Saturday, December 29, 2007

Barack Hussein Obama

Obama -- whack or blite?

Tuesday, December 18, 2007

Cuba -- The Pending Boom

It appears that Fidel is writing his epitaph. When he goes, his brother, Raul, is likely to succeed him. Raul has been to China, the former failing marxist experiment that is now in a hybrid zone and moving closer to capitalism. If there is such a condition as market communism, China defines it. It would be to the benefit of the 12 million Cuban citizens for the march to capitalism to begin. They've waited nearly 50 years for prosperity, but getting it will depend on Fidel's death. That day is getting closer.

If Raul has the sense to bring Cuba into compliance with US demands, Cuban citizens will finally enjoy the revolution Fidel falsely promised since 1959.

Castro Hints He May Step Down

Posted: 2007-12-17 21:50:43
Filed Under: World News
HAVANA (Dec. 17) - Ailing leader Fidel Castro said in a letter read on state television Monday that he does not intend to cling to power forever or stand in the way of a younger generation.

"My elemental duty is not to cling to positions, or even less to obstruct the path of younger people, but to share experiences and ideas whose modest worth comes from the exceptional era in which I lived," Castro wrote in the final paragraph of a lengthy letter discussing the Bali summit on global warming.

The 81-year-old Castro has not said when - or even if - he will permanently step aside after temporarily ceding his powers to his younger brother Raul 16 months ago. He has not been seen in public since he made that announcement in July 2006 after undergoing emergency intestinal surgery.But officially Castro remains the president of Cuba's Council of State, making him the country's head of government and state. Several times a week he pens essays, many of them on international issues that are carried on state media.

Wednesday, December 12, 2007

Water Works

Despite claims that waterboarding doesn't work, claims made by people with no credibility, there is evidence that it has remarkable powers to loosen the lips of previously silent terrorist detainees. Since terrorists are in the business of planning and executing terrorist attacks, it is a reasonable assumption that a known terrorist knows things we want to know, like the time and place of the next attacks, whose in on it and what methods are to be used. This is the stuff that saves innocent lives. If a little waterboarding is all it takes to save innocent lives, then let's get to it.



December 11, 2007 -- Thirty-five seconds of waterboarding was all it took to get a top al Qaeda terrorist to break, his CIA interrogator revealed yesterday.

Abu Zubaydah, a top lieutenant to Osama bin Laden captured in March 2002, gave up his conspirators after a half-minute of the technique, according to now retired CIA officer John Kiriakou.

"The next day, he told his interrogator that Allah had visited him in his cell during the night and told him to cooperate," Kiriakou told ABC News.

"From that day on, he answered every question."

He added, "The threat information he provided disrupted a number of attacks, maybe dozens of attacks."

Zubaydah was reportedly the first insider to finger Khalid Sheik Mohammed as the mastermind behind the 9/11 attacks, as well as Jose Padilla's alleged dirty bomb plot.

Zubaydah's aggressive interrogations were secretly videotaped by the CIA. The CIA said those tapes were destroyed to protect the identity of its officers.

Monday, December 10, 2007

Crack Up, Crack Down

NEWS ALERT from The Wall Street Journal Dec. 10, 2007

The Supreme Court said judges may impose shorter sentences for crack cocaine crimes, enhancing judicial discretion to reduce the disparity between prison terms for crack and cocaine powder.

In a separate sentencing case that did not involve crack cocaine, the court also ruled in favor of judicial discretion to impose more lenient sentences than federal guidelines recommend.

In a third case, the court unanimously refused to broaden the impact of a law that adds extra prison time to the sentences of drug traffickers who use a gun in carrying out their crimes.

Is it possible some sanity has slipped into federal sentencing guidelines? Is it possible for judges to recognize that drug addiction, specifically crack addition, is a medical problem rather than a criminal problem?

Here's hoping the federal government is on its way to embracing a humane perspective on illicit drugs, drug abuse and drug treatment. However, it's not yet clear what new limits exist. Can judges effectively decriminalize convicted crack buyers/users by reducing their sentences to time served up to their convictions? Or must they impose a minimum period of incarceration?

Meanwhile, using a gun in the commission of a felony should raise the penalty stakes. Even 22-caliber handguns have the stopping power to kill victims. Thus, a victim looking into a gun barrel is facing possible death, even if he/she surrenders to the felon's demands for ATM cards, cash, jewelry or other objects of value. Pro football player Sean Taylor died a few weeks ago because the bullet that struck him hit his femoral artery, the major artery in his thigh. He died from blood loss, which could have happened due to a wound from a 22-caliber bullet striking him or due to a 9 mm slug tearing through his leg.

To use a gun -- a device capable of killing a human target -- to scare innocent victims into submission and compliance should lift the penalty. A felon facing sentencing for a crime committed with the use of a gun should serve as much time as one convicted of attempted murder with a deadly weapon. Stiff sentences should apply even if a felon does not fire his weapon during the commission of a crime. Long lock-up times are the best protection against subsequent crimes committed at gun-point.

Saturday, December 08, 2007

Bewilderment, Outrage, and Confusion

Clinton Hostage Crisis

Speaking at the Sheraton Hotel in Portsmouth, N.H.,late last night, Clinton said she felt “bewilderment, outrage, and confusion” upon learning that some of her campaign workers had been taken hostage.

“These were my staff members and volunteers. It was, for me and my campaign, an especially tense and difficult day,” Clinton said. “We’re immensely relieved that this has ended peacefully."

Bewilderment, outrage and confusion. The words of the woman who wants to become Commander-in-Chief. Great start. How often can we expect those feelings to overtake the woman who dreams of heading the nation?

How long would it take for the haze of bewilderment to lift from her brow if terrorists hit the US again? Would her outrage last long enough to order the military to counter-attack? Or would she retreat into confusion? What would she do about the weather? A hurricane in the Gulf of Mexico aiming for New Orleans? Would she order the population to run for their lives?

How about people who default on their mortgages? Would she find their predicaments bewildering or confusing? Would she alleviate bewilderment and confusion through the intervention of the federal government in financial markets? Would she seek to void legally valid and binding contracts between borrowers and creditors? Bewilderment.

CompUSA is closing its stores. It's over. Beaten by Best-Buy and Wal-Mart. Would she support special financing for CompUSA? What does she think of Wal-Mart, the employer of one million workers in the US? Outrage.

The auto industry is changing in many ways. From our perspective, the loss of American dominance is a major change. On one hand, the Germans bought Chrysler for about $38 billion, aiming to refashion it and increase their presence in the US market. On the other hand, after seven years of struggle, the Germans dumped Chrysler for a net amount of about $1 billion. A giveaway price. They were unable to manage the US labor market, among other problems. Meanwhile, Toyota surpassed GM as the world's largest car-maker. Does she understand economics? Confusion.

She is the same woman who did told the nation her husband did not have sex with that woman. In other words, she is either a world class liar or the dumbest wife in America. The evidence suggests she is both.

She claims to have mastered futures trading after studying the topic for an hour at the knees of Don Tyson, head of the Tyson Chicken Company. Proof of her mastery arrived soon after his tutelage ended. She multiplied a $1,000 speculation into a $100,000 profit her first time in the game. Warren Buffett laughed.

Is it possible there are enough willing dupes in the country to elect this woman to the presidency? I sure hope not. Would voters elect a woman who thinks a drunk with road flares duct-taped to his body is cause for bewilderment, outrage and confusion? I hope not.

Rebuque, Iowa

Hillary wins or does not win the Iowa Caucus. Either way, unless she spontaneously self-destructs or is struck by some horrible tragedy, she is heading for the nomination. The other candidates are merely providing side-show entertainment while hoping the gods intervene to destroy her candidacy.

So, What's a Caucus?

Democrats Try to Spur Iowa Turnout

December 8, 2007; Page A4
Rebuque, Iowa

In the sprint to the first-in-the-nation caucus on Jan. 3, the three top Democratic candidates, running in close to a dead heat, are marshaling armies of surrogates to help get out the vote and boost participation in a Byzantine process that has never attracted more than 6% of the electorate.

While the three front-runners -- Mr. Obama, Sen. Hillary Clinton and former Sen. John Edwards -- are all employing many staff members to get out the vote, the organizational edge may go to Mr. Obama. With 37 local offices and nearly 300 employees, he has assembled the largest ground staff the state has ever seen.

Organizationally, the Obama strategy was on view this week in Cedar Falls, where the candidate stood on a makeshift stage in a campus gymnasium and pleaded with 1,200 students at the University of Northern Iowa to give up a portion of their winter vacation and caucus for him.

"Every four years, students say they're going to come out and caucus and they never do. I'm only going to win if all of you caucus," Mr. Obama said.

"How do we caucus?" a student shouted.

Fair question. One of the most important nominating contests is also one of the most complex. Voting in Iowa has proved a turnoff to college students in the past. Fewer than 5,000 eligible voters between the ages of 18 and 24 turned out in 2004, when a record 124,000 people caucused, the state Democratic Party says.

Coaxing voters to caucuses is difficult. Unlike primary voting, caucusing can take hours, often starting with party business before any decisions. Democratic candidates are subject to a so-called viability rule; if they don't garner at least 15% of the votes in a precinct, their supporters must choose their second-favorite candidate.

Mr. Edwards may enjoy an edge on caucus day because polls show that more of his supporters have been though the caucus process before. Pollsters judge these "chronic" voters as more reliable.

Friday, December 07, 2007

News Flash -- Mortgage Sky NOT Falling

Default. Foreclosure. Evictions. Every media venue is clogged with stories about people who are behind on their mortgage payments, who have defaulted, who are facing foreclosure and eviction from their homes.

How bad is it?

According to today's (12/7/07) Wall Street Journal:

"Subprime adjustable-rate mortgages continued to have the most problems, with 4.72% of those loans starting the foreclosure process during the quarter. Those mortgages represent 6.8% of loans outstanding but accounted for 43% of new foreclosures during the quarter."

Okay. The Journal claims that 6.8% of all mortgages are Subprime Adjustable-rate Mortgages. Thus, out of 1,000 existing mortgages, the Subprime Adjustables financed 68 homes. The Journal also states that 4.72% of the Subprime Adjustables went to foreclosure in the latest quarter.

In other words, 4.72% of the 68 homes purchased with Subprime Adjustables entered foreclosure. That's 3.2 mortgages out of 1,000. Or, since it's not likely a fraction of a mortgage is in foreclose while the remainder is healthy, 32 out of 10,000 mortgages went into foreclosure in the latest quarter.

The article also says the 32 troubled Subprime Adjustable Mortgages amount to 43% of the total entering foreclosure. Thus, out of 10,000 mortgages, 74 entered foreclosure.

Is this a problem?

Putting it another way, the numbers show that 99.26% of all mortgages are performing. More significant is the fact that as foreclosures rise, the number of non-performing mortgages will decrease as the foreclosed homes are purchased by solvent buyers.

Where's the problem?

A small group of former owners may once again become renters. Meanwhile, it's just as likely that a small group of former renters will become owners if they purchase the foreclosed homes at discounts to recent neighborhood prices.

Where's the problem?

How did we get here?

There was a time -- a few decades ago -- when a bank issuing a mortgage held that mortgage on its balance sheet until the home was sold or paid off. Secondary markets did not exist. Thus, if a bank issued a mortgage to a borrower who later defaulted, the bank was stuck with real estate it did not want.

To minimize the risk of defaults, banks offered mortgages to only their most creditworthy customers. Banks further insulated themselves against real estate risks by refusing to lend money to purchase houses in questionable neighborhoods. The upshot of these sensible policies was twofold. First, non-whites were far less likely to meet the credit standards of banks. Thus, they got few loans. Second, whole neighborhoods were judged as bad bets for lenders. Hence, red-lining.

Banks are in business to make money for their owners. To lend money to borrowers who will return it with interest. Better to be safe than sorry is the banking mantra.

What did these policies bring?

Polarized enclaves. New York City evolved into a collection of neighborhoods that were either good, starting to decay, or in some state of despair and delapidation. The race of residents usually told the story.

But today, NY City is a city of well over 8 million citizens, all of whom are living in neighborhoods that have been on an upward economic trajectory for the last 15 years.

What changed?

Mortgage lending. Why? Declining crime rates, improving economy. But a key change occurred in the credit process. Securitization became the standard practice. Secondary markets for all forms of financial assets arose. Thus, bankers were able to issue mortgages and sell them in new secondary market, freeing the banks from certain risks. Investment companies were able to buy those mortgages and bundle them into huge pools of interest-paying securities, minimizing the impact of the occasional defaulted mortgage.

Banks were free to issue mortgages on properties in troubled neighborhoods. They were relieved of the risk of holding mortgages on questionable properties. But they were able to obtain funds for buyers and earn fees. The arrival of secondary markets and securitization was the end of red-lining. No neighborhood was off-limits to buyers who needed a loan to acquire property.

Moreover, other antiquated banking rules were repealed. Many banking rules put geographical limits on lending by individual banks. Thus, a bank often held a near monopoly on lending in the neighborhoods surrounding its branches. But secondary markets, securitization and new banking regulations that increased competition changed all that.

Buyers had choices. Instead of one or two local banks from which to seek a mortgage, buyers were faced with too many to count. Commercial banks, savings banks, savings & loan associations, credit unions, mortgage banks, mortgage brokers, Wall Street brokerage firms, credit card companies. All of them in the mortgage business.

There were still questions, however. Buyers were rated. What's today's most often asked question? Once it was your zodiac sign. Today it's your credit score. Like it or not, almost everyone has been profiled for creditworthiness. As consumers we might have a long history of borrowing and repaying. Or no history.

Either way, there's a lender willing to supply capital to almost any borrower. For a price.

There's also another factor in play. When it comes to the price of an object, its price reflects the amount of money available to pay for it. Thus, housing prices will rise in tandem with the number of people able to obtain mortgage money. Therefore, it's no surprise that home prices have risen a lot over the last 15 years.

Will housing prices drop due to foreclosures? If so, how much? Sure. So what? The downside isn't really a downside at all. It's nothing less than a temporary sale. A January White Sale for housing. When prices are perceived as bargains, buyers will rush in and prices will begin to rise again. Does it matter if it takes two years before prices set new records? No.

Meanwhile, for years many elected officials charged the lending industry with bias and accused it of discriminatory lending practices. The arrival of secondary markets, securitization and heavy competition among lenders solved that problem. Home ownership among blacks and hispanics has increased faster than home ownership among whites.

Ironically, with defaults and foreclosures rising, the same politicians are accusing lenders of a new form of malfeasance. Easy credit, no questions asked. The old crime was tightfistedness. The new crime is improvidence.

There ought to be signs of indignance coming from blacks and hispanics about this. The subtext of the new crime implies the victims of these easy credit schemes are too dumb to know they should not borrow money to buy homes. Apparently the troubled borrowers were expected to believe that getting a mortgage fell into that "too-good-to-be-true" cateogory of offerings.

Were some people scammed? Certainly a few were. But no lender can earn profits from people who fail to repay loans. However, there are critics who seem to think some businesses can make money by losing money.

Why are people in default? Lots of reasons. Some simply cannot afford the payments they face after the Subprime Adjustable Mortgages adjust. But what is unclear is the percentage of people who refinanced existing homes with Subprime Adjustable Mortgages as a strategy to extract equity from their appreciated properties. How many of them are in trouble now? On what did they spend the money they obtained through refinancing? It matters.

How many borrowers borrowed everything, including their downpayment money? Many programs exist to help buyers get their first homes. They usually include downpayment cash. Thus, borrowers often kick-off their home-ownership with zero or even negative equity to cushion them against setbacks. If a buyer with no skin in the game loses his house, he simply returns to his previous life as a renter without losing a dime out of his pocket. Thus, he speculated on home-ownership and failed. At no cost to him. In other words, many defaulters have shown full understanding of the value of OPM -- Other People's Money.

Hey, for them, things could be much worse. They could have wagered their own money. But they didn't. Quite a few homes were financed with 100% OPM. Donald Trump applauds. Who wouldn't want to purchase valuable assets financed entirely with OPM?

Enter the Government. Washington has reluctantly agreed to step in. That's bad news. However, it appears that help for troubled homeowners will come in small doses. That's better. But any safety net will encourage more people to jump. Today it appears that only people who have not defaulted will be eligible for assistance. Imagine the surprise when people who had been prepared to pay the higher adjusted rates of their mortgage contracts opt for the free pass offered by Washington. Oh, I can pay my introductory teaser rate of 1% for another 5 years? Yippee. Where do I sign?

We are deep in the grip of a media-driven hysteria. The only role for Washington in this time is one aimed at keeping order while the private sector develops strategies to solve the problems. Unfortunately, this is the same federal government that lacks the will to reduce the threat of punishing oil prices by expanding oil drilling in the US.