NOVATOWNHALL

In a previous post I presented a brief discussion on my thoughts after hearing Obama discuss his health care plan during the second debate. As this subject keeps coming up, I thought I would do a little more digging to separate fact from election year fiction.

CNN, that steadfast bastion of right wing ideology, presented a Fortune Magazine comparison of the two plans, serving up the following summary :

But on economic merits, McCain wins. For all its problems, at least it puts the consumer in charge. Would that create a world where we’re forced to dicker with heart surgeons? No. It will create a world where health care is treated as the precious resource that it is, rather than a costless entitlement; where nationwide competition pushes down the price of catastrophic care and consumers focus their attention and budgets on what’s really crucial to their health. That’s an important first step. The price of health care is never going to get under control until patients get what they deserve: the right to be customers too.

We all hear Obama’s claim that McCain’s plain will tax you on your heath care benefits, but here Obama does not explain what the meaning of “is” is. CNN/Fortune explain this for us :

Say you’re earning $100,000 a year and your company provides about $9,000 toward your $12,000 family premium, which is about average. Today you’re taxed only on the $100,000. Under McCain’s plan, you’d also pay on the $9,000. That could mean an extra $3,000 or so in federal taxes alone. To compensate for the extra levy, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family, meaning a family would simply subtract $5,000 from its tax bill, the equivalent of a big cash payment.

Does McCain tax you on benefits you receive from the insurance company ? No, it taxes you on the benefit you receive from your employer, the employer paid portion of the premium. While removing the current exclusion that dates back to World War II, it also offsets this with a tax rebate.

The McCain plan “puts the consumer in charge”, a health care plan that “on economic merits”, beats Obama’s. This is the change that we need.

Contrast this with Obamacare :

the Democrat plan exacerbates the fundamental problem in the American health-care system, which is that no one has any incentive to care about price.

No incentive to care about price ? If there is one underlying problem with health care in the U.S., this is it. In my dictionary, change does not mean same old-same old. How about yours ?

“But on economic merits, McCain wins”, with his health care plan, How about his others, do they too win on economic merit ?

Read The Full Story At CNN.com

First, destroy the economy by creating government corporations that separate risk from reward in the mortgage lending.  Then, force banks to make bad loans and have the government corporations buy some of them.  (But not all, because you want the banks to collapse too.  You just need enough to control the market.)  When you have driven the housing market to sky-high prices, let the bottom fall out.  The government will have to bail out the banks, and in doing so, the government can take over the banks as a condition for doing so.  Even better, put up a sock-puppet for President just as you engineer the collapse, blame the collapse on the other party so you get the sock-puppet elected, and you control the Presidency, too.

Socialism, here we come.  Brought to you by the Socialist Democrat Party.

Addendum: I neglected to mention one critical part of the plan — take over the public school system to create a populace too ignorant of economics and history to understand what you are doing.

Yes, contrary to all the socialists’ claptrap that lack of regulation lead to the current financial collapse, it was in fact SEC accounting and capitalization regulations that accelerated the collapse.  The primary culprit is the “fair-value rule,” S.F.A.S 157, a.k.a. Mark-to-Market.  That regulation says that banks must carry assets at their current fair-market value — what they can be sold for today.

Now, let us say that I own a bond, which I intend to hold until maturity, and which I fully expect to be paid.  Previously, one could compute the Present Value of the bond, assuming it to be held to maturity, and assuming some nominal inflation rate.  With the Fair Value rule, the value of that bond is determined by the current state of the market.

The Fair Value Rule is not bad in and of itself — it does give investors a better sense of the book value of the companies of interest.  However, the Fair Value Rule did not stand alone.  Banks are required to keep a certain amount of capitalization.  So, when the market tanked, banks were forced to sell assets to keep up the capital reserves.  Barron’s said it better than I can:

Mark-to-market accounting, which stipulates that assets be carried on balance sheets at their current market price, has been blamed for exacerbating the credit crisis. By requiring writedowns on loans and securities that have declined in price, institutions have to make a corresponding reduction on the other side of the balance sheet, to capital. That only worsens the credit crunch.

“Ending the credit crisis will be highly unlikely without some type of accounting accommodation,” according to Bridgewater Associates, the highly respected institutional money manager. “Because mark-to-market accounting on existing assets threatens bank capital today, it increases solvency concerns today, which raises funding costs and accelerates the need to sell assets today, which depresses the prices of those assets, which threatens capital and raises funding costs.

This rule may be relaxed or removed soon, but it may be too late.  We have again paid the price of unintended consequences of government meddling and ineptitude.  Will we ever learn?

Brokaw: “Do you think that health care is a priveledge, a right or a responsibility?”

McCain: “It’s a responsibility.” Maybe.

Obama: “It’s a right.” 

Really?  It’s in the Constitution?  They call what you want an entitlement, Barry and that is NOT in the Constitution!  When elected officials and others in the government-especially the president-lay their hand on that Bible (in your case Chairman Mao’s Red Book) and swear to “uphold the Constitution”; it does not mean circumvent with entitlements.

I have been alive for most all of the Cold War. A generation exists that has no understanding of what socialism is or does to a populace.  It has infected our system slowly and, like a cancer, continues to fester out of control.  The legislative branch of our government is just about terminal.  The Executive branch is very close and the Judicial branch is teetering.  Time and again it has been proven that once you allow your freedoms to be eliminated, it takes a hard-fought uphill battle and a great length of time to get SOME of them back.  Do you really think the Russians are happy with their lives?  The old USSR is not dead.  Do you really believe that all Germans loved Hitler and what he had done to their country?  Do you people who think that Osama-bama is the next Messiah really believe that he will deliver what he promises?  If so, what do you think that YOU will have to give up and sacrafice?  At what point will you begin to fight back?  When he dictates the car you drive; the school your children go to; the curiculum they are forced to learn and ingest; the type of house and its size; etc.  How about “community service”?  He wants to double the Peace Corps.  What he might really intend is to MANDATE community service, where dictated, for all.

This campaign, in any sense of the imagination, is not a joke.  This philosophy is DANGEROUS to a democracy.  You can say later you made a mistake but you know what they say about hindsight.  Don’t be selfish and don’t be conned.  Think of the U.S. as a whole and tell this guy NO OBAMA!!!

Here, straight from the mouth of Товарщ Биден, we have one of the basic fallacies of modern socialism:

We’re going to focus on the middle class, because it’s — when the middle class is growing, the economy grows and everybody does well….

And later, repeating himself:

 The economic engine of America is middle class. It’s the people listening to this broadcast. When you do well, America does well. Even the wealthy do well.

Finally, this nugget:

The middle class is the economic engine.

As on most everything else, Товарщ Иосиф is wrong here, too.  In fact, he has it completely backward.  When the economy grows, the middle class grows, not the other way around.  It is not the people who are struggling who create jobs, but those who have money to spare.

Today, the House is expected to vote on the $700B bailout.  Where will the money come from.  Read the bill.  The fed will sell bonds to raise the money.  Who’s going to buy the bonds — the middle class?  No.  The rich are.

And that brings us to the dirty little secret — the real reason the leftists don’t want to lower taxes on the wealthy.  If the marginal rates on the wealthy are reduced, the value of the fed’s tax-exempt bonds are reduced, and the fed has to pay a higher interest rate on them to attract buyers.

I guess in a sense the supposedly 1000-1 against message from constituents puts some of the blame in their lap, but sometimes leaders have to lead.

John Hinderaker:

For the first time in my lifetime, serious people are talking about the possibility of a depression. The credit problem is world-wide. If there is a competing school of thought, a view that the credit crisis isn’t so bad or will take care of itself without great damage being done, I haven’t seen it articulated.

“There is something genuinely sickening about seeing Rep. Barney Frank (D-MA), House Speaker Nancy Pelosi (D-CA), and others trying to stick President Bush and the Republicans with the blame for the financial meltdown that has put the American taxpayer in hock for the problem they created….”

People are changing their minds. Read about it here.

Also here is the best summary of how the mess started and why exactly the bailout federal intervention is necessary.

This needs to be widely circulated.

Excellent commentary at Hot Air.

Read it in the Washington Times.

[UPDATE: Please read through the links in this post. A half-understanding of the problem is no understanding at all.]

I haven’t taken a position because I couldn’t understand fully what is happening. Thus no desperate calls for you to contact your congressman or senator.

Now I am beginning to understand and now I see why everyone is in such a hurry to see some sort of bailout coming from Washington.

There is talk, such as on Lou Dobbs tonight, comparing the political aspect of this crisis to the battle against comprehensive immigration reform, in which the majority of Democrats allied with the Bush administration to push something through, while some feisty Republicans on the Hill, bolstered by a flood of support from American citizens, stopped the locomotive in its tracks. We the people stopped a wrongheaded plan that would have changed our country irrevocably for the worse.

I don’t think that battle is quite the right analogy for what faces us now. A better analogy for what faces us now is more like: We the people are out on the ice in the middle of a lake, and the ice is cracking, and we are about to fall in and die - if a bailout is not crafted in Washington this weekend and passed on Monday.

When this guy started speaking up in favor of the bailout a few days ago it got my attention because everything I was reading had me leaning toward the idea this was another big, dumb government screw up. I figured, well Ace can be wrong about things, just like anyone.

Then I read this, and then this, then just now I read this. Holy crap.

We need the frickin’ bailout like yesterday. Voting against it is national suicide.

So, yeah, I am calling out again for action so, like before, we can save our country:

E-mail and phone your congressman’s office and then e-mail and phone your senator’s office, and if you don’t get through call one of their local offices, and tell them to vote for the bailout.

Tell your family and friends about this. E-mail about it. Blog about it.

Yeah, some prominent Democrats were responsible for the fact we are in this mess but that is not the point and it’s no reason to oppose the federal bailout. That would be like if Barney Frank ran you over with his car and you refused to get in the ambulance because Barney Frank was at fault.

Dobbs reported that our legislators are getting bombarded with calls which are majority against the bailout. This is lunacy. This is NOT like the immigration battle. The only similarity is they are both taking place in Washington DC. The correct vote on this one is “Yes.” Lou Dobbs is not right about everything.

This is really, really bad. Don’t futz around, make those calls.

TGIF, another work week down the tubes, and another trash can full of credit card offers and personal loan applications.

Experiencing a moment of bewilderment, I asked Mrs, Shiplap, “if there is a credit crunch, why am I still getting all of these in the mail?”. “I don’t know, I’m still getting them also” she replied.

Pondering this further, the logical assumption that I have reached is yes, there is a credit crunch, but only for those who have no credit, or bad credit. Isn’t this the way credit is supposed to work? Isn’t forgetting this basic tenet how we got into this mess in the first place?

Maybe, just maybe, given our current state of affairs, the understanding that no credit means no credit, is a very wise philosophy.

This is the most comprehensive and accurate explanation of the U.S. financial crisis I have seen. Watch it, copy the link, post it on your blog, and spread the word to everyone you know.

Burning Down The House: What Caused Our Economic Crisis?

Thanks to Cmac.

Three weeks ago the mortgage securities scandal was not even on the radar of popular culture. Now, it is issue number one and Congress is poised to pass quick legislation to address it. That fact right there should give everyone reason for pause.

By way of comparison, our energy crisis has been brewing in the open for decades, and even seven years after 9-11 Congress is still stalemated: We have no nuclear plants being built, no new oil refineries, no new areas opened for drilling, no new shale oil operations.

When Congress is poised to act quickly, to paraphrase the old maxim, we should all reach for our guns. What sort of lunacy might our federal government be about to introduce?

Case in point: Barney Frank is currently one of the leading legislative figures in the debate. In a sane world, Barney Frank would be sitting in the corner with a dunce cap on his head.

[via The Jawa Report]

Key quote by Barney Frank defending government sponsored entities such as Fannie Mae and Freddie Mac:

The more people in my judgment exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the treasury - which I do not see, I think we see entities that are fundamentally sound financially, and withstand some of the disaster scenarios, and even if there were a problem the federal government doesn’t bail them out - but the more pressure there is there, then the less I think we see in terms of affordable housing.

So the priority has been, above all else, affordable housing. Think about that. Then think of the zeros involved.

Events are progressing so quickly in Washington, D.C. right now that there has been no opportunity to explain the current financial crisis in context. Legislation that has not even been thought through is on the verge of being passed.

Yes, something needs to be done quickly - I understand that. Banks are going to fail. Bad, bad thing.

But here’s where the zeros come in: The basic fact that a movement which began in the 1990s to provide home loans to people who should not have received those loans was suicidal for our economy is being glossed over. When you’re dishing out $200,000+ loans to millions and millions of people who did not qualify for those loans, you are creating a liability figure with a LOT of zeros.

And now that exposure is being offloaded to American taxpayers. The dream of affordable housing has been revealed as taxpayers footing the bill for everyone in the U.S. who could not afford a house.

Maybe a bailout has to happen to secure our economy: I don’t have the expertise to know if that is the only solution. But as the details of the bailout are being debated and incorporated into the pending legislation, we need to keep in mind that at the root of the crisis are loans to a great many people who should not have gotten them, morons in the financial services industry who treated those loans as assets, and government officials who nurtured the hari-kiri economics. It needs to be reported far and wide that that’s why we are in this mess.

If we are about to pass new laws that will fundamentally change the U.S. economy for years to come, we need to be sure the American taxpayers who have played by the rules do not end up footing the bill for those who were chasing ghosts.

And let’s also be sure everyone knows the ghost-chasers, those who made this all happen, include the same Democrats who are now attempting to steer the hastily-crafted legislation.

UPDATE: Check below the fold for informative comment by Blog Fu.

Read the rest of this entry »

President Bush gave a speech tonight trying to tell the people why Congress should “[commit] so much of the taxpayers’ hard-earned money” to purchase “the troubled assets, including mortgage-backed securities, now clogging the financial system.”  (Read the transcript here.)

Never mind how we  got into this mess — the short answer is the socialism of the 1930’s New Deal, which created Fannie Mae.  Now we need to look at the proposed solution.  This is the gist of it:

First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system.

In the short term, this will free up banks to resume the flow of credit to American families and businesses, and this will help our economy grow.

Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply, yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages.

The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal.

Does anyone see the flaw in the plan?  What “taxpayer dollars”?  What “resources”?  We are now nearly 1.0e13 dollars in debt.  Where will the 7.0e9 dollars come from?  You guessed it — more debt.  So if these “troubled assets” were such a good deal, people would buy them instead of the bonds the government must sell to buy these “assets.”

The problem created by socialism, we’re going to fix with socialism.

The word BOHICA comes to mind.