Common Law Review

Responses to the Geithner Plan...

2009-03-24T10:13:00.003+01:00

are lukewarm at best. Today's Wall Street Journal op-ed ("The Geithner Asset Play") raises the appropriate objections. The goal of the plan, which is to rid banks' balance sheets of unmarketable assets, really is something that has to be done if credit relations are to be restored. But it seems that Geithner wishes to accomplish this, once again, on the backs of the taxpayer. Why not try something such as was suggested by Larry Kudlow (see my blog here), whereby mark-to-market accounting rules are eased -- something which will cost the taxpayer nothing. John Berlau notes that Geithner's plan mentions nothing about mark-to-market.

Furthermore, Paul Krugman's running commentary on the plan ("The Conscience of a Liberal") is well worth perusing, even if sprinkled -- liberally -- with really funky liberalism.

What the Fed is Up To

2009-03-20T09:31:00.005+01:00

The recently announced Fed action has been characterized as a massive exercise in printing money, in "pumping liquidity". But such characterizations, once again, are misleading.

Take a Wall Street Journal article from March 19th, 2009, by John Hilsenrath. In "Fed in Bond-Buying Binge to Spur Growth" he wrote,

The Fed had already cut its benchmark interest-rate target to near zero. Unable to go lower, the central bank now is essentially printing money to raise the supply of credit and thus push down the longer-term rates paid by families and companies on mortgages and other key loans. The impact was immediately felt.

First, has the Fed been "printing money"? Let's look at a few graphs, downloaded from the Fed web site, to determine if that's the case.

First, the trend line of the amount of assets on the Fed's balance sheet:

This means that the Fed has done a lot of buying since mid-2008. How has it paid for this? By printing money? Let's look at the trend line of liabilities over the same period:

Here you can see that the amount of currency in circulating (money printed) is roughly stable, while the amount of deposits at depositary institutions has ballooned. The Fed, thus, bought up all those assets by crediting the accounts of depositary institutions (mainly banks).

What does this do? It enables these depositary institutions to lend. How much they are able to lend is a function of how much they have on account at the Fed. Those Fed deposits, plus their own cash on hand (vault cash), constitute what is known as the money base. The money base was fairly stable through mid-2008, and then went through the roof, from $800-plus billion to over $1.5 trillion in March 2009 (see the table here).

So the money base, and thus the amount available to lend (which, with our fractional reserve banking system, is a multiple of the money base), has nearly doubled.

But the money supply, actual money put into the economy, has not. Here are the figures for the broadest money supply counter (monetary aggregate), M2. In March 2007, M2 stood at $7.111 trillion. In February 2009, it came to $8.275 trillion, an increase of about 16%. Nearly all of that increase has occurred recently: the year-on-year gain (February 2008-February 2009) was 9.8%, the six-month gain was 15.3%, and the three-month gain was 15.2%. Still, the gain is not nearly what one would expect given a near-doubling of the money base.

The conclusion: the Fed hasn't been printing money, it has been expanding the money base and thus the amount banks can lend. But even in that case, the banks can't lend what people won't borrow. Given the none-too-precipitous increase in the money supply, it doesn't appear that borrowing has increased much even given the enormous increase in potential for lending (look here for confirmation).

It would seem to me that the Fed's purpose in buying up the more unorthodox assets, which underlies the big increase in assets on its balance sheet, is 1) to stabilize the mortgage market by buying up mortgage-backed assets from Fannie Mae et al., 2) to bring down long-term interest rates by buying up long-term Treasury bills.

Bringing down long-term rates is a new way for the Fed to operate. It apparently is working, or at least has a chance of working. By bringing down long-term rates the Fed hopes to spur investment (see Hilsenrath's article from March 20th, 2009, "Excess Capacity Keeps Heat on Fed").

The danger is, of course, that by engaging in all this spending it has provided way too much lending potential to banks which could lead to inflation. Hilsenrath's "Excess Capacity" article shows just how much the Fed is expanding the money base by doing this. But on the other hand, it can head off the danger of rampant inflation by raising interest rates, as well as by selling off those self-same assets.

So this is an area which bears watching but is not yet cause for alarm. The Obama government's fiscal policy (not to mention war on capitalism) is where one really needs to watch out.

And We Have a Winner

2009-03-18T16:33:00.003+01:00

The solution to the toxic asset problem, and the credit crisis, may well be the one propounded by Holman W. Jenkins in his Wall Street Journal column of March 18 2009: "Needed: A Bailout That Doesn't Look Like One." The root of the crisis is bad assets (securitized subprime loans) on banks' balance sheets. Mr. Holman's column discusses how these assets can be most easily taken care of. It looks so easy that a child could do it. But there's the rub. It's too easy. After all, it would constitute the waste of the opportunity this "crisis" affords to Cloverfield government.

(Update March 20th: Larry Kudlow offers an alternative approach to solving the crisis. He may be right that no further action is required than the switch to cash-flow accounting from mark-to-market accounting, together with the normalized yield curve on short- and long-term loans. Who's to say? Not me.)

Cloverfield Government

2009-01-13T15:27:00.006+01:00

Well it's about time I woke up from hibernation to begin posting again. Not much to say for awhile there, not to mention being preoccupied with finishing the next volume of the Stahl translation, about the state and constitutional law. I hope to have it published within a month (that's quite optimistic though). At any rate, I did have a thought to communicate! And that is this. I finally got around to watching the movie "Cloverfield." It's not one of those movies my wife likes to see, so it sat around gathering dust until she went out of town for a few days, at which point I blew the dust off of the said DVD and watched it. What a grotesque movie, yet very well done, because it seemed real enough to actually have happened. But, here comes the thought I wanted to communicate: the monster in Cloverfield, while highly believable, was not quite up to the times. If he really wanted to come over as a modern-day monster, he would have gotten on the national news, have blamed all the carnage in Manhattan on the army, and stated that he really was there to fix things, to restore order, to rebuild, he being the only entity large enough to be able to do that. After all, isn't that what our government has done? Destroyed the economy through years of either parasitic or blatantly destructive action (e.g., subprime mortgage sponsorship), and then blame the entire mess on the victims, to wit, business and the market. We have a Cloverfield government; but there are those who are filming with their camcorders for posterity's sake. This hopefully will allow future generations to learn from our mistake, not to listen to big ugly green monsters, replete with giant teeth, in politicians' clothing.

What Went Wrong

2008-11-05T08:58:00.004+01:00

McCain-Palin lost this campaign when they fell for the Democrat bait in wrongly responding to the banking crisis. This post of mine explains the details.

The anti-capitalist mentality must be hit between the eyes once and for all. But when even conservatives fall into it, you know you have an uphill battle.

There are powers behind the scenes which seem to understand this. It could be that such powers (e.g., George Soros) precipitated the credit crisis, anticipating such an outcome. Somehow Henry Paulson got maneuvered into it. The arch-liberal Paul Krugman alludes to this.

Perhaps someday we'll know the truth about what actually happened in this election. Right now, our work is cut out for us.

Crossroads

2008-11-03T13:11:00.004+01:00

America is at a crossroads.

This election can go one of two ways: victory for Barack Obama, or victory for John McCain.

If McCain wins, it will mean that God has granted us more time to get our house in order before He lowers the boom. The Constitution will continue on life support, so to speak, with issues regarding abortion, homosexual marriage, and the like -- fundamentally, the question of the source of law, God or man? -- still yet having to be dealt with decisively, or else He will give us over forever to the forces of the Kingdom of Man.

If Barack Obama wins, then all bets are off; God will have given us over to the forces of the Kingdom of Man, and Man, both through the legislature and through the courts, will enact an agenda of godlessness that will dwarf any previously enacted in the United States of America, making it difficult to see how we will ever get out of it.

If McCain wins, muddledness continues until America chooses for life, for godliness, for divine standards of justice (read: the Ten Commandments); if Obama wins, clarity obtains: the choice is made, the die is cast. It will spell the triumph of the Entitlement Mentality, which is the root of political evil.

(By the way, no, I do not speak for God, but I do claim to be able to speak in general accordance with His will; after all, I have His promise: "Then said Jesus to those Jews which believed on him, If ye continue in my word, then are ye my disciples indeed; And ye shall know the truth, and the truth shall make you free " (John 8:31-32).)

Turnabout is Fair Play

2008-10-27T13:34:00.004+01:00

Well, the Democrats have fallen into the carefully laid trap laid for them by the devious McCain campaign. I say, turnabout is fair play. The Democrats started this by springing their carefully laid trap on McCain back in mid-September, when he was still enjoying the Palin Bounce. That's when Secretary Paulson (a Democrat) let Lehman Brothers go under, prompting Paul Krugman to write, "Henry Paulson’s decision to let Lehman fail, on Sept. 14, may have delivered the White House to Obama." It certainly precipitated the credit crisis and prompted McCain's knee-jerk condemnations of Wall Street greed, thus diverting criticism from where it truly was merited, namely, Washington Democrats and the sub-prime culture.

So McCain fell for their ruse. It has taken him a while to get back on message, more appropriately putting the criticism at the Democrats' doorstep. Then along came Joe the Plumber, who got Obama to admit that what he was after was wealth redistribution. This prompted shocked responses from the Obama campaign and from the media in general, who argued that it was not redistribution but "tax cuts" that Obama was after. (Joe the Plumber, they claimed, was a McCain plant, a Rove ruse. If so, perhaps the monicker "McBrilliant" will be dusted off for use again.)

They argue this because they know that opinion polls decisively show that Americans favor wealth creation over wealth redistribution to deal with economic difficulty. They do not like this line of questioning, as witness the over the top response to direct questions on the subject, asked by an honest journalist by the name of Barbara West.

But now there has surfaced audio of Obama arguing in favor of "economic justice" and "redistributive justice," that the very liberal Warren Court really wasn't that liberal because it did not take the step toward this kind of justice, and that community organizing is necessary to organize power to get redistributive justice accomplished in the legislature.

How is the Obama campaign and the media going to spin this? My guess is, by ignoring it. Will they get away with it? Time will tell. I'm sure that talk radio and Fox News, not to mention the blogosphere, will do their best to get this out there. If it does, perhaps people will begin to question the content of Obama "hope and change."

What a ploy, John! Well, perhaps it wasn't in your campaign strategy after all, but it sure couldn't have come at a better time. Or in a better way. They cannot argue their way out of this, they can only hope that people will not pay attention.

The King's Heart

2008-10-26T18:22:00.006+01:00

There is another Bible verse we should remember during this time of troubles:

"The king’s heart is in the hand of the LORD, as the rivers of water: he turneth it whithersoever he will" (Proverbs 21:1).

The king is the sovereign; in our Republic, it is the people who are sovereign. So, to paraphrase Solomon, the people's heart is in the hand of the Lord to turn it in whatever direction He wishes.

Do we believe that? Do we believe He can actually turn the hearts and minds of the people in the face of the onslaught of monolithic media representations?

Is there anything too difficult for God? Not according to the archangel Gabriel, this time speaking to a frightened teenager by the name of Mary: "For with God nothing shall be impossible" (Luke 1:37).

Pray now or forever hold your peace.

Struggle in the Heavenlies

2008-10-24T14:06:00.003+02:00

What is happening now is a spiritual struggle the likes of which we may not have seen in our lifetimes. The forces of ungodliness and overthrow, of disorder and irreligion, of Anti-Christ, are unleashed in such coordinated fashion as to be unprecedented. Therefore our calling is contrition and prayer, for if God does not see fit to deliver us from the hands of our enemies, they will conquer us.

The spiritual struggle is going on "in the heavenly places" (e.g., Ephesians 3:10) as well as on Earth. It is like what the archangel Gabriel was alluding to when he said to Daniel (Book of Daniel, ch. 9):

10 And, behold, an hand touched me, which set me upon my knees and upon the palms of my hands.
11 And he said unto me, O Daniel, a man greatly beloved, understand the words that I speak unto thee, and stand upright: for unto thee am I now sent. And when he had spoken this word unto me, I stood trembling.
12 Then said he unto me, Fear not, Daniel: for from the first day that thou didst set thine heart to understand, and to chasten thyself before thy God, thy words were heard, and I am come for thy words.
13 But the prince of the kingdom of Persia withstood me one and twenty days: but, lo, Michael, one of the chief princes, came to help me; and I remained there with the kings of Persia.

The angels themselves were in a struggle with the political leaders of the day. And I am sure they are struggling with the forces of evil even as we speak. But our prayers are necessary, just as Daniel's prayers and confession of sin were the catalyst of Gabriel's appearance to him.

There is so much at stake in this election. Far more than mere economics. Pray for God's mercy -- we cannot hope for more than that.

Stocks Are Down...

2008-10-22T15:32:00.002+02:00

and the polls seem to show a looming Democrat victory on November 4. Of course, the real reason stocks are down is "investors sorting through earnings reports" or some such claptrap. Ignore the elephant in the room, guys.

The Terms of the Debate Have Shifted

2008-10-19T16:57:00.002+02:00

Finally, the political debate in an election season revolves not around the question, "who should pay more taxes," but around the question, "why should anyone pay more taxes?" In other words, the very presupposition of the inherent goodness of government action is being questioned. This seems to me to be unprecedented. That it happened only a few weeks before the election, and was precipitated by a mere citizen ("Joe the Plumber") makes it even more extraordinary. The question now is, can it be kept at the forefront of average citizens' minds? Will it make them realize that the government is not the be-all-and-end-all of problem-solving? That the game of salvation by government is a dead end? If it does, the debate which has now hit the mainstream will carry on far beyond this election season. It could signal the turning of a tide.

Was I Right or Was I Right?

2008-10-17T10:11:00.002+02:00

Let's see, McCain scores in the debate, polls show tightening race, stock markets go up. Hmmmmmmmm.

I Do Not Wish to Tempt Providence...

2008-10-15T22:42:00.002+02:00

but if McCain scores in the debate tonight, especially regarding connecting the ACORN-Ayers-Fannie and Freddie-Obama dots (am I forgetting anything?), not to mention calling Obama on his ridiculous "tax cut" claims, then watch for a solid stock market rally.
Investors of all people do not buy into anti-capitalist rhetoric. At least not with their money. There may be those who want a Democratic administration, but they know that their investments won't be safe, at least their stock investments. This makes such investors schizophrenic -- on the one hand wishing for something which on the other hand they know will be bad for themselves. But that's why its best to view left-wingism as a religion, an expression of faith.

What is a Crisis of Trust?

2008-10-14T09:09:00.003+02:00

We hear a lot these days about the current financial crisis being one of trust. Banks don't trust each other any more, lenders don't trust borrowers, investors don't trust who or what they are investing in. That is all true, but it does not get to the heart of the matter.

What is trust? It is confidence that commitments will be honored, that agreements will be kept. Which gives us an indication of the true nature of the capitalist economy.

Classical economics has many virtues, but it has also saddled capitalism with the concept of homo economicus, the egotistical, self-serving economic actor as the core of the capitalist system. This is a gross misconception. Capitalism is not built upon self-serving egotists but upon people willing to make commitments to each other, both short-term and long-term, regarding their economic resources. That is what credit and debt, borrowing and lending, are all about. The commitments are mutual. When these commitments are reneged on on the scale they have been in the current crisis, the system fails.

Therefore it is a much better characterization of capitalism to label it the "commitment economy" rather than the "greed economy," which is what the Left paints it as, thanks to classical economics.

Capitalism is commitments, not greed. The trust one hears so much about is trust in keeping commitments. Capitalism, friends, is the commitment economy.

A Psalm for the Times

2008-10-12T11:37:00.005+02:00

If election politics are getting you down, just recall Psalm 93:

1 ¶ The LORD reigneth, he is clothed with majesty; the LORD is clothed with strength, wherewith he hath girded himself: the world also is stablished, that it cannot be moved.
2 Thy throne is established of old: thou art from everlasting.
3 The floods have lifted up, O LORD, the floods have lifted up their voice; the floods lift up their waves.
4 The LORD on high is mightier than the noise of many waters, yea, than the mighty waves of the sea.
5 Thy testimonies are very sure: holiness becometh thine house, O LORD, for ever.

And take Natalie Grant's advice:

I have been a wayward child,
I have acted out,
I have questioned sovereignty,
and had my share of doubts,
And though sometimes,
my prayers feel like their bouncing off the sky,
the hand that holds won't let me go,
and is the reason why
I will stumble,
I will fall down
But I will not be moved
I will make mistakes,
I will face heartache,
But I will not be moved
On Christ the solid rock I stand,
All other ground is sinking sand,
I will not be moved
Bitterness has plagued my heart,
many times before,
My life has been a broken glass,
and I have kept the score,
of all my shattered dreams,
and though it seemed,
that I was far too gone,
my brokenness helped me to see,
it's grace I'm standing on.
I will stumble,
I will fall down
But I will not be moved
I will make mistakes,
I will face heartache,
But I will not be moved
On Christ the solid rock I stand,
All other ground is sinking sand,
I will not be moved
And chaos in my life,
has been a badge I've worn,
and though I have been torn,
I will not be moved
I will make mistakes,
I will face heartache,
But i will not be moved
On Christ the solid rock I stand,
all other ground is sinking sand,
I will not be moved

Anticapitalism as Default Mode

2008-10-11T19:38:00.003+02:00

What explains the uphill battle Republicans have in convincing people that their agenda is better for the economy than that of the Democrats? What explains the ease with which Democrats can pretend that economic woes are attributable to Republicans, in the face of all evidence to the contrary?

One may blame the monolithic left-wing mainstream media for the one-sided coverage they provide on the issue, but that in fact begs the question a bit. For how is it that the media can come to be so one-sided?

The bottom line is, human beings have a basic anti-capitalist bias that is the default mode in the face of any crisis. Facts don't matter, emotions take over, and no amount of explanation seems to penetrate. Democrats simply appeal to this emotion.

Like taking candy from a baby.

Let Me Repeat This...

2008-10-10T14:59:00.003+02:00

(a la Joe Biden) let me repeat this: the collapse of the stock market is not due to the bailout per se, but due to the prospect of an Obama presidency coupled with a filibuster-proof Democratic Congress. The better the prospects become of a McCain presidency and/or Republican holds or gains in the Congress, the better the markets will perform. The world markets are following ours. It is all that simple.

Are Government Buyouts Socialism?

2008-10-09T13:19:00.002+02:00

On the subject of bailouts and government buyouts or buy-ups of banks, a caveat: the objection is making the rounds that such activity is "socialism." That is not the case. Socialism endeavors to cancel out the market. When it takes over business activities, it removes them from the sphere of the market. But these buyouts are not doing this at all. In fact, they are intended not to cancel out the market but to restore it. They work within the strictures -- key among which is free ingress and egress -- of the market and seek only to get malfunctioning markets running again. Objections to this activity are certainly apropos, in particular the objection of moral hazard. But that is something other than socialism. Of course, governments can get so involved in markets as to dominate them and in so doing to render them nugatory. That is a danger to be guarded against. But the current buy-up activity is not of that sort. It may be the only thing that will work in the current crisis.

Obama is a Revolutionary

2008-10-09T10:09:00.004+02:00

This is the point behind the Bill Ayers connection. No one believes that Barack Obama condones or has condoned the terrorism practiced by Bill Ayers. But the underlying goal of Revolution is what they share. The one tried to accomplish it through violent means; the other will attempt to accomplish it through the ballot box. This explains why Ayers mentored Obama in his early political career. This is the significance of the Annenberg Challenge. Obama's community organizer activity must also be seen in this light. Community organizing (cf. ACORN) is all about mobilizing the proletarian masses to accomplish the Revolution of wealth confiscation and redistribution through the ballot box.

The Revolution pursued by Barack Obama is antithetical to the revolution pursued by the Founders of this nation. In the one case, traditions, customs, institutions are overthrown by innovating government; in the other, traditions, customs, institutions are preserved from innovating government.

Why is the stock market tanking? Because investors see the Revolution coming and are getting out while the getting's good.

What's Behind the Meltdown

2008-10-07T23:10:00.003+02:00

The stock markets continue to plummet in unnerving fashion. The blame for it is centering on the "bailout" package -- was it too little too late, was it too much, was the passage of it a dispiriting display of bad leadership. I think it goes deeper than that. The bailout was never meant to solve the problem, only to stave off something worse. But what it most of all did was spark the fear of ever-more government takeover of the private sector, which combined with polls indicating Democratic victory in both Congress and the Presidency in November, has spooked the investor class to get out while the getting's good. Let's face it: if the Democrats win in November, this bailout package is going to look like libertarianism compared to the stuff they're going to pull to "solve the crisis."

The Bottom Line: False Weights and Measures

2008-10-07T13:57:00.005+02:00

At bottom, the issue involved in this financial crisis is false weights and measures. That is, a standard of valuation that is manipulated, making people believe they are receiving something other (of lesser value) than they actually are.

The Bible has this to say about such false weights and measures:

Le 19:36 Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the LORD your God, which brought you out of the land of Egypt.
De 25:13 ¶ Thou shalt not have in thy bag divers weights, a great and a small.
De 25:14 Thou shalt not have in thine house divers measures, a great and a small.
De 25:15 But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.
De 25:16 For all that do such things, and all that do unrighteously, are an abomination unto the LORD thy God.
Pr 11:1 ¶ A false balance is abomination to the LORD: but a just weight is his delight.
Pr 16:11 ¶ A just weight and balance are the LORD’S: all the weights of the bag are his work.
Pr 20:23 ¶ Divers weights are an abomination unto the LORD; and a false balance is not good.
Eze 45:10 Ye shall have just balances, and a just ephah, and a just bath.
Eze 45:11 The ephah and the bath shall be of one measure, that the bath may contain the tenth part of an homer, and the ephah the tenth part of an homer: the measure thereof shall be after the homer.
Eze 45:12 And the shekel shall be twenty gerahs: twenty shekels, five and twenty shekels, fifteen shekels, shall be your maneh.
Mic 6:10 Are there yet the treasures of wickedness in the house of the wicked, and the scant measure that is abominable?
Mic 6:11 Shall I count them pure with the wicked balances, and with the bag of deceitful weights?
Ho 12:7 ¶ He is a merchant, the balances of deceit are in his hand: he loveth to oppress.

In the current financial muckup, this falsification of the standard of value occurred thanks to a complete failure of functioning by the leading credit rating agencies. Subprime mortgages were packaged into bonds that were passed off as AAA -- the highest rating possible. Given the great demand for such safe-haven assets in a global economy awash in liquidity, these bonds were purchased like hotcakes, making for ever-increasing demand for subprime mortgages to be packaged into these bonds (CDOs, MBSs). They thus spread throughout the world. The questions which now arise are:

How many banks and other lending agencies have these assets on their balance sheets, and to what degree?
What is the degree that each of these assets is contaminated with subprime mortgages which either have already failed or will fail?

The recent "bailout" package passed by the Congress is intended to get this auditing process under way in the US. The question is, will it accomplish what it is supposed to, without subverting the system even further? Be that as it may: who is going to take care of this process in the rest of the world? And what is the best way to take care of it? It is the mother of all tangled messes.

The bottom line is, this was a catastrophe from start to finish egged on and smiled upon by the government, in pursuit of social justice, of Joe Biden's "fairness." It is the government that is supposed to supervise the functioning of such services as credit rating, simply as a matter of averting fraud. Instead of doing that, it turned a blind eye on the whole procedure, the better to achieve the stated goal of affordable housing.

Capitalism was set to work under the constraints set by the government. Now that government has nearly destroyed capitalism, it is going to fix it. How: with more of the same?

The Book of Amos speaks of a judgement upon a nation addicted to false weights and measures:

ch 8, verse 4: Hear this, O ye that swallow up the needy, even to make the poor of the land to fail,
5 Saying, When will the new moon be gone, that we may sell corn? and the sabbath, that we may set forth wheat, making the ephah small, and the shekel great, and falsifying the balances by deceit?
6 That we may buy the poor for silver, and the needy for a pair of shoes; yea, and sell the refuse of the wheat?

Amos's Israel was judged and found wanting; it was given over to conquest by the Assyrians.

What judgement awaits us? For we keep voting in people who, this time around in the name of the poor, love the false balance, the small ephah and the great shekel, who have hung this catastrophe around our necks and then blame the faithful servant (Wall Street) who in fact carried out their bidding; who want us to return them to office for more of the same.

That in itself is judgement I cringe to think about.

It's Starting

2008-10-06T22:56:00.003+02:00

The Fannie Mae-Freddie Mac push which, I argued in a previous post, needs to be made by the McCain campaign has finally begun. May Senator McCain not let up on this until election day -- and beyond, regardless of outcome.

The consequences of not exposing this are too serious to even contemplate. These people, willingly or unwillingly, knowingly or unknowingly, are destroying the entire capitalist edifice. Come to think of it, perhaps they wouldn't mind it so much if the whole thing did go down. They could take over each failing element one by one, until the entire economy is government-owned and operated. What a prospect!

More than an Analogy?

2008-10-05T19:20:00.002+02:00

One of the themes running through my head regarding a description of the current financial crisis is that of the similarity of subprime mortgages to HIV. Just as HIV gets in the bloodstream and destroys immune capacity, subprime mortgages were packaged together in MSOs and CDOs which, circulating through the banking system, in turn have destroyed the banking system's capacity to deal with bad risk.

But the analogy is even more appropriate given the latest news that Barney Frank's boyfriend was the one in charge of coming with the affordable housing schemes at Fannie Mae that precipitated this HIV infection of the capitalist bloodstream.

Makes one shudder just to think about it.

Maybe the Start?

2008-10-04T18:28:00.002+02:00

This ad the National Republican Congressional Committee may be the start of the "onslaught" I advocated earlier. We'll see.

She Did It Again

2008-10-03T14:45:00.004+02:00

Sarah Palin starred again, and has truly solidified her status as a Great Communicator of conservative ideals. Not that everything she said last night was conservative, but given the constraints of a McCain campaign, all in all an admirable performance. And what a capacity to bond with the listeners. Which is something altogether different from bonding with journalists and pundits. The quicker the media learn that distinction, the quicker they'll stop making fools of themselves.

And she did mention Fannie and Freddy. Not enough to shut down the Democrat "deregulation as cause of meltdown" argument. Perhaps that is still in the offing. Let us hope so. For it will not be until the root of the problem is recognized that the problem will be solved. To wit, it will not be until liberalism, in the guise of the push for affordable housing, is recognized as the catalyst for the explosion of easy credit and the relaxation of standards, leading to the spread of bad debt throughout the global financial system, that the buck will stop where it should, inside the Beltway, in Washington, from whence this push derived, and for which Wall Street firms were but the willing accomplices.