At least they were when McCain said this. Fundamentals are GNP growth (2.7%) and unemployment (6%). Exports are up. Despite Obama's mockery, these are good numbers. If GNP is growing, we aren't in a recession. Six percent unemployment used to be considered normal.
The financial world is sliding down the chute, but the real economy is still doing reasonably OK.
Wednesday, October 8, 2008
Things McCain should have said last night
1. Name a few names responsible for the Wall St disaster and promise vengeance. Start with Barney Frank and Chris Dodd, then add some targets of opportunity.
2. Point out there are only two exit strategies from war, victory or defeat. He wants victory, what does Obama want?
3. His $5K tax credit plan puts the self employed, who have to purchase their own insurance, on the same footing as the corporate employee who gets his free.
4. In response to the "what will you cut now that the USA is broke" question, suggest ending all farm subsidies, ethanol subsidies, federal highway construction, energy bills, and earmarks. Close down the education dept since education is a state matter, like wise health and human services cause welfare is a state matter.
5. Produce a list of reforms to prevent the Wall St disaster from happening again.
2. Point out there are only two exit strategies from war, victory or defeat. He wants victory, what does Obama want?
3. His $5K tax credit plan puts the self employed, who have to purchase their own insurance, on the same footing as the corporate employee who gets his free.
4. In response to the "what will you cut now that the USA is broke" question, suggest ending all farm subsidies, ethanol subsidies, federal highway construction, energy bills, and earmarks. Close down the education dept since education is a state matter, like wise health and human services cause welfare is a state matter.
5. Produce a list of reforms to prevent the Wall St disaster from happening again.
Tuesday, October 7, 2008
Do we need the "secondary mortgage market"?
Secondary, as in a mortgage trading market, like the stock market. Fannie and Freddie started the thing and look how it turned out. Used to be, up until about 1980, that banks and savings and loans wrote mortgages with their own money. Since their own money was at risk, they used to check out the borrowers pretty closely to insure that the loan would be paid back.
Once a secondary market exists, the original lender can sell his mortage thus avoiding all risk. Which encourages writing riskier mortgages, 'cause once sold, you don't care anymore. Up til now the secondary market has encouraged a whole lot of people to sign mortgages too big to pay off, financed speculators buying houses to flip them, jacked up the price of housing, and financed building acres of houses that can't be sold. And pushed the entire economy over a cliff into the next great depression. Do we need this?
We could eliminate the entire secondary mortgage business with a simple law stateing that mortgages are non transferable. A mortgage is a contract between a single borrower and a single lender, and cannot be sold. As a mortgage holder I like this. I sign a mortgage with the XYZ bank, and that's that. I don't have to worry that XYZ will sell me and my mortgage to someone awful.
The banks, real estate people, builders, and contractors all claim that they need the secondary market to raise the cash to do the mortgages. In effect, the banks borrow the cash on the secondary market and then lend it out again. I say that banks can raise all the money they need by just paying decent interest on savings deposits.
Eliminate the middle man. Make the banks responsible for writing mortgages that will get paid off. Cut the price of mortgages and put all the secondary mortgage market people to work doing something of real economic value.
Once a secondary market exists, the original lender can sell his mortage thus avoiding all risk. Which encourages writing riskier mortgages, 'cause once sold, you don't care anymore. Up til now the secondary market has encouraged a whole lot of people to sign mortgages too big to pay off, financed speculators buying houses to flip them, jacked up the price of housing, and financed building acres of houses that can't be sold. And pushed the entire economy over a cliff into the next great depression. Do we need this?
We could eliminate the entire secondary mortgage business with a simple law stateing that mortgages are non transferable. A mortgage is a contract between a single borrower and a single lender, and cannot be sold. As a mortgage holder I like this. I sign a mortgage with the XYZ bank, and that's that. I don't have to worry that XYZ will sell me and my mortgage to someone awful.
The banks, real estate people, builders, and contractors all claim that they need the secondary market to raise the cash to do the mortgages. In effect, the banks borrow the cash on the secondary market and then lend it out again. I say that banks can raise all the money they need by just paying decent interest on savings deposits.
Eliminate the middle man. Make the banks responsible for writing mortgages that will get paid off. Cut the price of mortgages and put all the secondary mortgage market people to work doing something of real economic value.
Monday, October 6, 2008
Regulation? Isn't Sarbox enough?
We shouldn't let the Democrats get away with calling for regulation as a cure for the $700 billion bailout problem. There was plenty of regulation, with Sarbanes Oxley the latest installment. Sarbox has reduced the number of initial public offerings to zero, and driven the merger and acquisition business off shore. Plus it has made the bean counters rich and the rest of us poor. Republicans have tried to regulate Fannie and Freddie since 2003 but Democrats, fearing to loose the gravy train of Fannie and Freddie money, defeated all attempts. Today's $700 billion disaster is the direct result of that Democratic policy.
Used to be, before Obama, that deregulation meant ending government price fixing. Over the years regulation (price fixing) of ground freight rates and air fares was phased out. Deregulation brought mass air service at good prices, and vastly cheaper shipping. Every thing we buy got shipped from somewhere, so lower freight rates benefit us all.
The Obama folks now blame the $700 billion catastrophe on "Republican Deregulation". That happens not to be the truth. The $700 billion was caused by democratic opposition to regulating Fannie and Freddie, not by lowering freight rates and air fares.
Used to be, before Obama, that deregulation meant ending government price fixing. Over the years regulation (price fixing) of ground freight rates and air fares was phased out. Deregulation brought mass air service at good prices, and vastly cheaper shipping. Every thing we buy got shipped from somewhere, so lower freight rates benefit us all.
The Obama folks now blame the $700 billion catastrophe on "Republican Deregulation". That happens not to be the truth. The $700 billion was caused by democratic opposition to regulating Fannie and Freddie, not by lowering freight rates and air fares.
Sunday, October 5, 2008
Health Care vs Obama & McCain
McCain wants to level the playing field between employees and the self employed. Right now employees get health insurance thru their company and it's tax free. The self employed have to buy their own health insurance with their after tax dollars. McCain wants to even this out. Everyone gets a $5K tax credit (subtract $5k from your income tax bill), and the employees pay income tax on their health insurance benefit , just like they do for their salary. So both the employed and the self employed get the SAME tax treatment for health insurance.
Obama has been attacking McCain's proposal saying it would cause employers to drop health coverage. I fail to see the logic of this argument.
Speaking as one who has worked as an independant contractor and as an employee of big corporations, McCain has a fair plan. It's unfair to give corporate employee's favorable tax treatement and deny it to the self employed.
Obama has been attacking McCain's proposal saying it would cause employers to drop health coverage. I fail to see the logic of this argument.
Speaking as one who has worked as an independant contractor and as an employee of big corporations, McCain has a fair plan. It's unfair to give corporate employee's favorable tax treatement and deny it to the self employed.
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