Thursday, March 29, 2007


Bush Gives Blogs Some Credibility

But the AP tries to discredit them.

This AP report via Michelle Malkin:

To back up his point that pulling out of Iraq would be a disaster, President Bush has quoted opinions from the secretary of defense, the Joint Chiefs of Staff, the top U.S. general in Iraq and now, two bloggers from Baghdad.....

Blogs are Web sites that tend to be narrow in focus and directed at a niche audience. Most operate without editors and give instant reaction to the news. Their freewheeling, open nature makes them popular but also ripe for unverified statements.

The AP might also want to note that television is primarily used for entertainment purposes and most broadcasts are fiction. Also most printed media have a target audience in mind and their content is carefully edited to either please readers or to influence them in ways the writers/editors/advertisers desire. So keep that in mind next time you watch the TV news or read a newspaper.

This is a good start but Bush should be doing much more to emphasize such reports from credible sources regardless of the type of media they report from.


McCain considered leaving party?

John O has been very concerned about a Hillary Clinton presidency for quite some time. It was my contention that this is simple not going to happen because roughly 1/2 of the electorate will not vote for Hillary. What could tip the balance is an independent candidate taking votes from the Republican a la Ross Perot. Hmmm, what Republican is crazy enough to do that?

St. John, say it isn't so!

John O adds: The thing I fear most about a Hillary presidency is that, aided by an ever more compliant judiciary, she'll act like an authoritarian while ceding as much US soveriegnty as possible to international institutions -- especially the UN, which her husband aspires (with her help) to one day lead.

I've long considered Hillary even money for the Presidency; in other words, it would be a matter of luck if we're able to dodge a second Clinton administration. But I'm becomming ever more optomistic. A serious independent or third party candidate who ran to Hillary's right would all but ensure a victory for her, but I don't think it will happen. I used to fear either Guliani or McCain might be tempted to run independently. As the GOP front runner, Guliani certainly won't. I don't think McCain can run as a credible independent. He's having difficulty raising money the old fasioned way and he's alienated too many internet-related constituencies to try that route.

I also think that someone (Ralph Nader?) will run as an independent on an anti-war platform, which will drain support from her candidacy. Hillary has alienated many on the far left who will never vote for her. Kos is one of them, and he could do a lot of damage to her candidicy if he lent his support to someone like Nader.

(Bye the way, I just don't believe the rumors about McCain switching aliegances in the Senate. He couldn't have switched sides and remained a credible Presidential contender.)

Bill C adds:

There are several Democratic sources who say McCain's aid approached them. He might have been thinking about going independent which would not have necessarily hindered his chances of running for President. At least in his mind. He thinks of himself as a maverick so he might not be bothered about running for President as an independent. That is scary because he would surely draw more Republicans than Democrats and ensure a Clinton victory. I think the Obama luster is starting to fade and Hillary will look like more of a shoe in for the nomination next year.

Wednesday, March 28, 2007


How liberals think and 10 years of South Park

South Park is celebrating 10 years of pissing off the left and right. Good for them. Also enjoy this comedians take on liberals.


The speaker is Evan Sayet. A self described 9/13 conservative who was a writer for Bill Maher and is currently doing stand up. Check out his blog.


Wednesday, 3/28, should be a bad day for stocks

I am looking at the charts and if I am right about the beginning of a correction then we should start it fairly soon. Otherwise, we should hold the 12,000 level on the Dow over the next two weeks and turn to make a new high. 12,500 is looking like good resistance on the upside.

Also, please read these two articles from Paul Kasriel of Northern Trust. He has some interesting metrics concerning predicting recessions and the currently inverted yield curve.


Ayatollah or moonbat

Watch the video of the 'evil Santa' and imagine what he is saying is being said by some leftist at one of the demostrations. Can you imagine them saying the same thing? I can. (Shudder)

Via Hot Air.

Monday, March 26, 2007


Flipper Nation

I got waylaid over in YouTube, just surfing around looking for stuff. Sometimes you find the strangest stuff on the internet. Well I found this funny satirical look at the house flipping business called Flipper Nation. Definitely a chuckle or two especially if you watch as many shows as we do about real estate.

Saturday, March 24, 2007


US troops prepare to be defunded

What would happen if the Democrats get
their way? Our troops would adapt.

(Via Hot Air.)


"It's not just Bush, it's the soldiers too. Fascist war is nothing new." (Strong bile warning. Don't watch this if a hippy/anarchist and a bat are within reach.)

Friday, March 23, 2007


Housing Tracker adds housing affordability measures

I found in September 2006. Boy was that exciting! But not as exciting as what they just added. Housing affordability measures! Compare prices to income levels and rent. Compare mortgage payments and rent. It's fantabulous!


Anecdotal evidence of tightening credit standards

This is all from California but I am sure that the same conditions are prevailing throughout the country. Now lenders are running from exotic loans as fast as they ran to them only a few years ago. The viscious cycle keeps turning.

Thursday, March 22, 2007


Pathetic Geek Stories

One of my favorite bits from back when the Onion was funny. True stories of embarrassing situations from peoples youth.


Fred Thompson on immigration

Running or not running? He's already tied with Romney in Ohio. (Via Hot Air.)

Wednesday, March 21, 2007


Time to sell short the stock market

As I mentioned in this post, there is a good opportunity to short the market right now. The Fed has announced they would not tighten and, apparently, they have eased off the tightening bias. Whatever the reason the time to go short is now. Assuming you short the Dow futures which are at 12525 as we speak then your stop is 12850- a little higher than the recent interday high.

FYI, both the stock market and the bond market is rallying at the moment. The fly in the ointment is the dollar. 134.27 and 196.80 against the Euro and the Pound, respectively. Both currencies are flirting with new highs against the dollar and if I had to guess that will probably be the background story if the stock market falls from here.


Tuesday, March 20, 2007


Housing Market Update:March 2007

The viscious cycle continues.

Housing starts were up 9% but permits were down. Housing starts are a very volatile number. One month does not a trend make. Yoda said that. So don't get too excited because housing permits were down and they have been down for 12 of the last 13 months. Permits are a more reliable indicator of future home building activity. Don't believe me then listen to David Seiders who has every reason to look for the silver lining, but didn't:

David Seiders, the chief economist for the National Association of Home Builders, said he doesn't believe that the downturn in home building has yet found a bottom.

"With the weather volatility, I think the permits is a better representation of the true trend," said Seiders. "I think we'll see a drop off in starts in March, and certainly no take off after that."

When a guy like David Seiders is giving the "we're doomed" message then pay attention. At least that's what I am taking from this. This guy is paid to look for good news.

In local news the housing market is starting to affect Chicago banks.

Problem construction and land development loans by local lenders increased 58% at the end of 2006 to $169.4 million from $107.2 million at the same point in 2005, according to Federal Deposit Insurance Corp. data.

Loans in which borrowers are late on payments by at least three months averaged 1.6% of local banks' total construction loan portfolios at the end of 2006. That was up from 0.95% in 2005 and was at the highest level in six years, according to Virginia-based SNL Financial.


It's unclear to what degree the bad loans ultimately will hurt banks' bottom lines. For now, property values appear to be stable, so bankers expect their ultimate losses to be slight. But that could change if land values decline. [Emphasis added.]

And the viscious cycle will guarantee that prices fall. The weakest links in the housing food chain, the subprime market, has been broken. This means fewer buyers in that market. Then subprime lenders go out of business. Construction and sales slow and GDP falls. The next highest level on the housing food chain can't or won't buy. Prices go down. Banks loan on and so forth. Just as greed drove the market up fear is driving it down.


Gretchen Morgenson of the NYT outlines the destruction that could result from the implosion of the subprime market. Crisis looms in market for mortgages.

Meanwhile, investors wait to see whether the spring home selling season will shore up the mortgage market. If home prices do not appreciate or if they fall, defaults will rise, and pension funds and others that embraced the mortgage securities market will have to record losses. And they will likely retreat from the market, analysts said, affecting consumers and the overall economy.

A paper published last month by Mr. Rosner and Joseph R. Mason, an associate professor of finance at Drexel University’s LeBow College of Business, assessed the potential problems associated with disruptions in the mortgage securities market. They wrote: “Decreased funding for residential mortgage-backed securities could set off a downward spiral in credit availability that can deprive individuals of home ownership and substantially hurt the U.S. economy.”

Read the whole thing.


Why The Surge Is Working

-Getting on the good side of the local Sunni sheikhs.
-Standing up to Sunni insurgents and Shia militia in Baghdad.
-Clarifying the rules of engagement so that our troops can worry less about being brought up on charges and more on killing the enemy.

It almost seems to easy but it isn't. All except the rules of engagement and standing up to Sadr. To paraphrase Hitchens while on Hugh Hewitt's show, Bush deserves a lot of criticism for not making the necessary changes and not being more prepared in the first place. Fair criticism. Now that things are going our way watch for the insurgents to try new tactics. They have to give the moonbats taking point, afterall.


Indoctrinate U

Show your support for this film by following this link. (Via Bookworm.)


An ATM Theft Explained

This is a link to a series of photos which show how thieves rigged an ATM machine to steal a card and then duped the unsuspecting bank customer into giving them his PIN. A detailed explaination of what is happening accompanies each photo.

Sunday, March 18, 2007


Global Warming & School Choice

Leftist dogma & an inconvenient truth

The Burlington Free Press reports about the controversy over teaching Global Warming theory in Vermont schools:
As global warming has shifted from the subject of scientific trade journals and alternative media to the center of the public and political arenas, it also has become a hot topic in public schools. That has some parents questioning what their children are hearing. Parents who disagree with the global warming theory, or who chalk it up to environmental alarmists or political hyperbole, are finding that their points of view aren’t given the attention afforded the "other side."
All scientific theories are just that — theories. Cell theory and atomic theory aren’t "proven," just as the global warming theory isn’t proven, says Judy Allard, a biology teacher at Burlington High School. At some point, cell and atomic theories were controversial, too; but these days, a parent would be hard-pressed to find a public school that spent equal time teaching opposing cell or atomic theories.

Allard said the political attachment to global warming — like the religious factor in the creation and evolution debate — keeps it controversial and prevents objective evaluation of the evidence.

"Global warming, 20 years ago, even 10 years ago, was thought of as sort of a wing-nut idea. It’s not a wing-nut idea anymore because of the data that’s accumulated," Allard said. "It still involves interpretation, but the political attachment is what makes it difficult. It’s easier to deny that it exists than to say it does and we have to do something about it."

Allard also pointed to the growing evidence that supports the evolution theory, but said religious fundamentalism gets in the way of acceptance.
Equating cell theory and global warming theory is ridiculous. One does a excellent job empirically explaining observable reality; the other doesn't. Global warming theory is similar to creationism in that it is Leftist dogma that human activity is responsible for climate change.

Allard notes the role competing agendas have in shaping how and what students ultamately learn in public schools. I share the view expressed in this unsigned letter posted on a sidebar:
I always smile when parents express surprise that political persuasion is used in the classroom of public/government schools. My lord, haven't we figured it out already? That's the only way to get the nation onboard is to indoctrinate early. That's why the NEA and the left will always argue against school choice. Get with the program, people.
Utah has:
The Senate approved the bill 19-10 on Friday, a week after the House endorsed it by a single vote, 38-37. Both chambers are controlled by Republicans. Gov. Jon Huntsman, a Republican whose children attend public schools, has said he will sign the bill into law.

The vouchers will be open to any of Utah's 512,000 public school students. The amount will depend on family income, but even affluent families would be eligible for at least $500 per child. Students already in private schools would not be eligible.

The plan, which goes into effect this fall, is expected to cost $9.3 million in its first year and $327 million over 12 years. Utah has a $1.6 billion budget surplus. Public schools that lose enrollment will still receive a portion of state funding for five years after each student departs.

The bill's sponsor, Republican Rep. Stephen Urquhart, tried to alleviate concerns that public schools would be shortchanged. In Utah, income taxes must pay for public education. The money for vouchers would come from the state's general fund, which pays for all other state programs.
Introducing accountability into the education system in this way empowers parents at the expense of bureaucrats and politicians, which threatens the stranglehold liberals have on the education industry in this country. Mike Rosen comments:
Tanya Clay House of the ultra-liberal People for the American Way recently declared, "We've never seen a shred of credible evidence that shows school vouchers actually help students learn. While all public schools must demonstrate success under No Child Left Behind, private schools are not held to the same level of accountability for their performance."

Nonsense. Private schools are held to account in the most effective way possible - they're accountable to their customers who are free to take their business elsewhere if they're not satisfied. All the evidence you need for vouchers is that parents who have used them to escape the government school monopoly fight to keep them.

Then, Clay House added this gem: "Every child deserves an excellent education, not just those who can get admitted to a private school." I wonder if she realizes how self-contradictory that statement is. She's acknowledging that private schools provide educational excellence and that kids who are stuck in government schools are denied that! Does she suppose that wealthy parents who pay a premium to send their kids to private schools (without "a shred of evidence that they help students learn") are stupid?

(My emphasis.)


Laser shoots down missles, artillery, and mortars!

Via Ace o' Spades. I wonder when stuff like this is going to be deployed?

Saturday, March 17, 2007


Shoddy Construction

As the credit crunch moves up the food chain a lot of fraud and dirty laundry in the real estate business is coming to light. Corey at InfoHype discusses the spreading panic among banks and has a link to an article about the poor quality of some of the homes built during the mania. Cavaet Emptor.

My own experience jibs with this article. Inna and I moved into a condo built in 2003-04 in January. We are renting because the precious owner complained about the windows which leak water and are drafty and threatened legal action so the developer took it back. Water collects on the ledges in our apartment and in the stair wells after a heavy rain. We also had a montrous heating bill in February. It was a cold month but next winter I will be putting up plastic.

I would never consider buying this place especially at the $430K price that they are asking. Good to know that I should be wary about new homes when we do buy in a few years. Now where can I find old houses for not too much money? ;-)


Victoria Toensing and timing

If you don't know who she is go to Hot Air and check out the video. She is exceptional at getting under Notrildamus' (snicker) skin.

Yesterday, she was on Hannity and Spock and she had something to say about Cheney's request to find out something coming a day after Plame said Joe Wilson was suggested to go on the trip. This was never elaborated upon but it would be a pretty damning piece of evidence suggesting that Wilson's trip originally had nothing to do with the V.P.'s office.

Anybody know anything about this? I am going to scour Tom Maguire's site for this.


Multi-National Force Iraq on YouTube

MNF Iraq has started up its own Youtube group. Lots of vids showing our boys giving the jihadis hell.

Friday, March 16, 2007


The running of the stops

A stop-loss order is a market order that is placed to buy, above the market, or sell, below the market. What you saw in the stock market on Wednesday was a classic spike to support levels, around 12,000 in the Dow Industrials, a triggering of stop-loss sell orders then a quick rally after the stops were triggered. This is a market technicians dream. What you have are two very good levels above and below the market which, once broken, will determine the trend. However there is an opportunity here for a trade with a high degree of success.

The move of the most recent high is at least a correction of the rally which lasted from June of 2006 until last month. A correction of a trend that lasted 8 months should last at least longer than the one month we have had so far. Here is the beautiful part. If it isn't a correction of this trend then it might be a correction of a bigger trend. Maybe the trend that started in October of 2002. Trend (a) is 2100 points and trend (b) is 5400. Pricewise the amount of loses, roughly 800 points, is big enough to say its over. A correction of trend (b) will take us below 11,000. So what is your risk? The most recent high! 12,821! Allow the market to rally to 12,400 or 12,500 and you are risking 400 points to gain 1,500.

Running stops is an old trick used by floor traders to screw screw the off floor customerss who would use the stop-loss orders as protection in case the market moved against a position they held when they were not watching. Sometimes the brokers who held the stop-loss orders would tip off the traders who would collectively buy or sell to the price where the orders where triggered. All very dirty stuff. The floor traders and brokers wondered why those who used their markets embraced electronic trading so quickly. Shenanigans like this are the reason.

Thursday, March 15, 2007


Alan Greenspan acknowledges the housing ATM

The housing ATM is the jump in consumer spending that results from home equity loans taken out on ever increasing real estate prices.

Meantime, though, Greenspan said much of the strength in consumer spending over the past five years can be traced to capital gains on surging housing prices, whether they were both realized or not. That means that if home prices keep falling, there could be more of an impact on the broader economy's momentum, he indicated, since consumer spending fuels two-thirds of national economic activity.

This is the equivalent of, "You're damn right I ordered that code red!" Greenspan has just admitted that he knows that much of our economic growth was the result of the housing bubble. Not productivity, speculation.

At this point he should be lead out of the room in handcuffs or whatever they do to failed central bankers.


When you treat them like children

And yet contemporary democracies, she says, accommodate the incitement of such behavior: "The multiculturalism theology, like all theologies, is cruel, is wrongheaded, and is unarguable because it is an utter dogmatism. . . . Minorities are exempted from the obligations of the rest of society, so they don't improve. . . . With this theory you limit them, you freeze their culture, you keep them in place." [Emphasis added.]

The most grievous failing of the West is self-congratulatory passivity: We face "an external enemy that to a degree has become an internal enemy, that has infiltrated the system and wants to destroy it." She believes a more drastic reaction is required: "It's easy," she says, "to weigh liberties against the damage that can be done to society and decide to deny liberties. As it should be. A free society should be prepared to recognize the patterns in front of it, and do something about them."

She says the West must begin to think long term about its relationship with Islam--because the Islamists are. Ms. Hirsi Ali notes Muslim birth rates are vastly outstripping those elsewhere (particularly in Western Europe) and believes this is a conscious attempt to extend the faith. Muslims, she says, treat women as "these baby-machines, these son-factories. . . . We need to compete with this," she goes on. "It is a totalitarian method. The Nazis tried it using women as incubators, literally to give birth to soldiers. Islam is now doing it. . . . It is a very effective and very frightening way of dealing with human beings."

The effect of totalitarianism upon the psyche of the populace is the primary reason we are having trouble dragging the Iraqis into the modern world. They want to live in this world but it is so easy for them to fall back on tribalism and sectarism. Give the left some credit for finally being cynical enough to see the problem. Often I was accused of utopian fantasies when I debated the effort to bring democracy to Iraq.

The quote from Ms. Hirsi Ali is not about the US and its racial and ethnic minorities but it might as well be. Expect great things and you will be rewarded with them. But treat adults as children/victims and they will revert to that role. The story of the 21st century will be about bringing the rest of humanity up to the living standards of the Western world. Integral to that effort is the common acceptance of democratic values and a large part of that is putting the burden of upholding those values on the people of the Middle East. My utopian side believes that they will rise to the challenge just as American minorities who seize the American dream have succeeded.

Tuesday, March 13, 2007


Immigration Reform

The Mexican Agenda

In Mexico today, President Bush made a promise:
"In the debate on migration, I remind my fellow citizens that family values do not stop at the Rio Grande River, that there are decent, hardworking honorable citizens of Mexico who want to make a living for their families," Bush said as he stood beside Calderon. "And so, Mr. President, my pledge to you and your government — but, more importantly, the people of Mexico — is I will work as hard as I possibly can to pass comprehensive immigration reform."
Mexican President Calderon said "migration cannot be stopped and certainly not by decree." He is wrong; illegal migration could be all but stopped cold if the political will existed to 1) enforce our existing laws; 2) build physical barriers where practical; 3) aggressively patrol the border with a sufficient number of border guards; 4) acknowledge there is a large demand for immigrant workers and adjust our laws accordingly; and 5) pressure Mexico into solving her own problems rather than deliberately exporting them here.

Calderon had his own ideas on how best to stop the flow of illegal aliens into the US:
Mexico has protested the construction of a barrier along more than 1,000 kilometers (625 miles) of the roughly 3,000-kilometer (1,875-mile) border.

Calderon suggested on Tuesday spending money on development in impoverished Mexican areas where many of the migrants come from would be more effective in combating illegal migration than building a wall along the border.
Nice try, but you're not getting a penny.

Its outrageous that Calderon would even make a suggestion like that. Even more outrageous is the fact that Mexico impinges upon US sovereignty so frequently and casually and no US official ever says or does anything about it. In fact, like President Bush, they aid and abet the Mexican agenda. For example, consider the legacy of Mexico's former diplomatic representative in Chicago, Carlos Manuel Sada:
Sada drew criticism from opponents of illegal immigration because the consulate aggressively promoted the matricula consular, a Mexican ID card.

The card is issued to Mexicans, even if they are living in the U.S. illegally. Banks and local governments have begun accepting the cards to open bank accounts and conduct other transactions, to the dismay of some U.S. lawmakers and other critics.

Consulate staff members regularly made stops at schools, churches and libraries throughout the Midwest to issue the cards. At its peak, the Chicago consulate was issuing 1,000 cards a day, the most in the U.S.

In an interview Thursday, Sada said he tried to use his tenure to strengthen ties to grass-roots organizations and local elected officials. The consulate, for example, signed an agreement with the Illinois Department of Children and Family Services to better serve Mexican immigrants.
Sada is proud that "Chicago has been a place that has been at the forefront in promoting the Mexican agenda."

And just what is the Mexican agenda? Preserving the status and power of the Mexico's ruling elite by encouraging its poorest citizens to move to the US, deliberately eroding or undermining US sovereignty in the process. In noting the rightward shift in public opinion regarding illegal immigration since his book Mexifornia was published 5 years ago, Victor Davis Hanson ovserves:
Worker remittances sent back to Mexico now earn it precious American dollars equal to the revenue from 500,000 barrels of daily exported oil. In short, Mexico cannot afford to lose its second-largest source of hard currency and will do almost anything to ensure its continuance. When Mexico City publishes comic books advising its own citizens how best to cross the Rio Grande, Americans take offense. Not only does Mexico brazenly wish to undermine American law to subsidize its own failures, but it also assumes that those who flee northward are among its least educated, departing without much ability to read beyond the comic-book level.

We are also learning not only that Mexico wants its expatriates’ cash—and its nationals lobbying for Mexican interests—once they are safely away from their motherland; we are also discovering that Mexico doesn’t have much concern about the welfare of its citizens abroad in America. The conservative estimate of $15 billion sent home comes always at the expense of low-paid Mexicans toiling here, who must live in impoverished circumstances if they are to send substantial portions of their wages home to Mexico. (And it comes as well at the expense of American taxpayers, providing health-care and food subsidies in efforts to offer a safety net to cash-strapped illegal aliens.) So it is not just that Mexico exports its own citizens, but it does so on the expectation that they are serfs of a sort, who, like the helots of old, surrender much of the earnings of their toil to their distant masters.

But even more grotesquely, in the last five years, the Mexican real-estate market has boomed on the Baja California peninsula. Once Mexico grasped that its own unspoiled coast was highly desirable for wealthy expatriate Americans as a continuation of the prized but crowded Santa Barbara–San Diego seaside corridor, it began to reform its real-estate market, making the necessary changes in property and title law, and it welcomed with open arms cash-laden subdividers looking to come south. This is sound economics, but examine the ethical message: Mexico City will send the United States millions of its own illiterate and poor whom it will neither feed nor provide with even modest housing, but at the same time it welcomes thousands of Americans with cash to build expensive seaside second homes.
I'm of two minds regarding immigration reform. We cannot consider our nation secure if our borders are porous and there is a huge population of illegal aliens living on the margins of our society; its just too easy for criminals, terrorists or other enemies of America to hide amongst them. On the other hand, it just galls me to see our country's left leaning elites succeed in forcing Americans to accept the economic, cultural, and political changes wrought by their policy of deliberately ignoring both American public opinion and US law -- its a very bad precedent to set.


Subprime mortgage market is done

The credit crunch rolls on.

I started writing this post, in my mind, days ago. It's nice when events confirm your beliefs. But first the technical look at the market. The area around 12,000 should be tough for the market to get through. I think it will but once it does, if we are in for a long bear market, it should be a ceiling. I don't have any idea whether this bear will be slow grind or a crash. I am guessing slow grind at least until more people become conscious of what is happening. Bear markets love to keep hope alive. As of this moment Asian stocks are just mimicking our loses and the futures are down slightly from today's close. The next support after 12,000 is 10,800, the beginning of the run that started in June of last year.

The subprime mortgage market no longer is lending. Subprime lenders are scrambling to stay afloat and even larger lenders are suffering from the deluge of poorly considered loans.

Subprime loans, a term applied to some of the riskiest home mortgages, are made to borrowers unable to qualify under traditional, more stringent criteria. The loans often carry interest rates 2 to 3 percentage points higher than regular mortgages and sometimes have low initial ``teaser'' rates that adjust higher in later years. Some lenders also lowered their standards last year to bolster revenue because slumping home sales had hurt demand.

The combination made the loans more prone to default, with delinquencies at more than 12 percent in the third quarter, according to the Mortgage Bankers Association. The Washington- based trade group is scheduled to release updated numbers for the fourth quarter tomorrow. Investors are increasingly shunning bonds backed by subprime loans.

``It's like a hot potato with these loans, no one wants them,'' Fitch's Arscott said.

What you will hear from the bubbleheads tomorrow is that the subprime market was only a small percentage of the mortgage market and that this crisis will not spread. There is some truth to this. Subprime lending is only between 15-20% of all mortgages. These loans are more popular is the areas that have had the biggest run ups and they will likely suffer the most. But credit crunches have a way of spreading and this is why what I am talking about is more psychology than economics.

It is very difficult to predict if a decline will turn into a panic and whether a panic will become a change in mass psychology know as a depression. Depression is really the correct word because it takes a tectonic shift in the collective world view of the majority of investors to a state of overwhelming pessimism. Difficult is not impossible and I am keying in on a simple indicator. Simple because our asset bubbles were the product of one institutions dereliction of duty and for the bubbles to pop, there has to be a realization of the folly of creating prosperity through ever expanding credit given to ever worse credit risks.

I knew that the end was near in 2000 when I heard about a company called Microstrategy had blown up. This company had catapulted to amazing heights and was crushed just as quick. It was an a-ha moment for me. People had decided that this stock was being driven by mass hysteria and when it stopped this tiny bubble popped. We are witnessing the same thing in the mortgage market right now. The weakest fail first.

So what can save the mortgage market? The answer is obvious, more credit. What prevented the bear market of 2001-03 from becoming an economic disaster was a massive influx of government spending and a fire sale on credit courtesy of the Fed. It was only right. The Fed caused the problem so it is fitting that they solved it. But solving a credit crunch with more credit only delays the pain. That is why we are here. That is why I am going to watch for the inevitable surprise interest rate cuts that are coming as soon as the Fed feels asset prices have fallen enough or there is a danger that they might fall too quickly. Panics are caused by collective realization that prices are too high. When the panic comes and the Fed cuts just watch the reaction of the market. If they can stop the plunge then we will have to find a new asset class to buy up. But I think we are done. There are no more assets left to bubblize. So the markets reaction should be to stop falling for awhile and then continue down. It is a little early to say if for certain we are going to see the worst possible scenario but it is not too early to prepare for it.

All the news that fits my opinions:

Late mortgage payments reach high

Retail sales barely rise.

Friday, March 09, 2007


Like a fat, lesbian vampire bat

Perhaps the funniest thing I've ever heard. Just go to this link at HotAir and watch the videos.

Wednesday, March 07, 2007


The Atkins diet works, so shut up

I really like the Atkins diet, the only bad side effect has been gout but I have come to the realization that has a lot to do with my consumption of bacon and sausage. So it is good to hear what I have known for a long time. The Atkins diet is the best diet for real world conditions.

Barry Sears, who developed the Zone diet, criticized the study as "bad science," saying details show the participants did not really follow the diet rules.

"The execution basically was fairly pathetic at best so the conclusions are jaded," he said in an interview. The way people followed the Atkins diet in the study, he said, is actually closer to the Zone's principles.

Study author Gardner, however, said one of the strengths of the $2 million project was that it mimicked real-world conditions, with participants preparing or buying all their own meals and not everyone following the diets exactly.

Gardner said the Atkins diet has "a very simple message. Get rid of all refined carbohydrates to lose weight," thus targeting the increasing consumption of refined sugars, such as high-fructose corn syrup.

He also said the Atkins diet is best at encouraging people to drink more water, and when people replace sweetened drinks with water, they do not generally eat more food.

I have had more than a few people tell me that Atkins is bad for me and that all that meat will kill me. The thing is, it is the only diet that has shown me positive results over time. The key is being on this diet doesn't feel like I am on a diet. I hate counting calories and feeling hungry. Besides the gout I don't drink on this diet. At least I shouldn't, alcohol makes me crave carbs. I have friends who have lost weight using Atkins and they enjoy a scotch but I try and stay away from it. Ok, maybe a vodka once a month, but not too often because it aggravates the gout. In fact, the diet is so good that I have slacked off on watching my weight because I know I can always go back to Atkins. That is a bad habit. But now I am back on track with no distractions.

So all you doubters, stop with the criticism. Let me eat my eggs in the morning. Let me eat chicken almost every day. (I love chicken.) Stop saying, "Why don't you eat a piece of fruit, it won't kill you." No it won't, but it won't help me lose weight.


Democrats Plan To Force Closure of Gitmo

Forcing the US to treat terrorists as criminals

Democrats are formulating a plan to shut down the detention camp at Guantanamo Bay, Cuba:
"It sets us back in the war on terrorism to be maintaining Guantanamo," said Rep. Jim Moran (D-Va.), who's heading an investigation of the facility for the House Defense Appropriations Subcommittee.

"It will enhance our reputation to close it down and to apply our system of justice to all of these detainees," he added.

After two trips to Guantanamo, Moran told The Politico that he's recommending Congress cut funding to the detention center at the end of summer 2008. The men held there should then be released, tried or moved to the United States, he said.

A Democratic official involved in developing the Guantanamo strategy said the Democrats, who control the new Congress, expect Republicans to object to bringing the detainees onto U.S. soil because their attorneys would surely argue they were entitled to myriad new rights.

The official, speaking on the condition of anonymity, said Democrats are planning hearings in April or May to "build a record" that closing Guantanamo would be beneficial and that it would be legal, as well as logistically feasible, to bring its detainees to the United States. The hearings would start with panels of lawyers, some of whom are convinced the plan is workable and some of whom represent detainees now at Guantanamo.

And to make the measure more palatable to Republicans, Moran said he would suggest the detainees be transferred to military bases that would allow them to be tried in federal courts under the Richmond-based 4th U.S. Circuit Court of Appeals.

(Via Drudge.)
What to do with those we capture in this war was always going to be a problem for us, especially perception-wise. Ideally, the US should still be holding these detainees incommunicado, without having revealed how many or who exactly we held. Closing Guantanamo and giving the detainees access to our domestic judicial system will transform a propaganda victory for al Qaeda and the Left into a strategic victory for both; as such, it cannot be allowed to happen. Supreme Court Justice Antonin Scalia got it right:
"War is war, and it has never been the case that when you captured a combatant you have to give them a jury trial in your civil courts," Judge Scalia said, during a talk on March 8 at the University of Freiburg in Switzerland, according to Newsweek.

"Foreigners, in foreign countries, have no rights under the American Constitution... Nobody has ever thought otherwise."

Judge Scalia said that if a foreign combatant was captured by the US army on a battlefield, a prison camp was where he belonged.

"I had a son on that battlefield and they were shooting at my son, and I’m not about to give this man who was captured in a war a full jury trial. I mean it’s crazy." The conservative judge’s son, Matthew, fought in the Iraq war.

Judge Scalia also said he was "astounded" at the hypocritical reaction to the Guantanamo camp in Europe.
Mark Steyn noted (no link) a few months back that Guantanamo Bay is more than just a public relations problem for us (via Jim Lindgren; emphasis his)
If I had to summon up Gitmo in a single image, it would be the brand-new Qurans in each unoccupied cell. To reassure incoming inmates that the filthy infidels haven't touched the sacred book with their unclean hands, the Qurans are hung from the walls in pristine surgical masks. It's one thing for Muslims to regard infidels as unclean, but it's hard to see why it's in the interests of the United States government to string along with it and thereby validate their bigotry.

When I put this point to Adm. Harris, he replied, "That's an interesting question," and said the decision had been made long before he arrived. He explained that they had a good working system whereby whenever it became necessary to handle a Quran — because a weapon or illicit communication had been concealed in it — a Muslim translator would be called to the cell to perform the task. But I wasn't thinking of it in operational so much as psychological terms: What does that degree of abasement before their prejudices tell them about us?


How do like your hippy cooked?

Plus this.

Equals problem solved. (Via HotAir and Ace.)

Monday, March 05, 2007


Bono Wants To Be Fair.

How about getting all the good stories out there.

Bono is the guest editor for the July issue of Vanity Fair:

“We need to get better at storytelling,” Bono said, sitting in the 22nd floor of the office of Graydon Carter, the editor of Vanity Fair. “Bill Gates tells me this all the time. We’ve got to get better at telling the success stories of Africa in addition to the horror stories. And this magazine tells great stories.”

I wont argue with a little balance and telling some stories of success but how about applying that concept to some other important issues. Like Iraq.

Bono is also on to something else:
“I live in that world, the world of media,” he said. “I don’t want to talk about Forbes right now, but I will say this: One of the things that I have learned of in Africa is the crucial role that commerce will play in taking its people out of extreme poverty. Everyone talks about China being the next big thing, but if you spend any time in the bars or hotels in Africa, you see a lot of Chinese doing deals there. There is tremendous opportunity there.”

All emphasis mine.

Saturday, March 03, 2007


The Deflation Elephant in the Room

It is not easy to be a conservative who believes that out of control credit creation has caused an asset bubble which threatens to send the US into depression. I came of age, economically, in the early 80's reading George Gilder's Wealth and Poverty and arguing for the simple elegance of the Laffer curve. I was and am a true believer in low tax rates being a stimulus to economic grow and to increased tax revenue. On top of this add on the fact that so many leftists have glommed onto the threat of the bubble to detract from anything President Bush touches. (Of course they were no complaints from the lefties when Greenspan and Robert Rubin made the handshake deal to cut the deficit and ramp up the credit creation putting the economy firmly in the hands of the Fed.)

Unfortunately, some of my old heroes have bought into the easy credit path to prosperity. I was watching Kudlow & Co. the day of the glitch and besides the usual cheerleaders was Arthur Laffer following the company line. Even the editorial page of the Wall Street Journal has had nothing but ridicule for the idea that debt poses a danger to the economy. They propose that the savings rate is an antiquated way of measuring what Americans are truly saving.

As a statistic, however, the official "savings rate" is nearly as useless a guide to prosperity as the trade deficit. In the government accounts, what is called the savings rate is literally income less consumption. But the government defines income too narrowly and consumption broadly. For example, "income" doesn't measure capital gains (whether realized or not), the rising value of your home, or even increases in your retirement accounts.

There is a reason that capital gains and increases in the value of your home are not counted as savings. Foremost is that both could be the result of inflation. Asset inflation to be more specific. There no small element of risk in most assets that throw of capital gains and the value of your home might be considered savings but now with home prices rising to levels of unaffordability in so many regions of the country how can anyone reasonable say they can count on the value of their home being their to tap for an emergency in the next few years. Only in a bubble driven economy which has existed for this long can so many ignore risk.

Well much to my surprise I caught a moment of sobriety in the WSJ this past week. I can't say I read them as religiously as I used to so I don't know if this is the first time they have acknowledged that there might be a Fed induced problem but this is the first time I have seen it.

The current problems in the housing credit markets owe a great deal already to the Fed's mistake in keeping monetary policy too easy for too long during the late Greenspan era. We now have to ride them out, and Mr. Bernanke shouldn't make them worse with a panicky, premature easing.

This is momentous because it shows a willingness to consider that Fed policy has been too easy. Something anathema to the likes of Larry Kudlow who still believes the bear market of 2001-2003 was caused by the Fed being to tight. Unfortunately it is far too late to do anything to stop the coming deflation. It will play out but there is a glimmer of hope that the blame will be laid properly, not at the feet of capitalism but firmly on the shoulders of Alan Greenspan and all who ignored the asset bubble while it was expedient.

Friday, March 02, 2007


Unhinged Liberal Stalker Mike Stark

...lied and got into the recent CPAC meeting and had his photo taken with Michelle Malkin. Apparently he is proud of this. He shouldn't be.

Thursday, March 01, 2007


It was an inside job!!!

I don't know how I could have been so blind. Warning, don't click the link if you don't want your world turned upside down. This will change your entire worldview. Will make you question all your assumptions. I'm warning you! The implications of this will shake the Galaxy.

(Via HotAir.)

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