Political talk that ain’t worth your time.

I watched a long TV discussion between Newt Gingrich, former speaker of the house, and E.J. Dionne, Washington Post columnist. Dionne would review various political ideas and classify them as “liberal” or “neo conservative”. He didn’t discuss the goodness or badness of the ideas, he just attempted to label the ideas he liked “liberal” and the ideas he didn’t like as “neo-conservative”. Newt did somewhat better, he did try to bring the debate around to real things, such as the decision to disband the Iraqi army, but Dionne wasn’t having any. He didn’t want to talk about the merits of ideas; he just wanted the viewers to agree with his ideas about good and bad. In short, Dionne was not willing to reach out to voters and citizens and appeal to their heads. He appeals to their partisanship.

So do all the TV talking heads who use the phrase “flip flop”. They are not attacking the ideas on the merits; they are accusing the speaker of going back on his sworn word. So does Obama when he rails against “Bush’s third term”. If he doesn’t like ideas, why not explain why he doesn’t like them?

Words of the Weasel, Pt 8

“Passed” or “passed away”. It’s all over the tube this weekend in connection with Tony Snow. Why can’t the TV people just say “died”?

They don’t do car ads they was they used to

I’m watching a short clip on “Speed” the car lover’s cable channel. The camera pans back and forth over a Ferrari 3300. The hood is raised, we see the fine Italian power plant, the manual transmission, the suspension parts, in short the nuts and bolts of this hot car. Then we get some shots on the road. For a point of difference, this particular Ferrari is painted grey, rather than the proper red, but the nondescript color lets the good lines of the styling show to advantage. Bottom line, after watching a 5 minute TV show/infomercial I am ready to own and drive a Ferrari.

The show cuts to commercial. A camera looks down on a blue car pulled into the gas pumps. We watch the fuel hose slip out of the fill pipe and slink down to let the air out of the rear tire. “Gas pumps hate us” “Chevrolet Cobalt” and “36 MPG” float across the screen. Cute, but it doesn’t sell the car to me, not the way the Ferrari piece sold that Ferrari. The top camera angle shows little of the vehicle. I’m left wondering “is that car

Wall Streeter opines upon the sub prime mortgage disaster

Ethan Penner, “a pioneer in real estate finance” shared his thinking with us on yesterday’s Wall St Journal op-ed page. He laments the fall of “securitization” and the business model for large sections of Wall St. He feels that credit rating agencies are completely capable of assessing the worth and risk of mortgage backed securities. Right there, we can see the difference between the Wall St world and the real world. A home mortgage is a sound investment only if the borrower[s] are both willing and capable to make their payments until the either they sell and move, or they pay the mortgage off. No way can a paper pusher in an office at Moody’s Investor Services have the faintest idea about the stability of a borrower. An experienced loan officer conducting a face to face interview with the borrowers can make a pretty good call (most of the time) but without that personal contact with the borrowers, you don’t have a clue. To say nothing of inspecting the property to see if its sale value is somewhere close to the amount of the loan. If the borrowers cannot/will not make their mortgage payments, the lender is going to take a huge loss. After foreclosure, the lender has to sell the property to get any money back. If the house was salable, the owners would have sold it to pay off the mortgage. Only the unsalable properties get as far as foreclosure.

Then Mr. Penner explains the difficulties doing thirty year mortgages with depositor’s funds with can be withdrawn at will. He blames the 1980’s savings and loan (S&L) disaster on depositors withdrawing their money from the S&L’s. In actual fact, the S&L’s went broke after Congress repealed the laws that restricted S&L’s to doing home mortgages. They used this new freedom to play the stock and commodities markets. Being unsophisticated newbies, the S&L’s got taken to the cleaners by sharp/dishonest salesmen. In the real world, a bank, even a junior bank like an S&L, can increase deposits by paying depositors higher interest.

Mr. Penner’s suggests a new system where the bank keeps owner ship of the mortgage, and issues some sort of trick bond to raise cash to do more mortgages. He doesn’t understand that, with or without trickery, such a bond works just like the ordinary bonds issued by ordinary companies every day. Investors buy ordinary corporate bonds based on the reputation of the issuer and the interest rate promised. The “securitized mortgage bonds” that fueled the sub prime lending spree, and of which Mr. Penner is so fond, were “backed” by the mortgages. Starting last summer, investors learned that the “backing” was worth no more than the underlying mortgages were worth, and surprise surprise, those mortgages turned out to be worthless.

A basic fact of mortgage lending, the lender has to borrow the funds for LESS interest than that charged for the mortgage. Today my local band is offering 30 year fixed rate mortgages for 6 and a fraction %. That means no way can an investor in mortgages make more than 6 and a fraction %. Mr. Penner states that investors could earn mid to high teens and that wasn’t very appetizing. This is the sort of thing a mortgage backed security salesman might say.

One Man’s terrorist is another man’s freedom fighter

Taxpayer funded National Public Radio (NPR) is calling the FARC “rebels” rather than terrorists. Doesn’t matter that FARC has been kidnapping for ransom, holding hostages chained to jungle trees for years, drug dealing, and murdering anyone who gets in their way. Doesn’t matter that the government of Columbia, against whom they “fighting”, is democratically elected and enjoys solid popular support. No matter, NPR likes the FARC and supports them, calling them by the romantic label “rebels” rather than calling them terrorists, which they are.

Let’s hope the Columbian armed forces are able to defeat the FARC in short order.

The Price of Gasoline is going down

Heard that on the BBC just this evening. Wonder what world they are reporting from?

Let’s Move to France

The clock radio came on as usual this morning, tuned to NPR. I let it play for a while before facing up to the awfulness of getting out of bed. The commentator was waxing lyrical about the French health care system. He talked and talked, and he made France sound like the most civilized and humane place in the world.

Except he failed to mention a single number. Such as the life expectancy and infant mortality rates in France, as compared with other places. Such as the cost of health care. The US is spending 16% of gross national product on health care. This is a shameful amount of money going to drug companies, insurance companies, hospitals and doctors. Hell we only spend 4% of GNP on defense. The medical community is sucking up four times as much money as the old military industrial complex.

The Europeans only spend 8% of GNP on health care, half what we spend. But NPR didn’t mention this fact, and said nothing about any possible restrictions upon expensive treatments this might cause. This reporter was convinced the French have it right and the Americans have it wrong without bothering to explain to us listeners why he felt this way.