What’s Going On? Evening News Round-up

Posted on September 10th, 2008 by ecthompson

My picks from the day’s news:

  • One of my readers is not happy with my discussion of the Vice Presidential Candidate Sarah Palin and teenage pregnancy. I’m sorry that he wasn’t happy and that he thought that I’m gutless. I wonder if it’s fair to talk about Palin the reformer? Maybe that is off-limits too.
  • I am still puzzled by Presidential hopeful John McCain’s refrain of “Drill, Baby, Drill.” Why is drilling a good thing? I don’t think that it is bad, but applause? Why?
  • Speaking of oil and drilling… OPEC is thinking about cutting production in order to keep the price of oil over $100 per barrel. Our friends the Saudi’s, have vowed to keep production at its current level. Well, that fills me with warm fuzzies.
  • There seems to be lots of reporters who are writing about the back-and-forth between the Obama camp and the McCain camp regarding lipstick on a pig. Of course, this distracts Americans away from the real issues. Our economy is in the toilet. We still don’t have a strategy for getting out of Iraq. We are no closer to Osama bin Laden. More and more of our troops are dying in Afghanistan as the Taliban returns. (Admiral Mullen stated that we are not winning in Afghanistan.) These are the issues that I want to hear about.
  • Lehman Brothers are desperately trying to restructure their debt and sell off whatever everything they can. They released their third-quarter earnings statements early in order to fend off criticism and speculation. They lost $3.9 billion last quarter. That is added to the $2 billion they lost in the first quarter of this year. Lehman Brothers have survived two World Wars and a Great Depression but may not be able to survive the deregulation in tax cuts by the Bush administration.
  • You knew it was going to happen sooner or later. Drudge, of the Drudge Report, has been on the sidelines. He really hasn’t made any headlines are breaking news. He really hasn’t done anything significant since the Clinton camp stopped feeding him information. Drudge completely botched the lipstick story. Is anyone surprised?
  • A new scandal is beginning to engulf the Department of the Interior. These are the kind of scandals that I like. It contains sex and drugs but, unfortunately, no rock ‘n roll. It does contain lots of money though.
  • EJ Donnie of the Washington Post asked the question, “Does the Truth Matter any More?” Nice OpEd.

Tags: Afghanistan, Economy, Election 2008, Energy, Saudi Arabia // View Comments

  • Mark
    EC,

    Let me clarify a little bit, as I re-read my comment it's far too general. Discrimination by lenders definitely exists, and it's absolutely wrong when it's based on race, gender, ethnicity, etc. I think it's less of a problem today than in the past, but it will probably never go away completely. It's sad, but probably true.

    But my example exists as well. Lenders generally decided not to lend money to people who they didn't think could pay it back. In some cases, these people also happened to be black/Latino, etc. Clearly these people weren't discriminated on the basis of their ethnicity, they were just a bad credit risk. There was definitely pressure from politicians, lawyers, and those who felt discriminated against to demand that the loan take place. And when the borrower defaulted, the lenders were criticized as "predatory" and "greedy". Overlooked is the fact that it's a poor decision to lend money when you don't think you'll get it back, so how were the lenders being predatory or greedy? Anyway, I digress.

    As for deregulation, I tend to disagree that's the cause. Are you referring to some specific law or rule that was repealed or de-regulated out of existence? I think there's a lack of transparency with the mortgage process, but that's not a de-regulation issue per se, it's simply regulation that was never enacted. Hard to fault anyone for that, Congress or otherwise.

    Finally, the attitude of the country in general is one that "everything is OK as long as we're making money" is certainly not unique to the Bush administration. Clinton presided over his own great markets and nobody complained about Enron, Worldcom, et al until AFTER the punch bowl was taken away.
  • Mark
    EC,

    Let me clarify a little bit, as I re-read my comment it's far too general. Discrimination by lenders definitely exists, and it's absolutely wrong when it's based on race, gender, ethnicity, etc. I think it's less of a problem today than in the past, but it will probably never go away completely. It's sad, but probably true.

    But my example exists as well. Lenders generally decided not to lend money to people who they didn't think could pay it back. In some cases, these people also happened to be black/Latino, etc. Clearly these people weren't discriminated on the basis of their ethnicity, they were just a bad credit risk. There was definitely pressure from politicians, lawyers, and those who felt discriminated against to demand that the loan take place. And when the borrower defaulted, the lenders were criticized as "predatory" and "greedy". Overlooked is the fact that it's a poor decision to lend money when you don't think you'll get it back, so how were the lenders being predatory or greedy? Anyway, I digress.

    As for deregulation, I tend to disagree that's the cause. Are you referring to some specific law or rule that was repealed or de-regulated out of existence? I think there's a lack of transparency with the mortgage process, but that's not a de-regulation issue per se, it's simply regulation that was never enacted. Hard to fault anyone for that, Congress or otherwise.

    Finally, the attitude of the country in general is one that "everything is OK as long as we're making money" is certainly not unique to the Bush administration. Clinton presided over his own great markets and nobody complained about Enron, Worldcom, et al until AFTER the punch bowl was taken away.
  • ecthompson
  • Mark -

    As usual, I appreciate your input. I would disagree with your assessment that none of this has to do with deregulation. The atmosphere that everything was okay if you were making money was and is promoted by the Bush administration. Deregulation was supported by both sides of the aisle in the 60's and 70's as they forgot the lessons of the great depression.

    I agree that everyone can't afford a home. I disagree with the discrimination problem. Lenders have discriminated against Blacks/Latinos/women in the this country. My parents who were putting down an unheard of amount of 35% on a house in North Dallas in 1968 ran into trouble with their loan. My father was a physician and had plenty of income. He had almost no debt. The trouble magically disappeared when they threatened to sue the lending company. I had some trouble getting my first house. One company said no way. The other is it was no problem. I had no problem making payments. So, there are some interesting standards in the housing industry.

    I don't like to bash anyone. I would like for people on both sides of the aisle to say what they mean and stand up for the people.

    Thanks again for your comments.
  • Mark
    EC,

    You are grossly mischaracterizing the demise of Lehman (and Bear Stearns, Fannie and Freddie as well, in case you lump them in there) on Bush's tax cuts. Lehman las large, leveraged investments tied to residential and commercial real estate. They used firm assets to make those investments, and thanks to leverage, were able to invest much than they had assets. Now, with the blowup in housing and the worsening situation in corporate real estate, their investments have become impaired, forcing the firm to raise capital to post as collateral. However, they cannot get capital because no one will lend or invest in them. Worse, Lehman's clients are recognizing this and beginning to pull their own assets out of Lehman, or shut down trading operations. This is a run on Lehman, similar to Bear Stearns. In the end Lehman is probably toast, and Merrill Lynch may not be far behind. It's a challenging situation, but not one iota of it has anything to do with Bush tax cuts or deregulation.

    If you want to play the blame game, let's start with Congress stretching back decades in their relentless promotion of home ownership. Massive subsidies and incentives were put in place to encourage people to buy homes. Lenders were penalized for "discriminating" against low-income buyers, then demonized as "predatory" when the borrowers defaulted on their loans and the lender took control of the house.

    I know it's fun to bash Bush, (and to be honest I am no fan of him either), but blaming Lehman, Fannie, or the current housing/economic woes on tax cuts is incorrect.
  • Mark
    EC,

    You are grossly mischaracterizing the demise of Lehman (and Bear Stearns, Fannie and Freddie as well, in case you lump them in there) on Bush's tax cuts. Lehman las large, leveraged investments tied to residential and commercial real estate. They used firm assets to make those investments, and thanks to leverage, were able to invest much than they had assets. Now, with the blowup in housing and the worsening situation in corporate real estate, their investments have become impaired, forcing the firm to raise capital to post as collateral. However, they cannot get capital because no one will lend or invest in them. Worse, Lehman's clients are recognizing this and beginning to pull their own assets out of Lehman, or shut down trading operations. This is a run on Lehman, similar to Bear Stearns. In the end Lehman is probably toast, and Merrill Lynch may not be far behind. It's a challenging situation, but not one iota of it has anything to do with Bush tax cuts or deregulation.

    If you want to play the blame game, let's start with Congress stretching back decades in their relentless promotion of home ownership. Massive subsidies and incentives were put in place to encourage people to buy homes. Lenders were penalized for "discriminating" against low-income buyers, then demonized as "predatory" when the borrowers defaulted on their loans and the lender took control of the house.

    I know it's fun to bash Bush, (and to be honest I am no fan of him either), but blaming Lehman, Fannie, or the current housing/economic woes on tax cuts is incorrect.
blog comments powered by Disqus
« »