Reader Mail

Builders’ Bawling

  Crisis causes. Hunting down Orlet. Only in Reich's world do certain folks need help. Plus more.

2.9.09

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LEKHAYIM
Re: Quin Hillyer's Defiance for the Greater Good:

The Bielski brothers and those who joined them are a reminder that God commanded the Jews not just to survive but to live.
-- Ira M. Kessel
Rochester, New York

ROOT CAUSES
Re: Peter Wallison's The True Origins of This Financial Crisis:

Thank goodness... Finally someone talking about the true source of this mess. We have been real estate investors for 27 years, in oil country, so we have seen our share of booms and busts. Until the last 3 years (this mess had already ruined much of the market 3 years ago) we have sold our high-end houses in 10 days or less, and always doubled our money. Now, we have lost all our savings and any hope of retirement at a decent age after working 80 hour weeks all those years to do things the right way, meaning we paid our bills on time every time. We still are, only now we are stuck with a high-end house that we are working three jobs to keep from losing, no home our own and three children in college (who are also working their tails off.)

Housing does best in an 8% interest atmosphere, not in an artificially created lower interest rate world. Overheated markets make for a cold plunge into icy waters in the end.

Thank you again.
-- D. Carroll


Peter Wallison did a great job explaining in simple terms what happened to cause the buildup to the present crisis.

The narrative from the New York Times, which he correctly deflates, is the story put out by the same political actors in Congress who were major forces in instigating the true causes described by Mr. Wallison. They have profited greatly both politically and personally (hello special loans from Countrywide). They can't allow their political kingdoms to be destroyed by the truth. They have fought the Bush administration tooth and nail when attempts were made to rein in the excesses. And they are using the crisis and their lies about the crisis to establish even greater powers for themselves.

We readers need to make sure that the true story beats down the phony propaganda, or else we will get more of the same problems.

I would add a couple extra details, probably omitted because of length. We don't have an official market designated for trading these bundled securities. Yet huge sums of money are involved. Markets like the stock exchange help to set and stabilize prices. They also help to require openness. These bundled securities intentionally obscured the realities underneath. They made it vary difficult to do any do diligence in estimating prices. The same irrational exuberance that led people to forget the real-estate crash that triggered the '87 S&L crisis, the horribly depressed rust belt markets and other real-estate problems and claim housing prices never fall, led the investors to believe that the shell game of selling homes for profit would never end and caused them to shrug their worries aside, thinking that defaulters could always sell at a profit, covering the loans.

And then we added the mark to market rules. These rules make great sense when there is a market. The market establishes the going rate. It also makes sure the price falls to find buyers or rises to find sellers, guaranteeing that every trade can happen. Yes, there will be horrible losses, but because mark to market is being applied without a market, and irrational greed has turned into irrational fear, the bundles are now considered worthless. Yet even with hundreds of billions of losses possible, there are trillions of dollars of good real-estate with solid payment track records, and even in a depression most of these people will keep their jobs and houses. So there should be a bottom value to these assets, which we can't find due to the lack of a market and the inability to see the underlying reality. Otherwise, someone would come in and buy them cheap, making a killing from the good ones. For the same reason, no one is willing to sell. No market means no buyers, no sellers, the values can't be corrected, and everything stays worthless.

The lenders fail, the insurers fail, and we rush to save the fat cats who give so generously to the same bad political actors. But we don't try to fix the broken mechanism that is keeping things down. We could use all this money to buy the bad assets and try and recover as much value from them as we can. Not my preferred choice. Or we could repeal mark to market rules for these assets, also not the best path. The best path would be to establish a good market, and to clean up the mal-regulation that Wallison has described when we do so. We need to  establish transparency in underlying information. A temporary suspension of mark to market might be necessary until the market is established, and we may still need to intervene in cleaning up assets from failed lenders, like we did in the S&L crisis.

Unfortunately, the one thing that could immediately reignite the economy is not going to happen. Instead of the needed tax cuts, we are getting massive spending as pay back rewarding political supporters, and calling this pork "stimulus." That means that we have to either tax the money from the economy, steal the money through inflation, or borrow it, starving out businesses from being able to borrow the same funds. Either way, we all pay, and this will be a drag on the economy, dragging us deeper in trouble and slowing our recovery.
The economy should recover by itself, unless government does something stupid like the tariffs they passed that caused the great depression to happen, or repeats FDR's New Deal which kept full recovery from happening, gaining political advantage by keeping people down and acting as their savior with government hand outs. But it will recover more slowly with the present policies. It could recover quite quickly with well targeted tax cuts. It would also help to stabilize the money supply and strengthen the dollar. The present crash has followed the horrible increases in the money supply.

Who gives jobs? Those who want to use their present money to make more money. Punish the rich and the want to be rich (that is nearly all of us), and we starve ourselves of jobs. But the bad political actors, who are telling the lies that Mr. Wallison has debunked, got power by demonizing the rich and giving handouts to those who suffer as a result. They want total power and total credit for all the good that happens, and they must have scapegoats to demonize to get away with their schemes. Hence the latest in their phony narratives.

Readers, please spread the truth and share this article with your friends and associates.
-- James Bailey

FEELING HUNTED
Re: Christopher Orlet's The Hunt for Gray February:

As a lifelong hunter and professional outdoor communicator I am ashamed and deeply concerned about a recent article, Christopher Orlet's The Hunt for Gray February, published on The American Spectator on February 3th 2009.

I am not sure what the writer tried to achieve with that article. I just know this. The article was not humorous, if that was the intent of the writer. The article is a blatant insult to women and hunters of the worst kind that I have had the misfortune to read in recent years. That hunters are portrayed as gun-toting alcoholics is nothing new and unfortunately the usual slander committed by people lacking facts and moral fiber to further their own agenda by insulting others. But that the writer puts women down and portrays them as some sort of second class human that should be kept chained to the stove is too much to comprehend for anyone who has evolved from his Neanderthal state to a modern man.

I am surprised that the editors of The American Spectator let such a piece of ignorance and bad penmanship slip by them. How could you insult and offend so many readers with garbage writing like that? You just lost a reader, and seeing the comments to that particular article I am sure I am not the only reader you will lose.
-- Othmar Vohringer

IN SOVIET RUSSIA, THE MILITARY RUNS YOU
Re: Doug Bandow's Completely Useless:

Sometimes I despair.

Although I agree with some of what Mr. Bandow wrote -- particularly the ancillary elements of his argument -- he is absolutely dead wrong in his two central premises.

One is that “The Cold War is over, and with it Moscow’s potential for dominating the continent.”

The other is that “Even before the economic crisis Russia’s global pretensions exceeded its capabilities.”

During the so-called “breakup of the Soviet Union,” I despaired. What logical person could believe, I asked then and ask now, that a country full of people -- in and out of government -- could go to sleep one night as third and fourth generation communists and wake up democrats and capitalists?

What logical person could believe that in the United States, Americans could go to sleep one night as third and fourth generation democrats and capitalists and wake up communists happy under a totalitarian government? Same difference.

What logical person could believe that a thousand years or more of living under some of the most totalitarian governments in history could blithely be set aside in favor of a wonderful, wacky dream world of democracy and capitalism?

I despaired at our American media who, alone inside their own foggy crystalline dream world where instant gratification is always narcotic, especially when the gratification coincides with their insular notions of how the world should look, displayed a paroxysm of joy and silly triumph matched in history only by the election of Barack Obama.

I despair now when I read that Russia is finished as a power, or has even the slightest limitation on her economic capabilities.

Whenever the Russian government chooses to kick aside this, to them, jejune experiment with democracy and capitalism, and return to a good old soviet totalitarian economy in a good old Russian totalitarian government, they will return to being a good old communist world power. And, as anyone can see -- anyone but a hermit (and the intellectually hermitted media) -- that process has already begun.

The “victory over tiny Georgia” did not just “demonstrate that Moscow could defeat a small neighbor.” It demonstrated that Russia could defeat a small neighbor without interference from a completely impotent world.

Do Mr. Bandow or the “wishes really ARE horses” world of the media remember how World War II started in Europe? Or in Asia? Germany and Japan both started their power projection by attacking their smallest and weakest neighbors -- and none of the loud but impotent world powers stopped them.

I despair.
-- A. C. Santore

IMAGINE A WORLD WITH NO BAILOUTS
Re: Brian Wesbury's Unemployment and Stimulus:

No need for more taxpayer bailouts and economic stimulus, if politicians would do the following: First, repeal all sales taxes and replace the lost revenue with an import tax/tariff on imported labor and manufactured goods. Second, repeal all local tax incentives that shift business costs to taxpayers and that create poverty wage jobs; or change these incentives to pay a living wage, minimum wage of $14/hour (parent with one child). Third, re-regulate banks and financial corporations. Fourth, enact a windfall profits tax on oil and gas companies; but, rebate this money through tax incentives for drilling and building refineries (including ethanol ones in other countries) as well as eliminating the $.54/gallon import tax on sugar cane ethanol. This strategy will slow these companies from using excess profits to enrich executives and to buy company stock. Fifth, increase taxes on fuel guzzling vehicles, wealthy individuals and corporations (eliminating corporate welfare and tax loopholes) to pay for the Wall Street bailout, the Iraq war and to pump more oil in Iraq for export. These strategies will lower the $11 trillion ($14 trillion forecasted) taxpayer debt leading to a stronger dollar that will reduce inflation and increase the number of good paying jobs with benefits for American citizens.
-- Brent Pittman
Brownsburg, Indiana

DEPT. OF SIMPLE SOLUTIONS
Re: George H. Wittman's China's Balance Sheet:

So high consumption in the USA is a problem for China?

If the poor trusting Chinese have been harmed by wicked America's appetite for cheap goods, the cure is certainly available:

Let us impose appropriate tariffs on cut-rate cloth, toxic toys, melamine milk, poison pharmaceuticals, etc, etc etc. -- at once.
-- Martin Owens
Sacramento, California

INTELLECTUALLY DWARFED
Re: Ralph R. Reiland's Isn't It Reich?

Reich is as short on intellect as he is in height. I worked construction putting myself through law school and gained a great repect for able construction workers, white and black, who don't need the like of Reich dissing them
-- Gary Beauchamp


Reich misses one point?

There could be a burgeoning tourist opportunity I am missing.

Where can one travel to see "white, male construction" workers?

I can find none in the Southwest.

For that matter I can routinely only find one English speaker on the job, the person who interfaces with people funding the job.

This "reverse prejudice" is a joke that perpetuates very real problems.
-- Malcolm Burton
South Montgomery County, Texas

DELAYED REACTIONS
Re: Paul Chesser's 2006 article Bible Bending Propaganda:

Are you seriously expecting any intelligent person to read this and find a well constructed argument?

I am a conservative Republican and I am fed up with my own party and fellow Christians denying the dangers facing our world from environmental change.

Please, reread the Bible and tell me where in there that the Lord states anything about lower taxes on the wealthy, gun rights, drilling for oil, declassifying mercury as a pollutant, allowing species to become extinct, building walls to stop immigration or any of the other mean spirited issues that dominate the Republican agenda.

Jesus is not Republican, Democrat or even American.
-- David Fisher

PELOSI LOVES HER 4.7 KIDS
Re: David N. Bass's Pelosi's Children:

I'm still waiting for someone to mention that Pelosi has far more than 1.7 children... She owes an apology to her last three children.
-- D. Carroll

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