Wednesday, September 24, 2008

Why We're In The Mess We're In

This prophetic news article comes from the September 30, 1999 New York Times (hat tip: Coyote Blog):
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

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.

''Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements,'' said Franklin Raines, Fannie Mae's chairman and CEO. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

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 1980s.

"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.''
Just one more example of the insidious effects of government intervention in the free market. And now we all have to pay for it, to the tune of $700 billion.

Friday, September 19, 2008

The Nonsense of Global Warming

Paul Johnson 09.11.08, 6:00 PM ET
Forbes Magazine dated October 06, 2008

August was one of the nastiest months I can remember: torrential rain; a hailstorm or two; cold, bitter winds; and mists. But we are accustomed to such weather in England. Lord Byron used to say that an English summer begins on July 31 and ends on Aug. 1. He called 1816 "the year without a summer." He spent it gazing across Lake Geneva, watching the storms, with 18-year-old Mary Shelley. The lightening flickering across the lake inspired her Frankenstein, the tale of the man-made monster galvanized into life by electricity.

This summer's atrocious weather tempted me to tease a Green whom I know. "Well, what about your weather theory now?" (One of the characteristics of Greens is that they know no history.) He replied: "Yes, this weather is unprecedented. England has never had such an August before. It's global warming, of course." That's the Greens' stock response to anything weather-related. Too much sun? "Global warming." Too little sun? "Global warming." Drought? "Global warming." Floods? "Global warming." Freezing cold? "Global warming."

I wish the great philosopher Sir Karl Popper were alive to denounce the unscientific nature of global warming. He was a student when Albert Einstein's General Theory of Relativity was first published and then successfully tested. Einstein said that for his theory to be valid it would have to pass three tests. "If," Einstein wrote to British scientist Sir Arthur Eddington, "it were proved that this effect does not exist in nature, then the whole theory would have to be abandoned."
To Popper, this was a true scientific approach. "What impressed me most," he wrote, "was Einstein's own clear statement that he would regard his theory as untenable if it should fail in certain tests." In contrast, Popper pointed out, there were pseudo-scientists, such as Karl Marx and Sigmund Freud. Marx claimed to be constructing a theory of scientific materialism based on scientific history and economic science. "Science" and "scientific" were words Marx used constantly. Far from formulating his theory with a high degree of scientific content and encouraging empirical testing and refutation, Marx made it vague and general. When evidence turned up that appeared to refute his theory, the theory was modified to accommodate the new evidence. It's no wonder that when communist regimes applied Marxism it proved a costly failure.

Freud's theories were also nonspecific, and he, too, was willing to adjust them to take in new science. We now know that many of Freud's central ideas have no basis in biology. They were formulated before Mendel's Laws were widely known and accepted and before the chromosomal theory of inheritance, the recognition of inborn metabolic errors, the existence of hormones and the mechanism of nervous impulse were known. As the scientist Sir Peter Medawar put it, Freud's psychoanalysis is akin to mesmerism and phrenology; it contains isolated nuggets of truth, but the general theory as a whole is false.

The idea that human beings have changed and are changing the basic climate system of the Earth through their industrial activities and burning of fossil fuels--the essence of the Greens' theory of global warming--has about as much basis in science as Marxism and Freudianism. Global warming, like Marxism, is a political theory of actions, demanding compliance with its rules.

Those who buy in to global warming wish to drastically curb human economic and industrial activities, regardless of the consequences for people, especially the poor. If the theory's conclusions are accepted and agreed upon, the destructive results will be felt most severely in those states that adhere to the rule of law and will observe restrictions most faithfully. The global warming activists' target is the U.S. If America is driven to accept crippling restraints on its economy it will rapidly become unable to shoulder its burdens as the world's sole superpower and ultimate defender of human freedoms. We shall all suffer, however, as progress falters and then ceases and living standards decline.

Out of Balance

When I'm driving to my country home in Somerset, I pass two examples of the damage Greens can cause when their views are accepted and applied. Thanks to heavy government subsidies, many farmers switched from growing food to biofuel crops--perhaps the most expensive form of energy ever devised. The result has been a world shortage of food, with near starvation in some places, and a rise in the cost of food for everyone. We're now getting wise to this ridiculous experiment; shares in biofuels have fallen, and farmers are switching back to their proper work. But the cost has been enormous.

The other thing I pass is a new windmill, spinning slowly around. Windmills were the great invention of the early Middle Ages--man harnessing nature and using it to replace muscle power. When I was a boy more than 70 years ago there were still a few windmills, but nobody doubted they were on their way out. The thought of going back to wind power would have seemed preposterous. Nevertheless, under pressure from Greens this has happened. Wind power is a grotesquely expensive and inefficient form of energy, and the new windmills are hideous things, ruining the landscape and making an infernal noise.

Marxism, Freudianism, global warming. These are proof--of which history offers so many examples--that people can be suckers on a grand scale. To their fanatical followers they are a substitute for religion. Global warming, in particular, is a creed, a faith, a dogma that has little to do with science. If people are in need of religion, why don't they just turn to the genuine article?

Thursday, September 18, 2008

Biden: Wealthy Americans Must Pay More Taxes To Show Patriotism

Joe Biden has informed us how our wealthier citizens can become more patriotic.

Presidential Candidates' Tax Policies in a Nutshell

I have copied and pasted the following summary from CCH Tax Research NetWork.

Whichever candidate is elected in November, there are likely to be big changes proposed to the tax code. The presidential candidates' proposed tax policies include changes to individual and business income taxes, the estate tax and Social Security. For individuals, Sen. Obama would provide expanded credits for families, savers, homebuyers and clean vehicles; Sen. McCain would double the personal exemption to $7,000 and extend and index the increased alternative minimum tax (AMT) exemption amounts.

On the business side, both Obama and McCain seem to support reducing the corporate tax rate; McCain proposes a corporate tax rate of 25 percent. However, the candidates differ on the estate tax with Obama favoring the status quo, a top rate of 45 percent and a $3.5 million exemption, while McCain proposes a top rate of 15 percent with a $5 million exemption. The candidates also differ greatly on the issue of Social Security: Obama favors the current structure, with an increase in the payroll tax to pay for it, and McCain favors personal accounts for younger workers.

Individual Income Taxes

Obama proposes a $1,000 tax credit for families with incomes between $8,000 and $75,000 ($500 for individuals). He would extend the current marginal rates for the lower tax brackets and proposes to eliminate the federal income tax on seniors with incomes below $50,000. He suggests a universal mortgage credit of 10 percent, up to $800, a $4,000 refundable education credit, and expanding the existing Savers Credit to more taxpayers and making it refundable. He also proposes an expanded earned income tax credit (EITC), an expanded Child and Dependent Care Credit by making it refundable, and an expanded tax credit for clean vehicles. To pay for these tax breaks, he proposes restoring the 36- and 39.6-percent tax brackets, raising the capital gains and dividend tax rate to 20 percent for families with incomes over $250,000 ($200,000 for individuals) and restoring the phase-out for itemized deductions and exemptions. He also supports simplified tax returns for many filers and would also extend and index the increase in AMT exemption amounts.

McCain wants to make the Bush tax cuts permanent, including the lower marginal rates and capital gains and dividend rates. He also proposes gradually doubling the personal exemption amount to $7,000. He would pay for these proposals by eliminating congressional earmarks and with unidentified cuts in government spending. He has proposed simplified tax returns for many filers. He would also extend and index the increased AMT exemption amounts and has proposed an election for a separate and simplified alternative tax system.

Business Income Taxes

Obama generally supports corporate tax reform and hints of corporate tax rate reductions for domestic business activity tied to repealing other business tax breaks and closing loopholes to pay for the rate reductions. He also proposes to eliminate capital gains taxes on small businesses. Loopholes Obama has identified include clarifying the economic substance doctrine, increasing capital gains reporting, eliminating special tax breaks for oil and gas companies while expanding the renewable production tax credit, taxing carried interests as ordinary income, and what is described as the CEO pay loophole. He would also reform international tax loopholes and crack down on international tax havens. Further, he proposes making the research and development credit permanent.

McCain has proposed reducing the corporate tax rate from 35 percent to 25 percent, banning taxes on internet sales and cell phones, and permitting full first-year expensing for capital acquisitions. These tax breaks would be paid for with spending cuts or corporate loophole closers, identifying some of the tax breaks for oil and gas companies and repealing the domestic production activities deduction. McCain has also proposed expanding the research and development credit and making it permanent.

Estate Tax

Obama would preserve the estate tax as in effect in 2009: a 45-percent top tax rate and a $3.5 million exemption.

McCain wants to preserve the estate tax with a 15-percent top tax rate and a $5 million exemption.

Social Security

Obama would preserve the existing Social Security structure but help cover the growing deficit by imposing a payroll tax of four percent (two percent each from employer and employee) on incomes over $250,000.

McCain has proposed adopting personal accounts for younger employees, similar to proposals by the Bush administration.

Health Care

Obama proposes targeted health care tax credits including a health care credit for small business. He proposes a new health insurance exchange to provide health insurance, paid for by employers who do not provide employee health insurance.

McCain wants a refundable tax credit of up to $5,000 for families to be paid for by treating employer-provided health benefits as taxable compensation to the employee.

By Jeff Carlson and Stephen K. Cooper, CCH News Staff

Wednesday, September 17, 2008

Halfway There

Only six more months to go!

Meet tonight at Kevin Barry's for shenanigans.

Friday, September 12, 2008

Celebrities chime in on Palin

Some of the Hollywood elite have been expressing their views on the nomination of Sarah Palin by the GOP. You can find a lot of them here.
But I think Pamela Anderson's hard hitting critique should really pull in those borderline votes Obama's way: "I can't stand her. She can suck it."

Wednesday, September 03, 2008

Give 'Em Hell, Sarah

Best running mate pick in modern history. Not exaggerating. Is it too late to flip the ticket and put McCain at VP instead?