TS - Random Thoughts

Random thoughts on the passing scene:
Talk show host Dennis Miller said, "I don't dig polo. It's like miniature golf meets the Kentucky Derby."
Nothing illustrates the superficiality of our times better than the enthusiasm for electric cars, because they are supposed to greatly reduce air pollution. But the electricity that ultimately powers these cars has to be generated somewhere -- and nearly half the electricity generated in this country is generated by burning coal.
The 2012 Republican primaries may be a rerun of the 2008 primaries, where the various conservative candidates split the conservative vote so many ways that the candidate of the mushy middle got the nomination -- and then lost the election.
Because morality does not always prevail, by any means, too many of the intelligentsia act as if it has no effect. But, even in Nazi Germany, thousands of Germans hid Jews during the war, at the risk of their own lives, because it was the right thing to do.
In recent times, Christmas has brought not only holiday cheer but also attacks on the very word "Christmas," chasing it from the vocabulary of institutions and even from most "holiday cards." Like many other social crusades, this one is based on a lie -- namely that the Constitution puts a wall of separation between church and state. It also shows how easily intimidated we are by strident zealots.
If you don't like growing older, don't worry about it. You may not be growing older much longer.
What do you call it when someone steals someone else's money secretly? Theft. What do you call it when someone takes someone else's money openly by force? Robbery. What do you call it when a politician takes someone else's money in taxes and gives it to someone who is more likely to vote for him? Social Justice.
When an organization has more of its decisions made by committees, that gives more influence to those who have more time available to attend committee meetings and to drag out each meeting longer. In other words, it reduces the influence of those who have work to do, and are doing it, while making those who are less productive more influential.
Anyone who studies the history of ideas should notice how much more often people on the political left, more so than others, denigrate and demonize those who disagree with them -- instead of answering their arguments.
The wisest and most knowledgeable human being on the planet is utterly incompetent to make even 10 percent of the consequential decisions that have to be made in a modern nation. Yet all sorts of people want to decide how much money other people can make or keep, and to micro-manage how other people live their lives.
The real egalitarians are not the people who want to redistribute wealth to the poor, but those who want to extend to the poor the ability to create their own wealth, to lift themselves up, instead of trying to tear others down. Earning respect, including self-respect, is better than being a parasite.
Of all the arguments for giving amnesty to illegal immigrants, the most foolish is the argument that we can't find and expel all of them. There is not a law on the books that someone has not violated, including laws against murder, and we certainly have not found and prosecuted all the violators -- whether murderers or traffic law violators. But do we then legalize all the illegalities we haven't been able to detect and prosecute?
In the 1920s, Congressman Thomas S. Adams referred to "the ease with which the income tax may be legally avoided" but also said some Congressmen "so fervently believe that the rich ought to pay 40 or 50 per cent of their incomes" in taxes that they would rather make this a law, even if the government would get more revenue from a lower tax rate that people actually pay. Some also prefer class warfare politics that brings in votes, if not revenue.
Can you imagine a man who had never run any kind of organization, large or small, taking it upon himself to fundamentally change all kinds of organizations in a huge and complex economy? Yet that is what Barack Obama did when he said, "We are going to change the United States of America!" This was not "The Audacity of Hope." It was the audacity of hype.
Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com. To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2011 CREATORS.COM

VDH - America's Two Front War

America’s Two-Front War
by Victor Davis Hanson
Pajamas Media

America has the slows. Sometime about mid-2009 America began changing psychologically. True, to the naked eye, America retained the old hustle and bustle, but in an insidious fashion it began to think a bit differently. And that change in mentality explains in part why a year-and-a-half recession that officially ended in summer 2009 seems never to have ended at all.

In short, a sizable fraction of the upper-incomes is hesitant, defensive, unsure — and to such a degree that for a while longer it is not hiring, buying, or investing in the old way. It believes not only that there is no certainty in the tax code, the cost of new entitlements, or our national finance, but that even if there were their own successes would be suspect and earn antipathy rather than praise.

In mirror-image fashion, those of the lower incomes are likewise hesitant to take risks — unsure that the rewards of work in the private sector are all that much better than what government can offer through subsidies. The former group fears government will grow; the latter that it will not. The one suspects that Obama will confiscate more earnings; the other hopes that it will. Either way, there are fewer enterprising employers and fewer self-motivated galvanized workers.

The result of this two-front war is that America has been slowing down.

Or in crudely reductionist terms: the one asks “why hire another worker, when it is not worth it to pay out more in new healthcare costs and taxes down the road?” while the other answers “why get off unemployment or food stamps when it is more likely that they will be extended than curtailed?”

We now accept the notion of the peasant mentality — that all wealth is finite and more for someone means less for another. In this new them/us atmosphere, Barack Obama took the natural tensions between the classes and exploited them as few other presidents dared. Suddenly, there really were two Americas: the suspect top who made over $200,000 and the more noble majority below who made less. Lost in that cheap division was any notion of the value to others from those who did well, or the reasons why some prospered, or the fragility of their brief good fortune.

If the upper 5% paid nearly 60% of the income taxes, then the problem was more fundamental: how had they been so well compensated in the first place to have the wherewithal to pay such taxes? It did no good to remind Obama that confiscating all the wealth of the 1% would not end the debt, or that steep new income tax on the 5% per se will do little to balance the annual budget. His war was not about finding a remedy to his own profligate borrowing, but in retaining power through revving up anger at the better-off.

In the last three years, we have become so numb to Obama’s monotonous invective that it is now part of the national DNA: spread the wealth, fair share, fat cat, punish enemies, corporate jet owners, Super Bowl and Vegas junketeers, 1%, raise the bar, Grinch, millionaires and billionaires, at some point you’ve made enough money, no time for profit, and on and on. The subtext is always the same: the reason why, say, an orthodontist makes more than a Wal-Mart clerk is due to some sort of race, class, or gender discrimination, unfair advantage, or fatal flaw in the capitalist system, and only a technocratic elite in government retains the wisdom and morality to rectify that resulting inequality. One’s salary, then, is not quite his own, but more the collective’s — given that the professional’s good fortune results from an insidious system of exploitation from the moment he was born to the last bill he sent out for services rendered.

Republicans have no answer for all this, and the most recent polls reflect that fact. The more we watch Ron Paul talk about American culpability for 9/11, the more Newt Gingrich talks about hauling in federal judges for inquisitions, the more we hear that Romney is an opportunistic flip-flopper, the more a Cain, Perry, or Bachmann melts down, the more Obama plays cool — emerging from Hawaii or the golf links to sermonize on fairness while hoping that a Joe Biden, Eric Holder, or Steven Chu keeps his mouth shut for a little longer. In comparison to whom is to blame, it is as if near 9% unemployment, $16 billion in aggregate debt, pathetic GDP growth, a dead housing market, and a $1 trillion-plus steady annual deficit are no more than “whatever.”

Note here, however, that the president’s social sermonizing is predictably selective. On the top end, we hear about the horrors of the anonymous millionaire and billionaire, never of the real Jon Corzine who bankrupted MF Global, gave over $70,000 to the Obama campaign, and cannot remember what he did with over $1 billion of someone else’s money. In the world of Obama, human greed is not endemic, but of a particular conservative and grasping sort; in contrast, liberal conniving is always one of carelessness or can be recompensed by liberal activism.

So what I most resent in Obama’s pop socialism is not just its proven impracticality and moral pretensions, but its utter hypocrisy.

And the rub is not just that he sees no contradiction between railing at the 1%, while keeping utterly silent about a George Soros’s past, or a John Kerry’s tax evasion, or a John Edwards’ palatial digs, or Leonardo DiCaprio’s $75-million-a-year in recompense, or his own preferences for elite getaway spots and golf links. Rather, he seems to think that redistributionist rhetoric provides a sort of penance for the high life, as if we are all to go for a stint in reeducation camp — and in the Buffett manner express remorse over the system that enriched us, or in the Soros fashion to fund organizations devoted to stopping what we had ourselves helped foster and perpetuate, or more mundanely, to vote for an organizer like Obama, a sort of 3-5% tax-increase mordida that is the cost of doing business.

On the lower end, in the them/us war of Barack Obama, the president never stops to contemplate the impulses in flash-mobs that target high-end stores, or why the poorer off still have the capital to buy $190 sneakers, and will fight savagely to get them. Or why shopping days around Thanksgiving and Christmas have turned into bare-knuckles free-for-alls in a nation that apparently is ill-housed and ill-fed. For Obama, the massive importation of cheap consumer goods, the revolution in technology, the vast expansion of federal entitlements, off-the-books cash income, the redistributive help from relatives and friends, all these considerations simply do not factor and therefore cannot nuance his picture of a vast underclass without access to basic necessities, at once victimized by the well off and in need of far more borrowed federal redress.

In the last three years, we have also developed a different idea about collective national wealth. In material terms, America has never had so vast a supply of natural gas and oil, so many minerals, timber, and prime agricultural land. Yet now there is something deemed wrong in carefully tapping such riches, whether in Alaska, offshore, in the Gulf, or throughout the American West. There is no logic to this strange attitude. After all, the Obama creed is to use fossil fuels abundantly. He likes arugula. Hardwood floors and lithium batteries are nice. The administration hardly cares that the exporters of much of our imported oil are politically illiberal and environmentally reckless. Instead, there is a deep sense of pessimism that there is something inherently wrong with profiting from our own oil, gas, trees, minerals in the ground, or soil. Is it the idea that a few will do too well from the exploitation of national wealth that will so enrich the many? Or is the idea that our culture is too affluent, too crass? Will solar, wind, and biofuel energy along with forced reductions in resources alone make Americans live the lifestyle that is more in accord with nature?

For Obama, the great tragedy of a Solyndra was not the corruption of old-style fast-buck artists masking their greed through insider green lobbying with members of his administration, but rather that such scandals (along with Climategate and the implosion of Al Gore) have sidetracked the entire green philosophy that mandated more government unionized employees, government technocrats, and government tax collectors to reorder society itself.

The result of all this is a sort of unending but rarely expressed war. The business man does not know what his taxes are, only that they should go up, given his privilege. He is judged not by the good that he does but by the excessive money he makes. The corporation does not know what the rules of the game are, whether his energy is too polluting, his workers not unionized enough, or his product not regulated enough. None believe Obamacare, as promised, will reduce costs. None believe that government borrowing and massive new entitlements are reducing unemployment and raising GDP. None believe that wealth can be created by record deficits and aggregate debt. None believe that printing ever more money will not lead to inflation.

What we have, then, is a war on two ends: the better off are hesitant to work more, given their fears that additional profits will either be more difficult to come by or not remain their own; the poor are hesitant to work more, given their expectations that entitlements will be extended and will be easier to come by. They both expect more government and they both as a result are not so eager to take risks and seek greater income in the private sector.

The result of Obama’s war is the current three-year slowdown. Obama in response counts on two strategies to nevertheless be reelected: either at some point the private sector will conclude that it is not going to get any better, and thus it is preferable to shrug, take its medicine, and get back to work, and so the economy picks up a little in 2012; or, to the degree that Obama can blame the lengthy pause solely on the minority of the undeserving rich, he believes that an angry and fearful bare majority may agree.

©2011 Victor Davis Hanson

VDH - ODS

I’d say if you live in the United States of America and you vote for George Bush, you’ve lost your mind. — John EdwardsWhen does the legitimate “I oppose Obama” descend into the illegitimate “I hate Obama”?It is popular now to suggest that conservatives in general and congressional Republicans in particular suffer from an obsession characterized by an uncontrolled antipathy for Barack Obama — personal and visceral — that warps their entire political outlook. No doubt some do experience the same obsessions that infected the Left in their furor at George W. Bush. One can find unhinged posters at anti-Obama rallies similar to those at anti-Bush demonstrations. Bloggers can show hatred for Obama in the manner one found them despising Bush. Perhaps for Howard Dean’s rants about Bush’s supposed foreknowledge of 9/11, we have Donald Trump insisting on a fraudulent Obama birth certificate.

Truthers are analogous to Birthers. And for every conspiracy theory that Bush was continuing a long family tradition of profiting from Nazi trade, there was a suggestion that Obama was a Manchurian candidate planted here by Islamic interests to destroy from the inside the United States.But again, I am not talking about conspiracy rants and raves, but a general psychiatric affliction that infects the influential political class — politicians, journalists, and those in popular culture and the arts.  So how does one distinguish natural political opposition from a psychotic state?In other words, when will we know that popular opposition to Obama’s worldview and a dislike at the way he seeks to divide the country degenerate into the paranoid venom that was unleashed against Bush?

Here are some things to watch on the national scene to warn us:

1) Assassination Talk

Watch it when opposition to Obama evokes thoughts of assassination and is not countenanced by the conservative community. In other words, be on guard for the conservative equivalents of a Gabriel Range’s Death of a President — a docudrama imagining a hit on Barack Obama. Especially important is to note any positive reaction to such hatred, like a first-place award from the Toronto Film Festival.

And do not forget novels. We are in trouble when a mainstream New York publisher (say, an Alfred A. Knopf) publishes a novel in which characters fantasize about shooting Barack Obama — in the manner of Nicholson Baker’s Checkpoint. Important here, then, is the reaction to such expression of murderous hate. Keep on guard for a conservative Michael Moore who might suggest that 9/11-like mass murder is appropriate for Obama supporters (“If someone did this [9/11] to get back at Bush, then they did so by killing thousands of people who did not vote for him!”) or who might resort to teen-age trash-talking, such as “What I meant to say is that George W. Bush is a deserter, an election thief, a drunk driver, a WMD liar, and a functional illiterate. And he poops his pants.”
The point is not that there won’t be conservative deranged equivalents to Moore, but to watch whether such demonic figures are fully embedded within the conservative political establishment. If one were to substitute Obama for Bush in Michael Moore’s rants, would he then be invited as a guest of honor to the Republican National Convention? If so, we would have a good example of Obama Derangement Syndrome. Note too the spread of Obama tics into the entertainment industry: do Hollywood celebrities routinely in their award acceptance speeches, performances, and interviews interrupt to blast Obama in the obsessive manner of a Barbra Streisand, Matt Damon, Sean Penn, or Dixie Chicks?

2) Nazi Talk

Watch the Nazi analogies from public figures; they are good evidence of psychosis. Are there anti-Obama zealots like an Al Gore, John Glenn, or Garrison Keillor who without rebuke compare Barack Obama to a brownshirt or Nazi? If they do so, and go unchallenged, then opposition to Obama may be reaching afflictive levels.

3) “Hate”

“Hate” and “liar” are also tip-offs, especially when used routinely by mainstream public figures and publications. We saw a little bit of that with Rep. Joe Wilson’s quite crudely spontaneous “You lie!” outburst during a presidential address. So look to see whether prominent conservative journals — a National Review, Commentary, or Weekly Standard — are publishing the equivalent of Jonathan Chait’s reprehensible New Republic article: “The Case for Bush Hatred.” It began: “I hate President George W. Bush. There, I said it. I think his policies rank him among the worst presidents in U.S. history. And, while I’m tempted to leave it at that, the truth is that I hate him for less substantive reasons, too.”

Of course, Chait’s article was not that unusual (cf. David Corn’s “The Lies of George W. Bush” — “George W. Bush is a liar”). Should the National Review ever publish an article that begins: “I hate Barack Obama. There, I said it,” then we can properly conclude its editorial board suffers from ODS.

4) America is Guilty Too

A good symptom would be conflating opposition with Obama with hopes for the failure of the United States — in the way a Michael Moore openly rooted for those killing U.S. troops in Iraq (“Minutemen”) and suggested our losses were proper penance for supporting Bush’s war. So does anger against Obama equate to anger at America itself? David Axelrod sort of argued that Republicans are actively trying to subvert Obama’s efforts to revive the economy in a way that is not constructive for the country (e.g., out of partisan maliciousness rather than genuine belief that Obama’s remedies are hurting rather than accelerating the recovery). But when a Senator McConnell openly states his efforts are focused on replacing Obama, or a Rush Limbaugh proclaims that he wants Obama’s program to fail, there is at least some indication that they offer such harsh judgment in hopes that Obama does not continue to apply statist medicine that makes us, the patient, worse off.

And, of course, arguments over how best to restore jobs are not quite like those aimed at a nation at war. By that I mean a true Obama Derangement Syndrome sufferer might announce that the U.S. military should quit fighting in mediis rebus — in the way Harry Reid declared the Iraq War lost, or that Barack Obama announced the ongoing surge was an instant failure even as it began succeeding. So far, we have not seen anything like the “General Betray Us” ads, or comparisons of our military to terrorists and mass murderers that were invoked against the Bush war in Iraq and the war on terror by the likes of a John Kerry, John Murtha, and Dick Durbin.


When opposition to Obama’s interventions is such that it translates into the hectoring of U.S. troops, then, yes, we have a reached a psychotic state. One can agree or disagree with Obama’s Libyan intervention (I thought “lead from behind” was poorly planned out) but once the U.S started bombing, then surely it was important to win that war. If any wished us to fail in Libya because Obama was commander in chief, then they were pathological.

5) Congressional Hatred

Joe Wilson’s outburst, as I noted, was quite wrong. But have we reached the point where senior Republican Congressional figures express serial personal animus in the strain of Harry Reid? (“President Bush is a liar. He betrayed Nevada and he betrayed the country.”) I am not aware of any Republican senator, as yet, on the floor of the U.S. Senate, who has compared Barack Obama to Hitler, in the way Robert Byrd did so — and without rebuke from his own party.

6) That Was Then, This Is Now

Look at issues that are identically embraced by both Bush and Obama. Are conservatives suddenly damning Obama, not for his hypocrisy, but for his advocacy of tribunals, preventative detention, the Patriot Act, renditions, and wiretapping? Or are many liberals now silent about or supportive of just those measures that they once damned when associated with George Bush? Are conservatives furious for Obama’s continuance of a U.S. presence in Afghanistan and Iraq from 2009-11? Are they mad at the extension of the Bush tax cuts because Obama supported it? It would be psychological derangement to so detest a president that one would simply condemn all his policies as nefarious.

In short, a symptom of BDS would be furious opposition to Guantamo, renditions, and tribunals, followed by silence or support for Obama’s embrace of them — in the manner ODS would envision a conservative in the past railing about the need for Guantanamo and tribunals followed now by abrupt opposition to them, given Obama’s surprising current signature upon them.

But Obama is Not Bush?


So far we do not have much evidence that there is unhinged hatred for Obama in the manner expressed for Bush by mainstream public figures, publications, films, and cultural institutions.

Why? I think ultimately the reason is that the Left really does believe in a sort of exalted ends justifying extreme means.

That is, they believed George Bush really was evil, incompetent, or fill-in-the-blank in the way that Barack Obama, champion of the poor and oppressed, could not possibly be. Therefore, hating Bush and what he stood for was legitimate in a way that opposing Obama is now deranged. Hypocrisy, then, just does not enter into the equation, given the claim of a greater morality that trumped consistency.

And it is sadly more than that: “correct-thinking” people, of course, can legitimately, given their exasperation at speaking truth to power, express venom for the Yale BA/Harvard MBA “nucular” idiot George Bush in the way that no one in his right mind could ever become furious at the Columbia BA/Harvard JD “corpse-man” savant Barack Obama. Dunce Bush got into the Ivy League only by pull and his now public undistinguished Yale undergraduate record proves that; genius Barack Obama got into Columbia by his brains and achievement and thus there is no need to produce the unreleased transcript to prove the obvious.

Tragically, in the end it is just that simple: Hating Bush is understandable opposition; opposing Obama is unfathomable hatred.

CK - Call His Bluff (on deficit)

President Obama is demanding a big, long-term budget deal.

He won’t sign anything less, he warns, asking, “If not now, when?”

How about last December, when he ignored his own debt commission’s recommendations? How about February, when he presented a budget that increases debt by $10 trillion over the next decade? How about April, when he sought a debt-ceiling increase with zero debt reduction attached?


All of a sudden he’s a born-again budget balancer prepared to bravely take on his own party by making deep cuts in entitlements. Really? Name one. He’s been saying forever that he’s prepared to discuss, engage, converse about entitlement cuts. But never once has he publicly proposed a single structural change to any entitlement.

Hasn’t the White House leaked that he’s prepared to raise the Medicare age or change the cost-of-living calculation?

Anonymous talk is cheap.

Leaks are designed to manipulate. Offers are floated and disappear.
Say it, Mr. President. Give us one single structural change in entitlements. In public.

As part of his pose as the forward-looking grown-up rising above all the others who play politics, Obama insists upon a long-term deal. And what is Obama’s definition of long-term? Surprise: An agreement that gets him past Nov. 6, 2012.
Nothing could be more political. It’s like his Afghan-surge wind-down date. September 2012 has no relation to any military reality on the ground. It is designed solely to position Obama favorably going into the last weeks of his reelection campaign.

Yet the Olympian, above-the-fray no-politics-here pose is succeeding. A pliant press swallows the White House story line: the great compromiser (“clearly exasperated,” sympathized a Washington Post news story) being stymied by Republican “intransigence” (the noun actually used in another front-page Post news story to describe the Republican position on taxes).
The meme having been established, Republicans have been neatly set up to take the fall if a deal is not reached by August 2. Obama is already waving the red flag, warning ominously that Social Security, disabled veterans’ benefits, “critical” medical research, food inspection — without which agriculture shuts down — are in jeopardy.

The Republicans are being totally outmaneuvered. The House speaker appears disoriented. It’s time to act. Time to call Obama’s bluff.
A long-term deal or nothing? The Republican House should immediately pass a short-term debt-ceiling hike of $500 billion containing $500 billion in budget cuts. That would give us about five months to work on something larger.

The fat-cat tax breaks (those corporate jets) that Obama’s talking points endlessly recycle? Republicans should call for urgent negotiations on tax reform along the lines of Simpson-Bowles that, in one option, strips out annually $1.1 trillion of deductions, credits, and loopholes while lowering tax rates across the board to a top rate of 23 percent. The president says he wants tax reform, doesn’t he? Well, Mr. President, here are five months in which to to get it.
Will the Democratic Senate or the Democratic president refuse this offer and allow the country to default — with all the cataclysmic consequences that the Democrats have been warning about for months — because Obama insists on a deal that is ten months and seven days longer?

That’s indefensible and transparently self-serving. Dare the president to make that case. Dare him to veto — or the Democratic Senate to block — a short-term debt-limit increase.
This is certainly better than the McConnell plan, which would simply throw debt reduction back to the president. But if the House cannot do Plan A, McConnell is Plan B.

After all, by what crazy calculation should Republicans allow themselves to be blamed for a debt crisis that could destabilize the economy and even precipitate a double-dip recession? Right now, Obama owns the economy and its 9.2 percent unemployment, 1.9 percent GDP growth, and exploding debt about which he’s done nothing. Why bail him out by sharing ownership?
You cannot govern this country from one house. Republicans should have learned that from the 1995–96 Gingrich–Clinton fight when the GOP controlled both houses and still lost.

If conservatives really want to get the nation’s spending under control, the only way is to win the presidency. Put the question to the country and let the people decide. To seriously jeopardize the election now in pursuit of a long-term small-government Ryan-like reform that is inherently unreachable without control of the White House may be good for the soul. But it could very well wreck the cause.

Fannie/Freddie What They Knew and When

• DECEMBER 22, 2011

What Fannie and Freddie Knew

The SEC shows how the toxic twins turbocharged the housing bubble.

Democrats have spent years arguing that private lenders created the housing boom and bust, and that Fannie Mae and Freddie Mac merely came along for the ride. This was always a politically convenient fiction, and now thanks to the unlikely source of the Securities and Exchange Commission we have a trail of evidence showing how the failed mortgage giants turbocharged the crisis.
That's the story revealed Friday by the SEC's civil lawsuits against six former Fannie and Freddie executives, including a pair of CEOs. The SEC says the companies defrauded investors because they "knew and approved of misleading statements" about Fan and Fred's exposure to subprime loans, and it chronicles their push to expand the business.

The SEC also shows how Fannie led private lenders into the subprime market. In July 1999, Fannie and Angelo Mozilo's Countrywide Home Loans entered "an alliance agreement" that included "a reduced documentation loan program called the 'internet loan,'" later called the "Fast and Easy" loan. As the SEC notes, "by the mid-2000s, other mortgage lenders developed similar reduced documentation loan programs, such as Mortgage Express and PaperSaver—many of which Fannie Mae acquired in ever-increasing volumes." Mr. Mozilo and Fannie essentially were business partners in the subprime business. Countrywide found the customers, while Fannie provided the taxpayer-backed capital. And the rest of the industry followed.

As Fannie expanded its subprime loan purchases and guarantees, the SEC alleges that executives hid the risk from investors. Consider Fannie's Expanded Approval/Timely Payment Rewards (EA) loans, which the company described to regulators as its "most significant initiative to serve credit-impaired borrowers."

By December 31, 2006, Fannie owned or securitized some $43.3 billion of these loans, which, according to the SEC, had "higher average serious delinquency rates, higher credit losses, and lower average credit scores" than Fannie's disclosed subprime loans. By June 30, 2008, Fannie had $60 billion in EA loans and $41.7 billion in another risky program called "My Community Mortgage," but it only publicly reported an $8 billion exposure.

The SEC says Fannie executives also failed to disclose the company's total exposure to risky "Alt-A" loans, sometimes called "liar loans," which required less documentation than traditional subprime loans. Fannie created a special category called "Lender Selected" loans and it gave lenders "coding designations" to separate these Alt-A loans from those Fannie had publicly disclosed. By June 30, 2008, Fannie said its Alt-A exposure was 11% of its portfolio, when it was closer to 23%—a $341 billion difference.

All the while, Fannie executives worked to calm growing fears about subprime while receiving internal reports about the company's risk exposure. In February 2007, Chief Risk Officer Enrico Dallavecchia told investors that Fannie's subprime exposure was "immaterial." At a March 2007 Congressional hearing, CEO Daniel Mudd testified that "we see it as part of our mission and our charter to make safe mortgages available to people who don't have perfect credit," adding that Fannie's subprime exposure was "relatively minimal." The Freddie record is similarly incriminating.

***

The SEC's case should embarrass Congress's Financial Crisis Inquiry Commission, which spent 18 months looking at the evidence and issued a report in January 2011 that whitewashed Fan and Fred's role. Speaker Nancy Pelosi created the commission to prosecute the Beltway theory of the crisis that private bankers caused it all, and Chairman Phil Angelides delivered what she wanted.

Far from being peripheral to the housing crisis, the SEC lawsuit shows that Fan and Fred were at the very heart of it. Private lenders made many mistakes, but they could never have done as much harm if Fan and Fred weren't providing tens of billions in taxpayer-subsidized liquidity to lend on easy terms to borrowers who couldn't pay it back.

Congress created the two mortgage giants as well as their "affordable housing" mandates, and neither the financial system nor taxpayers will be safe until Congress shrinks the toxic twins and ultimately puts them out of business.

Irag: US Out - Iran In (BMB)

Baghdad explosions kill at least 63 in first major violence since U.S. departure

By Dan Morse and Aziz Alwan, Updated: Thursday, December 22, 6:19 AM

BAGHDAD — More than a dozen explosions in Baghdad over a two-hour period Thursday morning killed at least 63 people--the first major violence in Iraq since the U.S. completed its troop pullout last week and a political crisis broke out.

At least 185 people were reported injured in the bombings, said officials at the Ministry of Interior, who were speaking on the condition of anonymity because they were not authorized to speak publicly.

The coordinated wave of attacks began around 6:30 a.m. local time (10:30 p.m. Wednesday in Washington). Witnesses said that all main roads and many government offices in the Iraqi capital remained closed for hours after.

Babil province, about 80 miles south of the capital, imposed a curfew after receiving intelligence information that explosive-laden cars had entered the area, according to a report on government-run Iraqia TV.

But by 2 p.m., traffic was clogging main roads in central Baghdad, and life returned at least partially to normal. Street vendors sold food. Women boarded buses. Pedestrians, including men in suits and carrying briefcases, walked down sidewalks.

The Baghdad blasts included at least five booby-trapped cars, two operated by suicide drivers. Police were able to diffuse or safely detonate an additional three booby-trapped cars, officials said. Additionally, a Katyusha rocket was fired into a western Baghdad neighborhood, killing one person and injuring another.

Qassim Atta, a spokesman for the Baghdad Operations Command, told the Iraqia station that the explosions targeted civilians randomly, and not specific establishments.

In response to the attacks, speaker of parliament Ussama Alnujafi called on leaders of the government’s political blocs to gather Friday to discuss security concerns, said Tami Ahmed Ma’aruf, a spokesman for the speaker.

Iraq’s political leadership has been in turmoil since Monday, when officials from the Shiite-backed central government announced an arrest warrant had been issued for vice president Tariq al-Hashimi, a leading Sunni politician. The warrant alleged that Hashimi he enlisted personal body guards to run a hit squad.

Hashimi has fled to Iraq’s semiautonomous region of Kurdistan. The country’s top government official, Shiite Prime Minister Nouri al-Maliki, is demanding that Kurdish officials return him to Baghdad to face the charges.

In a news conference on Wednesday, Maliki also said that he would release what he described as incriminating information about government officials unless they work to stop killings and to rebuild the country. Iraq’s constitution, he said, gives him broad authority and latitude to run the country as he sees fit.

Fannie / Freddie

Fannie, Freddie At Heart Of Financial Crisis, Fraud Charges Show

Posted 12/16/2011 06:54 PM ET

Financial Crisis: The SEC is suing top officers at Fannie Mae and Freddie Mac for not disclosing their true exposure to subprime loans.

Maybe now the left's tired canard that Fannie and Freddie were blameless can be laid to rest.

The left's preferred narrative of the financial meltdown goes something like this: Greedy banks, encouraged by reckless Bush-era deregulation and lusting after ever-higher profits regardless of the risk, caused the financial crisis.

Fannie Mae and Freddie Mac, the two government-sponsored mortgage companies, were mere victims.

Well, the left has it exactly backward: It is a well-documented fact that government regulators twisted the arms of private banks to make subprime and other risky loans to people who couldn't pay them back.

And it imposed "goals" on Fannie and Freddie — with an implicit guarantee of taxpayer backing — to buy huge blocks of those loans and, ultimately, to resell them to gullible investors as mortgage-backed securities.
When the market fell apart, the banks were left with rotten loan portfolios, and Fannie and Freddie stuck the taxpayers with billions of dollars in losses.

To date, taxpayers have spent $169 billion on Fannie and Freddie's mistakes. But some analysts believe the losses could ultimately reach as much as $1 trillion.

Even so, the left refuses to face reality.



As recently as 2008, New York Times columnist Paul Krugman stated: "Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income."

Now, the government's own market watchdog, the Securities and Exchange Commission, says that's false. They're going after former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron to prove it.
"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," was how Robert Khuzami, director of SEC enforcement, described it Friday.

But that's an understatement.
From 2007 to 2008, according to SEC documents, executives at Freddie and Fannie together estimated their total exposure to subprime loans at about $10 billion.

The real amount? Nearly $300 billion total.
In short, Fannie and Freddie are frauds. They systematically hid their exposure to potential losses from investors, taxpayers and regulators.
Nor was this their first financial shenanigans.

In the early 2000s, both companies grossly overstated their earnings — which led to fat bonuses that enriched a long line of cronies of President Clinton and President Obama who used Fannie and Freddie to get rich at the public's expense.

Unfortunately, the SEC's actions on Friday don't go nearly far enough. Because while it will sue top executives, it also signed "nonprosecution agreements" with Fannie and Freddie. So no matter how guilty their executives turn out to be, they won't be punished.
Let it be said that the government covering up for these criminal enterprises at the heart of our financial crisis is getting a bit old. It's time we closed them down or privatized them, before they create another crisis.