Barack Obama and John Kennedy: Headless Horsemen or Headless Chickens?

One glaring similarity …

Kennedy wasn’t in control of what was going on in Washington and neither is Obama. Kennedy’s honest critics point out that he was basically punted around by senators and representatives who were old pros in Washington. Does anyone have any question about who’s actually controlling policy and spending … Harry Reid and Nancy Pelosi?

The classic example is Obama’s current approach to earmarks or “porkbarrel spending”. It’s gone from being one of his main campaign promises to neutralize John McCain’s pledge to …, “Well, I’ll deal with that later.”

For the Democrats, it’s gone from being “something evil only the Republicans did” to “additional necessary stimulus”. “It creates jobs” is the argument. Well, it created jobs back then too. So, what’s changed?

Maybe, Obama’s promises to rein in porkbarrel spending were just slips of the tongue like “Bible hugging and gun toting” or “typical white person”. Maybe someday the people who got teary eyes and tingly legs will wake up and realize what they’re smelling isn’t roses.

The only similarity between Obama’s White House and the “Headless Horseman” is the lack of a head. At least, the “Headless Horseman” had a directed and focused purpose. Obama’s White House is more like a headless chicken, flailing around in circles and a multitude of directions while the body is being rapidly drained of blood.

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Another “Mark to Market” Debate is Approaching

In an article published on CNBC’s website, Death To Mark-To-Market – Tomorrows Playbook – CNBC.com, it was pointed out that on April 2, 2009 regulators will again reconsider the official position on the “Mark-to-market” rule that was initiated in November of 2007.

This has become one of the most controversial aspects of the current financial crisis with support for maintaining the rule coming from such stalwarts as Tim Geithner, Ben Bernanke and Paul Volcker, all prominent players in the Obama administration.

Opponents of the “mark to market rule” aren’t without considerable financial expertise also.

Former FDIC Chair William Isaac placed much of the blame for the subprime mortgage crisis on the Securities and Exchange Commission and its fair-value accounting rules, especially the requirement for banks to “mark-to-market” their assets, particularly mortgage-backed securities.[6] Whether or not this is true has been the subject of ongoing debate. [7][8]

As mentioned in a previous article, Why Not Suspend “Mark to Market”? other noted experts such as Steve Forbes have also opposed the rule.

The issue was first addressed in this blog in the articles, Bail out, Investment or Moot Point? and Was John McCain Right About Wanting to Fire SEC Chairman Cox? « Earl says ….

McCain and the SEC: On CNBC- “Where Were the Regulators?”

He was called reactionary a while back when he called for the firing of SEC head, Chris Cox.

Well, today an Inspector General’s report says that the SEC under Chris Cox has been derelict in its duty failing to provide adequate oversight of investment banks.

The IG report was reported on by Scott Cohn on CNBC today. Watch the following video on CNBC:

http://www.cnbc.com/id/15840232?video=868666144 (cut and paste) or go to the following site:

Video – CNBC.com “Where Were the Regulators?”

It appears that the reactionary John McCain might have been right on the money in demanding the firing of the SEC chairman.

Maybe Chris Cox will just do everyone a favor and simply resign. It appears obvious that, in some way, he might not have been doing his job. There’s nothing like being “a day late and a dollar short” … or $700 billion short … or a $1 trillion short.

Now he’s calling for scrapping the voluntary regulation program for the investment banks … and the meltdown has been going on for how long … nearly 11 months?

Thank You, Barney Frank, for the Mess We’re In

Most people haven’t gone so far as to directly blame him, close but not quite, but I will. And we can throw in a few other prominent Democrats like Chris Dodd and Chcuk Schumer as well if you like. If there was ever any one person who deserved to have about 300 million people attend his tar and feathering party, it’s Representative Barney Frank of Massachusetts.

If you don’t want to take my word for it, then read the following article by Michael Graham of the Boston Herald.

Better not bank on Barney Frank – BostonHerald.com

Haven’t we been repeatedly hearing how the Republicans and the Bush Administration created this whole mess because they’re in favor of deregulation. And, John McCain is a deregulator so he, in particular is responsible.

Well …

From the standpoint of Fannie Mae and Freddie Mac, nothing could be farther from the truth. Okay, let me be a little more blunt. They are blatant liars, every one of them … including Barack Obama and all of his puppet like mouths such as Bill Burton and more recently, Stephanie Cutter. These people couldn’t recognize the truth if it hit them in the face.

The truth is …

The Bush Administration as early as 2001 … that’s right … within less than a year in office … recognized that there were serious problems with Fannie Mae and Freddie Mac and sent John Snow who was the Secretary of the Treasury to Congress to try to get laws passed to increase regulation of Fannie Mae and Freddie Mac. The Democrats wouldn’t hear of it. The Bush Administration sent Alan Greenspan to Capitol Hill but, again, the Democrats wouldn’t listen.

I watched a tape yesterday where Barney Frank said in one of those hearings that the warnings of crises that were being presented were only “hypothetical” and would “never happen”. That’s right. that’s exactly what Barney Frank said … what we’ve been going through the past year and right now would not happen.

In 2005, the Republican passed a bill in committee to increase regulations of Fannie Mae and Freddie Mac which was voted against to the man by the Democratic members. The bill wasn’t put on the floor for a vote because the Republicans knew they couldn’t get 60 votes to pass the bill.

Barney Frank has consistently favored Fannie Mae and Freddie Mac forcing banks and other lending institutions to underwrite loans for people who couldn’t afford them.

Now the taxpayers are having to bail out the corporations that bought these bad loans …

and the Democrats wants the American Taxpayer to pay for the same people who shouldn’t have had the loans in the first place to keep the property that they couldn’t afford in the first place.

That’s the real screw job … not the $700 billion bail out. If it were only the $700 billion bail out American Taxpayers could probably wind up making money on the deal in the long run because the property could probably be sold later at a profit. But, no. We have to pay to keep the people who couldn’t afford the houses in the first place in them.

That’s the real shaft that the American public is getting.

Of course, there’s one more card in the deck. All of this property could be sold at a profit later. My bet is that it will be sold for pennies on the dollar to some special friends of a few special people … (Democrats, of course, since they’re counting on controlling both Congress and the White House after November) … and the American taxpayer and public will be shafted anyway.

Thanks, Barney … and Barack and Chris and Chuck. Yeah … thanks.

26 September 2008 …

I’ve read some people trying to debunk my article by saying that the Republicans controlled Congress and could have passed any bill they wanted to. Those people obviously don’t know what they’re talking about or don’t understand how the Senate works.

A look at the following article on the History of the U.S. Senate,

U.S. Senate: Art & History Home > Origins & Development > Party Division

clearly shows that the Republicans never had a veto proof majority of 60 to pass legislation over the threat of a filibuster. There were never more than 55 Republican Senators in a given Congress during this period and then only that many in two Congresses.

A simple majority is not veto proof control.

So, let the critics try to debunk fact.

Addendum (2/21/2009): The Boston Herald article is no longer available for free access as I found out today … but the comments are. I suppose if you want to read the article you’ll have to subscribe … although I did a search of the title and got “0” results. ???  “Earl”

Bill Burton Says Obama can “Walk and Chew Gum”

He also said “politics should be put aside” … as he tried to make points to slam Senator McCain again and again. Hummmmmm …

Like Stephanie Cutter who appeared on Fox News this morning just before him, he adroitly managed to get all of his ten or twelve talking points in essentially within one sentence. It was nothing short of amazing.

As they both pointed out, Senator Obama can multitask. He can handle more than one thing at a time. Apparently, Senator Obama is one of those people who can perform open heart surgery while playing golf.

But he’s in daily contact with Nancy Pelosi, Harry Reid and Secretary Paulson. I’m sure the patient would be reassured when his surgeon calls the hospital everyday to see how the patient is doing rather than coming in to see him.

Do you get my point. It’s called setting priorities and doing your job. It has nothing to do with being able to do more than one thing at a time. Sometimes the patient wants to feel like he has the complete attention of his doctor., that his physician is giving him his full attention and not talking to everyone in the room after he asks the patient how the patient is doing.

Isn’t Senator Obama still Senator Obama?

Meanwhile Harry Reid and Nancy Pelosi treat John McCain like he’s the janitor in the men’s room at the Congressional office building rather than one of their colleagues. That’s probably wrong. They probably treat the janitor with more respect.

If there’s one thing I intensely dislike it’s arrogance and snobbery.

It seems that Senator Reid and Representative Pelosi are confusing Senator McCain with Senator Obama They’re apparently used to Senator Obama not having any input or actually doing his job.

It’s also fairly obvious that Senator Obama is extremely experienced in doing nothing substantive while allowing others to do the work and then taking credit for their efforts as Senator Obama has repeatedly shown by his campaign statements and previous actions in the Illinois legislature.

Was John McCain Right About Wanting to Fire SEC Chairman Cox?

A short time ago, John McCain said the chairman of the SEC (Securities and Exchange Commission), Chris Cox, should be fired. For making this statement many ridiculed McCain for being reactionary and hot headed.

Supporters of Chairman Cox have pointed out that the chair of the SEC has limited regulatory powers and hasn’t had the authority to regulate many of the activities which have brought on the current financial crisis.

On Fox News this afternoon some accounting experts pointed out some information that would indicate otherwise.

According to them, a simple change in accounting requirements which the chairman of the SEC does have the authority to effect might have averted the current crisis.

Let me see if I can explain this correctly.

Current accounting regulations require that the mortgage packages have to be valued at what they would sell in the current market. This would value the mortgage packages at whatever they would sell for even under the worst conditions which these instututions currently face. This has caused a continuing downward spiral in the value of all the loan packages as if they all had to be sold today … at current market prices … as if they all had to be sold at a fire sale, regardless of whether the mortgages in the packages were being properly serviced by current home owners.

In other words, the mortgages of the 95% of the people who are actually making regular payments on their loans are being treated as having the same value of the loans of the less than 5% who have defaulted on their loans.

How does this affect the credit market? As the values of the loan portfolios have contracted because they all have to be valued as if they had to be sold today or were all literally worth nothing, this has caused a contraction on the perceived value of the bank’s assets which in turn has caused a contraction in the amount of credit a bank can extend.

In other words, a bank can only loan a multiple of its assets. The example given was a bank being able to make loans valued at 10 times its assets. If the assets are forced through accounting rules to be devalued from $100 billion to $10 billion, then the credit a bank can extend decreases correspondingly.

What does all of the have to do with the chairman of the SEC. Apparently, he has the authority to change the accounting rules so that the banking or investment institutions could change how they value their assets … say to fair market value or some other standard. One mentioned was basing the mortgages on current rental or mortgage payment income.

Let’s face it, we aren’t paying our property taxes based on the value of a forced sale of our homes. We all know if we had to sell our homes today we’d take a beating and only receive a fraction of its true worth.

Imagine the effect on cities, counties and state governments if they had to change their property assessments to the worst case value of the properties within their jurisdictions.

Well, that’s exactly what’s being done to the investment banks and commercial banks.

And, apparently, the chairman of the SEC has the authority to change that. It appears that if he had, that action might have been one of the things that could have been done to avert the current crisis.

Maybe, John McCain was right to recommend firing Chris Cox.

Stephanie Cutter on Obama’s Financial Crisis Plans

On Fox News today, an Obama pundit, Stephanie Cutter, staunchly defended Barack Obama’s “steadfast” positions for correcting the housing and financial crisis that worsened this past week.

She stated that Barack Obama proposed a “housing summit” one year ago and proposed regulations for the housing and financial markets six months ago.

She claims that Barack Obama has been on top of the situation and making significant proposals while John McCain has been sitting idly by or changing his positions in reaction to the changing conditions.

Recently John McCain proposed a commission to study the causes of the current housing and financial crises. Barack Obama ridiculed him for that stating that a commission wouldn’t resolve the current crisis. John McCain has grudgingly gone along with the current proposals to bail out the failing financial institutions and Barack Obama has ridiculed him for that.

While both Obama’s “housing summit” and “regulatory proposals” have be reactionary since these crises began last fall, Ms. Cutter failed to note his lack of proactive action in 2006 when reform of Fannie Mae and Freddie Mac was proposed and supported for John McCain.

I don’t think that trying to take proactive steps at reform two years ago is either “sitting idly by” or “floundering” for a solution. If anyone has been floundering, it’s been Obama since the crises began about a year ago.

I’m no economist but I sensed a tremendous bubble forming in financials and liquidated all of the financial shares in portfolios I was managing and recommended to others I was discussing the market with to either do the same or exercise extreme caution with this segment of the market. I’ll be the first to admit that I was unsure of my caution as I watched the dramatic rise in these stocks over the next year, but felt complete vindication as I also watched their dramatic two day crash at the end of October in 2007.

Barack Obama can propose a summit but John McCain can’t propose a commission.

And, somehow, proposing regulations six months ago is better than supporting reform two years ago.

Amazing.

And people believe Obama.