| Thursday,
April 3, 2008 Fed Sub-Prime Responsibility
Fair Housing & the Sub-Prime Mess By Jerry
Bowyer Tuesday, April 1, 2008
http://www.townhall.com/columnists/
JerryBowyer/2008/04/01/meet_barry_obama,_
fair_housing_lawyer
Last Saturday, I was a guest on Larry
Kudlow’s WABC radio program. Larry’s a good friend and we have been
talking quite a bit lately on his TV and radio shows about the ways in
which Federal regulations have created the sub-prime mortgage crisis.
This is far and away the most underreported aspect of the mortgage
story, and aside from Larry’s shows and a few conservative media
outlets, such as Townhall, it has been completely missing from the
discussion.
That’s a shame, because there simply was no
such thing as a developed Subprime mortgage industry until the US
congress created it by ordering banks to issue loans to people who were
not credit worthy. Community activist groups (such as the Public
Interest Research Group and Acorn) and civil rights law firms (such as
Miner, Barnhill & Galland) had make their living by accusing banks of
racism when the banks hesitated to approve loan requests from minority
citizens with poor credit scores. Fair Housing laws, championed by
American Heros like Martin Luther King, Jr., had long-ago outlawed the
practice of ‘redlining’, which is refusing to sell or rent to blacks in
certain neighborhoods. But a new generation of activists modified the
concept of redlining, applying it not just to race-based home sale
covenants, but to any refusal to lend to a minority member, even for
sensible financial reasons.
The Community Reinvestment Act was created
as a result. Initially the act was used, not to get banks to lend to
minority households, but to get them to cut checks to ‘community
groups’. Left of center activist agencies, which had pushed for the act
in the first place, used it as a shakedown tool. So long as the banks
kept paying off to the activists, the activists would hold off on
sending complaints to the bank regulators’ CRA files.
Eventually, under Clinton, the CRA was
renewed and, not surprisingly, made more punitive. Banks were required
to make Subprime mortgage loans now too, or else suffer a low CRA rating
and be punished accordingly. The Fed played it’s part. The Home Mortgage
Disclosure rules created an unfunded mandate for banks to track and
publicly disclose the race and gender of it’s mortgage clients. Now the
shakedown artists had an easy source of complaints and a club with which
to beat the banks into submission. The bankers complied and the Subprime
mortgagage market was born.
But the bad paper remained principally on
the balance sheets of the originating banks for a couple of years. The
banks and their shareholders were directly hurt, but not the general
public, at least in the beginning, that is until the bank regulators
once again intervened and encouraged banks to push the paper out to
unsuspecting investors.
First the Fed issued guidance which warned
the banks that their capital requirements would be severely raised in
response to the Subprime mortgages. In other words, banks were told that
to the extent that they issued mortgages to high risk borrowers, to that
extent they would not be allowed to put as much of their money into
income-producing activities. The banks had already been told by the Fed
that they would have to set aside more money for mortgages in general,
and now they were being hit again for the Subprime variety.
Second, the Fed issued guidance on how to
mix Subprime mortgage paper in with good paper and sell the resulting
composite security to the general market. This is how the ‘toxic waste’
of bad debt was pumped out into the world. This is why credit markets
are now having trouble clearing. This is why banks are taking massive
write-downs of the loans which still exist on their books. This is why
foreign investors don’t want to buy US mortgages, or bank stocks, and
consequently don’t want to buy the dollars in which they are denominated
either. If you add to this a Security and Exchange Commission ruling
which compels banks to ‘mark to market’, which means they are forced to
show large losses in times of market panic, you give a legal mandate for
short-term thinking. You create a more serious crisis for the system and
a fatal blow to the weaker banks.
This crisis has the fingerprints of
congress and its bureaucratic enforcers all over it. It also has the
fingerprints of a generation of activists and ‘fair housing’ lawyers as
well.
Julie Woodman
Astute. Very much worth your reading.
=========
Re: USAF
And let's not forget that the USAF killed the SR-71
(and several other Interesting Programs.) This was, basically, a fit of
pique; the A-12 and SR-71 were Mach-3 aircraft built on a civilian contract,
for a civilian agency, and they were flown and operated by civilians.
Meanwhile, the USAF's XB-70 was cancelled after only two prototypes. And the
USAF has never quite gotten over that...
-- Mike T. Powers
Well the Valkyrie flew at optimum speed and
altitude for the Soviet intercept system; the threat of building a fleet of
them (originally the WS-100A; I was on the design team) was to require the
Soviets to keep a very expensive system in place. Eventually only three were
built, and one was wrecked in training. All told it was a very cost
effective program in the war of attrition that we called The Cold War.
That part USAF got right. If USAF had stuck the air
superiority and strategic bombardment all would have been well; but it
insists keeping control of vital missions it will not perform, and that is
disaster.
=========
Cuban Blog
http://www.desdecuba.com/generationy/
Jerry, the above link will take you to blog of Yoani
Sanchez, a 30 something Cuban woman who tells of her daily life under
Castro. She sneaks into tourist hotels to get internet access and post this
blog. If caught, she would most certainly be imprisoned. Where does this
woman get her courage? A little anecdote from a recent entry in her blog
perhaps contains a clue. Referring to her family’s Easter celebration, she
regretted that there would be an empty chair because of a missing relative —
Adolfo Fernandez Sainz, one of the 75 independent journalists jailed by the
Castro regime five years ago. And she expressed the hope that no one would
deserve the phrase hurled at her by her young son when he learned of those
detentions: “So, you are still free because you are a bit cowardly.”
And that is a challenge to us all.
I'm glad to see that your symptoms are improving. An
ocologist friend said (in another context) that with post radiation therapy,
changes in symptoms were a good thing, they showed that the body was dealing
with the waste. He would be very concerned with early stability.
We continue to pray for you at St. Mat's.
David A. Smith
=========
Zaps and economy
Dr. Pournelle,
First things first; you have my devout prayers and
sincere hope that the 'zaps' have accomplished their purpose and need not be
repeated. Having said that, a happy ending is not necessary for a book of
your treatment even if it is earnestly to be desired. There are several
books (Death Be Not Proud springs to mind) that were successful without a
happy ending.
My mother, who is of your generation, completed
similar treatment in a similar location about one month ago. In her case,
she had neither the understanding of technology to ask the questions of her
doctor that you would have, nor the information resources your readership
allows you to get the depth of information you have. I mentioned to her your
treatment and description of same and she asked for your web site so she can
read it herself. Please understand, this is a woman who is profoundly
ignorant of computers and the web. Previously, nothing has induced her to
get on a computer. I am, in my copious free time, attempting to collect your
musings in relation to your treatment and symptoms, to make her search
easier. Please consider a book on this subject in your copious free time,
and do not hesitate to write about this on your salon.
Of the reports on the economy, I have known for over a
year that the economy was bad. Currently, I am making almost identical
salary to what I was making ten years ago. At the time, I still had children
at home, and I was in school. I did not have a degree yet and was able to
(barely) support my family on my income alone. Occasionally, I could take
the family out to dinner, or a movie. Currently, I am supporting only a
wife. My house is now paid off, and I am now getting a small VA disability
pension. My wife and I have been out to a restaurant only one in the last
year and we are unable to meet all our bills which include no credit card
payments. We have bills which are almost a year behind and saving have been
exhausted. (Parenthetically, this is the reason I have not renewed my
subscription to your site). This situation should be corrected for a short
time as my wife, for the first time in our 35 year marriage, has gotten a
job, but previously we had been able to make it on my income alone even
though we raised three children and for almost half our life together, I was
military.
I mentioned some of the observations on your site to a
friend of mine. He immediately (as is his wont) started researching my
statements. He is currently trying to figure how to reinvest his savings,
but has pulled his money out of both the market and government bonds. He is
very frightened at the economic future.
One of the observations you have made repeatedly was
reference to the German hyper-inflation of the '20s. My reading of this from
history has been that it was engineered by the Wiemar government as a method
of paying the enormous reparations imposed by the Versailles treaty. In
other words, they ran the presses until the cash was available even though
it was worthless. This is supported by the fact that when the reparations
were repudiated after the Ruhr occupation was ended, the mark recovered very
quickly.
This has several effects. It allowed payment of the
reparations without raising German taxes. It punished the foreign holders of
German Marks and made investment in German recovery worthwhile. I made for
good propaganda to the Brits and the American peoples who generally were
opposed to the terms of the Versailles treaty. It was an excellent form of
non violent resistance to the treaty. Of course it was kind of hard on the
German middle class but you cannot make an omelette without breaking a few
eggs.
The point of the above paragraph; when are our
politicians going to start this or have they already? Paying out the voters
(modern bread and circuses) is one benefit. Another would be paying off our
enormous trade deficit. But who could think of such conspiracy? After all,
no moral nation would do that, would they?
On another vein entirely; I have read two new books
recently, Christianity's dangerous idea : the Protestant revolution-- a
history from the sixteenth century to the twenty-first by Alister E.
McGrath, and Persian fire : the first world empire and the battle for the
West / Tom Holland. Both came out late 2007 and both are very much worth
reading.
Please know that your fans value your contributions
and your opinions (even if we sometimes disagree) and that you have our
payers for a complete and speedy recovery. Eagerly awaiting Inferno 2 and
Mamelukes;
Sincerely
Patrick A. Hoage
Thanks!
===========
NATO: Am I mad?
LTC (Ret) Ralph Peters has a column in Todays' NY Post
advocating NATO membership for Ukraine and Georgia, specifically as a way to
'keep the bear caged' .
http://www.nypost.com/seven/04032008/
postopinion/opedcolumnists/caging_the_bear_104843.htm
Evidently that is what the administration is doing as
well.
I have to ask: Are we mad?
Because a military alliance is ultimately a commitment
to defend another militarily. Does anyone seriously believe we're going to
go to war in Ukraine or Georgia if the Russians decide to invade?
What's more, I don't recall us being the enemies of
the Russians before our Kosovo adventure antagonized them. Yes, we are
rivals rather than allies now. But rivals allow each other their proper
space. If you walk too far into territory another dog has claimed as its
own, expect to growl louder and louder until biting happens.
And don't think for a minute the Ukraine is not
territory Russia claims as its own.
This is , IMO, stupid. We're needlessly antagonizing
one of the world's great powers in order to offer paper assurances we can't
possibly follow through on. We tried that once before, in 1956 Hungary IIRC,
when we deliberately fomented revolt in Eastern Bloc countries, then stood
aside while the Russians crushed them with great violence and brutality.
It's all very well for LTC Peters to talk about 'appeasing bullies' , but
the wise man knows when not to pick a fight.
We have no business further antagonizing one of the
world's great powers in order to make a promise we have no intention of
keeping.
And you know very well we'd never try this during
Brezhnev's time, or Andropov's. I think the message we're sending the
Russians is: Not only do we consider you enemies, we consider you
contemptibly weak. How does anyone *expect* the Russians to respond to
something like that?
Have I gone mad, or has the world?
Respectfully,
Brian P.
Stark Raving Mad. Entangling alliances. Involvement
in the territorial disputes of Europe. Bombing Serbia in defense of the
tights of illegal Albanian immigrants to Kosovo. Stark Raving Mad. Bush and
Rice have apparently lost their minds. Worse than Albright. Stark Raving
Mad,
=========
Subject: POD --
Jerry,
Here's an interesting article on the logistics of POD:
http://www.fonerbooks.com/pod.htm
At those prices (Ingram's "Lightning Source" POD
subsidiary) -- three bucks per, wholesale, the "grocery store" (or airport)
book becomes a lot more viable.
Using those other outfits, and paying twelve or
fourteen bucks "wholesale," I just don't see how any kind of general
interest book can even dream of making it.
Ron
I am learning more about POD publishing; I will
have my views another time. Meanwhile Francis Hamit is following it closely.
And that article is worth the time of anyone
intersted.
=========
"Internet book piracy will drive authors to stop
writing"
http://entertainment.timesonline.co.uk/tol/
arts_and_entertainment/books/article3648813.ece
"Book piracy on the internet will
ultimately drive authors to stop writing unless radical methods are
devised to compensate them for lost sales.
"This is the bleak forecast of the Society
of Authors, which represents more than 8,500 professional writers in the
UK and believes that the havoc caused to the music business by illegal
downloading is beginning to envelop the book trade."
Jim Douglas
Another reason for the Platinum Patrons, of course.
I don't need boom and bust with best sellers. Just an assurance that I will
have an income to support my family. I can spend time negotiating with
publishers and writing what they are interested in, or I can write what I
think is important with the assurance that I will have sufficient income
(from subscriptions) knowing that what I write will be published and
available one way or another.
Now to build the subscriber base...
=========
Subject: Few Students are Proficient Writers
<http://www.nytimes.com/2008/04/03/education/
03cnd-writing.html?em&ex=1207368000&en=
d5f9c0d1c8fa0d03&ei=5087%0A>
<snip>
In Test, Few Students Are Proficient
Writers
By SAM DILLON Published: April 3, 2008
About one-third of America’s eighth-grade
students, and about one in four high school seniors, are proficient
writers, according to results of a nationwide test released on Thursday.
The test, administered last year, showed
that there were modest increases in the writing skills of low-performing
students since the last time a similar exam was given, in 2002. But the
skills of high-performing eighth and 12th graders remained flat or
declined.
</snip>
Hmmm, HUGE increase in the focus on underperforming
students equals, "modest increases in writing skills of low-performing
students" while at the same time, "the skills of high-performing eighth and
12th graders remained flat or declined." This looks like proof that
no-child-gets-ahead works just as you figured it would. Don't you get tired
of being so right most of the time?
Braxton Cook
=========
Subject: Amazon smacks little people with BookSurge
Jerry
Here is a comprehensive piece on the Booksurge issue
from The Register:
http://www.theregister.co.uk/2008/03/31/amazon_booksurge_ultimatum/
Ed Hume
==========
Publishing News - News Home Page - Amazon threat on
direct selling
Dear Jerry:
More evidence that Amazon has gone mad. I signed up as
an Amazon Associate today. Why? It's like that story about the guy who
complains about the poker game he was in the night before. Asked why he put
up with people who dealt seconds and off the bottom of the deck, he replied
calmly "It's the only game in town?" Thus it is with Amazon, but such
behavior will only come back to bite them in the end. One suspects that Jeff
Bezos has no idea what's going on and that when he finds out how these
clowns are damaging his brand, will lay about him with a flaming sword. The
company has grown too fast. It has also hired a lot of people who are more
interested in power than profit.
http://www.publishingnews.co.uk/pn/pno-news-display.asp?
K=e2008040310393759&TAG=&CID=&PGE=&sg9t=.
Regards,
Francis Hamit
=========
Subject: Letter from Francis Hamit 3/31/08
Dear Dr.Pournelle,
The mythical company, the one that made construction
machinery, featured in Saturday Evening Post stories was Earthworm Tractor,
with super salesman Alexander Botts. The inspiration for the tractor company
is easy to see. It was many years before I heard about a Collins Machete
salesman that was the equal of Mr. Botts.
regards,
William L. Jones
wljonespe [at] verizon [dot] net
Indeed. I grew up reading Alexander Botts stories
and loved them. I read the first one before I was in third grade, and we
took the Post so I read each as it came out. I have a paperback collection
of all of them, and I presume they're still available. Earthworm Tractor vs.
Steel Elephant...
=========
Subject: "Someone liked them"
Jerry,
"Someone liked them, or they wouldn't have paid me all
that money ..."
Being a writer means having to have the same kind of
thick skin a salesman has, the same kind of JOAT inclinations an old farmer
has, the same kind of imagination a florid schizophrenic has<g> -- and
world-class diplomatic skills OR the ability to get away with being a
complete introvert.
I've been told by an editor at a "major imprint"
publisher that "writers are scum" -- and I've received solicitous fan mail
that creeped me out (and discovered, after moving *way* into the boonies
that a relative of a friend of a relative "read all my stuff and really
wanted to meet me," which just made my blood run cold. I think I blurted out
"No!" before I was even finished digesting the statement.) Is this "right"
or "wrong"? I don't even go there. It's *me*. I know that *I* could never
open my life up the way that you do with CM, but that's *you*.
For every "critic" who pans your work, there's a RAH
who comments on Mote being the best SF novel ever written. (And remember
that a critic (de facto or de jour) is someone who can't make it as a
writer.) You grow inured to the twin demons of praise and condemnation, peck
out your thoughts, and with luck, make enough to keep ahead of the bill
collector.
It's a different kind of life...
Ron
Of course. I have always known this, and perhaps I
waxed sarcastic in pointing to the nonsense over on Schneier's site.
========
Seitz The Bayeux Travesty
PLAN STEIN FROM OUTER SPACE
What a milestone week for seriously bad Fan Film
remakes
First, The Sirens Of Titan location got hit with a 100
kilometer thick ice regolith and pelting methane rain.
Now Plan 9 From Outer Space has been rendered
redundant by a flick that may edge out _An Inconvenient Truth_ when the
Academy gets around to awarding Intellectual Dishonesty Oscars .
The top banana in _ Expelled _ is second string Nixon
speech writer Ben Stein, who seems to know less about Darwin than Ferris
Bueller, and whose knowledge of evolution would fit on a Visine label.
Only photoshop can do its trailer credit-- behold the
Bayeux Travesty
http://adamant.typepad.com/seitz/2008/03/the-bayeaux-tra.html
--
-- Russell Seitz
==========
A point on the iPhone
Subject: an iPhone point...
Jerry, just reading the column and came across this:
Alas, no GPS so the iPhone doesn't know where it is, but that, too, is
probably only a matter of time.
Actually its already sorta here - you can tell the
iPhone to search for its current location and it uses the nearest Cell
Towers to triangulate your position within a couple of blocks. Then you can
tell it where you want to go from there and Bob's Your Uncle - sorta
GPS...it will give you maps, satellite views or turn by turn directions.
I've tried it in Houston, Memphis, Sacramento and the Bay Area...works like
a champ
Cheers.....rh
Yes! It took a while the first time, but it has
found Chaos Manor. Thanks
========
Sleeper.
<http://www.washingtonpost.com/wp-dyn/content/
article/2008/04/02/AR2008040203952_pf.html>
--- Roland Dobbins
==============
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