People who say it cannot be done should not interrupt those who are doing it. Welcome to From On High.

Tuesday, September 30, 2008

We Probably Have No Alternative

I'm inclined to agree with the Roanoke Times's (and more particularly the Wall Street Journal's) cautionary support of the government bailout that is inevitably going to work its way out of Congress. Experts who are vastly more knowledgeable on the subject than me (and who are not running for office and who therefore can be trusted) tell us that we have no alternative. I listened to Steve Forbes on the radio yesterday and he sounded alarmed by that which is taking place on Wall Street, and when he's shaken, it's time for all of us to get a little nervous.

Back to the Times, the editorialists there call upon Congress to act:
Clear thinking about complex issues is never easy to come by in Washington, D.C., especially just weeks before an election. But having made a convincing case that crisis is upon the nation, members of Congress need to buckle down, put partisan interests aside and develop a course of action that people can accept.
I agree.

The only objections I have to that which the boys at the Times write are these:

1) Is the following necessarily true?

"The 228 representatives who voted against the bailout either didn't believe the warnings or cared more about their political future than the nation's economic future. The latter should be ashamed."

I'd like to think there was a third option in play - many members truly believe a government bailout is, in the long run, only going to prolong the agony (much as the New Deal prolonged the Great Depression). Then there is the socialism argument. Then there's simply the uncertainty of it all. Will the bailout work? Even the experts tell us they can provide no assurances.

Which brings us to number (2):

The stock market dropped 777 points yesterday. As a result, investors lost the equivalent of $1.1 trillion. In one day. Is an infusion of a mere $700 billion from the federal government over time going to stop the bleeding? Nobody knows. Nobody ... knows.

Still, we need to rely on the experts at times like these. That's why I read the Wall Street Journal cover to cover these days. These guys are the best at laying out the problems and offering up solutions of anyone I have access to. And the WSJ editorial page says this is our last best shot at avoiding collapse.

If the WSJ says so, I tend to believe it.

This Is Probably True

Unfortunate, but true:

Analysis: House vote against bailout wounds McCain

It's unfortunate particularly because of the approach that his opponent has taken to providing leadership in time of crisis. The one Obama quote that will go into the history books should the financial sector implosion bring ruin to this nation:

"And I told Speaker Pelosi and Majority leader Harry Reid to call me if they need me."

I'm trying to picture General George S. Patton ...

This Is Encouraging

Stock markets around the globe were expected to react the way the NYSE did yesterday. But something interesting happened. Take a look at how trading on Britain's exchange (FTSE) fared today:

After an initial plunge, the market came storming back and ended about where it began in the morning. As the New York Times reports today, the same occurred - more or less - on the Japanese, French, and to a lesser extent, Hong Kong exchanges.


- - -

Pay no attention to what's being reported this morning in the Washington Post. I don't know where they're getting their numbers.

Chart courtesy of the New York Times and Reuters.

Quote of the Day

Expect to read more of this kind of criticism as time - and the financial crisis - drag on. From this morning's New York Times:
The candidates to replace Mr. Bush, Senator John McCain and Senator Barack Obama, were far from Washington, bit actors at best in helping to resolve a crisis that one of them will inherit.
Both men are now leaders of their parties. And both are currently members of that legislative body that is struggling to come to grips with a crisis that is unlike any we have ever witnessed before. And both are "far from Washington," working on improving their own lots in life.

This is not the way leaders act.

Where It All Began

This, believe it or not, appeared in the New York Times, way back in 1999:

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

And could this prediction of the outcome be any more spot-on ...

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

And fail they did.

Experts saw it coming but a host of politicians in Washington chose not to care. Mortgages being offered to low-income Americans (meaning minority ...) was the important thing.

And the rest is now history.

Naming Names

From a congressional hearing in 2004, a host of Democrats are on record as having declared there to be no problem with Fannie Mae or Freddie Mac whatsoever, with the same record revealing them voicing their opposition to reforming a system that Republicans at the same hearing say was broken and was leading to impending doom.

The leading Democrat at that committee hearing?

Barney Frank of Massachusetts.

Watch as each of them - in high dudgeon - expresses confidence in the design of the Titanic, even as it is taking on water:

The American people are - in overwhelming numbers - opposed to the Wall Street bailout because the same people who fought to preserve the system that has potentially brought ruin to the United States of America are now in charge of "fixing" it. The same people - Congress - who are now held in the lowest regard since public opinion polling began.

Perhaps these clowns will regain the confidence of the American people when those most responsible for this debacle - Barney Frank, Clay, Meeks, Waters, et al. - are run out of Washington on a rail. Not until then though. Not until.

The Truth About Yesterday's House Vote

Much will be made about how Republicans defeated that bailout bill that the leaders of both parties and the president had put before them yesterday. But here's the truth. Take a look at how Democrats voted on the measure that some have deemed creeping socialism:

Pelosi and her gang have a whole lot more selling to do - within her own party - before she can declare victory on this one. And for her and her pals in the press to quickly assign blame to the Republicans in the House is just a tad bit of a fib.

For the stunning details, go here.

And where is the (ostensible) leader of the Democratic Party as all this is going on? During the most troubling crisis this nation has been through in my lifetime? Out on permanent campaign.

Meanwhile, the train hurtles out of control down the track ...