Monday, March 31, 2008
5. Centralisation of credit in the banks of the state, by means of a national bank with State capital and an exclusive monopoly.The Treasury Secretary has proposed "sweeping" reforms in how our financial systems are regulated. Great idea if you think big, bloated bureaucracies are a good idea.
--Marx and Engels, Communist Manifesto
The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.This is so typical of our government. When there is a problem, they assume that more regulation and bigger government agencies are the way to fix the problem. I think we can all agree that the US is much safer since the Department of Homeland Security came into existence by combining a bunch of smaller agencies into one uber-agency (yes, that was said facetiously).
It would give the Federal Reserve more power to protect the stability of the entire financial system while merging day-to-day bank supervision into one agency, down from five at present.
Instead of trimming the bureaucracy so that the regulators can focus on the fundamentals of the financial companies, this will - as usual - add more burden on companies for regulatory compliance. Most of this regulatory compliance is to push social agendas. One of these agendas, called the Community Reinvestment Act (CRA), actually contributed in a large way to our current problems.
The CRA was originally enacted to ensure banks weren't "red lining" - specifically NOT lending in areas that are high in minority populations. The reporting is through the Home Mortgage Disclosure Act - HMDA. It is reinforced with the Equal Credit Opportunity Act (ECOA), the Fair Housing Act and a whole host of other regulation.
Bottom line: If you don't have enough blacks, Hispanics, Asians, Inuit or women customers, you get penalized. This sounds like a good idea (well, at least to those that think Affirmative Action is a good idea) in helping to ensure no portion of your local area is being "kept down by the man".
What it does not take into consideration is that banks are in business to make money. We don't care what color you are or where you live. What we care about is that you have shown the ability and the historical inclination to pay back your loans. It's really that simple. You have a history of paying your bills, we'll give you money.
Instead, we have entire non-earning departments whose sole purpose is to complete forms, file reports and count heads to ensure compliance. You don't think we actually pay for those departments, do you? Just like any type of corporate tax, the cost is passed along to the consumer in the way of higher costs and fees.
The law could be enforced by simply having one small part of the CRA in effect: Investigation of charges of discrimination. If someone thinks they have been turned down for a loan solely because of their race or gender, they can file a complaint and have it investigated. If it is found to be true, charge the bank the cost of the investigation, fine them, and require them to make the loan.
But that would be too easy and make too much sense. In my 30 years of banking, I have NEVER heard of a bank being found guilty of not funding a loan due to discrimination. I'm not saying it hasn't happened, I've just never, EVER heard of one proven case.
When the housing boom was in full-swing, the banks were doing the low-down payment, Stated Income loans. But, the vast majority of those borrowers had pristine credit. They were typically business owners that knew how to manage their money. Even though they had little "skin" - equity - in the deal, they were a good risk, because they had shown that they had paid their bills in the past.
But this caused a problem. Most of these people were white or Asian. The CRA/HMDA race percentages were getting thrown out of whack. Not enough blacks and Hispanics were getting loans. The "Compliance Police" were not pleased. Banks were pressured to make the numbers right. To do this, they had to lower their credit underwriting standards. This opened the door to people getting loans they should have never been funded.
The result has been that blacks and Hispanics are "disproportionately represented" in these loans that have gone to foreclosure. Shocking, I know. Who would have ever thought that people that couldn't qualify for a loan would default on it?
The banking regulatory community (through a joint agency called the Federal Financial Institutions Examination Council - the FFIEC) in 1999, had made note of the dramatic lowering in credit standards and the accompanying risks. Here's an excerpt from the 12 page "Interagency Guidance":
Due to their higher risk, subprime loans command higher interest rates and loan fees than those offered to standard risk borrowers. These loans can be profitable, provided the price charged by the lender is sufficient to cover higher loan loss rates and overhead costs related to underwriting, servicing, and collecting the loans. Moreover, the ability to securitize and sell subprime portfolios at a profit while retaining the servicing rights has made subprime lending attractive to a larger number of institutions, further increasing the number of subprime lenders and loans. Recently, however, a number of financial institutions have experienced losses attributable to ill-advised or poorly structured subprime lending programs. This has brought greater supervisory attention to subprime lending and the ability of insured depository institutions to manage the unique risks associated with this activity.Remember, this was written in 1999. Well before it hit the fan. Still, the "do gooders" had to make sure that anyone who wanted money, got it. From the same document:
Institutions that originate or purchase subprime loans must take special care to avoid violating fair lending and consumer protection laws and regulations. Higher fees and interest rates combined with compensation incentives can foster predatory pricing or discriminatory “steering” of borrowers to subprime products for reasons other than the borrower’s underlying creditworthiness.What does that mean in regulator-speak? If we see higher fees on your subprime loans, we're going to assume you are practicing predatory lending, and we're going to crawl up your ass. You won't like us there.
You learn to read between the lines when the regulators pass a pronouncement. Clearly, most banks interpreted this the same way so they made the bad loans, risk-be-damned.
Because home ownership numbers were skyrocketing for minorities, the regulators didn't clamp down as they should have. The social agenda was being met. We mustn't upset the applecart.
Greed and market pressures (Hey, XYZ Bank is making tons of money, why aren't we?) led banks to start "fudging" on applications and pressuring appraisers to make the home values match purchase offer prices. These are the real killers in this mess.
But it started with the government forcing a social agenda down the throats of banks.
Regulators should be concerned with one thing, and one thing only: Safety and Soundness. That was their original purpose. Make sure that government insured entities are not participating in overly risky loans and investments, and that they have adequate, high-quality capital to weather losses.
Then get out of the way.
We have to publicly report (even if we're privately owned) our financials on a quarterly basis. When certain ratios change, we get a call - immediately - to explain what is going on. If the answer isn't satisfactory, we get a visit from an examiner to take a closer look. This is in addition to our regular federal exams that come very 18 months or so (and generally take 6 weeks to complete).
This new proposal will lump banks, securities dealers, investment banks, mortgage brokers, insurance companies - it seems like anyone that deals with any kind of finance - under a single regulator. This is simply insane.
Competition is going to die because of the increased cost of doing business due to regulation. When I started in banking in 1977, there were over 15,000 banks. There are now 8,500. The same thing will happen if this aggregating of all financial companies happens.
You'll have fewer options for finding financing for your home, business, personal credit, car loans - you name it. You'll also have fewer companies over which to spread losses. That will increase the likelihood of a government bail-out should one of "the chosen few" start to go under.
Can anyone say, "Bear Stearns"?
When will we ever learn? More regulation brings higher cost and lower competition. Targeted regulation is the answer.
Do you think there could be a reason for the madness? Read the quote at the head of this rant if you're unclear on the concept.
Friday, March 28, 2008
Created by OnePlusYou - Free Online Dating
I have a horrible swearing problem. Apparently, my blog reflects my real life. Shocking.
Labels: Life and Times
Thursday, March 27, 2008
Black Power is giving power to people who have not had power to determine their destiny.Two quotes on self-determination by two black men. Look how different they are in their basic approach to the subject.
--Huey P. Newton
Freedom is not something that can be given. Freedom is something people take, and people are as free as they want to be.
Huey Newton's quote has the flavor of the current race-baiting crowd. Somehow, the power of self-determination has been stripped from blacks and it has to be given back.
The quote by James Baldwin understands freedom and self-determination for what it is: If you want it, you've got to take it. Most American's live by this ideal, as do the vast majority of immigrants to this country. It is the main reason they come here. The ability to determine your own path is a very strong incentive. Or it should be.
It's not a race-thing. It's an individual-thing.
I was over at GuyK's place, and he had a link to a post that just set me on my butt. I swear, this woman must have my home, car and office bugged. She has a rant that so perfectly states my perspective of "oppressed blacks".
This is golden:
And I haven't plotted to develop hard-won skills in my life just to keep you from your dreams. I've worked hard because the world is a pitiless shark-pool of competition and I don't have the luxury of a conscience that allows me to expect someone else to back off and give me a chance. Because they won't.Why do blacks think I have the inclination, let alone the time to figure out ways to keep them down? I'm busy enough working to make a house payment, putting food on the table, stashing some money away for retirement and helping my kids get an education. When am I going to have time to plot against an entire race? Hell, I don't have time to go to the gym!
You know, the world doesn't just screw Black people over, the world screws everybody over. That's its job. Our job is to not let real or imagined circumstance define us.
So, you can go on blaming me for everything you think, do, and say. But as long as you think I'm your problem, then I'm your master.
An evening out with my wife to see a movie would be nice. Masterminding the downfall of all that is black? Get a fucking grip on reality.
I've seen this my entire life.
Speaking of Huey Newton, my dad arrested him and the rest of his Black Panther's on numerous occasions when he was an Oakland cop back in the 1960's.
In the late 60's, he transferred and got a promotion to Investigator (later, a Lieutenant) with the Marin County sheriff's department. In 1970 or '71, there was a trial being held for some Black Panther. Somehow, a gun got into the courtroom. The sheriff's department was located in the same building as the courts, so the place was locked-down immediately.
The judge for the case was taken hostage and had a shotgun taped to his face. The shotgun went off, and my dad said it basically took off his head. The prosecutor of the case was a friend of my dad's. He was also taken hostage, and was shot and paralyzed. He ended up becoming a judge.
Even through all of this, I never, ever heard my dad use, "The N Word", or even speak badly of blacks in general. Individuals by name, sure. Generalities, never.
My dad, obviously, had a lot of cop friends. The racial epithets flew pretty freely with these other guys. He would shut it down right away. He had grown up as a kid in Oakland and had friends of all races. When we were kids, he was ALWAY careful to distinguish between "radicals" and people just trying to make a living. Business people that had to pay protection money to the Panthers. That disgusted him.
My dad passed away - twenty years ago this coming May. Much too young, he was only 55.
If he were still alive, I wonder what he'd think of the "progress" made by blacks since his early days in Oakland. "Black Power", indeed.
We spent the bulk of the day in the town of Eagle. We could definitely live there. Rural enough for me and civilized enough for my wife! Work-wise, it would be about 30 minutes to downtown Boise, so that works out as well.
My wife is intending to come back with her brother (a fire chief who is retiring in July) and her sister during the summer school break. They were all supposed to come on this trip (as well as her sister's husband, and one of my brother's). I guess we were the "advanced scouts".
Idaho clearly has potential. I floated the idea of a home in the Eagle area to start, then getting a cabin more north in the town of McCall. No objections. Hmm.
Assuming no big changes in our lives or the world, we're most likely looking to move here (or somewhere else other than CA) in 2010-2011. We'll continue to scout around for the next couple of years and see what we can see.
When we were out with our real estate agent yesterday, I made a comment about Cabela's. She said that one had opened up a couple of years ago. We went there today after our property tours.
Oh My God.
This place was massive. 130,000+ square feet of "stuff". More guns and ammo than I have ever seen in one place at one time. Remember, California is extremely weird about guns and ammo. For instance, in the town in which I work, Oakland, I cannot have ammo delivered by mail.
I recently purchased a new rifled barrel for my Mossberg 500 shotgun. I needed some sabot shells. My wife and I went to the ammo aisles and she said, "They sell ammo right off the shelves?!" I told her that's how it's done in CA as well, it's just tough finding a store that sells it outside of a shooting range. I believe my local Wally World has even stopped stocking 12 gauge shells.
They had the Idaho state record Elk in their center display area. This thing had a B&C score north of 400. It was amazing to see something that large in person.
They're having a huge, 3-day gun show that starts tomorrow (of course, we'll be on the road). I would have loved to have spent just a few hours seeing how the rest of America handles a gun show. You feel like a criminal in CA (smile for the nice state DOJ agents).
Wednesday, March 26, 2008
We saw a half-dozen or so properties that ranged in size from 5 acres up to 17 acres. Three of them in particular were actual producing farms/ranches. One had 15 acres of wheat production with a nice home on it. Where I live now in CA - most of my town is farm acreage - this property would be a multi-million dollar piece of land (crap land goes for $50k an acre, prime producing land upwards of $200k an acre). It's just insane. The 15 Idaho acres plus a large home were offered for less than $400k.
But this isn't what we're looking for.
When I told the real estate agent I wanted 10 acres or so, I had in my minds-eye 10 acres of Tahoe-like forest. Even though I knew that's not what we would be seeing, that's still what I had in my mind.
Reality set in. If we move here, I still need to work. I'm a banker. The headquarters of all of the local banks are in Boise. I need to be within 45 minutes of Boise.
Tomorrow, we're spending the morning looking at homes in the towns of Star and Eagle. Properties with 1 or 2 acres so I can build my wood and metal shops, and house my brewing equipment. Maybe an out-building for guests.
The prices, while higher per square foot than the properties we saw today, are still dwarfed by CA prices.
In the afternoon, we're heading down south to Twin Falls, mostly to see the scenery. We'll catch some of the sights, then head back to our hotel in Boise.
This area is just beautiful. Boise is rimmed by mountains. The people are (mostly) friendly. A lot nicer than any place I've ever lived in CA. We went into downtown Boise tonight, got some Greek food and putzed around, getting a feel for the place.
We called Hermit's brother to see if we could take him out for a bite to eat, but it was near the end of the day, so we left a message (he probably saw my bank's name on the Caller ID and figured, "Why the hell is a bank calling me at this hour?! - it can't be good news!").
Tuesday, March 25, 2008
I am just amazed at the different topography we keep passing through. We left Winnemucca, NV this morning and got on I-95. Yesterday, I was pissing and moaning about how desolate I-80 was yesterday. In comparison to the early parts of I-95, it looked like rush hour in San Francisco!
Whereas 80 was two lanes going each way, I-95 was a single, two lane highway(?). This picture doesn't do justice in conveying the desolation. I'll tell you, I clinched up a bit when I saw the "no gas for 100 miles" sign. Glad we filled up in Winnemucca.
I-95 goes Northeast from Winnemucca into Southeastern Oregon. From there, it goes due North until it hangs a right, and head East into Idaho. Most of the Nevada portion was still land covered in tumblin' tumbleweeds. Literally. Once we got into Oregon, we got topography that ranged from open prairie, to carved canyons to decent looking farm land. Absolutely stunning countryside.
When we crossed into Idaho, it was still high desert (4,500 feet or so) but the land was much more rolling hills and even some craggy outcroppings. This second image simply does not do justice to this absolutely beautiful canyon we came upon. When the road turned right at the bottom of the picture, we were in this, well, hole. This just seemed to show up out of nowhere.
We will be making a 200 mile tour of the greater Boise/west-central Idaho area with a Realtor tomorrow, seeing homes and properties with land.
We've had a couple not-so-great incidents since we got to Idaho - one with some prick who saw my CA plates and gave me a ration of shit, and one with our hotel in Boise (though, to their credit they fixed it afterwards).
I'm "cautiously optimistic" about tomorrow's adventure...
All compromise is based on give and take, but there can be no give and take on fundamentals. Any compromise on mere fundamentals is a surrender. For it is all give and no take.I heard on the TV in my hotel room this morning about how the families of the slaughtered Virgina Tech students are being offered some "hush money".
Families of those killed in the Virginia Tech shootings have until March 31 to say whether they'll accept a settlement that would include $100,000 each and the chance to question the governor and university officials about the shooting, a victim's relative said.I don't know what is pissing me off more: The fact that the university thinks the life of one of my kids is only worth $100k, or that every single one of the families involved haven't told the school to shove the money up their asses.
In exchange for accepting the agreement, the family members would give up the right to sue state government, including Virginia Tech, said the relative.
If I were involved with this, I would try and find like-minded families regarding "gun free zones". If there were enough of them, I'd consider taking the money and pooling our pay-offs to set up an organization to pressure legislators into allowing concealed carry on all public property. So slaughters like this never happened again.
Victims and families also could meet with senior Virginia Tech officials within six months of the settlement to ask questions and discuss changes made to the campus since the tragedy, as well as memorials. They also would receive an update on the investigation from the university and state police.The only meaningful memorial would be my living, breathing child. Anything else would be hollow.
Wringing your hands and mourning his or her death does nothing positive to prevent this from happening again. This crap shouldn't be about perpetuating a false sense of security by setting up a notification system to tell students that a gunman is loose on campus. It should be about the government taking away the right and ability to defend yourself, and taking back that power.
Monday, March 24, 2008
We finished the first leg of our trip to Idaho. Our first leg had us going from the SF Bay Area to Winnemucca, Nevada. What an amazing change in topography we saw along the way.
This first image is from just before Reno on Highway 80. From the Sierra Foothills just outside of Sacramento to 20 minutes before Reno, the view looked like this:
Absolutely pristine alpine forests. There had been forest fires in the past year, so there were spots with some bad burn out, but most looked like this. Just a bit of snow still on the ground, but the road were very dry, and we moved along at a good pace.
Just outside of Reno, we made a pit-stop for gas and a pee, as we were still 150 miles or so from Winnemucca. I just had to take a picture of the quickee mart.
Now, I don't think there was any association with the infamous Mustang Ranch, but one never knows!
As soon as we got back on the highway, the change in topography was stunning. We went from alpine forest, to flat, desolate high desert. At this point, Highway 80 is two ribbons of two-lane highway - one going east, one going west. You are out in the middle of nowhere. I packed our emergency bag with enough food and water for 2 adults for three days, plus the Glock and 4 magazines.
If you look closely at this next image of the highway, you'll notice "snow" on the side of the road. Nope. It's some kind of borax or something. There were "dust devils" 100 feet high throughout this area. Flat, desolate, dry.
They did use this area for one great industry: Prisons. Along the way, we saw two prisons in an hour an a half. If you've got to place them somewhere, this is where you want to do it!
This picture of the first prison we passed really give a good idea how there is nothing out here but scrub brush and dirt. For those of you looking on ebay for Nevada property that goes for $5,000 for 40 acres, this is what you're getting. If you like roughing it, this is the place to go. No water, electrical or...... neighbors. The towns out here are very small, generally no more than a grouping of trailers. Most have signs on the exits to their towns that say, "No Services". This is a bit more remote than we're looking for, but obviously suits some folks. Personally, I need soil that is lower alkaline so I can grow food crops and trees. I've got to have trees.
Tomorrow, we go from Winnemucca to Boise. More of this high desert for the first part, which is actually quite beautiful, but sparse.
All adventures, especially into new territory, are scary.The first step in getting the hell out of Dodge - The People's Republic of California - starts today. We are taking a week to drive and explore Northern Nevada and Southwestern Idaho as possible new home states.
We'll be jumping in our rented SUV in a little bit to head off to Winnemucca, NV. This is about half way between our home in the SF Bay Area and Boise. We'll spend the night, and head off to Boise tomorrow morning. We'll then spend 3 days in Boise and the greater Southwestern corner of Idaho seeing properties - with and without homes. Ten acre minimum plots of land. We'll turn around on Friday, pit-stop again in Winnemucca, then head home on Saturday morning.
We've got a mix of excitement and abject terror! We (but especially me) are sick and tired of California politics and socialist practices. Like so many individuals, families and businesses before us, we're tired of paying, and paying and paying - and not seeing anything for our money. The hand-out takers keep growing in numbers - hell, they're encouraged to "come on down!" - and those of us who work, see larger and larger chunks of our paychecks disappear. It's a formula destined for disaster, and I just won't participate anymore.
The hardest thing about this is our family. Both my wife and I have our entire families within 4 hours of where we live - most are within 90 minutes. Both of our children, aged 19 and 20, are just starting to build their own lives. They're both still in college, so a final move won't be before 2010 or 2011 to help get them on their feet as independent adults. At this point, neither of them have any interest in moving to where ever we end up, despite "bribes" of a chunk of land and statistics of the incredibly lower cost of living outside of California. The nice thing, though, is the general Boise area is only 10 hours or so, by car, back to the SF Bay Area, so visits - both ways - are not a major inconvenience.
At our Easter get-together yesterday, both of my brothers indicated an interest in hearing about what we find. I think this is more of in a retirement perspective. Their kids are all younger than mine -my youngest niece is 13 - so picking up and leaving isn't really an option for them in the near future. My mom is pretty upset about this.
I'm pumped up. I'm really looking forward to this trip, and I hope that the "Chamber of Commerce" photos and other images aren't too over-stated. I'm bringing my laptop and an AirCard, so I should be able to check in during the trip. I'll post some pix as well.
If Idaho doesn't pan out, we have a bunch of other states here in the west that are possibilities as well.
Let the adventure begin!
Friday, March 21, 2008
Self-reliance is the only road to true freedom, and being one's own person is its ultimate reward.Why is this the first I've heard of the Bakken Formation? I was doing some research on Peak Oil. I was not ready to buy the premise just yet. So I'm snooping around, and I bump into this 200,000 square mile formation in North Dakota and Montana that has upwards of 500 BILLION barrels of oil.To put that in perspective, the total known reserves of the US are currently in the neighborhood of 20 billion barrels. The Saudis have 260 billion.
We currently use 20 million barrels of oil a day. If the most optimistic estimates are correct, that 500 billion barrels would cover all of our needs for 68 and a half years. Hell, be a pessimist, and cut that in half. Thirty four years of oil ain't a bad thing...
Now, this stuff is in shale. Unlike a lot of oil reserves, you need to do horizontal drilling - get in between the slabs of rock, and suck up the juice. The Evil Halliburton (actually, I really do think they're evil) has some kind of technology that gets past some of the impediments they were having in extracting the oil (They've known about this formation since the 1950's).
The land in the area is getting snapped up by the oil companies. One site I read said that at $40 a barrel, it can be profitably drilled. We passed that marker quite a bit ago.
One well has already been started, and it alone is expected to produce 700,000 barrels. So maybe all is not lost. Maybe there's a chance we can be oil self-sufficient. I would hope our politicians would use this time to encourage (but NOT subsidize) alternative energy. Nukes would be a good place to start. I'm hopeful, but not optimistic.
Any bets on how long it will take The Sierra Club or Earth First or one of the other eco-freak groups to declare North Dakota a national treasure that mustn't be besmirched? If the over/under is 18 months, I'm betting on under.
Thursday, March 20, 2008
When I hear somebody sigh, "Life is hard," I am always tempted to ask, "Compared to what?"I heard about this on the way into work this morning. How I didn't put the pedal-to-the-metal and rear-end someone or simply pull off the side of the road in a crazed blaze of gunfire, I'll never know. I can't take much more of this.
--Sydney J. Harris
California lawmakers are considering granting special parking privileges to women in the final three months of pregnancy and the first two months after birth.Temporarily disabled. For an act in which they voluntarily participated.
The legislation would apply to more than a half-million women who give birth every year in California.
Assemblyman Chuck DeVore's bill would qualify pregnant women for "temporarily disabled" parking placards from the Department of Motor Vehicles.
Shockingly, the National Organization of Women agrees with me.
You go, girl!
Helen Grieco, executive director of the California chapter of the National Organization for Women, said AB 1940 inadvertently could send the wrong societal message.
"It's very much a normal part of a woman's life – we have children," Grieco said. "So we've always been troubled by framing pregnancy as a disability."
So, I get to work, and one of my brothers has sent me an email about this. It had a "throbbing vein in the forehead" tone to it. It included a link to the website of the Assemblyman. Right up front, banner headline, big as can be, was this sentence.
California's government gets bigger every year, infringing on our liberty while wasting more and more of our hard earned tax dollars. We have a clear choice: we can cede more power to the state, expecting that government knows best how to run our affairs; or we can take responsibility for our own lives, families and communities.You mean like when we get preggers?
Perhaps a staffer erroneously posted this drivel without the Assemblyman's knowledge. Still, I guess I shouldn't expect more, even from a Republican, in The People's Republic of California considering they have Arnold The Govenator as their role model.
[Please, please, please, don't ruin everything in the state until AFTER I leave...]
Tuesday, March 18, 2008
There is nothing more dreadful than the habit of doubt. Doubt separates people. It is a poison that disintegrates friendships and breaks up pleasant relations. It is a thorn that irritates and hurts; it is a sword that kills.Most folks have heard about the recent collapse of the major investment banking house, Bear Sterns. The causes of its decline are a sneak peek into the shaky underpinnings of our country's financial system. As you'll see, it's really very simplistic. There is nothing special about how or why Bear was the first to fail.
There are a number of things at play that are compounding the problems. There are hedges, derivatives, swaps and obscene levels of leverage (purchasing something primarily with borrowed funds). These are complicated financial practices that are on the periphery of this issue (although there are HUGE dollars involved here).
Hedge funds, in fact, are what eventually pushed Bear over the edge. I believe, though, that the sub-prime loan problems are the root of the problem. At the very minimum, they have laid bare the incredible amount of speculation that is engaged in by the players in our financial system.
At every point on the road to Bear's failure - and perhaps our larger economy - it comes down to one thing: Lack of confidence.
As I said, the first breach of confidence started with the sub-prime loans. It amazes me to no end to see how this has trickled throughout this entire decline.
When you buy a home, you find a bank to make a loan. They hire an appraiser to verify the value of the property. If everything meets the bank's underwriting standards, they make the loan. Generally, the bank will lend up to 80% of the value of the home. You have to put up the other 20%. In the event you stop making payments, there is enough excess equity in the property for the bank to quickly sell the home and get their money back. Well, that's how it's supposed to be.
What happened was, the real estate market was hot, and banks were feeling the pressure to put more loans on the books. Shareholders wanted to see earnings like their competitors were getting. So underwriting standards were lowered. Instead of a 20% down payment, they'd let you get a way with 10%. Then it dropped to 5%. Then Zero-Down loans.
Home values were rising at astronomical rates. Twenty percent or more a year. The banks figured that even if the zero-down borrower defaulted, they'd still get their money back because by the time they foreclosed, the value would be enough to cover the loan amount.
And for a long time, they were right. But they got sloppy. And greedy.
Prices started getting out of the reach of most people. Loan volumes dropped. Profits followed. So, to maintain profits, banks made two horrible decisions: They lowered the credit standards required of the borrowers (sub-prime - increasing risk) AND they began pressuring appraisers to make sure their appraisals matched the purchase prices, regardless of the actual value.
The value of the asset securing the loan was being mis-represented, yet it was this representation that was the basis for future transactions involving the loan.
I've discussed before how most banks don't hold on to the loans they make. They'll make a $100,000 loan and quickly sell it for a small profit to a company that bundles a bunch of similar loans into huge securities (MBS - Mortgage Backed Securities) valued at tens or hundreds of millions of dollars. These securities are then sold to investors looking for a steady stream of income based upon the payments being made by the individual home loan borrowers.
These payment streams are higher when you buy MBS secured by sub prime loans. More risk, more reward. They have algorithms that calculate how many of these loans have historically gone bad, and that's figured into the payment stream. BUT, it assumes losses are unlikely because the underlying asset - the home - can be sold to make things square.
As we've seen, the loans have gone bad at greater than expected levels. And, when the foreclosure sales took place, the homes were selling for much less than was expected. Income streams to investors were interrupted. As a result, the market recognized that all of the MBS's were not as valuable as was previously believed.
The market had lost confidence in the values assigned to these securities.
Well, banks and investment houses will buy MBS's as investments for their own portfolios. They will often uses these securities as collateral for borrowings for liquidity purposes. To make loans or just to pay bills. There are markets specifically for this purpose.
When investors lost their confidence in the MBS's, the money for liquidity dried up. Over the past few months, the Federal Reserve has jumped into the fray, allowing banks to borrow from them using collateral (MBS) that the private market would not accept.
Bear Sterns had used a borrowing technique called Repurchase Agreements or "Repos". In these, you actually sell the security to an investor, but agree to repurchase it at a later date for more money than you received when you sold it.
Here's where things get interesting. On Monday of last week, the Fed makes the announcement that they will now lend money to Primary Dealers, like Bear Sterns (Hmmm. Coincidence or did they know what was coming...?). On Tuesday, the CEO of Bear tells the world that they are very sound and have buckets of cash, despite rumors on The Street to the contrary. I've read that they had in the neighborhood of $17 billion in cash.
Then the shit hits the fan. These negative rumors grow. Investors (mostly hedge funds) that have placed orders with Bear have lost confidence in Bear's ability to meet their obligations. Firms start pulling out their money. By the bucket. They are in the middle of a full-on bank run. By Thursday, Bear is down to $2 billion in cash!
To make things worse, Friday Bear was due to buy back billions worth of Repos. And they had no money. For all intents and purposes, they were bankrupt. Failed.
By this time, their stock price had dropped like a stone. In April of 2007, their stock traded for nearly $160 a share. On Friday, it was trading in the $50's and dropped into the $30's. This was despite the fact that their book value (Total Assets minus total liabilities divided by the number of shares outstanding) was $80 per share. Fully one-third of their assets were MSBs. No one had confidence in the valuation of their assets.
On Friday, the Fed gave them a cash injection, through JP Morgan Chase, allowing Bear to use the crap securities as collateral. The belief was, in the 28 days the loan was extended, they could either restructure or find a buyer.
It's anyone's guess what happened this past weekend. It is believed that the Fed pressured Bear to sell, and for JP Morgan Chase to buy. They DID NOT want a major failure in the financial system. It worried the Fed that this would start a run on other banks, and lead to a rapid collapse. It is unclear how the whole deal will work, but JP will pay $2 (yes, two dollars) a share for a 20% interest (a controlling interest - assuming the current shareholders agree). The Fed is providing some sort of loan for the purchase that is essentially guaranteeing performance on some $30 billion in securities.
If those securities go bad, you and I take the loss, not JP Morgan Chase.
Think about it: Just by fudging on the value of a home, our entire financial system is teetering on the edge of disaster. Well, it is once you multiply that error (deception?) by millions of homes. If there is no confidence in you or your assets, investors will run away screaming.
Now, for those of you keeping track, the math doesn't seem to work. Bear Sterns has 118 million shares outstanding. At $2 a share (trading today at $6+ a share), that would be $236 million dollars for everything. JP Morgan Chase is only buying 20%, but are borrowing $30 BILLION to do it. Apparently the Fed may just be guaranteeing the securities, but the press is calling it a loan. How that works, I dunno...
Monday, March 17, 2008
Try to relax and enjoy the crisis.I'm going to try and put together a post on all this crap happening with the collapse of Bear Stearns. I'll try and give you a look into what all of these moves and maneuvers mean, and how it will impact you. I'm slammed for most of today, so I'll take a swing at it tomorrow. Or the next day.
That being said, here is, perhaps, some insight into why the Fed is doing what they're doing, even though their actions would appear to be harming the economy (which, I believe, they are).
The Federal Reserve Bank is acting as the "front man" for the administration to prevent a bank run. They will do whatever is needed to ensure the confidence in the US banking system is maintained. If that means bailouts, so be it.
In their eyes, the impact of a depression/financial system collapse would be far worse than printing up money, and lending money with questionable collateral.
Today, with little fanfare, the Fed has done something last done during the Great Depression:
In a rare action aimed at heading off fresh market upheaval, the US Federal Reserve cut a key rate for direct loans to financial institutions and said it would offer immediate liquidity to the brokerage system.Not liquidity for banks, but for stock brokerage houses. I wrote about them doing this last week ("Smoke and Mirrors, Baby...") for Primary Dealers. Now it's open to ALL brokerage houses, not just the cream of the crop. What (so far) hasn't gotten any press is the length of the loans.
The Fed said it would make liquidity available starting Monday to "primary dealers," which include brokerages that were not previously eligible for direct loans from the central bank. The Fed board also extended the maximum time of discount window loans to 90 days from 30 days.OK, let's recap what has happened in the past week:
- Last Monday, the Fed opened the discount window to Primary Dealers.
- They extended the time of the loans from 1 day to 28 days
- They accept collateral other than US Treasuries (they'll take the crap the banks can't collateralize in the market)
- Now they open the discount window to all brokerage houses, and
- They extend the repayment period to 90 days
So. The Fed is making all of this money available to banks to keep them liquid. But the lack of confidence in our markets may already be too far gone to rescue.
Business aren't borrowing because of the uncertainty in our future. My bank, for instance, is awash in cash. We didn't play in the sub-prime game, so we haven't taken a bath, but people are uncertain where the economy is headed, so they aren't investing in their businesses. They're not borrowing to grow their businesses.
What is scary is that banks are slowing lending to other banks as well.
Take a look at this piece I wrote in December on Liquidity Traps. It's where we are right now. A guy much smarter than me, Irwin Kellner, wrote:
He was right when he wrote that back in December. The markets have only gotten worse.The Panic of 1907, like others before it, led to a recession. The liquidity trap of the 1930s was part and parcel of what came to be known as the Great Depression.Today there are some similarities to the liquidity trap of the 1930s. The credit crunch is clearly one of them. No matter what the Fed does on Tuesday [of last week], it will not be able to thaw out the frosty financial markets.This is because the markets lack confidence. As I wrote two weeks ago, "fear, and not a lack of liquidity, is what's freezing up the credit markets ... and ... it's going to take a lot more than infusions of liquidity to thaw them."
Now we wait. The Fed has fronted the nation's financial system with a short-term loan in hopes that they can ride out this rough patch.
Honestly, the only action I can see the Federal Government doing is a full-blown bailout of the sub-prime mess. If they do some sort of guarantee for the negative equity in most of these properties - and those guarantees can be traded and securitized just like real property - confidence in damned near everything will be restored.
Real property prices will stabilize. The securitized loans will now be worth something again, restoring confidence in the financial markets and the firms that underwrote, bought or insured them. Confidence in the economy will get businesses invigorated, banks will make loans, and all will be good in the world.
It's like a world championship prize fight. You may be the biggest, baddest dude in the ring, but every now and then, the big boys get dropped.
Clearly, we've been taking a lot of body blows, and the occasional shot to the head. We're wobbly and are just praying for the bell so we can take a breather. Think about our strategy. Figure out ways to stop taking shots.
This new money facility should give us some time to breath. Some time to assess the situation and figure out a way to stop the assault.
Whether it works or not, is anybody's guess. The quality of our corner "cut man" will be put to the test.
Friday, March 14, 2008
A surprise birthday party for Dawn Wells, the actress who played Mary Ann on "Gilligan's Island," ended with a nearly three-hour tour of the Teton County sheriff's office and jail when the 69-year-old was caught with marijuana in her vehicle while driving home.
What's the world coming to when Mary Ann (who ROCKED over Ginger) is getting busted over a joint or two? Don't they know of her harrowing tale?
Maybe I'll look her up on my trip to Idaho the week after next... Note to self: Wife will not appreciate....
Labels: Life and Times
Arms in the hands of citizens may be used at individual discretion... in private self-defense.I've mentioned here (I think) and at a number of other sites through my comments, that I will not vote for the "lesser of two evils" in this upcoming election. I just won't do it. If the "third party" is ever going to have a chance to break the lock of the Republicrats or the Demicans, there has to be a significant number of people that don't vote for either of them. I don't care if it is for the Greens, Communists, National Socialists, Druids, or whomever. The two major parties have nothing to worry about if there isn't a demonstration of disgust at the ballot box.
For my part, regardless of who the candidates are, I'm writing in Ron Paul.
The way I look at it, there will be no appreciable difference in the resulting mess our country will be in after 8 years of John, Hillary or Barack. Illegal aliens. The War in Iraq. Domestic security. Adherence to the Constitution. Guns, Guns, Guns. Taxes. It's depressing simply to think about it.
Anyways, I was seeing one potential long-term bump. If Barack became president, it might act as a beacon of sorts to poor, black kids that don't seem to think there is any way to get out of the crap their lives - indeed, the lives of much of their entire race - have degenerated in to.
It might help to shut the pie-holes of the race-baiters like Jesse and Al. It might show them that, just like every other race that has ever come to America, you can make something of yourself if you put forth some effort. If a black man can become president of a largely white nation, you can no longer use race as an excuse for not getting ahead. The whinings of the race-baiters would ring hollow.
To his credit, Barack has largely run his campaign without bringing race into the mix. Others have, but he has run as a typical tax, spend and "make others dependent upon the government" Democrat, not as a black tax, spend and "make others dependent upon the government" Democrat.
So when his religious advisor and every-day preacher goes all race-a-palooza on us, it is disturbing.
In the sermons the Rev Jeremiah Wright, who presided over Obama's marriage and provided the title of his book Audacity of Hope, condemned what he described as a systemic effort to keep black people in poverty.
The accusations of racism could prove embarrassing to Obama who has based his candidacy around a message of unity. In his sermons Wright reportedly refers to the US as being under the influence of the Ku Klux Klan, and describes black Republicans as sellouts.
"The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing God Bless America. No, no, no, God damn America, that's in the Bible for killing innocent people," he said in a 2003 sermon which was aired by ABC television.
"God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme."
It is people like this bastard that are the main reason blacks as a demographic are poor, uneducated and under-achieving when compared to every other racial demographic in America. It is always "whitey" that keeps the black man down. There is never any responsibility for their plight. When you bring up hard statistics - black-on-black crime, out-of-wedlock birth rates, anything - you are painted as a racist, bent on keeping the blacks on the plantation.
The other demographics are sick and tired of hearing about it. If Obama does not clearly and unambiguously refutiate the words of this racist preacher, he will have virtually no chance of winning the general election. McCain will beat this like a drum. As he should.
It is Obama's election to win or to lose. How he handles situations such as this will demonstrate how he handles crisis.
I don't think he'll do it, though. This is not good.
A while back, Hermit had said something on his site that got my attention. He was discussing about how there would be a good chance of race riots should Obama have the Democrat nomination "stolen" by Hillary.
I hadn't even thought about that. But he's right. Especially in areas with high concentrations of blacks and poverty. I've got two of those areas very close to me. One, Oakland, is where I work. The other, Richmond, is right down the road.
If the race-baiters feel the nomination has been stolen by whitey - and they will if he loses, regardless of the real reasons - they will incite the "believers" and riots will ensue.
Great. There's probably a better than 50/50 chance of riots. What to do?
Here in The People's Republic of California, without having one of the impossible-to-obtain CCW permits, you can only have a handgun in your car if you either have it in your locked trunk, or in a locked, steel box. The ammo cannot be in the gun, nor can a loaded magazine be inserted into a semi-auto.
To stay clear of these laws or an over-zealous gun-grabbing DA, I currently keep my handgun in a locked steel case that is in my locked trunk. The ammo is kept in the locked trunk in a separate area.
If it looks like things might get bad, I may come down with the flu and just stay home. I think that a week or so before the Dems convention, I will start keeping the locked steel box in the cabin of my car, with the magazines in the center console. Because "travel to gun ranges" is one of the specifically mentioned justifiable reasons for having a gun in your car, maybe I'll throw my range bag in the back seat to add to the "plausible deniability" aspect.
Bottom line is, if it hits the fan in a bad way, I'm not going to become the next Reginald Denny. I won't go silently.
Wednesday, March 12, 2008
My wife actually sent me this link. It was from another female friend of hers who loves guns. Can I really be in The People's Republic of California??
Tuesday, March 11, 2008
Deception is a cruel act... It often has many players on different stages that corrode the soul.The Dow Jones Industrials index went absolutely nuts today. Almost all of the reason was a seemingly mundane announcement by the Federal Reserve System:
--Donna Favors, Member of the Board of Directors of the Montgomery Institute, 1955
In another global show of financial force, the Federal Reserve and four other central banks announced significantly expanded loans of cash and securities to banks and securities dealers in an effort to alleviate growing strains in the credit markets.You could hear the cowboys on Wall Street, yippee-ki-yo-ki-yay! These were some happy people:
This is the smartest thing I’ve seen the Fed do in a long time… [The move] is based on the Fed’s existing securities lending facility with some key changes. First, the existing program is overnight lending only. Second, the existing program was a Treasury for Treasury switch only. The new facility is up to a 28-day term and accepts agency debt, agency residential [mortgage backed securities], AND AAA/Aaa-rated private label residential MBS [Mortgage Backed Securities]. The last security class is currently not accepted via the RP facility announced Friday. This does not represent an increase in the Fed’s balance sheet, rather they are simply lending a portion of their existing Treasury portfolio ($709 billion) and replacing it temporarily with other securities. Given the size of the Fed’s balance sheet there likely is some room to further expand this program if necessary… A very powerful tool. –Drew Matus, Lehman BrothersLet's break this down, and see what it really says.
This is the smartest thing I’ve seen the Fed do in a long time…Mr. Matus' employer, Lehman Brothers, is one of the 20 Primary Dealers. These are 20 banks and security firms that are allowed to directly purchase government securities through the Federal Reserve. They then turn around and sell them to investors - foreign and domestic - for a tidy little profit. Ya think Lehman's will profit from this? But how?
[The move] is based on the Fed’s existing securities lending facility with some key changes. First, the existing program is overnight lending only. Second, the existing program was a Treasury for Treasury switch only. The new facility is up to a 28-day termSo, we've gone from short-term money, to medium-term money. No bigee, but you don't need to scramble as much to manage your money. It's nice.
and accepts agency debt, agency residential [mortgage backed securities], AND AAA/Aaa-rated private label residential MBS [Mortgage Backed Securities]. The last security class is currently not accepted via the RP facility announced Friday.Hmm. Here's our first real red flag. In the past, for the 20 Primary Dealers to borrow money, the only acceptable collateral was other Treasuries. NOW, they can use "agencies" and MBS. Agencies are securities guaranteed by Freddy Mac and Fannie Mae, the two largest guarantors of loans in the country.
Oh, and they're quickly approaching bankruptcy.
Fannie and Freddie are publicly held companies (often called agencies) that buy, sell and guarantee home mortgages.Ahhhhhhhh. So what is really happening is a transfer of risk from the Primary Dealers to..... the Federal Reserve. Uhm, that's you and me. The Fed is allowing them to pledge these loans as collateral for liquidity borrowings. These are the same loans that the market has said aren't worth a damn.
Heretofore, their bonds have been considered nearly as safe and liquid as U.S. Treasurys. Although they are not explicitly backed by the federal government, there is a presumption that the government would not let them fail because of their importance in the housing market.
Recently, however, there has been growing concern about Fannie and Freddie's portfolios, specifically what are called private-label mortgage securities they have bought from others and do not guarantee, says Joshua Rosner, managing director of research firm Graham Fisher.
You see, the Primary Dealers (and virtually all banks) could not get any liquidity, even though they were holding loans that were backed by "agencies" (usually good-as-gold). Without liquidity, and bank will die on the vine. Can't let that happen, now, can we?
OK, back to Mr. Lehman Brothers:
This does not represent an increase in the Fed’s balance sheet, rather they are simply lending a portion of their existing Treasury portfolio ($709 billion) and replacing it temporarily with other securities.Right, it won't change the balance sheet, but it significantly changes the risk profile. This guy makes it sound so innocuous. Hey, nothing going on here. It's just a fart in the wind.
In an earlier post DAL357 had asked why the financial press doesn't sound the alarm on crap like this. I told him that they generally don't understand what's going on, and just parrot the tripe spewed out by the Official Spokesmodel.
So, is this a bad thing that has happened? That's very tough to call.
The underpinnings of our financial system are really shaky right now. The Fed is working over-time to come up with ways to prop up the system in the hopes that the economy will improve, real estate values will rise, and the sun will shine again.
What is troubling to me is how our government continues to accept levels of risk that it has been unwilling to accept in the past (see House of Cards). If you remember, back in December, they opened the Term Auction Facility which allowed banks to bid on government funds and to pledge the sub-prime loans as collateral. Again, this was done to provide liquidity to the market. They've done the same thing here, but now it's at what used to be the "gold standard" borrowing desk. Not so golden any more.
This is precisely what the European Central Bank and the Bank of England did (and still do) and they ended up nationalizing Northern Rock Bank because the securities they accepted as collateral were worthless on the open market.
This is big-stakes shit. As I mentioned, the Dow seemed to like the news, at least for today. Gold didn't really twitch. Supposedly, it will now be unlikely that the Fed will again lower rates on March 18th, as had been widely expected. The liquidity is there through this latest trick, so no need to further erode rates. Who knows what will happen between now and then?
It's a parlor game with major-league consequences. To really seal the deal here, I think it will take the government guarantees on the refinancing of individual loans (sorry, I just threw up a little in my mouth). The political pressure on both sides of this argument is huge. Treasury Secretary Paulson - a former Wall Street boss - is, surprisingly, fighting the bail-out. That is just shocking to me. I can't believe it's because of principle.
And that scares me, because I can't see why he wouldn't support bailing out his buddies, the borrowers and the investors all in one fell swoop. Spread the pain from the mistakes of individuals to the whole population. Ethically, it's the wrong thing to do, but politically, it's gold.
Gotta do me some thinkin' on this one....
Sunday, March 09, 2008
A greedy father has thieves for children.In this instance, the father is government, and the children are the tax collectors.
I was searching the Internet for a status update on a recent post, Butter, Guns, Dirt and Ducats. In it, I discussed how a local city, Vallejo, CA, was considering declaring bankruptcy. They were spending more for social services than they were bringing in with taxes, and were looking for a way out.
In it, I had noted:
California may be the canary in the mine, but this exact problem is a very real likelihood in almost every state in the nation. The financial disaster is already affecting the social aspects of our lives.In my research, I stumbled across what may be an even more disgusting abuse of public trust. Jefferson County in Alabama is on the verge of bankruptcy, not only for taking on more public projects than they could afford, but by compounding the error by participating in one form of derivatives called Interest Rate Swaps.
Jefferson County, Alabama, in a move that may cost it $184 million, said it wouldn't pledge reserves against $5.4 billion of interest-rate swaps tied to sewer debt that its bankers may demand.----------
While county officials say filing for bankruptcy isn't being considered, they concede it's an option.
Derivatives are incredibly complicated and risky financial instruments. Very simply, you invent a financial agreement based upon - derived from - something of value which you do not own or control, such as the direction interest rates will go, or if gold will rise or fall in value, or if the Dow will soar or crash.
It's a bet. Finance people call it a hedge.
Let's say you are a company that has an adjustable rate loan. When you take out the loan, the payment is $1,000 a month. That's just about all you can afford to pay. Your accountant tells you that he thinks rates are going to rise, pushing up your monthly payment. Not good for your bottom line.
He tells you about these financial instruments that can protect against rising rates. They are called Interest Rate Swaps.
Let's say right now the variable Prime Rate is 6%. If we agree to pay a fixed rate of 6% on $1 million (or any amount both parties agree to), he has an investor that will pay us a variable rate on $1 million equal to Prime. You see, this investor believes that Prime will go down.
If rates go up like we believe, the investor has to pay us the net difference between the 6% starting point and where ever Prime has landed. We have now cushioned the blow of the increase in payments we have to make to our bank.
If rates go down, we have to pay the investor the net difference in the decline. Hopefully, the amount we have to pay the investor is less than the reduction in our loan payment.
The original $1 million (or whatever amount is agreed upon) is never exchanged. It simply determines how big the bet -and the gamble - will be.
The hedges will work as expected if everything is aligned perfectly. If your loan is $1 million and is tied to Prime, and your Swap is for $1 million and is also tied to prime. Any rate movements will be counter-acted. Your net risk will be zero.
But people, companies and yes, even governments, get greedy, stupid or both.
You may have a loan you're trying to protect that is tied to Prime, but you do a Swap that is tied to the price of gold. Prime may go up, but gold may simultaneously drop.
Anyone wanna guess what Jefferson County did?
Compounding the problem, interest-rate swaps the county bought from JPMorgan, Bear Stearns Cos., Bank of America Corp. and Lehman Brothers Holdings Inc. to shield it against rising borrowing costs have backfired. The floating rates it pays on its bonds have climbed while the variable rate banks pay the county under the agreements has declined, pushing interest costs higher.These guys are toast. They don't want to pledge more collateral, so the bonds are being down-graded, further increasing their payment obligations. It is spinning out of control, and there aren't a lot of good options.
Just like Vallejo, if they go the bankruptcy route, someone else will end up picking up the slack. Taxes will be raised or services cut. Pain will be inflicted because of poor choices by elected officials.
This really is a story of living beyond your means. Just like with the sub-prime mess, where people were trying to buy homes they could not afford, these municipalities are committing to more services than they can afford. They have more month than money.
Jefferson County got into this by doing a massive sewer project. They didn't have the money to pay for it, so they had to borrow. Governments do that by issuing bonds.
What other options did they have? How about scaling back the project? Or doing it in phases. Or only issuing building permits that had assessments to pay for the upgrades needed for the increase in capacity. Or doing the unthinkable and cutting back on other services that were of lower necessity. I'd be willing to bet that Jefferson County has a number of departments or commissions that are less important than making sure your fecal matter makes it to the treatment plant. Maybe that's just me.
Here in The People's Republic of California, when Governor Schwartz-N-Kennedy came into power, he was able to hoodwink the sheeple into a $15 billion bond issue to pay for ongoing expenses. A long-term loan to pay for short-term expenses.
This will shock you, I'm sure, but the money is almost all gone. Poof! But the bond payments will endure for 20 years...
I've noted in the past that I think we will have a total societal collapse in the next 15 years or so. Increasing numbers on the public dole coupled with decreasing numbers able to foot the bill can only end badly. The recipients will revolt once they are torn from the public teat.
I think The People's Republic will be one of the first to fall, possibly within the next 8-10 years. Sooner, perhaps. The numbers of tax payers leaving this state and being replaced (and exceeded) by those getting services is already becoming unmanageable. The socialists in Sacramento will continue with the smoke and mirrors, keeping the "needy" pacified, but it can't last.
Socialism will fail here as it has failed everywhere it has been attempted in the past. When you don't encourage people to care for themselves, they won't. More accurately, when you incent people to stay dependent, they will do so.
Why care for yourself when Nanny will do it for you? It ain't gonna be pretty...
Friday, March 07, 2008
Morality is simply the attitude we adopt towards people whom we personally dislike.We've all read about the sub-prime melt-down, the greedy borrowers, the greedy investors, and of course, the greedy bankers. Everyone wants to tear off the heads of bankers, and shit down the hole.
And that's fine. If you're a shareholder, depositor or borrower, you have every right to feel this way if you've been harmed. Your investment/deposits/line of credit may be at risk because of poor decisions by the management of the bank. You have a vested stake in the health of the bank.
What drives me crazy is when camera-whoring Congress-critters start jumping on the bandwagon.
Lawmakers aimed their sights at three corporate executives Friday as they questioned how the CEOs managed to take home hundreds of millions of dollars in compensation while their companies were taking a financial nosedive due to the subprime mortgage crisis.Henry Waxman is the epitome of the over-zealous government wonk that has to have his rat-like schnoz in everyone's business - even when he has no authority to do so. This is the same committee that recently looked into the baseball "steroid scandal".
"It seems that CEOs hit the lottery as their companies collapse," House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif., said at the opening of the hearing. "Any reasonable relation between their compensation and the interests of their shareholders appears to have broken down."
Why is our federal government sticking its collective nose into these two private business matters? This is so far off the plate (like the baseball analogy?) for what our federal government should be doing. More than that, it is outside of what it is empowered to do.
If the shareholders of these banks want to pay these guys a billion dollar bonus for every billion dollars they LOSE, so be it. It's their company, and they can do what they want.
The same with baseball. If they want a bunch of juiced-up guys ruining their sport, let them! I can make the choice never to go to another game, and if enough people think like I do, they'll go out of business.
This is part of a bigger, long-lingering government trend (I don't know if it's actually a "plan") to control or direct every facet of our lives. To dumb us down. To tell us what to put into our bodies. To tell us what words and thoughts are "hateful".
It's like a cancer. It starts out small. Some legislator sees something they think is wrong, and they pass a tiny little law to fix it. They feel good about what they've done. They're serving their peeps.
They do it again, because the first time was so successful, and so good and so righteous, they clearly know what's best for the dirty little people.
Pretty soon, that cancer has spread. It's everywhere, in every system, in every pore.
Then the body dies.
I probably get into my most "heated discussions" - OK, arguments - with people in regards to how far government should intrude into our lives. The conversation almost always drifts to morals.
I'm a strong believer in personal choice and personal responsibility. Any act or arrangement between one or more adults which does not infringe on the rights of others, should not be prohibited by the federal government in any way, shape or form.
If I want to take any drug that is on this earth, and put it into my body, no one on the federal payroll should be able to stop me, or threaten me with sanctions. If I die because of my choice, so be it. The government should have no obligation to wipe my ass if my choice has resulted in me becoming unable to care for myself. I fucked up. Bummer.
The same goes with buying hookers, marrying any number of people of any gender I want, or watching whatever I want on the TV. Anything.
I'm sure I just pushed at least one button of everyone reading this. Good.
You see, YOU can also make choices. To only take aspirin. Or only have sex with your opposite-sex spouse. Or only marry one person. Or only watch Disney on the tube.
My actions don't infringe on your ability to make those choices. You have the freedom to set your own morality, and to only associate with people of similar mindset. It's your choice.
But don't you dare force your morality on me.
I just ask for consistency. If one party or ideology is in power, they will try and force their morality down our throats. The problem is, it might not be our ideology.
At the federal level, we must all rail against morality laws even when they fit our morality. Once the cancer of group-think takes hold, it can be impossible to stop. We must resist the urge to "jump on board" with government control of our lives simply because the most recent law is to our benefit or liking.
Otherwise, soon enough, someone with a different morality will be in power, and you will have helped grease the skids for them to pass morality laws of their own.
Before you go all nuclear on me, read what I said. Everything was about adults and the federal government. Obviously, children need protection when the parent is unable to do so. There has to be a hell of a lot of evidence, though, before Nanny gets to take charge.
Something like child porn - producing, participating or purchasing - should result in execution. A child is legally unable to make the decision to "act" in a porno. They are messed up for life because some sick fuck wants to get his jollies (Sorry, but this hits close to home, as I had a niece that got knocked up at age 13, by an 18 year old guy - he knew never to come visit my niece when Uncle Mike was there. I would have killed him. Or at least beaten him badly enough that he would have wished death upon himself.)
I think states and localities should have the ability to define local standards. Mostly through zoning laws. If I want to have a porn palace, I should be able to do so, but it might be restricted to certain parts of town. Just like an auto body shop, a dry cleaners or a grocery store. I'm OK with that.
The reason for this belief, really, is the Constitution. It was designed to have more power locally. If I don't like what the zoning commission is doing, I have a much better chance of getting them voted out of office than if it is a federal law, where I'm basically powerless.
I can also just move to the next town that has laws more aligned to my own beliefs. Again, at the federal level, if I don't like it, my only option is to suck it up, or to become an ex-pat. Neither hold a lot of value to me.
Control should be local. Morality should be personal.
Mystical references to society and its programs to help may warm the hearts of the gullible but what it really means is putting more power in the hands of bureaucrats.This state of mine, aptly nicknamed The People's Republic of California, continues to live up to its billing. It seems, now, that children are no longer the responsibility of the parents. Nanny is now the clear Top Dog.
Californians no longer have the choice of how to teach their children. State indoctrination is now mandatory.
A three-member panel in Los Angeles ruled unanimously last week that parents who home-school their children must have such a credential.This has the potential for incredible damage. Aside from stripping parental rights, it may also put private schools at risk as well. Many private schools do not require the teachers to be state certified. My wife is one of those people. Is this crossing the church/state boundary? Probably, but who cares? It's the power of Nanny that matters.
The ruling has angered and confused tens of thousands of parents who are part of the state's vast and diverse home-schooling community. If the decision is upheld, California would become the only state in the nation to require parents who educate their children at home to have a teaching credential.
In the beginning of February, I did a post called, Good Bye, Sweet America! in which I published the 10 planks of the Communist Manifesto. Number 10 on the list was:
10. Free education for all children in public schools.It is not optional. If all are not indoctrinated, there may actually be some free thought that questions the wisdom of the elites.
They might understand the absurdity of this statement:
“Parents do not have a constitutional right to home school their children,” wrote Justice H. Walter Croskey in a Feb. 28 opinion signed by the two other members of the 2nd District Court of Appeal.What Justice Croskey forgets is that pesky little Tenth Amendment. You know, the one that say that unless a power is specifically granted to the feds or prohibited by the states, the power rests with the state or the people. The SCOTUS has, on numerous occasions, stated that parents have the right to home school their children.
These three appellate judges are the worst example of "legislating from the bench". What started as a potential child abuse case morphed into a likely prohibition on homeschooling. Get on the wrong side of Nanny, and go directly to jail.
I think we'll expand the number of homes and home sites we see on our trip in two weeks to Idaho. I can't get out of this cesspool of a state fast enough.
Thursday, March 06, 2008
Oh no! What have I done? I smashed open my little boy's piggy bank, and for what? A few measly cents, not even enough to buy one beer. Wait a minute, lemme count and make sure... not even close.I tend to be obsessive. If I sink my teeth into something, I go all-out. Brewing is no different.
Back in 1980, two short years after Jimmy Carter did the only decent thing of his presidency - legalizing home brewing - I brewed my first beer. It was 5-gallons of an Anchor Steam knock-off (the actual style is called California Common).
It was made with a kit. A bag of malt extract, a bag of hops, tap water, a bag of yeast and some crude tools. It was more like throwing together a cake mix than really brewing. But, it made a hell of a beer. Even the kits were much better than 90% of the crap domestic beer on the market. I brewed with kits for 10 years or so.
I then graduated to all-grain. This is where you actually grind your own barley malt, steep it (mashing) in temperature-controlled water and a bunch of anal retentive procedures. I now harvest my own yeast, freeze it, resuscitate it and ferment for free. I've built a fermentation fridge out of an old fridge that I've coupled with a temperature controller so I can make both ale and lagers any time of the year. It is just too damned cool.
Eventually, I got into kegging. Bottling is a royal pain in the ass. 1 5-gallon batch makes approximately 2 cases and a 6-pack of beer - 54 beers. Since I now brew in 10-gallon batches, that's a lot of damned bottles to clean, sanitize, prime, fill and cap. I almost quit brewing a few years back because it was such a pain. I started kegging, and as usual, I went over the top.
I now own 22 5-gallon kegs, and 2 10-gallon kegs. When I moved into my current house 5 years ago, I was somehow able to
That's a Sears 19 cubic foot chest freezer that I added a temperature controller, a wooden skirt to the lip and put in 10 taps and faucets. The 3 on the left-hand side generally hold homemade soda or plain soda water for the kids. The last 7 taps are for beer, with the final faucet always holding my World Famous Dry Stout.
Every year, we have an Oktoberfest party where we have 75 friends, friends-of-friends and just people that like beer, come on over to eat, drink and be merry. It takes a lot of beer!
I need to start increasing my lager stores, as they take about twice as long to ferment (4 weeks or so), then need to be conditioned for about 3 months before consumption. I like to have at least 3 lagers on tap, but my fermentation fridge can only handle 1 batch at a time. Ales take much less time, and are generally drinkable in 6 weeks (you can actually drink an ale right after it has fermented and been carbonated, but it sucks).
I'll be making my award winning (really!) Bohemian Pilsner this weekend. I use this technique called "decoction mashing" that imparts a wonderful malty flavor to the brew. My oldest son and his best friend have said they want to learn the ropes from the Old Man, so they'll be Brewer's Apprentices. They get to lift the crap, clean the crap, do the crap. Being Head Brewer does have its perks!
Labels: Life and Times
Wednesday, March 05, 2008
It's interesting, but this has diverted my attention from the "bigger picture" of what is happening in the country and the world. I didn't even realize the Japanese stock market took a huge hit, that gold tickled the $1000 level and that oil had broken its all-time high price per barrel.
Speaking of gold, back on the 23rd of February, I had a conversation with Karen in the comment section of one of my posts. We were talking about how to buy gold coin. I noted that the spot price of gold was $944.60 per ounce. As of yesterday, it was at $989 per ounce, a 4.7% increase in 10 days. Annualized, that is a 173% rate of increase. Now, I doubt the increase will continue at that rate, but I do believe it will continue to grow. It's up around 50% over the past 6 months.
I bought 400 rounds of .223 Rem ammo and some gold coin this weekend, paying (what seems to me) way too much for both. Ammo and gold are both true commodities, where supply and demand are making prices skyrocket. Both also share a common thread that people hoard both when they don't have rosy outlooks for the future. Same with the bucket of wheat I just bought. At least there isn't any inflation to worry about, and we're not yet in a recession. So sez Dubya.
On Friday, the employment numbers will be released. The preliminary figures have not been too good. Especially here in The People's Republic of California. Maybe the Leader of The Free World will change his tune at that time. Doubtful.
When will a group of Nazi's or Skin Heads or some other racist group protest to Harvard University and get preferential treatment for use of the gym. The Muslim's get special privileges, and there are fewer Nazi's in the US than there are Muslims, so the Nazi's are actually a minor minority. They should get extra special treatment.
I wonder how Harvard would argue in denying the Nazi's request. It couldn't be on hate-speech grounds, because no group is more vocal in their hate of anything more than the Muslims. It couldn't be on promoting violence, because no group is more proactive in promoting and actually carrying out violence in furtherance of their goals than Muslims.