposed every bailout that has come down the pike, and has done so to the strong opposition of his CNBC colleagues who, with a few exceptions, have been all for the bailouts that constitute the Bush/Obama financial policy.
The responsible are already bailing out the irresponsible through the low interest rates we receive on our savings, low interest rates that prevail largely because Obsequious Ben Bernanke and his colleagues at the Fed simply can’t bear to see any borrower, especially big borrowers with impressive sounding Wall Street names, fail. Now Mr. Obama is following in Mr. Bush’s bail out footsteps by proposing a massive government spending program, ultimately coming out of the taxpayers’ pockets, designed to bail out more people who simply borrowed too much money to buy too much house and too many toys. Again, the responsible will be forced to pick up the tab for the irresponsible.
And people wonder why the ranks of the responsible continue to shrink.
In a 3/1/09 Chicago Tribune commentary piece, Mike Zucker, a stockbroker who resides in South Lake Tahoe, California, excoriates CNBC futures reporter Rick Santelli for Mr. Santelli’s expression of exasperation at the government’s plan to bail out millions of underwater and/or behind on their payments “homeowners.” Mr. Santelli, making perfect sense, said of the Obama administration’s plan “The government is promoting bad behavior!” Then Mr. Santelli went on to ask if “we really want to subsidize the losers’ mortgage.” While the word “loser” was poorly chosen, and one suspects Mr. Santelli regrets using it, Mr. Santelli’s major point was absolutely right; the Obama administration’s proposal is yet another in a long line of government schemes designed to punish the responsible to bail out the irresponsible.
Mr. Zucker disagrees, but his arguments are specious. He says that
“Nobody’s suggesting paying for neighbors’ mortgages or extra bathrooms. The proposal deals with a shared government/lender concept of moderating some mortgage rates and possibly some minor principal.”
Who exactly does Mr. Zucker think the “government” is in a “shared government/lender concept”? The government is indeed the taxpayer, the responsible taxpayer who pays his or her mortgage on time because he or she didn’t feel the need to look down his nose at others by an ostentatious display of wealth s/he did not have in the form of a house s/he could not afford.
Mr. Zucker, while castigating Mr. Santelli for not having read the Obama plan, is apparently a little short himself on the plan’s details. One component is a refinance plan, allowing Fannie Mae and Freddie Mac, both now wards of the state, to lend up to 105% of the value of home, up from the previous 80% of a home’s value. Who is on the hook for the $200 billion the government will put up to back these risky mortgages? The taxpayer. The second major component, of the plan, with a price tag of $75 billion, is to persuade lenders (if they can be identified, but that is another issue) to reduce the monthly principal and interest payment on a mortgage to 38% of borrower’s income. If the lenders do that, the government (i.e., the taxpayer) will provide a further subsidy to bring down the P&I to 31% of a homeowner’s income. The first component of the Obama plan puts the taxpayer on the hook for untold liabilities, the second goes right into the taxpayer’s pocket to, indeed, bail out his neighbor’s extra bathrooms and outrageous spending.
Mr. Zucker argues that not all lenders are in trouble because they bought too much house. This argument is ridiculous. If you can’t afford your mortgage payment, you bought too much house, and/or borrowed too much against your house, by definition. Even outside the most outrageous cases (e.g., the (perhaps, but probably not, apocryphal) guy who makes $50,000 and has $350,000 (or more) in mortgage debt and a home equity financed Lexus or two in the driveway), even those few people whom Mr. Zucker cites who actually put down 20% on a conventional mortgage and are now in default are, by definition, in more house than they can afford. When one buys a house, one does not spend to the absolute limit of one’s income and assume everything will at least stay the same, or, in most cases, improve, financially. A prudent buyer buys less house than s/he can afford and puts money aside just in case things take a turn for the worse on the financial and economic front. I’m sure those in favor of bailing out the irresponsible can find a few people who applied such quaint logic to their home purchases and subsequent spending habits but who still find themselves in danger of default, but I’d be willing to bet a very few. If this program were designed only to help out such responsible borrowers, it would be so small it would escape all but the most ardent political junkie’s notice.
Mr. Zucker, who apparently doesn’t watch CNBC and thus doesn’t know Rick Santelli’s position on the overall bailout mania in Washington, comes up with the following:
“Rick, rewarding bad behavior is giving huge subsidies to financial institutions that use them to buy other companies, or to treat their incapable executives to expensive junkets…”etc., etc.
Perhaps to Mr. Zucker’s surprise, this is a point on which he, I, and Mr. Santelli agree. Rick Santelli has consistently opposed every bailout that has come down the pike, and has done so to the strong opposition of his CNBC colleagues who, with a few exceptions, have been all for the bailouts that constitute the Bush/Obama financial policy.
The responsible are already bailing out the irresponsible through the low interest rates we receive on our savings, low interest rates that prevail largely because Obsequious Ben Bernanke and his colleagues at the Fed simply can’t bear to see any borrower, especially big borrowers with impressive sounding Wall Street names, fail. Now Mr. Obama is following in Mr. Bush’s bail out footsteps by proposing a massive government spending program, ultimately coming out of the taxpayers’ pockets, designed to bail out more people who simply borrowed too much money to buy too much house and too many toys. Again, the responsible will be forced to pick up the tab for the irresponsible.
And people wonder why the ranks of the responsible continue to shrink.
“I RESEMBLE THAT REMARK”
3/1/09
The storied Fifth Congressional District of Illinois, the district of Rostenkowski, Flanagan, Blagojevich, and Emmanuel, will effectively select a new Congressman on Tuesday. Who’s going to win? No one knows. Reliable, independent polling is largely unavailable. State Representative John Fritchey has the support of most committeemen in the district. Alderman Patrick O’Connor of the 40th Ward has his powerful ward organization, and whatever support Mayor Daley can muster in the district, behind him. State Representative Sarah Feigenholtz and Cook County Commissioner Mike Quigley split the independent, progressive vote between them and with labor Tom Geoghegan. So no one knows who will win, but it is highly unlikely to be anyone but the aforementioned four current officeholders.
What prompts me to address this race was a comment Alderman O’Connor made in an interview on an Irish radio show on WCEV-AM to host Sean Ginnelly. Ginnelly, obviously cognizant of the advantage that Irish names have on the ballot in Chicago (or anywhere in this country, for that matter), laughed as he asked O’Connor “Does the name help out at all?”
Alderman O’Connor replied “I’ve always been proud of it, so I don’t hide from it for sure.”
What an idiotic reply! Who in anything resembling his right mind would hide from a name like Patrick O’Connor, especially in a district in which Dan Rostenkowski (whose surname surely didn’t hurt him in that district for LOTS of reasons, not least of which is the large number of Polish-American voters who live there) was defeated by a guy named Michael Patrick Flanagan? Alderman O’Connor is either too obtuse to see that Mr. Ginnelly was joking or too obsequious and timid to take any kind of risk by giving a light-hearted reply to Mr. Ginnelly’s obvious softball.
A personal point: If we ever move back into the city, any district in which people with names like Rostenkowski, Flanagan, Quigley, O’Connor, Feighenholtz, and Geoghegan are, or were, politically viable is a district in which I would want to live. Okay, so it’s not the 19th ward, but it still sounds like a great place despite that obvious shortcoming.
The storied Fifth Congressional District of Illinois, the district of Rostenkowski, Flanagan, Blagojevich, and Emmanuel, will effectively select a new Congressman on Tuesday. Who’s going to win? No one knows. Reliable, independent polling is largely unavailable. State Representative John Fritchey has the support of most committeemen in the district. Alderman Patrick O’Connor of the 40th Ward has his powerful ward organization, and whatever support Mayor Daley can muster in the district, behind him. State Representative Sarah Feigenholtz and Cook County Commissioner Mike Quigley split the independent, progressive vote between them and with labor Tom Geoghegan. So no one knows who will win, but it is highly unlikely to be anyone but the aforementioned four current officeholders.
What prompts me to address this race was a comment Alderman O’Connor made in an interview on an Irish radio show on WCEV-AM to host Sean Ginnelly. Ginnelly, obviously cognizant of the advantage that Irish names have on the ballot in Chicago (or anywhere in this country, for that matter), laughed as he asked O’Connor “Does the name help out at all?”
Alderman O’Connor replied “I’ve always been proud of it, so I don’t hide from it for sure.”
What an idiotic reply! Who in anything resembling his right mind would hide from a name like Patrick O’Connor, especially in a district in which Dan Rostenkowski (whose surname surely didn’t hurt him in that district for LOTS of reasons, not least of which is the large number of Polish-American voters who live there) was defeated by a guy named Michael Patrick Flanagan? Alderman O’Connor is either too obtuse to see that Mr. Ginnelly was joking or too obsequious and timid to take any kind of risk by giving a light-hearted reply to Mr. Ginnelly’s obvious softball.
A personal point: If we ever move back into the city, any district in which people with names like Rostenkowski, Flanagan, Quigley, O’Connor, Feighenholtz, and Geoghegan are, or were, politically viable is a district in which I would want to live. Okay, so it’s not the 19th ward, but it still sounds like a great place despite that obvious shortcoming.
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