The world according to Sam "Eyebrows" Donaldson

"The mortgage crisis isn't caused by Fanny and Freddie, it's all those low life salesmen pushing unaffordable mortgages on poor people who don't know any better" said Sam on the ABC Sunday pundit show.
This is the long time TV newsie, bane of Republican presidents, talking. Talking through his hat. Only because Fanny and Freddie and some brain dead brokerage houses buy toxic waste mortgages do the low life salesmen bother to sell them.
When a borrower defaults on his mortgage the lender takes a big loss. Repossessing the house doesn't help the lender. They won't be able to sell it either. Borrowers with more than two brain cells firing will attempt to sell the house before giving it to the bank. The banks only foreclose on the houses that won't sell. But, if the lender has sold the mortgage to Fanny or Freddie or a brokerage house, he doesn't care, he doesn't own it anymore. The low life salesmen only exist because there are bigger suckers (Fanny, Freddie and the brokerages) out there. Turn them off and mortgage lending (and house prices) will return to reality.
When Sam blames lowlife salesmen instead of the real villains, it shows how ignorant the newsies are.

Speculation Regulation?

The details and language of the proposed bill are obscure, so we don't really know what will happen if they do pass it. But, will it work? Or will the speculators, day traders, and buyers merely move to a friendlier overseas market? London or Dubai or Tokyo or wherever. The United States isn't the only commodities market in the world.
Remember Sarbanes-Oxley? It tightened up corporate governance and finance and added a terrible load of paperwork. Since Sarbox, new public offerings of stock and merger/acquisition activity left Wall St and settled down in London.
Can you say "shoot yourself in the foot"?

After a $5 trillion bailout, do we need Fanny&Freddie any more?

The rationale for Fanny and Freddie is they can borrow money more cheaply than banks can. The downside to Fanny and Freddie is when they blow it, we taxpayers take one helluva hit. We could go back to financing houses the old fashioned way, with bank depositors money. Of course for that to work, banks would have to pay decent interest on savings deposits, which they don't do anymore.
Nowadays, to get decent interest, investors have to go thru Wall St whiz kids, who take their money and buy weird bonds that put money into banks to make mortgages with. And sometimes the weird bonds don't pay off. In olden times investors simply deposited their money in a reliable bank. We could go back to that. It would put a lot of Wall St whiz kids out of work, but they could get real jobs in sales, manufacturing and new product design. Finance isn't a real job, it's parasitic.
For 6% mortgages the banks could pay depositors 5% interest. For the depositors it's good money, as good as they get on "mortgage backed securities", and with FDIC protection to boot. Unlike subprime mortgage backed securities.
So, why not rein in Fanny & Freddie? Prohibit them from buying anything but real mortgages, no mortgage backed securities. Set a limit on their liabilities, about equal to their current ones. Demand they raise capital equal to 5% of outstanding liabilities before they can take on any more debt. Insist upon the borrowers putting up 5% of property value. Insist that the borrowers live on the property. Each borrower gets only ONE mortgage on ONE property. Don't do mortgages on McMansions. Lower the mortgage limit to $500,000, any house costing more is a luxury house and fat cat buyers will have to get a private bank mortgage. Appraise each property with in-house appraisers who have to personally sign the appraisal. Fire them when they inflate the value of any property. Never do a mortgage for more than the appraised value. Prohibit them from making campaign contributions (aka bribes) to elected officials. Limit salary and bonus to less than $1 million a year for senior management/every employee. Prohibit payment to consultants for anything.

The left cannot let it go

Woke up as usual to Vermont Public Radio, except, just for this day I set the radio to chime in at 0400 in the morning. At that early hour, VPR is channeling the BBC world service. And the BBC is running a story about the Rosenburg espionage case. Groovy. The Rosenburgs, Ethel and Julius, were sent the the gas chamber 50 years ago. The jury convicted them of passing the secrets of the atomic bomb to the Soviets. The judge felt that giving the deadliest weapon in history to our mortal enemies justified the death penalty. Fifty years ago the left conducted a furious defense of the Rosenburgs to little effect. But why is the leftist BBC bringing up the story again? Events of half a century ago are not news. There are plenty of current stories with a good leftist slant they could have run instead.

Driving to Brooklyn

College is finally over for the year. I drove to Brooklyn from Franconia to pick up son and his stuff. The stuff level was so high I borrowed a real 3/4 ton Chevy pickup to do the job. It's about 300 miles each way. Traffic was light until I hit Connecticut. Then it got real heavy, 10 mph creep&beep along shoreline Conn. Turnpike. Trucks galore, all crawling along with the rest of us. You'd think some of them would be going piggy back on the trains just to save diesel fuel.
New York State continues it's distinguished career of illiterate, missing, and worthless road signage. Not sign one for the Whitestone Bridge off I95. I got pushed over Throgs Neck bridge while looking for signs to Whitestone. Not the end of the world, but not a real confidence builder either. Arrived around noon after driving thru rain showers. Took three hours to schlep all the stuff down from the fifth floor and tie a tarp over the top. Trip back was long. Didn't get in til after midnight. It rained and a lot of wet got under the tarp. Truck used 44 gallons of gas for $180. Round trip on Amtrak is a lot less than that. Truck only gets 16.4 mpg even with a very tall gear and a V6. My Caddy DeVille does a lot better at 27 mpg. I guess the truck has more frontal area, a worse drag coefficient and more weight to push up hills. Today the yard is full of drying stuff.

Chevy Camaro

Nice set of pictures here. Not a bad looking car. Wouldn't mind buying one just for the cool of the thing. I have to wonder about the horsepower claims on the V6. 300 horse from 217 cubic inches is 1.4 horsepower per cubic inch. That's a lot. Used to be hot rodders were doing well to obtain one horse per cubic inch and still have an engine smooth enough to drive in the street and pass inspection. I notice the V6 has double over head cams, 11.3:1 compression and the 300 horse is only obtained at 6400 RPM. The overhead cams are what lets the engine rev up that high. In the old days a push rod V6 wouldn't rev to 5000 RPM, the valves would float long before 5000 RPM was reached. Getting an 11.3:1 compression engine to run on regular gas is a trick for which Chevy is to be complimented.
Weight is 3750-3860 pounds for the various models. Wasn't clear about the weight of the V8. If the heaviest 3860 pound car has the V8, then Chevy has done a nice job keeping the weight down. It may be,since the V8 is optional at extra cost, the weight figures shown are for the 300 hp V6. That makes power to weight 12 pounds/horsepower with the V6, which is very hot indeed. My 99 Caddy Deville is about 18 pounds/hp and offers sparkling acceleration. The Camaro at 12 pounds/hp will be a hellova lot hotter. The V8 at 422 horse is overkill for anything but racing.
Gas mileage (26 mpg) is disappointing. The Deville gets 27 mpg highway. You would think a lighter car with a smaller engine would do better than a 10 year old Caddy. Not that anyone buying a hot rod like this really cares about a few mpg, but still.

AlGore on Meet the Press

Tom Brokaw interviewed Al at length this morning. Al is still beating the drum for "alternate energy". Mostly he made those innocous comments about "moving forward" and "thinking outside the box", stuff that contains no real information but sounds good. He now wants the entire economy converted over to solar electric and electric cars. Al said all we need is better electrical transmission lines to move the juice from producer to user. What Al didn't say is that you can only transmit electricity 500 miles before the line losses get so bad that it isn't worth it. Nor did he explain how to heat your house on alternate energy. Nor did explain where the batteries for electric cars are coming from. Current battery technology (lead acid) is only good enough for golf carts. The only difference between a golf car and an electric car is better batteries.
But Al is opposed to oil drilling because only running out of oil will drive Americans to the enlightenment of true greenness. Freezing to death in the dark is very enlightening.
Brokaw asked Al about his lavish energy hog of house, and Al said "I buy electricity from "green" producers and that makes it alright." He also claimed his house uses "geothermal" power which is a stretch, there are no volcanic hotspots in Tennessee. He probably means he has a heat pump working off a heat exchanger buried in the lawn. That's nothing new, I had one in a cheap garden apartment in Mississippi back in the 1960's.
Al again claimed that science is on his side, even though the American Physical Society declared that man made global warming is not scientifically accepted just last week. That means a small majority of physicists think man made global warming is balony, but a sizable minority still believes in it. If the majority were larger, they would have used stronger language to condemn man made global warming. Opinions of physicists counts, global warming is a heat transfer problem, which is squarely in the domain of physics.