Hello, again.  I have been busy with some other things and haven't written anything.  However, I have visited some interesting sites and I did watch the Obama 'infomercial' last night.  Frankly, I was impressed.  First thing I noticed was the absence of party affiliations with all of the politicians who provided sound comments.  I know some of them were Republicans but no one was labeled.  Second, nothing was said by anyone about the Republican Party, the Republican Candidate, or the Republican President.  Obama's comments were tightly focused on the problems Obama thinks are critical and his notions of how they should be addressed.  McCain's comments, so repeatedly and thoroughly covered by the news media, appeared to be so many sour grapes.  I don't think the World Series is so important that a serious candidate cannot delay a game to address voters with a paid ad.  Eric Alterman noted yesterday in his Altercation blog that the game itself was not delayed, just the pre-game show and one of the opening games of the football season was moved to accommodate his own acceptance speech at the convention.  Lets get real here: sauce for the goose is sauce for the gander.  

I am also very unimpressed with McCain's criticism of Obama for not following through with his pledge to accept public financing.  Why should he?  According to several fairly reliable bloggers McCain tried to weasel out of the public financing program when he nearly ran out of money during the primary season.  Unfortunately for McCain, Obama's message of change resonated with so many people that his campaign generated undreamed of contributions.  Perhaps, now that the Republicans are on the short end of this stick, they will have some motivation to change how campaigns are financed.  I do think that it is obscene how much money candidates have to raise and spend to get elected to serve the public.  An old saying tells us 'he who pays the piper calls the tune.'  It is all too obvious who has been paying the piper for all too long.

It is now Nov. 1.  Various things got in the way of continuing this post.  Oh, Well!  Life does happen.

For some time now Mom and I have asked one question over our morning coffee:  when will the credit card debt start collapsing.  It is, of course, the next big sword hanging over our economic heads.  John Mauldin's 'Out of the Box' gives a good idea.  Sorry I can't link to it directly.  I subscribed to it some time ago and get it by e-mail.  Some of the more frightening aspects of the data he puts out concern credit card debt.  Most of the growth of the U.S. economy has been fueled by withdrawals of mortgage equity by home owners who borrowed on the rising value of their homes to fund their lifestyles.  With the crash of home prices, consumers shifted to credit cards. The following two points are crucial: 

 "* Credit Card Loans, 10 months Sep07-thru-Jul-08 ... up + $29.1 billion

   * Credit Card Loans, 10 weeks Aug-08-to-mid-Oct-08 ... up + $32.3 billion"

Mauldin notes that credit card defaults have doubled for American Express and more than doubled for Band of America.  And that the options for either McCain or Obama are really limited.  Both have made expensive promises but the deficits are already exploding (and have been throughout the Bush years).  I am not entirely convinced that small businesses will take as big a hit as Mauldin thinks they would in an Obama administration.  But then I am not so sure that the figures used to gauge the effect of small businesses on job generation are all that accurate.

Mom and I noticed an interesting phenomenon, however.  Over the last month or so we have seen fewer of those annoying Visa ads that show the world stopping when anyone uses cash or checks.  In fact there have been far fewer Visa ads since the Olympics ended.  And most of the American Express ads are targeting potential business customers. 

I read and watched some of the accounts of Greenspan's testimony before Congress yesterday.  I don't think I have ever seen a more bewildered and shattered man.  Do you remember the line from 'Silence of the Lambs' concerning assumptions.  "Assume makes an ASS of U and ME. "  Well, Greenspan's assumptions certainly made an ASS out of someone.  I thought his most pathetic statement was the one where he said he didn't quite know what went wrong.  I can tell him and very likely any other moderately informed and perhaps a little cynical person could also.  His basic assumptions, his 'articles of faith' to use an apt religious metaphor, were flawed from the beginning.  Greenspan thought that self-interest would ensure that each party to any financial deal would rigorously examine the particulars of that deal to safeguard the profits and stability of his institution.  That assumption rests on a couple of other faulty assumptions.  First, that the deal was transparent enough for the parties to accurately gauge the value of the deal.  Second, that the self-interest of the individuals involved was tightly aligned with the self-interest of the institutions on behalf of which they acted.  Anyone who has followed the meltdown knows by now that the various financial instruments (credit default swaps, whatever) were anything but transparent.  No one knew for sure what any of them were worth. Regarding the second assumption, I think that anyone assuming that the hired guns running the various institutions had any self-interest tied to the long term performance of their employing institutions was and is seriously deluded.  Executive pay packages have been scandalous for over a decade, even for those who have managed to perform well.  And many have been rewarded for poor performance with golden parachutes and bonuses completely divorced from results.  Worse, when they leave they walk away with the remainder of their contracts no matter what the condition of the company they ran.  A basic rule of logic is that when the assumptions are false the conclusions cannot be anything but false.  Unfortunately, Greenspan evidently never took a course in logic.

I compared Greenspan's assumptions to religious articles of faith above.  Archcrone at The Crone Speaks echoes this comparison.  The blame game is on and you can tell which church the combatants worship in by who they want to blame.  The Republicans blame Freddie and Fannie, the Community Reinvestment Act, the nefarious poor who hoodwinked innocent bankers into giving them mortgages they couldn't afford based on 'no income/no assets' standards,  or the ghastly specter of an Obama victory which has spooked all those capitalist true believers who are selling stocks in quantity.  Of course they attach no fault to their own policies.  Like Greenspan they fervently believed in deregulation.  Unlike Grenspan, they can't quite bring themselves to recognize their own faulty assumptions.  The Democrats blame the rampant deregulation of the last fifteen years.  On the whole the Democratic version appears to me to reflect reality while the Republican version does not.  Unfortunately, it appears that certain people can no more question their economic faith than they can their religious faith.

Well, Sarah and John have pounced all over Joe's prediction that if Obama is elected he will be tested 'as John Kennedy' was tested in the 1960s.  My, my, what a surprise.  I do think Biden is right that the new President, which ever is elected in two weeks time, will be tested.  Unfortunately for the McCain/Palin camp I definitely do not want 'Quick Draw McGraw' McCain and the Beauty Queen Palin responding to those crises.  I like the prospect of measured, thoughtful, adult responses.  We have had much too much of the shoot-from-the-hip, knee-jerk kind of response that all too often results in our President shooting us in the foot, or the ass, or the pocketbook.

I have just been over to Tom Englehardt's tomdispatch blog reading his 'report card' on the Bush Administration's Global War On Terror.  Talk about friendly fire, I think we have all been 'fragged.'  

I can also say that I am not very surprised or impressed by McCain's and Palin's recent attempts to define Obama's economic policies as 'socialist.'  For years we have suffered through repeated tax cuts for the wealthy and tax increases for the less than wealthy but no one talked about socialism.  Somehow, it seems, taxing those who have little to give to those who have much isn't socialism.  Certainly McCain, who by his own admission voted for Bush policies '90% of the time,' is making, by implication, that claim.  Now he claims that he doesn't want to tax anyone.  Really??  How, then, will he pay for his programs which are largely left overs from the current administration?  His recent singing from the Populist hymnal is very unconvincing.  Too little, way too late.  And, I suspect, way too insincere.

PureLandMountain has an interesting graph and it does, as he says, explain a lot.  No wonder tuition is so high at the nations' colleges and universities.  Although the ultimate source for the graph is PHD Comics, the graph may not be far fro reality.  Many years ago, when I attended a University that I won't name, the University President held the equivalent of a town hall meeting to defuse the rising tide of dissatisfaction students were expressing over the large amount of money the University was spending on a perennially losing football team.  He repeatedly told us that the money spent on football paid for itself.  I asked him how he could claim that when the University spent $1.5M on the team and only got back, by the University's own figures, $500k.  That seemed to me a deficit of $1M.  All he could say in reply was he was sorry I 'felt' that way.  I guess my advanced degrees in science didn't provide me with the expertise required to do such elevated math.  

I am continuing today (Thursday) what I started yesterday.  Sometimes I just don't have the time to finish off what I start.

Archcrone at The Crone Speaks has a blog post that hits the nail on the head and says much of what I have been thinking about our economy for a very long time.  We have a very peculiar brand of capitalism now.  One which exists only because more and more people used credit to maintain a middle class or higher level of consumption.  We are beginning to learn the answer to the question I have frequently asked: what happens to a consumer based economy when the consumer can no longer consume in the heroic style to which we have become accustomed?  Another thought: why is it not considered fraud to make deceptive offers of credit cards to economic fragile and possibly desperate people?

This is amusing from The Australian.  Australia has been in the grip of a prolonged drought and now the authors of a government study wants people to stop using the word drought because it 'depresses' farmers.  Instead they want to encourage the use of 'dryness' instead.  Rather reminds me of the gyrations economists go through to avoid the word 'depression.'  How many kinds and levels of recession do we have to go through before someone decides to ignore the lipstick and call a pig a pig? Note: I find the linguistic contortions amusing NOT the drought.  I am glad to see that some are resisting the notion.  They are also debating the effectiveness of government programs to help drought ravaged farmers. 

Talking about code words and the creative use of language to hide rather than illuminate, take a look at Helen's latest entry at Margaret and Helen.  She is right on and we have had scads of trash talk ever since St. Ronald railed against the 'welfare queens.'  Now we have McCain ranting on behalf of the poor Joe the Plumbers while proposing programs that would leave Joe and his brothers and sisters in the dust while transferring more wealth up the economic ladder.  I don't care much for taxes either but, like Helen, there are amenities those taxes pay for which are necessary. I do like properly maintained roads.  I would like an education system that really educated.  I would love a health care system that worked for more than those who have, however tenuously, insurance or the money to buy whatever services the wanted.  I also think that a system that acts on the old Ebenezer Scrooge sentiment (If the poor are like to die without assistance, let them get on with it and reduce the surplus population) is a very unChristian, and immoral one.  If that is the essence of Capitalism I will take socialism any day.

Enough of my jaundiced rants for today.  See you all next time.

I just approved a comment by Timothy on my post for sometime back in January of this year on the best politics money can buy.  It was simply a notice that the early/absentee voting systems' deadlines is approaching.  I have a general policy that I will approve any comments unless they are abusive.  However, I decided to re-read the post because I had forgotten what I wrote.  It was interesting how much remains the same just ratcheted up a notch or two.

The news this morning noted that an oil company is 'suffering' because the price of oil has dropped by about 50% since about July so it is cutting its work force.  Our comment over coffee this morning?  'Great!! (sarcasm here)  People can now buy gas but they are unemployed.'  We also noticed that this is an industry that had record 'profits' over the first two quarters this year.  (Sorry, I didn't hear which company was mentioned or if the situation is industry wide. I may find out later.

In the wake of the debates and Joe the 'Plumber,' Senator McCain has been trying to make some headway on the issue of 'spread the wealth.'  That is, he is trying to paint Obama as one who would take the hard earned money from the middle class and distribute it to those who don't deserve it (remember the 'undeserving' poor I have mentioned before?).  This post by Dean Baker on TPM Cafe notes that the lions' share of the redistribution to date has been from those lower on the economic food chain to those higher up.  And the bail out package just continues that pattern.

I caught an interesting few minutes of a discussion on CNBC yesterday.  The topic for that segment of the Sunday morning talk show was 'Who was to blame for the mortgage mess?  Greedy bankers or Greedy loan applicants?'  Of course, this is the kind of question which will never get answered to any one's satisfaction.  It implies an either/or answer when the real situation is much more complicated.  I don't doubt that there were greedy bankers AND greedy loan applicants some of whom were moved by their greed make fraudulent or nearly fraudulent loan deals.  However, the commentators moved away from the greed angle to another which was, to my mind, a more fruitful discussion of how much the ordinary consumer really knows about the ins and outs of mortgages loans.  Two of them recounted their own experiences shopping for loans.  One remembered how much pressure the person she was negotiating with put on her to accept an adjustable rate loan with a very low teaser interest.  She managed to reject it for a fixed rate loan.  Another recalled how he was cajoled into an adjustable rate loan which he was able to convert to a thirty year fixed rate when he realized what had happened.  They both noted that if this could happen to them, seasoned financial professionals, what could happen to those who were not so knowledgeable.  

Thankfully the presidential/vice-presidential debates are done.  They were, on the whole, unenlightening.  I found out less from them than I had going to the various campaign sites.  The last one was the best.  I will agree on that.  And John McCain turned in a better performance than he had in the previous debates.  However, that performance did nothing to convert me into a McCain supporter.  I will make a few observations.

First, if McCain hoped to appear confident, commanding, and thoughtful, he failed totally.  What I saw was a man who desperately wants to be president and will say and promise anything to get there.  He appeared smug and condescending.  His fake look of surprise when Obama told him that businesses making less than $250k under the Obama plan would pay no increased taxes was totally off-putting.  He was informed of that fact in the last debate and evidently wasn't listening.  

Second, I am not convinced by his apparent conversion to 'Populism Lite.'  The items he incorporated into his proposals to appeal to middle-class voters are too little, too late.  And I wonder how many people noticed that his proposed middle class tax cuts were paired with a 50% cut in the capital gains tax?

Third, I loved George Will's comment concerning 'historical amnesia,' which he attributed to both sides, rightly.  McCain showed his amnesia by repeating the conservative cant that Freddie Mac and Fannie Mae initiated this global financial meltdown we have been watching.  I have seen several very good articles which show that they were part of the problem but not the precipitating factor.  Go to this link courtesy of Eric Altermann for some of the details.  As Will pointed out, this crisis has been festering for the better part of the last 40 years under both Republican and Democratic administrations.

Fourth, if McCain isn't concerned about the 'washed up old terrorist' in Obama's background why have he, his running mate, and his campaign made such a big deal of it?  Once a very long time ago I was involved in a graduate seminar in which I made a similar big deal out of a tangential point and then back tracked to the 'well, I am not really concerned about THAT.'  My about face did nothing for my position and McCain's did nothing for him.  I would also suggest to Senator McCain that we really do NOT need to exhaustively examine every little detail of HIS life or Senator Obama's to know for whom to vote.  After all, McCain surely can't be entirely proud of his association with Keating and the savings and loan scandal.

Fifth, I notice that McCain is still boosting nuclear energy.  I have a question for him.  What does the U.S. Navy do with its spent fuel?  The major problem I have with the whole notion of nuclear energy is disposing of the waste.  By the way, what did a pilot have to do with the nuclear power plant on his ship?  What kind of expertise does his experience really give him?  

I noticed that MarketWatch and the morning news noted that OPEC has moved up the date of its regularly scheduled meeting.  It had been set for next month but will now take place next week.  Is anybody surprised?  In classic economics, where price is determined by supply and demand,  if the demand falls the only way to keep prices high is to reduce supply.  Of course, I have been wondering, along with others, just how connected supply and demand have been lately.  I guess we will find out.

As I promised, here are some more photos from some of the small festivals and shows we saw over the past month.  These ladies are from one of the local quilt guilds.  The oldest, in the center, has been quilting for only a couple of years having come to the craft late in life.  One of these days I will have to try hand quilting.  Once I would have said that I don't have the patience.  All of my quilts to date have been machine pieced and machine quilted.  But I am currently working on a small piece that is hand pieced.  Who knows? Hand quilting may be just around the corner.

Some of the festivals encourage kids to try the crafts.  These two are trying their hand at hand-dipping candles.  Mom and I came too early.  Later in the day we might have seen more vendors and visitors. 

Every year the Sunset Hill Farm park holds several festivals.  This picture came from the Harvest Festival/Antique Power Show.  Unfortunately,  you can scratch the 'Harvest' part since it was more flea market than harvest.  They had a very large array of vendors but most of the merchandise was mass produced.  This machine looks like some kind of steam tractor.  That cone at the back is actually a fall of hot, steaming water.  

This painter is one of the local artists that showed her work at the Sunflower Art Festival at the Art Barn.  I have more pictures of the more interesting exhibitors that I will include on a later post.  This lady is clearly enjoying herself.

The kids here are obviously enjoying the greyhounds brought out by the local chapter of a Greyhound Rescue group.  I think the greyhounds are enjoying the kids and the attention.

You may notice that I have a new photo in my header.  My last photo was a picture I took of a quilt block I made for a quilt I finished earlier this year.  I thought it was time for a picture of a new project.  I finally got the photo transfer process to work and this is one of the quilt blocks I made from family photos.  I will show the quilt when I get it done.  I shouldn't say that I finally got the process to work.  I finally was forced to admit that the easiest way to get what I wanted was to use the commercially prepared solution to fix the photo print onto the fabric.  I tried some of the least caustic mordants but nothing home made worked. 

Some readers may remember the dragon I used to have on the header.  I decided to change because I realized that the work I was showing wasn't mine and I had no idea where I got the original image.  I have read too often on the needlework blogs about artists who have found their work appropriated without permission by others who exploited it for their own profit.  I don't want to have anything to do with that kind of theft.  Instead, I will include only my own work in my bog or that of others from whom I have permission or to whom can give credit for the work.

I think it is time for a change of pace.  I am so totally pissed off with both politics and economics that I don't even know how to express myself on those topics.

The fall color is almost fully developed here and now.  A month ago we began to see some of the changes.  Some trees changed almost overnight, almost with the kind of drunken enthusiasm the stock market had the few times over the last month when it went up.  Those trees are nearly bare now surrounded by the irregular circles of fallen leaves.  We passed several such on our walk this morning and crunched our way through the leaves where the passage of other walkers had created two channels along the path.  I love watching the trees change.  The change last year was much less than spectacular because we had had so little rainfall.  Perhaps the color this year is one of the few good gifts of Hurricane Ike.  Some of the trees change from the top down.  Others change in stripes while still others take on a painted pony appearance with blotches of bright color in the green.  We have a few still hanging on the the summer foliage but even they are showing reluctant edges of color.  They will eventually change protesting all the way.

When I first came back to this area we visited some of the bigger festivals in Chicago.  The Taste of Chicago was a disappointment.  Much too expensive, much too crowded.  We enjoyed the Tall Ships but the lines to see the ships were so long.  The one we enjoyed the most was the Celtic Fest.  But with the changed economic times such trips to the big city have become too expensive and we have been staying closer to home.

This picture is from the Popcorn Festival, Valparaiso's yearly tribute to Orville Reddenbocker, who I understand was a home town boy.  Unfortunately, many of the booths had signs that asked us not to take pictures.  Some of the local artisans showed their wares.  However, most of the vendors displayed goods that may have been hand made but were hand made in China.  Our verdict: the music was too loud, the booths too commercial.

This girl is making apple butter at the Pioneer Park Harvest Festival.  We spent about an hour here watching exhibitors crocheting rag rugs, quilting, making some kind of Indian bread, cooking up a huge pot of ham and beans.  Unfortunately, if their blurb in the festival directory was accurate, many of the usual exhibitors did not show.  But we had fun talking to those who did.  The photo at the top is the lady who makes the rag rugs.  She had a lot of them for sale.  We didn't buy any because I am using my quilting scraps to make my own.

We have been to other festivals and I will include pictures of them on a future post.

I found the link to this New York Times article on MSNBC this morning.  Reading it I got the sinking feeling that we may look back on the year of hanging chads with some nostalgia.  Over the last seven years I have read several articles about concerted efforts by, usually, Republican officials in Red states trying to trim the voter rolls, usually, to the detriment of the Democrats.  Though the NYT did not find evidence of an intentional bias, I am such a suspicious old biddy that I can't help but wonder.

This article from the International Herald Tribune boils down the reasons why all the frantic activity of governments around the world may not put our shattered financial system back together.  At least not to the extent that we can resume the business that has been normal for the past forty or so years.  Over the last few years, when Mom and I discuss the economic events over our morning coffee or evening news programs, I have often asked: what happens to a consumer driven economy when the consumer can no longer consume?  We may be on the verge of finding out given that the lion's share of consumption in the recent past has been facilitated by debt (credit cards, retail loans, student loans, and home equity loans.)

Continuing Friday, October 10. Above written Thursday.

As an adjunct to the above cited New York Times article take a look at Eric Altermann's 'Think Again' column here.  I have often thought over the last few years, since George Bush was elected, that much of the charges of voter fraud by Republicans was designed to reduce the number of Democrats, reduce the number of minorities and poor who often vote Democrat, and to frighten the groups trying to bring eligible but previously unregistered voters into the process.

I did watch the debates and I will say that both sides managed at various times to raise my blood pressure some.  Like the commentators after the debate, I noticed that John McCain's new plan to allow the Treasury Department to buy at risk mortgages and allow it to re-negotiate them so that the amount of the new loans reflect a more accurate current value of the homes is already in place, if the Treasury chooses to act on it, thanks to the recently enacted bail-out.  Oh, excuse me.  McCain and others of his persuasion prefer to call it a 'rescue.'  I also noticed that both candidates spent a lot of their time dancing around unpalatable issues: how deep the recession will be, how to 'fix' entitlements,' and whether to engage our enemies in conversations, to give some examples.  Not much heat there and no light.

I also noticed that he, like other Conservatives, are trying to fix the blame on Fannie and Freddie.  Perhaps they should read the article in Newsweek (found via MSNBC) by Daniel Gross who makes the very appropriate point that no legislation required anyone to throw away lending standards.  We have seen lenders go from 'verified income, verified assets' to 'stated income, stated assets' to 'no income, no assets.'  You can follow a link in yesterday's post to get more of the recent history leading to our current problems.  That article conceded that, perhaps, 10% of the loans involved scammers who got in under the last mentioned criteria.  I will also concede that point.  But then I have to ask: what about the other 90%?  Could that have been driven by the same mentality that made executives of AIG think they could give themselves a nice little spa/resort vacation AFTER getting that $85 billion bail-out? Gross does not let Fannie and Freddie off the hook.  He very properly points out that they were a part of a business culture that was (is?) corrupt to the core.  This paragraph I think sums up the problem: "There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb lending virus originated in Greenwich, Ct., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital."

I was surprised to notice one difference between the candidates last night.  McCain continued to present the economic crisis as one which revolves around credit and housing.  Fix those, he seems to think, and the whole thing will be fixed.  Obama tentatively broadened the discussion.  For the first time I heard a candidate mention jobs and the fact that fixing the housing and credit crises requires fixing the jobs situation as well.  I am amazed by how little the job market has figured into any discussion of the economy.

I just read Fran aka Redondowriter and she made me aware of a niggling thought that passed with only a brief moment's awareness last night: McCain's reference to Obama as 'that one.'  I think it didn't register more strongly last night because I was already mightily irritated because McCain was, again, so vague in his comments.  I have felt, as I have said before, that McCain thinks of us voters as mushrooms.  His vagueness and lack of specifics is simply reflects his disdain for the voters he is asking to send him to the White House.  However, this is the second debate in which McCain has demonstrated an utter contempt for his opponent.  I have to ask if it is really possible for McCain to effectively work with someone for whom he has so little respect.

I rather liked one interesting departure from the tip-toeing around an unpalatable question that has been so prominent in all the debates to date.  In the first Presidential debate both Obama and McCain tried to avoid giving a straight answer to the one about what of their pet projects they might have to scratch or significantly delay because of the economic crisis.  This time, however, in answering the question about what sacrifices they would ask Americans to make, Obama actually engaged the question.  I think his answer, centering on energy usage, was a good start.  But only a start.  We do need to question, examine ruthlessly, our energy usage and think about ways to reduce it.  But we also need to examine, equally ruthlessly, our entire way of life and make firm decisions to cut out the waste.  I don't think we, individually or collectively, have any clear idea of what is 'want' and what is 'need.'  We want whatever we see and we want it now.  If we can't afford it now, we buy it on credit.  We don't question that want.  We don't think about how that want really fits into our lives and whether it will really be useful.  I think about the two PDAs I acquired before I learned that the damned devices don't fit into my life, don't make my life easier or more efficient.  They are taking up space in my drawer.  Of course, if we all start examining our buying habits to weed out unaffordable wants and subjecting our needs to standards of thrift and efficiency, our consumer culture will have to change radically.  Not a bad thing, I believe.

Good morning, All. 

It has been an interesting month (and more) on the financial front.  I found an interesting article by way of Eric Altermann at Altercation.  It is a very long article but I think Dean Starkman lays the case out plainly:  the mortgage mess was due to a systemic change in the culture of the mortgage/banking industry.  I would go even further and say that the change has permeated our entire economic culture.  I call it the 'industrial model' of economic activity.  Maximum through put for maximum profits short term and sustainability be damned.  Morals be damned as well, as Starkman makes clear.  This article provides one reason to reject Governor Palin's determined effort to 'turn the page' and not look to the past.  How can we figure out what went wrong if we don't look at the past?  And if we don't get a handle on what went wrong, how do we fix it?

I remember when we thought it was scandalous that the dead voted in Chicago.  Now it seems some of them can get mortgage loans.  "Mike Garner: Then the next one came along, and it was no income, verified assets. So you don’t have to tell the people what you do for a living. You don’t have to tell the people what you do for work. All you have to do is state you have a certain amount of money in your bank account. And then, the next one, is just no income, no asset. You don’t have to state anything. Just have to have a credit score and a pulse.

[reporter] Alex Blumberg: Actually, that pulse thing. Also optional. Like the case in Ohio where twenty-three dead people were approved for mortgages."  (the quote is from a NPR piece Starkman cites for a glimpse at the history of the subprime quagmire.)

I have wondered for a while now when the credit card market would blow up.  We have heard stories for some time of people relying on credit cards to meet their monthly expenses.  Moms who use it to pay for groceries and elders for their medications.  This story from MSNBC today gives a hint.  Now American Express is factoring into their equation of credit worthiness where its card members shop and who holds their mortgages.  And it seems that the criteria are used as a sledge hammer rather than a scalpel.  The card holder featured in the story refinanced an adjustable rate mortgage into a fixed rate 30-year mortgage but was slammed because the mortgage was with the infamous Countrywide.  

As the price of oil fell in the market over the last while and settled yesterday below $90/barrel, I wondered what OPEC and other producers might do.  I thought it likely that they would reduce production to keep their prices high.  The falling of the demand for gas as we drive less would give the perfect excuse.  Archcrone at The Crone Speaks has found some evidence that that is exactly what is happening.  She is absolutely right that we should continue to economize on gas usage.  That may be an inevitable outcome considering the rising un/under-employment rate.  Though prices may fall at the pump, if we don't have the income we still cannot buy.

We only have another month of the longest political silly season (elections if you prefer) and I can hardly wait.  The McCain/Palin Campaign has decided to go nasty, as if it hadn't nibbled on the edges of nasty before.  They can't make any headway on issues so character assassination will be the tactic.  I have always been amazed at the grace of losers in the most recent elections who made nice after being savaged by opposing candidates or their Swiftboat supporters.  I would much rather tell the bastards to do unspeakable things to themselves and subject any proposals they made to intense and minute scrutiny before I would even consider supporting them.  I really resent how politics has been hijacked by 'true-believers' who use scorched earth tactics to win.  I almost expect to see them organizing a mass burning at the stake for their opponents.  I, for one, am utterly sick of it.  

It looks like the Senate has passed a 'rescue' plan that may actually get through the House.  I still think the whole thing is an exercise in futility.  We have been in a recession no matter what the cooked and massaged figures the Government puts out say.  The economy is out of balance in more than just the credit markets and the plan does nothing to deal with the deep systemic problems we face.  I did get a look at what a good plan might look like at John Mauldin's 'Out of the Box' e-newsletter.  He summarized at a study that examined bank failures world wide and came to some conclusions as to what did and did not work.  What doesn't work is 'dithering' and forbearance (as in suspending mark-to-market and other regulations), and purchasing bad assets to be managed by a management agency. What does work is targeted relief to debtors and recapitalizing the stronger bank while letting the weak ones disappear.  It looks to me like the plan put forward is long on what won't work and very short on what will.  And the worst of it is that even enacting those strategies that have a good record of success did not avoid economic pain.  Mauldin did link to another site that also covered the details of the study.  I haven't read it but will include it here so anyone who wants to can see more details.

C. Robb at Sustainable Living asks a very good question that has been lost in this whole mess: should we spend all that money to maintain a system that is unsustainable or should we spend it to somehow create a new more sustainable system.  To date, all our elected representatives and their functionaries have focused their efforts on getting the system humming along as it did before.  I think most would be happy to wind the clock back to spring of last year and ignore the fact that a large part of the population were already in dire straights while someone else was making the profits, the big salaries and getting the big tax cuts.  

It is now Friday morning.  I started writing this on Thursday morning for anyone who wonders. 

I did watch most of the debates last night, though by the end I wished fervently that they would wrap the blasted thing up.  I got in about twenty minutes late because we started a Charlie Chan movie and wanted to finish it.  Old Charlie was much more entertaining.  The pundits and political handlers set the bar so low that failure was nearly impossible for either candidate.  Neither side made any serious gaffs and neither delivered a knockout blow.  I don't really know anything more about Palin or John McCain than I did before the debate.  She totally failed to enlighten me with any specific information.  Nor did she deliver any specific information which would induce me to support the ticket next month.  I was glad to see Biden come out swinging on the issue of John McCain's 'maverick' status (NOT!!!.)  Palin's attempt to do a Ronald Reagan failed.  A condescending 'There you go again, Joe.' to rebut Biden's effective linkage of McCain to failed Bush Policies was weak in the extreme.  And how can we trust her and McCain to get us out of a mess that his support of Bush has helped create when she refuses to look at the past actions that exacerbated the problem?  The answers Biden and Palin gave to one question, I think, sums up the differences between the two through out the debate.  The candidates were asked to describe a specific instance when experience changed deeply held beliefs or positions.  Palin gave a superficial answer which vaguely mentioned a couple of situations in which she could not win a political battle and simply chose to not to fight what had become inevitable.  She did not change her view or her position.  Biden recounted how fights over judicial appointments changed his view that judicial philosophies of the proposed appointees should not be a consideration in the appointment to a view that those judicial philosophies were absolutely key to understanding how the potential judges and justices would rule on key issues.  Palin revealed nothing except perhaps a smug, self-satisfied, certainty which cannot be shaken by any real world experience and won't be confused by facts.  Biden reveals a character ruled by values that can change when experience shows that the values should be changed.  I like the latter far more than the former.