Archive for February, 2012
Skunks Don’t Change Their Stripes
by L. J. Martin
Now that the initial shock of a collapsed economy is over (not the problem, only the shock), now that the media, the politicians, the bloggers (like myself), and the general public have spent a couple of years of recriminations, of blaming Wall Street, Fannie Mae, Freddie Mac, mortgage companies and brokers, real estate developers and home builders, and anyone with an income over the national average…who is really to blame for the economic mess, the morass, in which the country finds herself wallowing?
The real mess began with a collapsed real estate market with carpenters, concrete men, plasterers, and all the other trades out of work. Which of course reverberated up through suppliers of all kinds of building materials and services being not only out of work…but out of business. Which of course is reflected in the fact no one’s buying appliances, furniture, automobiles, landscaping, and it goes on and on and on. And everyone is affected.
Home equity has long been the source of wealth for the average family in America, long been that family’s hedge against inflation, for home prices rose with inflation. As the value of, the purchasing power of, your savings went down, the equity in your house went up and things equaled out. However, that age old economic law, supply and demand, cannot be ignored, and when there’s a plethora of empty houses in almost every community in America, supply overwhelms demand, particularly when demand is tempered by 1/5th of the potential buyers being unemployed or underemployed. And oversupply drives down prices, drives them down to below what’s owed, and equity disappears. Equity not only disappears but debt is incurred and savings wiped out as American’s desperately try to hang on to home and respectability. And everyone is affected.
And it will be a long, long time before home equity is again the basis of the average American’s wealth, yet inflation will continue and probably be the country’s next devastating balloon. That doesn’t bode well for most of us.
So, why can’t we blame Wall Street? After all the evil minions of Wall Street made billions on the great fraud of a “never ending” rise in real estate prices. They packaged up all those mortgages and sold them to unwary buyers all over the world. Why can’t we blame Fannie Mae and Freddie Mac, who facilitated all those mortgages by telling mortgage brokers and banks they must relax their credit requirements and loan to folks who merely said, “we can pay it back.” Why can’t we blame the mortgage brokers and bank lending officers who sat across the desk from borrowers and took those loan applications (many fraudulent), and profited from those loans. Why can’t we blame real estate brokers and homebuilders, who profited from those loans and the resulting home sales?
Because they’re not at fault, that’s why. They were only pawns, albeit willing pawns, in the results of an upper level decision. In this case profits, at first and ka ka later, rolls downhill.
We are blessed to live in a free enterprise economic system. Everyone in America is blessed by unparalleled opportunity as compared to the rest of the world, to put their head down and tail up and go to work building economic security for themselves and their families. But there are limitations to what you can do. The old laws of caveat emptor, buyer beware, are water-under-the-bridge in America and have been for decades, we are regulated as to what we can do in our business life, what we can represent, whom we can take advantage of, and if we violate those regulations, rules, laws, we can be fined and sometimes prosecuted. And we’ve been conditioned to rely and depend upon that regulation, however good or bad that might be.
So what went wrong with the system?
Congress, that’s what, that’s who. Barney Frank (as Chairman of the House Financial Services Committee), that’s who. Did he act alone? Of course not. He had a House and Senate full of folks who were more than happy to appear, for even a short time, to be great benefactors to the average American. Why shouldn’t everyman not only have a chicken in every pot, but a four bedroom, two and a half bath home? congress wanted to keep their jobs, and thought they could bribe their way into the hearts of America. I, for one, hope and pray they’re wrong about keeping their jobs. I hope we average Americans can’t be so easily bought, so easily fooled.
To his credit, George Bush warned congress and the American people at least 17 times against credit easing. That said, in my opinion, he didn’t act nearly strong enough. He knew the potential problem and should have shouted it from the top of the White House portico, then issued a presidential edict. George didn’t want to look like the ultimate villain, and he would have…but he should have. History would have eventually judged him as a soothsayer and a hero of his time. Now, who knows?
What did congress do wrong? Simple, they ignored basic economic laws of credit that had been established in this country for two centuries and in England, Holland, Germany, France, and other basically free enterprise systems for centuries before. Credit has long established rules, established over centuries. However Congress, via Fanny Mae and Freddy Mac, instructed all those financial players out there in America to ignore the tried and rule rules as well, with impunity. And are the players going to say, “No, I won’t take advantage of this opportunity to profit from this unregulated windfall?” Of course not, if they don’t take advantage the bank and mortgage broker, the real estate broker, the builder across the street will do so. It’s get onboard or be left in the dust.
The rule when I was a California licensed general contractor, real estate broker, and appraiser was simple and straightforward: a borrower can only qualify for a loan that 20% (sometimes slightly more) of his income will support. And beyond that, the lender must be satisfied that the loan application the borrower submits is true. Thus, the intermediary, the bank or mortgage broker, must obtain verifications of deposit and employment (including income), and a credit report. And these must be obtained and verified independently of any claim by the borrower. Congress changed all that, after all, Congress is smarter than centuries of accumulated credit knowledge. Let’s see, do you think human nature and the desire for a better home for themselves and their families, might, just might, motivate some borrowers to lie? If you answered that question NO, then I’ve got some ocean front property in Montana I’d like to sell you. Caveat emptor.
Easing credit requirements created an artificial real estate market, and the balloon grew and grew, until it’s inevitable burst. You can’t build a market upon a lie, and Congress allowed…no, instructed…bankers and mortgage brokers to accept lies instead of verifications. Where they being good guys? In their eyes, maybe. We’re they stupid? No question. Were they self-serving? I hope not, in the long run; although I think that’s what motivated many of them. Now millions of good Americans, along with those who lied (and were encouraged to in many instances), are upside down owing more than their house is worth, and the fault lies with Congress. Nowhere else.
Ladies and gentlemen, Congress played you, congress, obviously is not made up of economic geniuses or even those skilled in Econ 1A. As we know, it’s made up of lawyers and primary school teachers and professional politicians. It’s been demonstrated too many times that Congress has far more than it’s share of self-serving worms willing to do anything, say anything, to keep themselves among the aristocracy. The fact is, you can’t change basic economic laws, you can’t change or legislate human nature. Let’s hope you can no longer buy votes, but I see no change in the system to eliminate that carrot at the end of the stick.
Age-old laws of credit are there for good reason, because they’ve been tried and found true over centuries. Congress, obviously, didn’t know their butts from a box of rocks about either credit or human nature. And the hell of it is, we can rest assured they still don’t. Skunks can’t, don’t, won’t, change their stripes.
I hope Barney Frank will be happy in his retirement, for we can rest assure that he’ll not be foreclosed upon, nor will he be standing in unemployment lines. After all, he’s got retirement and health insurance paid for by you and I, not to speak of financial gain and profiteering from inside information. As he’s always done, I’m sure the fat little toad (expletives deleted) will be popping bon bons while the rest of the country stands in unemployment lines. And the rest of Congress is right up there alongside him. Let’s retire them all, at least those who have voted to take raises, to have us pay for their excessive retirement (when they should be on social security like the rest of us), to pay for their exclusive health care club, to allow them to profit from inside information while the rest of the country is subject to prosecution for the same offense.
Obama was right about one thing…it’s time for a change.
Go to http://fromthepeapatch.com/congress/stealing-from-we-the-people-must-end-sign-the-petition/ and sign the petition. It’s from change.org and will put no cookies or other bugs on your computer. No, Congress doesn’t have to pay the slightest attention to it, but if we get enough signatures, how can they ignore it? Join us in telling Congress there are…
NO ARISTOCRATS IN AMERICA.
L. J. Martin is the author of 30 book length works of both fiction and non-fiction, and the conservative political blog From The Pea Patch. He lives in Montana with his wife, author of over 50. Learn more at http://fromthepeapatch.com and www.ljmartin.com.
God Bless America
I would never ask you to sign a petition that might put something like a cookie on your computer. This petition utilizes change.org, and will PUT nothing on your computer, no cookies, no tracking, NOTHING. If you believe, as we do, that Congress has overstepped their bounds, that they should be one of WE THE PEOPLE and not the privileged aristocrats they’ve become, then sign this petition. No, it has no authority other than saying to Congress “We know who you are, we know what you’ve become, we want real CHANGE. We want you to come back to earth and rejoin WE THE PEOPLE.” We need lots of sigs to get their attention. Sign this safe petition, and feel safe about passing it on to others who want to get our country back. Sign, for the good of yourself, your children, your grandchildren…and theirs.
NO ARISTOCRATS IN AMERICA petition: (read more)
No raises for Congress while America stands in unemployment lines.
No fat retirement for Congress paid for by the American people.
No “free” healthcare for Congress.
No bribes by lobbyists and others.
No voting on unread bills.
No profiteering by inside information.
Go to the link on the left and sign the petition NO ARISTOCRATS IN AMERICA
Jan Brewer Brings it Home
The owner of the Phoenix Suns basketball team, Robert Sarver, came out strongly opposing AZ’s new immigration laws.
Arizona’s Governor, Jan Brewer, released the following statement in response to Sarver’s criticism of the new law:
“What if the owners of the Suns discovered that hordes of people were sneaking into games without paying? What if they had a good idea who the gate-crashers are, but the ushers and Security personnel were not allowed to ask these folks to produce their ticket stubs, thus non-paying attendees couldn’t be ejected.
Furthermore, what if Suns’ ownership was expected to provide those who sneaked in with complimentary eats and drink? And what if, on those days when a gate-crasher became ill or injured, the Suns had to provide free medical care and shelter?”
- Arizona Gov. Jan Brewer
Here’s a very perceptive article on what’s happening to us thanks to the Obama administrations refusal to pursue American oil and gas, and particularly his refusal to approve the pipeline. Now all that Canadian oil and gas will go to China rather than to American refineries in Texas. I do, however, think he will reverse his stand on the pipeline (claiming the environmental problems resolved, not that there really were any) well before the election, thus claiming to have created lots more American jobs. It’s all about politics, and getting re-elected, God forbid, as then the real destruction of the American economy will begin.
– Forbes Magazine
Oil is plentiful as new discoveries continue to be made, natural gas exploration and production is up, the dollar has strengthened, it’s an election year, and so gasoline prices are going which direction? Down? Well, no, according to the experts, gasoline prices are rising and could top $6 per gallon by summer.
Each of the above conditions usually results in lower prices at the gas pump. If supply goes up on constant demand, then price should at least remain steady or go down. As new discoveries are made then supply goes up and at constant demand, price should go down. Even as production lags discovery, markets build in the worldwide supply figures. Natural gas production is soaring allowing for cheaper substitution for oil. When the dollar strengthens versus foreign currencies then each dollar buys more quantity of foreign oil and hence prices should go down for the same quantity. Usually election years result in government policies that are neutral for energy prices. So what is going on?
1) Iran has cut off supply to Western Europe as punishment for political stances. This has created increased demand for the remaining world supply from Europe although Iran likely will turn around and sell this supply elsewhere so perhaps this effect is temporary.
2) A possible military attack on Iran’s nuclear facilities could result in a closure of the Strait of Hormuz, the path for 20% of the world’s oil supply. This alone could result in $200 a barrel oil or about a doubling from the current prices. Defense Secretary Leon Panetta believes there is a “strong Likelihood” that military action will happen.
3) If Iran does cut off supply, Venezuela could follow and cut off their supplies to the U.S.
4) There is a shortage for U.S. east coast refinery capacity tied to the closings of several refineries.
5) While the dollar has strengthened versus the Euro, there still is concern that Federal Reserve policies and U.S. deficits will weaken the dollar. Weakness in the dollar feeds upward pressure on commodities like oil that is priced in dollars dollars and thus is at a discount on foreign markets.
6) Storm season is coming again. Every year brings new worries about the potential impact of storms in the Gulf of Mexico on supply operations at sea and refinery operations on land.
7) Supplies from the Alberta oil sands now likely will go to Asia versus the U.S. now that the Keystone XL pipeline project has been stopped.
Last year was the highest priced year ever for gasoline and national averages for a gallon of regular are about $3.50 now. Consensus is that the current situation will result in prices over $4 by spring and any of the other possibilities, especially military action in the Middle East, could easily push gasoline prices to $6. Some people believe that rising gasoline prices are a sign that the economy is strengthening but one sure way to knock the economy back into recession is a $6 or even $4 per gallon gasoline price. And this, in turn, could have an impact on this year’s elections. Stay tuned.
– Forbes Magazine
When you hear the facts, does it make you wonder why Obama would kill the pipeline, why he would force our dependency on Middle East oil? Watch this….
Who is ACT for America:
Who is Bridgett Gabriel, founder of ACT for America:
Gabriel recalls that during the Lebanese Civil War, militants launched an assault on a Lebanese military base near her family’s house and bombed her home, and consequently she and her parents were forced to live in an 8′x10′bomb shelter underground for seven years with only a small kerosene heater, no sanitary systems, no electricity or running water and little food. To get water she states that she had to crawl in a ditch alongside a road to a spring in order to evade Muslim snipers. She also said her home was destroyed by a shell in a militant attack, and that the bomb shelter was all that remained.
In 1978, Gabriel says a man warned her family of an impending attack on Christians by militias. She says that her life was saved that night when Israelis invaded Lebanon in Operation Litani. Later, when her mother was seriously injured and was taken to an Israeli hospital, Gabriel noted the humanity of the Israelis in contrast to the propaganda against the Jews she says she saw as a child.
Critics of Gabriel say that her biographical account is riddled with factual inaccuracies, and that she misrepresents the conflict in South Lebanon as a Muslim war against Christians when it was in fact much more complicated – Muslims and Christians were represented both among the Palestinian secular nationalists and their supporters who used South Lebanon as a base of operations against Israel, and among those who collaborated with Israel to put an end to the Palestinian influence and presence there. While Gabriel claims that she lived for seven years in a bomb shelter, her former neighbors in Marjayoun recall that her family, like others in the village, might have spent a few nights in their shelter or basement at times, but that they otherwise lived relatively normally. Gabriel also used to tell audiences that Hezbollah was the group that terrorized her family for the seven years between 1975 and 1982. She stopped making this claim after people objected, pointing out that Hezbollah was formed after she left Lebanon, as a direct result of the Israeli invasion and occupation of 1982.
“Perfect freedom is reserved for the man who lives by his own work and in that work does what he wants to do.”
– Robin George Collingwood