If you have a copy, peruse page 10 for a surprise.
That is all...
Donnerstag, Januar 20, 2011
Mittwoch, Januar 19, 2011
Unintended Consequences...redux
Imagine, if you will, a government that believes in the anthropogenic theory of Global Warming. Their "scientific advisers" tell them that they are facing decades of drought, that flood plains have become irrelevant because it will never flood again (or, more exactly, the likelihood of floods is as great as the likelihood of the Sahara becoming green again), that fresh water is a precious, precious resource that needs to be carefully conserved and controlled.
That government takes this advice seriously: they open up flood plains to development; they institute water management policies that are designed primarily to maximize stored and controllable water resources, and they drop training for floods and tell their emergency service people that the need to train for fires and dry conditions instead of floods. This government spent $13bn on desalinization plants to meet water needs, abandoning flood planning because, of course, there wouldn't be any more floods for the foreseeable future.
Sounds sensible, right? Sounds like a sound thing to do?
Read this and see how horribly wrong this has been: just as wrong as when houseowners were told they were not allowed to trim back trees and brush from their houses in the interest of keeping temperatures down to reduce cooling costs, only to see brush fires kill dozens trying to save their houses.
The only thing anthropogenic about the Brisbane floods was the policies that led to abandonment of flood planning, of allowing buildings to be erected on flood plains, of being forced to release massive amounts of water into Brisbane all at once (to save the dam from overflowing) because policies forbade measured releases that would have avoided the degree of flooding to begin with.
In other words, the authorities in charge ignored the historical record, ignored the geological record, ignored the direct and causal relationship between flooding/droughts and the Pacific Decadal Oscillation; ignored the warnings of those who said they were talking a crock, and barged ahead with policies that have now killed people.
There will be an inquiry now, a full judicial review by the Lord Mayor of Brisbane. Tad late for that.
These are the unintended consequences of believing in something to the exclusion of any alternatives. It shows the utter idiocy of politicians beholden to special interest groups.
Oh, and the desalination plants?
Mothballed because of a lack of demand: rain has been so heavy that it is no longer needed. More misallocated capital.
Isn't it ironic, don't you think?
That government takes this advice seriously: they open up flood plains to development; they institute water management policies that are designed primarily to maximize stored and controllable water resources, and they drop training for floods and tell their emergency service people that the need to train for fires and dry conditions instead of floods. This government spent $13bn on desalinization plants to meet water needs, abandoning flood planning because, of course, there wouldn't be any more floods for the foreseeable future.
Sounds sensible, right? Sounds like a sound thing to do?
Read this and see how horribly wrong this has been: just as wrong as when houseowners were told they were not allowed to trim back trees and brush from their houses in the interest of keeping temperatures down to reduce cooling costs, only to see brush fires kill dozens trying to save their houses.
The only thing anthropogenic about the Brisbane floods was the policies that led to abandonment of flood planning, of allowing buildings to be erected on flood plains, of being forced to release massive amounts of water into Brisbane all at once (to save the dam from overflowing) because policies forbade measured releases that would have avoided the degree of flooding to begin with.
In other words, the authorities in charge ignored the historical record, ignored the geological record, ignored the direct and causal relationship between flooding/droughts and the Pacific Decadal Oscillation; ignored the warnings of those who said they were talking a crock, and barged ahead with policies that have now killed people.
There will be an inquiry now, a full judicial review by the Lord Mayor of Brisbane. Tad late for that.
These are the unintended consequences of believing in something to the exclusion of any alternatives. It shows the utter idiocy of politicians beholden to special interest groups.
Oh, and the desalination plants?
Mothballed because of a lack of demand: rain has been so heavy that it is no longer needed. More misallocated capital.
Isn't it ironic, don't you think?
Dienstag, Januar 18, 2011
The Conundrum of Low Interest Rates...
Low interest rates are great, right? As a consumer, you pay less for the money you are borrowing; as a government, you can issue far more debt; as a company, money is easily available.
So what's not to like?
Read this to understand the dangers of low interest rates.
First and foremost: misallocation of capital.
This is the first and foremost cardinal sin of economics: money poorly spent, money frittered away on non-essentials, money invested in projects that fail to perform, all of it is wasted.
Economics, after all, is primarily about limited resources and unlimited demand, reconciling the two.
Misallocation of capital is, I repeat, a cardinal sin in economics.
What does this have to do with low interest rates?
Simple: lowering the price of money increases the possible universe of projects that can be financed. Not all projects should be financed; not all projects will be financed; not all projects deserve to be financed. By putting a price on money, you can judge which projects are those that should be financed, that deserve to be financed, and finally those that will be financed because they bring a proper return in income.
Drop the price of money and you strongly expand the "proper" return on income, that which is enough to pay for the project and remain profitable. The more expensive money is, the more difficult it is to find projects worthy of investment: when interest rates are 10%, the universe of viable projects is much, much smaller (and generally involved considerably more work) than when interest rates are at 3%.
A fundamental truth, despite low interest rates remains: that capital is and always will be a limited resource, despite the activities of the government printing presses. Once invested, it is no longer fungible and easily moved from one project to the next; once invested, it is no longer available for other uses.
Hence low interest rates can be extraordinarily destructive: it leads to investments that fail to perform when interest rates are no longer low and when it comes time to refinance the investment, the business case evaporates and someone is left with a white elephant that cannot be sold for love or money. Case in point: Xanadu.
Now, why then the insistence of low interest rates by the Fed?
Well, there was this recession...
Seriously: low interest rates by the Fed saved the financial system from gridlock and collapse as the subprime crisis and its follow-on effects worked it way out. It allowed the banks to avoid liquidity traps and survive.
It also allows the government to take on very large debt levels, as the cost of financing that debt remains well within the ability of the US government to pay via its cash flow.
The downside, of course, is that while the banks survived, they also stopped lending in order to eliminate any new debt turning into a problem, as well as to return to profitability, since the liquidity was invested in US government debt, with the banks making a handy, risk-free return on the money that they had borrowed from the Fed in the first place. After being burned so badly, a risk-free return of 100 basis points sounds awfully good to a lot of bankers; why loan money with risks of default at relatively high levels when you can earn it for free elsewhere?
Another downside is that interest rates won't remain low forever, but that is exactly the only way that the US government can afford a debt crisis without having to either cut spending drastically and/or raise taxes significantly. If interest rates for US government bonds were to climb to, say, 5% for a 90 day bond (which is where a significant portion of US government bonds are issued), the government would have to spend quite a bit more for interest servicing. Back in the good old days (pre-Clinton, to be exact), the US government largely financed spending via long-term bonds; this was explicitly changed by the Clinton Administration to short-term bonds, increasing the inherent instability of the US government's ability to service those bonds.
Why this?
Because short-term bonds are always more volatile than long-term bonds. Bonds have an interest rate and a price; the combination of the two determines the performance of the bond. The interest rate is determined when the bond is issued; the price fluctuates, approaching 100% of the nominal price of the bond when the bond reaches maturity and is paid out at the face value. If demand for a bond suddenly tanks - no one wants to buy it, everyone wants to sell it - then the effective interest rate skyrockets upwards; long-term bonds are usually fairly free of these fluctuations, as they can first be redeemed in years, not in months or days.
Hence if the Fed were to raise interest rates, the ability of the US government to finance its debt could be called into question, as the sum of the debt is huge and even small changes here make mockery of any budgetary planning.
This is perhaps the greatest danger of low interest rates coupled with heavy debt: once that debt is accumulated, it has to be serviced and, invariably, re-financed as short-term bonds mature and have to be repaid (financed by new bonds). The fact that interest rates are low has enabled the US government to take on massive debt; the flip side is that this debt is largely short-term and must be refinanced. Raising interest rates here would effectively cripple the ability of the US to refinance its debt.
If that happens: watch out, what we saw in the last few years is nothing in comparison to a US sovereign debt default.
So now we have the conundrum of low interest rates: great to have as a consumer, but a catastrophe for the economy. The Fed cannot afford to raise interest rates because if it does so, the ability of the federal government to raise capital is badly damaged; if it does not, in the face of inflation, it will damage the rest of the economy. Companies have taken on projects that can only show a return on profit when interest rates are low (because when interest rates rise, they turn the project unprofitable) because it was simpler and easier to do so, rather than finding the projects that were more resilient and rewarding, but harder to do and harder to make work well.
Low interest rates are a trap for the unwary. If companies and the US government had maintained their standards, low interest rates wouldn't be a problem: however, low interest rates drive both companies and the US government to misallocate capital, the cardinal sin of economics.
The conundrum remains: there is no simple solution. The only real solution would have been to not go so heavily into debt (US government) or to maintain high standards of due diligence for corporate investments and spending (companies).
Returning to economically sensible behavior after such a period of debauchery will be both expensive and tedious, marked by much stronger savings rates and the accompanying postponement or abandonment of consumption in order to regenerate savings and hence capital.
We'll all be paying for the low interest rates for decades to come, until companies have written off their losses and government debt comes down significantly.
Now that's a legacy.
There is no easy answer
So what's not to like?
Read this to understand the dangers of low interest rates.
First and foremost: misallocation of capital.
This is the first and foremost cardinal sin of economics: money poorly spent, money frittered away on non-essentials, money invested in projects that fail to perform, all of it is wasted.
Economics, after all, is primarily about limited resources and unlimited demand, reconciling the two.
Misallocation of capital is, I repeat, a cardinal sin in economics.
What does this have to do with low interest rates?
Simple: lowering the price of money increases the possible universe of projects that can be financed. Not all projects should be financed; not all projects will be financed; not all projects deserve to be financed. By putting a price on money, you can judge which projects are those that should be financed, that deserve to be financed, and finally those that will be financed because they bring a proper return in income.
Drop the price of money and you strongly expand the "proper" return on income, that which is enough to pay for the project and remain profitable. The more expensive money is, the more difficult it is to find projects worthy of investment: when interest rates are 10%, the universe of viable projects is much, much smaller (and generally involved considerably more work) than when interest rates are at 3%.
A fundamental truth, despite low interest rates remains: that capital is and always will be a limited resource, despite the activities of the government printing presses. Once invested, it is no longer fungible and easily moved from one project to the next; once invested, it is no longer available for other uses.
Hence low interest rates can be extraordinarily destructive: it leads to investments that fail to perform when interest rates are no longer low and when it comes time to refinance the investment, the business case evaporates and someone is left with a white elephant that cannot be sold for love or money. Case in point: Xanadu.
Now, why then the insistence of low interest rates by the Fed?
Well, there was this recession...
Seriously: low interest rates by the Fed saved the financial system from gridlock and collapse as the subprime crisis and its follow-on effects worked it way out. It allowed the banks to avoid liquidity traps and survive.
It also allows the government to take on very large debt levels, as the cost of financing that debt remains well within the ability of the US government to pay via its cash flow.
The downside, of course, is that while the banks survived, they also stopped lending in order to eliminate any new debt turning into a problem, as well as to return to profitability, since the liquidity was invested in US government debt, with the banks making a handy, risk-free return on the money that they had borrowed from the Fed in the first place. After being burned so badly, a risk-free return of 100 basis points sounds awfully good to a lot of bankers; why loan money with risks of default at relatively high levels when you can earn it for free elsewhere?
Another downside is that interest rates won't remain low forever, but that is exactly the only way that the US government can afford a debt crisis without having to either cut spending drastically and/or raise taxes significantly. If interest rates for US government bonds were to climb to, say, 5% for a 90 day bond (which is where a significant portion of US government bonds are issued), the government would have to spend quite a bit more for interest servicing. Back in the good old days (pre-Clinton, to be exact), the US government largely financed spending via long-term bonds; this was explicitly changed by the Clinton Administration to short-term bonds, increasing the inherent instability of the US government's ability to service those bonds.
Why this?
Because short-term bonds are always more volatile than long-term bonds. Bonds have an interest rate and a price; the combination of the two determines the performance of the bond. The interest rate is determined when the bond is issued; the price fluctuates, approaching 100% of the nominal price of the bond when the bond reaches maturity and is paid out at the face value. If demand for a bond suddenly tanks - no one wants to buy it, everyone wants to sell it - then the effective interest rate skyrockets upwards; long-term bonds are usually fairly free of these fluctuations, as they can first be redeemed in years, not in months or days.
Hence if the Fed were to raise interest rates, the ability of the US government to finance its debt could be called into question, as the sum of the debt is huge and even small changes here make mockery of any budgetary planning.
This is perhaps the greatest danger of low interest rates coupled with heavy debt: once that debt is accumulated, it has to be serviced and, invariably, re-financed as short-term bonds mature and have to be repaid (financed by new bonds). The fact that interest rates are low has enabled the US government to take on massive debt; the flip side is that this debt is largely short-term and must be refinanced. Raising interest rates here would effectively cripple the ability of the US to refinance its debt.
If that happens: watch out, what we saw in the last few years is nothing in comparison to a US sovereign debt default.
So now we have the conundrum of low interest rates: great to have as a consumer, but a catastrophe for the economy. The Fed cannot afford to raise interest rates because if it does so, the ability of the federal government to raise capital is badly damaged; if it does not, in the face of inflation, it will damage the rest of the economy. Companies have taken on projects that can only show a return on profit when interest rates are low (because when interest rates rise, they turn the project unprofitable) because it was simpler and easier to do so, rather than finding the projects that were more resilient and rewarding, but harder to do and harder to make work well.
Low interest rates are a trap for the unwary. If companies and the US government had maintained their standards, low interest rates wouldn't be a problem: however, low interest rates drive both companies and the US government to misallocate capital, the cardinal sin of economics.
The conundrum remains: there is no simple solution. The only real solution would have been to not go so heavily into debt (US government) or to maintain high standards of due diligence for corporate investments and spending (companies).
Returning to economically sensible behavior after such a period of debauchery will be both expensive and tedious, marked by much stronger savings rates and the accompanying postponement or abandonment of consumption in order to regenerate savings and hence capital.
We'll all be paying for the low interest rates for decades to come, until companies have written off their losses and government debt comes down significantly.
Now that's a legacy.
There is no easy answer
Donnerstag, Januar 13, 2011
A Political Inversion...
The political inversion in the US is striking.
On the one hand you have the Democrats, the traditional party of the unions, of the little guy, fighting for the disadvantaged, caring about those less better off.
On the other hand you have the Republicans, country club members, bosses and exploiters of the poor, slumlords and commercial developers who would love nothing better than to turn out grannies and unmarried black lesbian single mothers onto the street in order to build another shopping mall.
Okay, so much for the fantasy image that the Democrats have been living for the last 50 years.
The inversion of these roles is, for me, amazing. The Democrats have been completely corrupted and now actively are in collusion with those who would rob most Americans blind in a second if they could (and that is what they are working on right now).
Read this to understand what is going on.
Simply put: there has been massive incompetence, fraud and outright theft by the mortgage servicers. Massachusetts (yes, liberal-until-our-dying-breath Massachusetts!) courts have found that the mortgage servicers have been foreclosing on properties that they have no title to (and hence no standing before a court of law). The corollary of this is that if the mortgage servicers don't have title, how can they have securitized the mortgages?
Let's back up a second so that this is better understood.
Someone buying a house gets a mortgage from a mortgage originator. The mortgage originator used to be the local bank, it no longer generally is. The mortgage and the note for the house (title) goes to the mortgage originator. The mortgage originator usually turns the mortgage around and securitizes it, selling off the cash flow of the mortgage to a financial instrument. The note is transferred to the legal entity of the financial instrument as security against failure of the cash flow (non-payment): in this case, with a home mortgage, the financial instrument would be a residential-backed mortgage security (RBMS). If a homeowner fails to pay their mortgage, the mortgage servicer - which, remember did not originate the loan and does not have direct title to the property, as this has been turned over, physically, to the legal entity of the financial instrument as security (it's the basic definition of what a security is!) - then tries to come to an agreement about repaying the monies owed; failing this, they foreclose on the home, selling it for what it can be sold for, and turning the monies over to the financial instrument. When the RBMS is formed, as a legal entity, there is a relatively small window of opportunity for transferring the title and effective legal ownership of the property without paying taxes (this is done deliberately to avoid having unresolved tax problems).
So,that's the theory.
What really happened?
When the mortgage was sold by the mortgage originator, titles and paperwork were transferred. When the mortgage servicing companies sold the mortgages to the RBMS, the paperwork wasn't done properly: the notes of ownership, in some cases, were scanned in and the originals discarded (in violation of 8 centuries of legal precedents); on other cases, no one knows what happened to them, as the originators, original servicers and everyone in-between were closed, were taken over, became another company, etc.
In other words, the legal chain of ownership, the core of the real estate business, was disrupted for any number of reasons, the most usual one being efficiency, rather than doing what the law required. The problem isn't so much that there is a problem when it comes to foreclosure: if the notes weren't properly transferred - and apparently the lawyers involved vouched for the correct transfer, even when they could not have known that this was the case - it also means that the RBMS are no longer securitized financial instruments, but rather ... no one really knows. They don't have recourse to the securities that they were supposed to have, meaning that they are actually worth...no one really knows.
In the name of efficiency and getting literally millions of deals done and sold off, the mortgage servicers failed in their duties, miserably so. They know this or, more exactly, the companies that unwittingly bought their assets without due diligence now know this. Legally, the whole mess must be unwound under control of the courts in order to clearly identify who owns what and who is actually allowed to foreclose; the RBMS side of the business is a catastrophe, as the investors there have been clearly defrauded, fooled into thinking they were buying securitized investments (i.e. with recourse to the assets if the cash flow failed) when, in fact, they were sold fraudulent financial instruments.
However, we are talking billions and billions of dollars here, as well as the future existence of the entire industry.
Rather than leaving this to the courts - where it is supposed to be dealt with - the mortgage servicing industry is putting on an all-stops effort to change the laws in order to make the fraud non-fraud.
Let me quote from that link above:
This proposal guts state control of their own real estate law when the Supreme Court has repeatedly found that "dirt law" is not a Federal matter. It strips homeowners of their right to their day in court to preserve their contractual rights, namely, that only the proven mortgagee, and not a gangster, or in this case, bankster, can take possession of their home.
This is central to the inversion of the political parties in the US: Democrats (which, remember, was the party of States' Rights leading up the Civil War) want to take over determining real estate law from all the states, eliminating due process (since a homeowner being foreclosed on can't have their day in court to point out that they have been current on their payments and that the bank has made a mistake, for instance), all in the name of fixing the greatest cluster-fuck in American history.
Sorry for the language, but this is really what is going on.
The Democrats appear increasingly to be committed to do outright harm to the little guy, the homeowner, really anyone buying a home with a mortgage, in order to protect those who, through their own abuse of the system, have a vested interest in not having the system fall apart because it would cost them money.
In other words, the Democrats are becoming the party of big business, pandering to corrupt businesses in order to preserve the profitability of those businesses.
Don't believe me?
Again, from the link above:
The discussion in the summary takes the view that the only "injured" homeowners that get any consideration are those "genuinely damaged by paperwork failures". Thus the only problems that are addressed are screw-ups in the mod/short sale process and wrongful foreclosures. We see nary a mention of origination fraud or servicing abuses and errors. Yet foreclosure defense attorneys have said in 50% to 70% of the cases they represent, the borrower got in serious arrears as a result of servicing errors and compounding fees; a single late or misapplied payment can quickly compound into a multi thousand dollar deficiency before the borrower even finds out something is amiss.
Read that again: 50%-70% of foreclosures are because the servicers erred and then charged homeowners for their errors, driving them into foreclosure. This is as close to outright theft as can be imagined.
To make matters worse, this destroys contracts without recourse. All in the name of protecting businesses that have been good supporters of the Democrats.
The political inversion is amazing. The Republicans are now fighting for state's rights, protecting the disadvantaged and the small guy, fighting to let them keep what they earn, while the Democrats are the party of big business, corrupted through and through.
Hat-tip to Yves at Naked Capitalism, of course: without her diligent work, much of this would have remained carefully hidden, out of the limelight.
On the one hand you have the Democrats, the traditional party of the unions, of the little guy, fighting for the disadvantaged, caring about those less better off.
On the other hand you have the Republicans, country club members, bosses and exploiters of the poor, slumlords and commercial developers who would love nothing better than to turn out grannies and unmarried black lesbian single mothers onto the street in order to build another shopping mall.
Okay, so much for the fantasy image that the Democrats have been living for the last 50 years.
The inversion of these roles is, for me, amazing. The Democrats have been completely corrupted and now actively are in collusion with those who would rob most Americans blind in a second if they could (and that is what they are working on right now).
Read this to understand what is going on.
Simply put: there has been massive incompetence, fraud and outright theft by the mortgage servicers. Massachusetts (yes, liberal-until-our-dying-breath Massachusetts!) courts have found that the mortgage servicers have been foreclosing on properties that they have no title to (and hence no standing before a court of law). The corollary of this is that if the mortgage servicers don't have title, how can they have securitized the mortgages?
Let's back up a second so that this is better understood.
Someone buying a house gets a mortgage from a mortgage originator. The mortgage originator used to be the local bank, it no longer generally is. The mortgage and the note for the house (title) goes to the mortgage originator. The mortgage originator usually turns the mortgage around and securitizes it, selling off the cash flow of the mortgage to a financial instrument. The note is transferred to the legal entity of the financial instrument as security against failure of the cash flow (non-payment): in this case, with a home mortgage, the financial instrument would be a residential-backed mortgage security (RBMS). If a homeowner fails to pay their mortgage, the mortgage servicer - which, remember did not originate the loan and does not have direct title to the property, as this has been turned over, physically, to the legal entity of the financial instrument as security (it's the basic definition of what a security is!) - then tries to come to an agreement about repaying the monies owed; failing this, they foreclose on the home, selling it for what it can be sold for, and turning the monies over to the financial instrument. When the RBMS is formed, as a legal entity, there is a relatively small window of opportunity for transferring the title and effective legal ownership of the property without paying taxes (this is done deliberately to avoid having unresolved tax problems).
So,that's the theory.
What really happened?
When the mortgage was sold by the mortgage originator, titles and paperwork were transferred. When the mortgage servicing companies sold the mortgages to the RBMS, the paperwork wasn't done properly: the notes of ownership, in some cases, were scanned in and the originals discarded (in violation of 8 centuries of legal precedents); on other cases, no one knows what happened to them, as the originators, original servicers and everyone in-between were closed, were taken over, became another company, etc.
In other words, the legal chain of ownership, the core of the real estate business, was disrupted for any number of reasons, the most usual one being efficiency, rather than doing what the law required. The problem isn't so much that there is a problem when it comes to foreclosure: if the notes weren't properly transferred - and apparently the lawyers involved vouched for the correct transfer, even when they could not have known that this was the case - it also means that the RBMS are no longer securitized financial instruments, but rather ... no one really knows. They don't have recourse to the securities that they were supposed to have, meaning that they are actually worth...no one really knows.
In the name of efficiency and getting literally millions of deals done and sold off, the mortgage servicers failed in their duties, miserably so. They know this or, more exactly, the companies that unwittingly bought their assets without due diligence now know this. Legally, the whole mess must be unwound under control of the courts in order to clearly identify who owns what and who is actually allowed to foreclose; the RBMS side of the business is a catastrophe, as the investors there have been clearly defrauded, fooled into thinking they were buying securitized investments (i.e. with recourse to the assets if the cash flow failed) when, in fact, they were sold fraudulent financial instruments.
However, we are talking billions and billions of dollars here, as well as the future existence of the entire industry.
Rather than leaving this to the courts - where it is supposed to be dealt with - the mortgage servicing industry is putting on an all-stops effort to change the laws in order to make the fraud non-fraud.
Let me quote from that link above:
This proposal guts state control of their own real estate law when the Supreme Court has repeatedly found that "dirt law" is not a Federal matter. It strips homeowners of their right to their day in court to preserve their contractual rights, namely, that only the proven mortgagee, and not a gangster, or in this case, bankster, can take possession of their home.
This is central to the inversion of the political parties in the US: Democrats (which, remember, was the party of States' Rights leading up the Civil War) want to take over determining real estate law from all the states, eliminating due process (since a homeowner being foreclosed on can't have their day in court to point out that they have been current on their payments and that the bank has made a mistake, for instance), all in the name of fixing the greatest cluster-fuck in American history.
Sorry for the language, but this is really what is going on.
The Democrats appear increasingly to be committed to do outright harm to the little guy, the homeowner, really anyone buying a home with a mortgage, in order to protect those who, through their own abuse of the system, have a vested interest in not having the system fall apart because it would cost them money.
In other words, the Democrats are becoming the party of big business, pandering to corrupt businesses in order to preserve the profitability of those businesses.
Don't believe me?
Again, from the link above:
The discussion in the summary takes the view that the only "injured" homeowners that get any consideration are those "genuinely damaged by paperwork failures". Thus the only problems that are addressed are screw-ups in the mod/short sale process and wrongful foreclosures. We see nary a mention of origination fraud or servicing abuses and errors. Yet foreclosure defense attorneys have said in 50% to 70% of the cases they represent, the borrower got in serious arrears as a result of servicing errors and compounding fees; a single late or misapplied payment can quickly compound into a multi thousand dollar deficiency before the borrower even finds out something is amiss.
Read that again: 50%-70% of foreclosures are because the servicers erred and then charged homeowners for their errors, driving them into foreclosure. This is as close to outright theft as can be imagined.
To make matters worse, this destroys contracts without recourse. All in the name of protecting businesses that have been good supporters of the Democrats.
The political inversion is amazing. The Republicans are now fighting for state's rights, protecting the disadvantaged and the small guy, fighting to let them keep what they earn, while the Democrats are the party of big business, corrupted through and through.
Hat-tip to Yves at Naked Capitalism, of course: without her diligent work, much of this would have remained carefully hidden, out of the limelight.
Mittwoch, Januar 12, 2011
Back In The Day...
I did my undergraduate degree in philosophy and psychology. I decided that psychology was not for me (or, more exactly, working in group made me realize how little patience I had with people who had easily solveable problems that they were reluctant to solve for one neurotic reason or another), but it was an excellent education in the foibles and nature of my fellow humans. I did some clinical work at a local institution learning how to classify, how to identify patients that could be helped and those who could not, as well as meeting some truly evil individuals (nightmares back then about those folks) that underscored the need for institutionalization.
This prodded me to recall some of the topics discussed back then.
Fundamentally, there was a shift, driven in no small part by the film "One Flew Over The Cuckoo's Nest" in terms of general consciousness-raising amongst the population, from institutionalization to non-institutionalization.
Back in the day, there were abuses of the system. Borderline (not syndrome, but actual borderline) cases where someone could have lived in society, but parents and others responsible didn't want to be bothered (and yes, there was often money involved, usually a sizable inheritance) and hence someone who simply needed some therapy (to overcome deliberately induced feelings of worthlessness and self-disgust) and normal, non-destructive relationships to become a functioning and, dare say, even happy member of society would often be institutionalized and end up vastly worse-off than before.
But the solution was and is devastating,driven by do-gooders who wanted to correct "horrible wrongs" and ended up inflicting misery and more often than not outright horror and death by removing as many from institutionalization as possible.
The goal wasn't only to "liberate" those who were, in many cases, clinically insane, but also to confront society with its debris, with those who failed to make the grade, to rub society's nose in the dirt, so to speak, because capitalism was so horrible and anyone who didn't want to live the capitalist dream was oppressed and downcast. The institutionalized were viewed as victims of a ruthless and brutal society who did not want to deal with their problems, which needed to have half-way houses placed in the best neighborhoods in order to remind the successful of the societal costs of capitalism.
Yes, I am being serious about this. This is virtually verbatim from one activist psychologist working with one of the deinstitutionalization advocacy groups of the day.
There was a method to the madness: throw the institutionalized out in order to generate budgets for half-way houses, employing those who proclaimed the need to integrate these people into society. The idea was that a generation of advocates could live off the state this way, while at the same time confronting American capitalist society with the costs of capitalism, mental illness of those who were too frail to withstand the rigors of that society. Half-way houses were considered optimal, situated with plenty of room, plenty of space, in upscale neighborhoods to force the rich to see what costs their success required. Half-way houses would let the institutionalized, taking their medications, to reintegrate with society and ultimately help change society so that their "different" ways of perception and behavior would become acceptable.
The reality, of course, was that the advocates, as did most people, found the institutionalized to be extremely difficult to get along with, that they would conveniently forget to take their medications, that putting a half-way house near a school would only infuriate the parents and that the half-way houses would end up in the worst possible neighborhoods because they were powerless to fight them. The reality was that institutionalization was actually necessary in many cases - I remember the statistic of over 90% - in order to prevent, for instance, a severely neurotic young man who masturbated constantly from doing so in the local playground.
It was, as is so often the case, a massive failure. But the activists based their careers on it, the institutions were closed down, the institutionalized became homeless and lived lives of despair in a mental fog.
The best intentions. The worst possible results.
This prodded me to recall some of the topics discussed back then.
Fundamentally, there was a shift, driven in no small part by the film "One Flew Over The Cuckoo's Nest" in terms of general consciousness-raising amongst the population, from institutionalization to non-institutionalization.
Back in the day, there were abuses of the system. Borderline (not syndrome, but actual borderline) cases where someone could have lived in society, but parents and others responsible didn't want to be bothered (and yes, there was often money involved, usually a sizable inheritance) and hence someone who simply needed some therapy (to overcome deliberately induced feelings of worthlessness and self-disgust) and normal, non-destructive relationships to become a functioning and, dare say, even happy member of society would often be institutionalized and end up vastly worse-off than before.
But the solution was and is devastating,driven by do-gooders who wanted to correct "horrible wrongs" and ended up inflicting misery and more often than not outright horror and death by removing as many from institutionalization as possible.
The goal wasn't only to "liberate" those who were, in many cases, clinically insane, but also to confront society with its debris, with those who failed to make the grade, to rub society's nose in the dirt, so to speak, because capitalism was so horrible and anyone who didn't want to live the capitalist dream was oppressed and downcast. The institutionalized were viewed as victims of a ruthless and brutal society who did not want to deal with their problems, which needed to have half-way houses placed in the best neighborhoods in order to remind the successful of the societal costs of capitalism.
Yes, I am being serious about this. This is virtually verbatim from one activist psychologist working with one of the deinstitutionalization advocacy groups of the day.
There was a method to the madness: throw the institutionalized out in order to generate budgets for half-way houses, employing those who proclaimed the need to integrate these people into society. The idea was that a generation of advocates could live off the state this way, while at the same time confronting American capitalist society with the costs of capitalism, mental illness of those who were too frail to withstand the rigors of that society. Half-way houses were considered optimal, situated with plenty of room, plenty of space, in upscale neighborhoods to force the rich to see what costs their success required. Half-way houses would let the institutionalized, taking their medications, to reintegrate with society and ultimately help change society so that their "different" ways of perception and behavior would become acceptable.
The reality, of course, was that the advocates, as did most people, found the institutionalized to be extremely difficult to get along with, that they would conveniently forget to take their medications, that putting a half-way house near a school would only infuriate the parents and that the half-way houses would end up in the worst possible neighborhoods because they were powerless to fight them. The reality was that institutionalization was actually necessary in many cases - I remember the statistic of over 90% - in order to prevent, for instance, a severely neurotic young man who masturbated constantly from doing so in the local playground.
It was, as is so often the case, a massive failure. But the activists based their careers on it, the institutions were closed down, the institutionalized became homeless and lived lives of despair in a mental fog.
The best intentions. The worst possible results.
Dienstag, Januar 11, 2011
Blood On Their Hands...
Reading this in the WSJ got me to thinking.
I've not commented on the Arizona shootings because there is too much going on and already too much vitriol - from the left - that it scarcely deserves serious thought.
But seeing that article and the sheer bloody-mindedness that has led to the deaths of many, let's consider this: that the "progressives" in our society are the most dangerous elements in society.
Not because they want to overthrow established principles in the name of progress, not because they want to spend all of your money as do-gooders on pet projects.
No, rather because they are dangerous in their ignorance, dangerous in their deeds, and dangerous in their intentions.
The key quote in the link above is this:
The editor of the Lancet, Richard Horton, sent Dr. Wakefield's paper to six reviewers, four of whom rejected it. That should have been enough to preclude publication. But Mr. Horton thought the paper was provocative and published it anyway.
In other words, Mr. Horton put his own opinions above that of scientific research, choosing to publish bad science in the name of ... what?
Pretending that vaccines are bad for you? Making up a story to further your career? Living in a fantasy world where science is debased into opinion and peer review destroyed - and it has been most thoroughly by the likes of Mr. Horton and by the Global Warming Alarmist Industry, which has rigged peer review to the point of censorship - in order to be "provocative"?
Why not, after all, it's risk-free for the editor. Nothing is going to happen to him: if, at the worst, he comes under fire for being a really bad editor, he can say "but I thought it would be an interesting topic for greater discussion".
Too bad kids have died for this.
The same sort of risk-free political nonsense permeates the left. They can call for the welfare state and insist that the primary role of government is to do good, that progressives have a right to re-make society into something they think is better (destroying family structures and economies along the way). That's why you see the vitriol coming from them in the wake of the Arizona shootings: they think, seriously, that anyone who disagrees with them is not just wrong, but are, necessarily, bad people.
The truth is that the left is seriously irresponsible. You can't trust them with the simplest of tasks, let alone complex ones.
And they have blood on their hands. They just don't see it as blood, but rather necessary sacrifices for the greater good.
I've not commented on the Arizona shootings because there is too much going on and already too much vitriol - from the left - that it scarcely deserves serious thought.
But seeing that article and the sheer bloody-mindedness that has led to the deaths of many, let's consider this: that the "progressives" in our society are the most dangerous elements in society.
Not because they want to overthrow established principles in the name of progress, not because they want to spend all of your money as do-gooders on pet projects.
No, rather because they are dangerous in their ignorance, dangerous in their deeds, and dangerous in their intentions.
The key quote in the link above is this:
The editor of the Lancet, Richard Horton, sent Dr. Wakefield's paper to six reviewers, four of whom rejected it. That should have been enough to preclude publication. But Mr. Horton thought the paper was provocative and published it anyway.
In other words, Mr. Horton put his own opinions above that of scientific research, choosing to publish bad science in the name of ... what?
Pretending that vaccines are bad for you? Making up a story to further your career? Living in a fantasy world where science is debased into opinion and peer review destroyed - and it has been most thoroughly by the likes of Mr. Horton and by the Global Warming Alarmist Industry, which has rigged peer review to the point of censorship - in order to be "provocative"?
Why not, after all, it's risk-free for the editor. Nothing is going to happen to him: if, at the worst, he comes under fire for being a really bad editor, he can say "but I thought it would be an interesting topic for greater discussion".
Too bad kids have died for this.
The same sort of risk-free political nonsense permeates the left. They can call for the welfare state and insist that the primary role of government is to do good, that progressives have a right to re-make society into something they think is better (destroying family structures and economies along the way). That's why you see the vitriol coming from them in the wake of the Arizona shootings: they think, seriously, that anyone who disagrees with them is not just wrong, but are, necessarily, bad people.
The truth is that the left is seriously irresponsible. You can't trust them with the simplest of tasks, let alone complex ones.
And they have blood on their hands. They just don't see it as blood, but rather necessary sacrifices for the greater good.
Donnerstag, Januar 06, 2011
Back to the Good Old Bad Days...
With the relative unimportance of the old-school conflict between the forces of Light and Dark after the Cold War ended, strategic thinking - the mind-games of how nuclear deterrence needed to work, of what role nuclear weapons play in strategic planning, of what the basis should be for war-fighting capabilities, etc - basically disappeared from the view screen.
Well, it's back.
But with a dearly ironic difference.
Read this to see what I mean.
Back in the day NATO was faced with a potential foe - who made it quite clear in their own writings and actions that they considered war, if not inevitable, to be a clear part of the spectrum of political tools at their service. The Soviet Union and the delightfully named Warsaw Pact - delightfully so named because the shorthand became "WarPact" - were belligerent and not above shooting to kill when warning shots were perfectly adequate. Their doctrine - we now know this as a fact, while back in the day it was considered to be an extremist interpretation - was massive use of nuclear weapons to cripple NATO while sending in very large conventional forces to achieve quick victories at extreme cost to civilian populations. When it became clear that NATO could survive and that such a doctrine would be counter-productive at best, the move went to massive conventional forces to achieve "proper correlation of forces" to achieve needed battlefield superiority to be able to defeat NATO divisions in detail. The creation of Operational Maneuver Groups (OMG!) to break through the crust defense of NATO was the final strategic plan of the Soviet Union and the Warsaw Pact.
NATO at first designed its forces as tripwires that would then result in nuclear strikes on WarPact forces entering NATO territories. When certain key countries realized that it would be political suicide if it became public knowledge that NATO's war fighting strategy was massive use of tactical nuclear weapons to destroy WarPact forces, this strategy had to change. While the WarPact chose to use its comparative advantages - large conscript armies coupled with products from heavy industry (tanks, artillery) - NATO chose to counter this with technology, developing extremely effective anti-tank weapons (the Soviets despaired of facing attack helicopters armed with TOW missiles) and long-reach weapons designed to dismantle the ability of the WarPact to actually wage war by crippling their logistics.
We know how this ended: the WarPact collapsed because they devoted too much of their less productive economic output to feeding the military with troops, weapons and logistics and ended up bankrupting their system long before anyone thought that their State would wither away. The NATO plan worked: substituting technology for mass led to the modern US war-fighting doctrine, of relatively small and mobile forces appearing at exactly the right place and the right time with the right weapons to destroy their enemies with minimal casualties, combining technology and information with war-fighting capabilities fine-tuned to achieving the goal of winning the battle with minimum casualties.
So, what does this have to do with China?
China sees itself confronted with a potential foe - who makes it quite clear in their own writings and actions that the deliberate use of force to resolve political confrontations is part and parcel of the spectrum of political tools at their service - that has overwhelming conventional superiority.
Now that's ironic.
Read the story at the link: China is saying, moving from a long-term no-first-use commitment to "we're going to nuke your fleet if you attack us" doctrine of nuclear weapons. They are deliberately lowering the nuclear threshold in order to avoid having to try to match their potential opponent in terms of conventional forces: back in the day, such a doctrine for NATO generated massive bad publicity and quite a bit of opposition (in no small part financed by the WarPact, but that is another story for another day) that ultimately led to the development of conventional weapons to do what nuclear weapons were to be used for.
Lowering the nuclear threshold becomes very, very dangerous when conflict looms: it really does imply that even a small attack will bring Armageddon, that there could be no doctrine of "limited war," that escalation to using nuclear weapons would be fast and unavoidable. If that is your policy, then you have to implement strategic planning that matches that policy (otherwise it is non-believable and invites provocation, since your opponent does not see you backing up your public statements with weapon systems).
Of course, what it does is lower the nuclear threshold and raise the specter of a nuclear war actually being fought, as once they are in use, there is little or no likelihood that the other side will not use them as well. What was a conventional war with lousy consequences for civilians becomes a nuclear war with absolutely devestating consequences for civilians.
The world is not going to be a safer place if this becomes really is becoming Chinese nuclear doctrine. That is the fundamental line that "peace movements" used to try to discredit NATO war fighting plans and doctrines, that these would make the risk of war greater, rather than less.
How ironic, don't you think?
It looks like we are heading back to the good old bad days of nuclear war-fighting doctrines.
Well, it's back.
But with a dearly ironic difference.
Read this to see what I mean.
Back in the day NATO was faced with a potential foe - who made it quite clear in their own writings and actions that they considered war, if not inevitable, to be a clear part of the spectrum of political tools at their service. The Soviet Union and the delightfully named Warsaw Pact - delightfully so named because the shorthand became "WarPact" - were belligerent and not above shooting to kill when warning shots were perfectly adequate. Their doctrine - we now know this as a fact, while back in the day it was considered to be an extremist interpretation - was massive use of nuclear weapons to cripple NATO while sending in very large conventional forces to achieve quick victories at extreme cost to civilian populations. When it became clear that NATO could survive and that such a doctrine would be counter-productive at best, the move went to massive conventional forces to achieve "proper correlation of forces" to achieve needed battlefield superiority to be able to defeat NATO divisions in detail. The creation of Operational Maneuver Groups (OMG!) to break through the crust defense of NATO was the final strategic plan of the Soviet Union and the Warsaw Pact.
NATO at first designed its forces as tripwires that would then result in nuclear strikes on WarPact forces entering NATO territories. When certain key countries realized that it would be political suicide if it became public knowledge that NATO's war fighting strategy was massive use of tactical nuclear weapons to destroy WarPact forces, this strategy had to change. While the WarPact chose to use its comparative advantages - large conscript armies coupled with products from heavy industry (tanks, artillery) - NATO chose to counter this with technology, developing extremely effective anti-tank weapons (the Soviets despaired of facing attack helicopters armed with TOW missiles) and long-reach weapons designed to dismantle the ability of the WarPact to actually wage war by crippling their logistics.
We know how this ended: the WarPact collapsed because they devoted too much of their less productive economic output to feeding the military with troops, weapons and logistics and ended up bankrupting their system long before anyone thought that their State would wither away. The NATO plan worked: substituting technology for mass led to the modern US war-fighting doctrine, of relatively small and mobile forces appearing at exactly the right place and the right time with the right weapons to destroy their enemies with minimal casualties, combining technology and information with war-fighting capabilities fine-tuned to achieving the goal of winning the battle with minimum casualties.
So, what does this have to do with China?
China sees itself confronted with a potential foe - who makes it quite clear in their own writings and actions that the deliberate use of force to resolve political confrontations is part and parcel of the spectrum of political tools at their service - that has overwhelming conventional superiority.
Now that's ironic.
Read the story at the link: China is saying, moving from a long-term no-first-use commitment to "we're going to nuke your fleet if you attack us" doctrine of nuclear weapons. They are deliberately lowering the nuclear threshold in order to avoid having to try to match their potential opponent in terms of conventional forces: back in the day, such a doctrine for NATO generated massive bad publicity and quite a bit of opposition (in no small part financed by the WarPact, but that is another story for another day) that ultimately led to the development of conventional weapons to do what nuclear weapons were to be used for.
Lowering the nuclear threshold becomes very, very dangerous when conflict looms: it really does imply that even a small attack will bring Armageddon, that there could be no doctrine of "limited war," that escalation to using nuclear weapons would be fast and unavoidable. If that is your policy, then you have to implement strategic planning that matches that policy (otherwise it is non-believable and invites provocation, since your opponent does not see you backing up your public statements with weapon systems).
Of course, what it does is lower the nuclear threshold and raise the specter of a nuclear war actually being fought, as once they are in use, there is little or no likelihood that the other side will not use them as well. What was a conventional war with lousy consequences for civilians becomes a nuclear war with absolutely devestating consequences for civilians.
The world is not going to be a safer place if this becomes really is becoming Chinese nuclear doctrine. That is the fundamental line that "peace movements" used to try to discredit NATO war fighting plans and doctrines, that these would make the risk of war greater, rather than less.
How ironic, don't you think?
It looks like we are heading back to the good old bad days of nuclear war-fighting doctrines.
Mittwoch, Januar 05, 2011
Why the Democrats Are Doomed...
I saw this, and rejoiced.
It's the answer to all of our problems: let's simply get rid of the Fed, disband it entirely, and replace the Federal Reserve Notes (aka "money") with ... US Money. Printed by the Congress.
Repudiate all debt, simply print money. Need to fund something? Simply print money.
Hallelujah! All of our problems solved!
Author of the Bill, HR 6550: a certain Mr. Kucinich.
If that is the solution, then it is rather apparent that the Democrats have no clue what the problem is. Zilch, nada, not one whit of a tad.
Read this specifically
SEC. 106. ORIGINATION IN LIEU OF BORROWING.
(a) In General- After the effective date, and subject to limitations established by the United States Monetary Authority under provisions of section 302, the Secretary shall originate United States Money to address any negative fund balances resulting from a shortfall in available Government receipts to fund Government appropriations authorized by Congress under law.
(b) Prohibition on Government Borrowing- After the effective date, unless otherwise provided by an Act of the Congress enacted after such date--
(1) no amount may be borrowed by the Secretary from any source; and
(2) no amount may be borrowed by any Federal agency or department, any independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, Federal savings association, or Federal credit union) from any source other than the Secretary.
(c) Rule of Construction- No provision of this Act shall be construed as preventing the Congress from exercising its constitutional authority to borrow money on the full faith and credit of the United States.
(d) Technical and Conforming Amendment- On the effective date, chapter 31 of title 31, United States Code, is hereby repealed, subject to the retirement of outstanding instruments of indebtedness of the United States in accordance with section 401.
Ye gods. This is the complete and total abolition of any fiscal responsibility and the destruction of US government bonds as the most secure investment instruments the world has ever seen (okay, the Democrats have been working on that last one for quite a while).
He seriously wants to forbid borrowing by simply allowing Congress to print whatever money it needs.
What would monetary policy then be? Take a look:
It's the answer to all of our problems: let's simply get rid of the Fed, disband it entirely, and replace the Federal Reserve Notes (aka "money") with ... US Money. Printed by the Congress.
Repudiate all debt, simply print money. Need to fund something? Simply print money.
Hallelujah! All of our problems solved!
Author of the Bill, HR 6550: a certain Mr. Kucinich.
If that is the solution, then it is rather apparent that the Democrats have no clue what the problem is. Zilch, nada, not one whit of a tad.
Read this specifically
SEC. 106. ORIGINATION IN LIEU OF BORROWING.
(a) In General- After the effective date, and subject to limitations established by the United States Monetary Authority under provisions of section 302, the Secretary shall originate United States Money to address any negative fund balances resulting from a shortfall in available Government receipts to fund Government appropriations authorized by Congress under law.
(b) Prohibition on Government Borrowing- After the effective date, unless otherwise provided by an Act of the Congress enacted after such date--
(1) no amount may be borrowed by the Secretary from any source; and
(2) no amount may be borrowed by any Federal agency or department, any independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, Federal savings association, or Federal credit union) from any source other than the Secretary.
(c) Rule of Construction- No provision of this Act shall be construed as preventing the Congress from exercising its constitutional authority to borrow money on the full faith and credit of the United States.
(d) Technical and Conforming Amendment- On the effective date, chapter 31 of title 31, United States Code, is hereby repealed, subject to the retirement of outstanding instruments of indebtedness of the United States in accordance with section 401.
Ye gods. This is the complete and total abolition of any fiscal responsibility and the destruction of US government bonds as the most secure investment instruments the world has ever seen (okay, the Democrats have been working on that last one for quite a while).
He seriously wants to forbid borrowing by simply allowing Congress to print whatever money it needs.
What would monetary policy then be? Take a look:
(5) GOVERNING PRINCIPLE OF MONETARY POLICY- The Monetary Authority shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner. The Monetary Authority shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
How is this then to be reconciled with allowing Congress to print whatever money is needed?
Hopeful thinking is all: stating that whatever Congress needs will, in effect, not become inflationary or deflationary in and of itself, but will be ... sufficient.
If this is not a case of serious parody - and Mr. Kucinich is scarcely capable of such a sense of droll humor - then this is one of the better examples of why the Democrats are doomed. Sheer ignorance of basic economics and sheer ignorance of how economies actually function appears to be the basis for their thinking: it is the only explanation for such a folly.
Oh, and interest rates may not exceed 8%, nor may the amount of interest over the life of the loan exceed the equity, nor may interest be paid on your regular banking account. Oh, and local governments can borrow money for nothing.
Ye gods. The man seriously just wants to get rid of economics because it keeps on getting in the way.
Keep it up, Democrats. Keep on showing how you elect congresscritters who are fundamentally incompetent, fundamentally ignorant and cannot even begin to understand the consequences of such an act.
Keep it up, and you'll look back at 2010 as one of the good years.
Dienstag, Januar 04, 2011
First post of 2011...
Generally speaking, 2010 was a fairly lousy year, highlighted really only by the pummeling the Democrats took in November.
On the other hand, 2011 is shaping up to be a fairly interesting year, not the least because the Democrats were pummeled so heavily and lost the House.
Congress right now is held largely in contempt, with congresscritters of all types rated down there with used car salesmen and the like. It is also rightly held in such contempt: largely speaking, Congress has failed to do its right and proper job under the Constitution, and hasn't since the New Deal. What is this right and proper job?
Read this.
If you consider that, you can see that Congress has been irresponsible for far too long. The whole system of earmarking - aka pork - is indicative of this: it is a way of getting something done without having to stand up and push a bill through that obviously is a payoff for some congresscritters' pet project/constituency/lobbyist payoff/etc. No exceptions here: Congress has failed to fulfill its constitutionally appointed role.
What is that role?
To quote from the above link:
The Constitution gave the federal government the authority to pursue certain limited ends, like national security and ensuring free interstate commerce, but otherwise left us free to pursue our ends either through the states or as private individuals. It did not authorize the federal government to provide us with the vast array of goods and services that today reduce so many of us to government dependents.
How did Congress get into its current state? Roosevelt and the New Deal: they abdicated their responsibility to the Supreme Court to determine what was constitutionally allowed (the Supreme Court should really only decide what is not allowed, rather than what is allowed...) and gave the Executive an enormous expansion of enumerated powers.
What are enumerated powers?
Well, to quote that radical and subversive document, the Constitution of the US, Article I, Section 8:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Now, this is going to out me as a strict constructionist (duh), but the Supreme Court made mistakes when it allowed the US Congress to interpret "To make all Laws which shall be necessary and proper" to mean an effective carte blanche to make laws however Congress saw fit, rather than to make laws "necessary and proper".
It's all a question of perspective: how is the government allowed to spend money?
To again quote from the above link:
In 1794, for example, James Madison, the principal author of the Constitution, rose on the House floor to object to a bill appropriating $15,000 for the relief of French refugees who had fled to Baltimore and Philadelphia from an insurrection in San Domingo. He could not, he said, "undertake to lay [his] finger on that article of the Federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." The bill failed.
Bingo: if such a bill were to be brought forward today, it would pass without a fight (well, at least under the last Congress). Who would want to go on record of not caring for the modern equivalent of French refugees?
Well, according to James Madison, it is not the role of the government to spend money on objects of benevolence.
It is the role of the Federal government to do what is enumerated: we are going broke trying to be benevolent.
The sooner that this is realized, the better. If you want to be benevolent, Democrats, then do it with your own damn money. Not with the money of taxpayers.
Nowhere amongst the enumerated powers is "to provide benevolence."
If "progressives" (in quotes because their policies increasingly show them to be regresssive, not progressive, i.e. harming the poor, rather than helping them) or Democrats want to provide for benevolence, let them amend the Constitution. Anything less than that is cowardly, showing that they have not the courage of their convictions.
It will be a good start to 2011 when the Constitution, for the first time, is read out aloud at the beginning of the next Congress. A very good start indeed...
On the other hand, 2011 is shaping up to be a fairly interesting year, not the least because the Democrats were pummeled so heavily and lost the House.
Congress right now is held largely in contempt, with congresscritters of all types rated down there with used car salesmen and the like. It is also rightly held in such contempt: largely speaking, Congress has failed to do its right and proper job under the Constitution, and hasn't since the New Deal. What is this right and proper job?
Read this.
If you consider that, you can see that Congress has been irresponsible for far too long. The whole system of earmarking - aka pork - is indicative of this: it is a way of getting something done without having to stand up and push a bill through that obviously is a payoff for some congresscritters' pet project/constituency/lobbyist payoff/etc. No exceptions here: Congress has failed to fulfill its constitutionally appointed role.
What is that role?
To quote from the above link:
The Constitution gave the federal government the authority to pursue certain limited ends, like national security and ensuring free interstate commerce, but otherwise left us free to pursue our ends either through the states or as private individuals. It did not authorize the federal government to provide us with the vast array of goods and services that today reduce so many of us to government dependents.
How did Congress get into its current state? Roosevelt and the New Deal: they abdicated their responsibility to the Supreme Court to determine what was constitutionally allowed (the Supreme Court should really only decide what is not allowed, rather than what is allowed...) and gave the Executive an enormous expansion of enumerated powers.
What are enumerated powers?
Well, to quote that radical and subversive document, the Constitution of the US, Article I, Section 8:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; [Altered by Amendment XVI "Income tax".]
To borrow money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
To establish Post Offices and Post Roads;
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
To constitute Tribunals inferior to the supreme Court;
To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;
To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;
To make Rules for the Government and Regulation of the land and naval Forces;
To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
In addition, to put this in perspective, the 10th Amendment is worth quoting as well:The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Now, this is going to out me as a strict constructionist (duh), but the Supreme Court made mistakes when it allowed the US Congress to interpret "To make all Laws which shall be necessary and proper" to mean an effective carte blanche to make laws however Congress saw fit, rather than to make laws "necessary and proper".
It's all a question of perspective: how is the government allowed to spend money?
To again quote from the above link:
In 1794, for example, James Madison, the principal author of the Constitution, rose on the House floor to object to a bill appropriating $15,000 for the relief of French refugees who had fled to Baltimore and Philadelphia from an insurrection in San Domingo. He could not, he said, "undertake to lay [his] finger on that article of the Federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." The bill failed.
Bingo: if such a bill were to be brought forward today, it would pass without a fight (well, at least under the last Congress). Who would want to go on record of not caring for the modern equivalent of French refugees?
Well, according to James Madison, it is not the role of the government to spend money on objects of benevolence.
It is the role of the Federal government to do what is enumerated: we are going broke trying to be benevolent.
The sooner that this is realized, the better. If you want to be benevolent, Democrats, then do it with your own damn money. Not with the money of taxpayers.
Nowhere amongst the enumerated powers is "to provide benevolence."
If "progressives" (in quotes because their policies increasingly show them to be regresssive, not progressive, i.e. harming the poor, rather than helping them) or Democrats want to provide for benevolence, let them amend the Constitution. Anything less than that is cowardly, showing that they have not the courage of their convictions.
It will be a good start to 2011 when the Constitution, for the first time, is read out aloud at the beginning of the next Congress. A very good start indeed...
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