Election Wrap Up
Here in the great state of Massachusetts we reelected everyone (yes Barney Frank only got 79% of the vote as opposed to his normal 85% so I guess there was some backlash to his championing the TARP bill!) and the referendum questions went as so:
Question 1: Repeal the state income tax [70% voted against the repeal]
Question 2: Under an ounce of pot is a fine and no other legal hassle [65% said toke it up!]
Question 3: Eliminated dog racing in the state [65% said no more doggie races]
Myself I voted for the tax repeal (of course), I voted to decriminalize the pot (free country, at least it used to be) and I voted against the dog racing (poor greyhounds got to me).
Last nights videos caught the ire of a reader who left this comment:
" Anonymous said...
I consistently read your blog everyday. I have always found you to be quite insightful in economic matters, especially for a non-economist, showing a fundamental intellect to understand complex relationships. I am some what surprised by your choice of two videos, having a racial bias, with the myriad of political issues in the news, today. The videos show nothing more than sound bytes with no sound bases of good journalism."
I thank you Anon for the kind words, but I am puzzled by the "racial bias" charge. Those two videos show one lady too dumb for words and two idiots acting like fools. Give me a YouTube link with one of those moron "god will make McCain win" or a bunch of drunks with a confederate flag outside a voting site and I will happily include them. I used those videos to highlight dumb behavior, which is my normal operation. I saw just people, but you chose to see something else. I would hate to lose your readership, but alas, we can all vote with our mouse!
Fundamental Nature of the Situation has not Changed
Looking around the web you get an overriding read that now with the terrible George Bush gone, the credit crisis is a past tense event and things are going to become rainbows and music. Even some of the better sites out there seem to have sipped at least some kool aid on this matter. There is a ton of "Hope won" and "A new era of honesty" has come upon us.
I am sorry to tell people that George Bush, just as former president Clinton before him, had an absolutely minimal effect on things economic.
Lets run the laundry list:
-Bush Tax Cuts Were Bad: Well yes they added to a deficit, but had ZERO effect on interest rates which is the prime concern with deficits. You think deficit spending is now going to go down? I'll take that bet!
-War in Iraq a Failure: On this I can agree. I supported the operation to remove any weapons, and yes I did think there were some, but when it was clear there were none we should have said "sorry, see ya" and left. The added years of cost were a waste of funds, but the loss of US forces lives borders on criminal.
-Deregulation Led to the Credit Mess: Only dumb people think this, I am sorry as some writers I respect trot this tired line out too often. There were regulations up the wazoo for all things credit related, just ZERO enforcement. If you think more regulations that are not enforced are going to make any difference, I'll take that bet!
-Bush Pushed "Home Ownership": So what? Half of the country did not vote for the guy and thought he was a stupid monkey. So did you run out to buy a house because a stupid monkey told you to do it? No one to blame but yourself there I would say.
I could go on, but none of the above charges make any sense. We know why we are here, too much spending, borrowing, and consuming with no way to pay it back. Add to this an out of control FED and Treasury that were handed sweeping powers by the ENTIRE CONGRESS and we are just as deep into it as we were last month. George Bush was a terrible president that lacked direction and really was an ineffective leader for his entire second term. History will judge him poorly I imagine, but trying to wrap the credit mess around him just will not work. It was the bankers, the FEDS, the greedy flippers, and the lack of desire to enforce rules and ratings that got us here.
I like the story that things are going to be great from here on out, I just do not see how. I will say that if President Obama get Paul Volker to take the treasury position, goes after the bonus money that was paid out using the bailout funds, stops trying to put floors under home prices, and lays it out that the funny business is over I will become a rabid loyal supporter even if I do not agree with his other objectives. This is my number one issue and I can be won over. I guess I will hope as well.
More of the Same Coming Right Up
So things are going to be so different? No more baloney and giveaways? From the Housing Wire:
Feds May Be Considering Subsidy on Troubled Mortgages
By: PAUL JACKSON
November 4, 2008
The proposal outlines the mechanics of a mortgage bailout that would cost as much as $441 billion, relying primarily on a three-year borrower subsidy that would be repaid in five years, with interest. “Upon receipt of a notice of default on an owner-occupied primary residence, a homeowner could apply to participate in a program under which the government would fully subsidize three years’ mortgage payments in exchange for a note, to be paid in a lump sum five years from receipt of the first payment subsidy, equal to the payment subsidies plus interest accrued at the federal funds rate,” reads the proposal, in part.
“In five years’ time, participants would, in all likelihood, be able to sell their homes or refinance their mortgages at amounts that would allow them to repay the loan.”
Full read is worth a look:
This is a basic lotto ticket that gambles on home prices coming back enough to save any involved. Great idea! As opposed to the old way of thinking like a gambler this plan...oh wait.
There is nothing new coming down the pipe to change the fundamentals facing the markets. As they say on Minyanville, only Time and Price will allow the debt destruction that is needed.
Have a good night.