New rules to prevent another subprime crash

The Treasury Dept and the Federal Reserve bank issued a joint policy statement. Too bad the policy, as published in the Journal, is so vague and wimpy. They call for more regulation of mortgage lenders and brokers, but don't say what regulations were not enforced. They call for licensing of mortgage brokers, where as they ought to call for the total elimination of mortgage brokers. Brokers are middle men who take a cut, and con borrowers into signing bad mortgages. They call for ratings firms to rate ordinary bonds differently from "complex structured products". They should have eliminated the "complex structured products" because they are IOU's disguised as real bonds.
Issuers of IOUs (aka mortgage backed securities) would have to reveal if the mortgage borrowers had shopped around for a good credit rating. This is close to worthless. Of course the mortgage borrowers have attempted to get the best credit rating they can, 'cause it entitles them to a cheaper mortgage. And some credit raters are more generous than others, or are willing to take bribes for a good rating.
Treasury Secretary Paulson's closing quote. "We are going to be mindful when we impliment it to not create a burden. But we think it's very appropriate to lay out some of the causes and some of the steps that need to be taken... to minimize the likelihood of this happening again. The aim is to alter the rules and incentives that led to excesses that are now painfully evident--- years of lending and and investing at prices that didn't fully recognized the risks by institutions with inadequate capital cushions, the development of financial instruments so complex that even the most sophisticated didn't understand them, and a deterioration of lending standards. "

Let me rephrase Paulson's talk. "We will let you continue to make most of these shady deals. You need to charge more interest on loans, and you have to have a bigger rainy day fund to cover the shaky loans that go bad. The sophisticated investors didn't buy subprime mortgage bonds because they were so complex. The rubes were taken in and fleeced. And you issued too many mortgages to people with no income, no jobs and no assets ("ninja" borrowers).

Fox News covers Eliot Spitzer like a blanket

Fox is running continuous Spitzer news. We have a live camera feed of the front door of Spitzer's apartment house, pundits wondering whether the resignation will be written or delivered live, commiseration with Spitzer's wife and children, speculation about criminal charges. It never stops. Apparently nothing else is going to happen today. Enormous verbiage and TV time to tell us that Spitzer is resigning. Actually they only need to tell us once every hour, rather than once every minute.

Franconia NH Town meeting

By state law, town meeting is the second Tuesday of March. I went. It was a scene right out of De Tocqueville's "Democracy in America". Citizens gathered in Town Hall, a modest frame building in a vaguely colonial style. Mostly dressed in bluejeans and winter boots. Ourside it was below freezing. There were 19 warrant articles to fund the town for the next year. We appropriated $29K for a new police cruiser, $126K to rebuild a fire truck, $70K to build a garage to get town equipment out of the weather, $71K to operate the town library, $269K to operate the town dump, excuse me, the transfer station. Dumps are politically incorrect. Even when they cost more than libraries.
Serious discussion of the town water system, improvements there to. The first article was $250K to put in water meters. After a number of probing questions from the audience, it developed that water meters are required by the Federal government, and Franconia was planning to apply for a federal grant of a few million to update the 1930 town water system. No meters, no grant. So, $250K blown on water meters. They had a guy from the State DES attempt to explain the need for meters, but he was unconvincing. Second article was $99K for a consulting engineering firm to draw up plans, price them, and do the grant applications. So, $350K expended in the hopes of winning a Federal grant of $3.5 million.

Air Force takes flack over Airbus tanker

Strategy page blog has a posting about the Airbus-Boeing competition. Boeing plans to contest the contract award. The Air Force is buying existing airliners, the Boeing 767 vs the Airbus A330. Both planes have been in production for years. Cost to buy, to operate, range, payload, and everything else is well known. There is no research and development money or risk, there is no logistics support, parts and service are widely available on the civilian market.
Airbus offered a larger plane. Boeing could have offered their larger 777 transport if they had been asked, or if they thought it was more appropriate to the mission. Or Boeing could have offered both aircraft and let the Air Force decide which size fits all.
Domestic content of the two planes is not all that different. The Airbus plane has American engines and a lot of American made parts in it. The Boeing plane has major subsections built over seas.
Air Force supplied reasons for the Airbus win boil down to the larger plane was more cost effective, could supply more fuel with fewer flights, which is pretty obvious. Air Force has not released the vital bid costs. Both aircraft are well proven, widely sold, commercially successful jet liners. Either would do a fine job as a tanker. Air Force should select the lower cost aircraft. So far, we don't know which plane was lower cost, the Air Force has not released the cost data.
Expect a long drawn out contest of the contract award, with plentiful fees for lawyers.

Clocks get smart, automatically switch to DST

I survived the great clock switchover. I have no mechanical tick tock clocks left in the place. The VCR and the computers were intelligent enough to know about daylight savings time and switch over by themselves. Wrist watch, Bose clock radio, and car clock had to be manually changed. Pretty soon the clocks will be in control...

Does insulating hot water pipes save electricity?

May be. February's electric bill was $104, down from $141 in January. Both months were cold. I've been gung ho on turning out un needed lights. The only thing I did differently in February was insulate the copper pipes running to the water heater. Used to be, the pipes were hot to the touch all the time, a sign of expensive heat leaking out of the heater thru the copper. I bought a $4 pack of plastic foam insulation sometime in January and snapped it over all the exposed copper pipe. If true, this makes a $37 monthly saving from a $4 investment. Something dropped my usage from 940KWH in Jan to 697KWH in Feb. Price didn't change, I'm paying $0.15 per KWH in both months. For this month's magic energy saving trick I'm going to insulate the big hole that runs my electric wires from the junction box into the sills of the house.

Horse Race coverage

The Lehrer News Hour was discussing the goodness of press coverage of the primaries. A couple of reporter/pundits held forth on the essential goodness of "horse race" coverage. "That's what people want to see". I'm sure the newsies love horse race coverage, because they don't have to know anything to do it. Just flip the election results up on the screen, and throw out a few opinions, (opinions are cheap, everyone has one) about why so-an-so won, and somebody-else lost. No knowledge of politics, history, issues, election law, or the candidates is necessary, just the plain election results, available from the state election officials for free, and a few cheap opinions. Anyone can do it. In fact, most working reporters are so ignorant of nearly everything that all they can do is horse race coverage.