The Sun is at the center of Earth's Climate Change, Who Knew??

"In America sun warm you, in Soviet Russia we warm sun. What a country!" comic proverb

Polar bears and penguins may be marching long into the future; a march that may take place on your frozen face.

Never underestimate man's ability to usurp the sun's position and revolve earth around himself. Unfortunately, what stands to be lost, as the science of climate change progresses, is the impetus for addressing the ever-present national security risks that are the unintended consequence of relying on other countries for crucial resources. An unintended possible outcome--blowback--of investing so much time and energy in an important issue, but without understanding all aspects involved is the possibility of losing the consensus. Because Disney movies and the green movement have gone 'all in' on global warming, any indication of global cooling stands to set back a process that needs to occur anyway.

I see parrallels between the religious commitment of global warming advocates and the history of how capitalism had been promoted throughout the 20th century. Thankfully, it is not possible to underestimate the extent of the world's memory.

Notes on a Bubble

My reaction to the practice of judging market fluctuations as a byproduct of Obama policies and Cheney's assertion that this is a global crisis, therefore prior administration should not be blamed, was to consult my notes from a lecture posted on Academic Earth.

The Ten 'Culprits' of the Financial Mess A Lecture by Alan Blinder

1) The Bond Market: low interest rates set by Fed 2003-04--reach for yield/returns
Not many defaults, during this period, thus lending risks thought to be minimal.
Used short time horizon for mathematical models.
Leverage magnified returns (then losses).
Created a "fixed income bubble" but nobody knew where or when. turns out Aug 2007 subprime market.

2) Ordinary Americans/Ordinary Europeans (AIG had 141 billion worth of European residential mortgages on their books compared to 78 billion in C.D.O's some subprime): believed housing prices would rise faster than everything else, forever.
Took on irresponsible mortgages that could only be paid if housing prices continued to rise.

3) Mortgage Lenders: Subprime Market share ~50% Banks, ~50% non-banks,
Ninja loans (no income, no jobs or assets) liar loans, no document loans, made possible because these loans were written to be passed on in ~four days.
No federal authority over all mortgage lenders.
No 'suitability standards' for mortgages, such as the one applied to stock brokers.
Mode for percentage of loans held to maturity was 0%.

4) Bank Regulators: Failed in both their safety and soundness (test of financial institutions) and consumer protection roles.
Horrible subprime lending practices were visible years before the bust. Worst loans occurred late in the bubble. Subprime market represented 25% of mortgages by 2007.

5) "Private label" securitizers (the non-government or quasi-government entities): Packaged mortgages into Mortgage Backed Securities(MBS) and then into complex derivatives and CDO squared and sold them (to suckers? looks like "curn 'em and burn 'em"?) But stars of wall street held them in portfolios, Goldman Sachs got out. Risk management embarrassing. Large amounts of junk held in terms of capital, large percentages of capital tied up in this one asset class. Chuck Prince "While the music plays you have to dance." former pres of Citibank.

6) Rating Agencies: Investors rely on rating agencies to assess risk, failed miserably. Private label securitizers negotiated ratings with rating agencies to achieve triple AAA ratings.

7) Securities firms and some banks: mountain of complex derivatives built on top of mortgages. Derivatives were unregulated. OTC source of large fees. Operated with 30 to 1 leverage if there is a decline of 3.1% you have negative net worth. Funded by short term loans, allows for possibility of liquidity crunch. None of the big 5 financial firms exist completly in their prior form.

8) SEC: Why allow extreme leverage and tenuous liquidity? Mistake made in 2000 regarding regulating derivatives, request to regulate by lesser regulating agency shot down by SEC, Federal Reserve and Treasury Dept.

9) Disengaged President: Starting in August 2007 coupled with initially passive Treasury that transitioned into a incredibly proactive policy. Never articulated plan (TARP) to public, thus raises the question was there ever a plan.

10) Whoever decided to let Lehman Brothers fail: U.S. had policy of 'too big to fail' for decades. Bailout of Bear Stearns would indicate that Lehman Bros passed that test. Sept. 15th failure of Lehman Brothers destroyed the faith that there were entities that were 'too big to fail'. Less than 24 hours after Lehman Brothers failed, money market mutual funds 'broke the buck'. Since Lehman Brothers met 'too big to fail' or 'too entangled to fail,' was the policy shift ideologically based with no forewarning i.e. inconsistent with decision to bailout Bear.



Here is the question that hasn't been answered by either administration: "Was/Is this a solvency issue or was/is this a liquidity issue?"

If the crisis for the financial institutions is the toxic assets then the solution is to buy them, thereby removing them from companies' balance sheets. This has been done by the Federal Reserve, and is listed on the Fed's balance sheet as Maiden Lane I (condition for JP Morgan's absorption of Bear Stearns), Maiden Lane II (AIG bailout, for residential mortgage backed securities) and Maiden Lane III (AIG's multi-sector collateralized debt obligations CDOs). As of Jan '09 the Fed had 74 billion dollars worth of 'toxic assets' on its books.

Or is the present situation best addressed as a liquidity problem, in which case the injection of capital into troubled firms would avoid the negative implications of mark-to-market accounting in terms of day-to-day business operations. Why should losses on an asset that a company is not going to sell anytime soon impact daily operations? What happens when defaults slow and mortgages are re-worked, then mark-to-market created operating problems that otherwise wouldn't occur. This line of thinking is the impetus for TARP and other Fed (not Maiden Lane) and Treasury bailouts that have been implemented.

In my humble opinion, it seems that at NO TIME has there been a consensus as to which is the greater problem and therefore which solution is/was the better course of action. Economists are still left guessing at Timothy Geithner interviews, reading between the lines and mostly agreeing that the current administration views the problem as primary one to be treated as a liquidity crisis. However, everyone would be better served if the Treasury's view was clearly articulated, unless the goal is to simply buy time. This goal seems to be the only one that makes sense of actions by BOTH administrations.

Commrade, Where's my Overseas Empire Gone?

In 2009, the unfortunate part is that someone actively engaged in addressing looming problems is all that is required to appear magical.

On a different note, a section (Part I Section D) of the 2000 Green Party Platform...

"With half of all discretionary spending now going to the military, the president requesting spending even the Pentagon thinks is wasteful, and the Congress proposing even more than the president requests, Greens believe the more than $300 billion DEFENSE BUDGET MUST BE CUT. The Green Party calls for military spending to be cut by 50% over the next 10 years, with increases in spending for social programs. Preventive diplomacy, a strong economy and humane trade relations are our best defense. We must maintain a viable American military force, prudent foreign policy doctrines, and readiness strategies that take into account real, not hollow or imagined threats to our people, our democratic institutions and U.S. interests. Even so, Greens seek strength through peace."

This plank represented the primary reason for casting my vote for Nader in 2000. In 2001, a colleague asked me to change my position regarding the military budget. The position I took was that it was too soon to know with any certainty which position was correct.

Today, I re-cast my vote for Nader in 2000. While there would have been down-sides--perhaps some nationalized banking, maybe a little no-bid (i.e. communist) government contracts to those deemed most deserving, or government subsidies for failing energy technology secured by proximity with government officials, meanwhile those few trying to better themselves would have lacked even basic armor that could have afforded them a minimal standard of protection as they soldiered their way through the poor masses, but there was potential for a singular upside that would outweigh any left to us by this opulent decade of decadent capitalism.

There's an old saying in Tennessee, that any competent politician or break-even gambler is familiar with, "Don't throw good money after bad." Even the least pessimistic economists acknowledge that pre-proverbial River Rubicon as long crossed. Yet mistakes were made and maxims can sometimes be broken in order to save the maxim. Yet that is the commitment that I am willing to make after a hypothetical eight year run of psuedo-socialism that in no way culminated with an Orwellian War crippling empires to a tune the loyal Greek Alcibiades couldn't keep up with.

Perphaps, hypothetical governments shouldn't be encumbered with ancient history. More recently, what did George Washington think of foreign entanglements? Or, youtube Eisenhower on the military industrial complex. Does Woodrow Wilson sound like he was perserving a solid foundation for capitalism when it came time to reflect on his signing of the Federal Reserve Act:

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson

I would be HAPPY if this was a subprime housing problem. I would be HAPPY if this was laissez-faire capitalism. I would be HAPPY if the bible's actual position on usury was persued with the half the zealorty as the bibles infered stance on abortion. (To take issue with this statement, and what you are intended to infer from my links, I will not acknowledge anything lacking a position other than the bible is twice as clear about abortion as it is about usury. Enjoy explaining quickening.)

You who hope that Obama fails, to You, I posse these ironic questions, what has changed, what will change? A party, yes. A face, yes. But dare say the requiste resounding chorus of NOTHING and I will yell, Where the BAUK (this links to an NPR story that may be offensive to some audiences) have you been for eight long years, PATRIOT?

This Hockey Stick Goes the Other Way

Oh, this stimulus is going to be so stimulating!

In an effort to comply with the audience's confirmation bias...

Is this still YouTube propaganda?

Chrysler Thanks America

Chrysler thanks American's for "investing", by buying an ad in USA Today.

What it really should have said:

You didn't want to invest in our company, but you did anyway.

Hank's YouTube Propaganda of the Day

Grand Prize winner of the Tax Foundation's CompeteUSA YouTube contest. See the other winners here.

Helpful advice from someecards.com