The Stakes are High.

I have been buried in financial opinion and analysis and of course the opinions vary widely. I am not an economist and this is not a subject I enjoy looking into, but the stakes are high and we are being rushed to give a huge blank check and unaccountable power to the very people who's reckless tampering with the markets got us here. They have lost the benefit of a doubt in my eyes. It should not surprise anyone that when you dump huge amounts of easy credit into a limited market, the value of those dollars goes down, causing the price of those houses to go up in the inflated dollars. If you then dump yet more dollars into the market, backed by those inflated property values, you are building a bubble. If you or I ran such a ponzi scheme we would be prosecuted. Only our congress would see it as a reason to open our wallets to them when it collapsed.

We are being told that we "Must do something!", and I agree we should, as we have brought this about, but we should be careful that we don't make the problem worse or longer lasting by what we do. I do not think we should try to save the mortgages of people who should never have been given loans in the first place and I don't want to shift the costs from the bankers to the tax payers. If the government buys these loans it would seem they will be dumping them, further depressing a market already flooded with under priced homes. Also, with so much money moving around and so little transparency I absolutely do not trust these bozos not to skim off huge amounts for their favorite groups. Having taken over the housing market and the banking system, what industry is next? When the market tampering makes the problem worse rather than better, will they admit their error and undo it or will they say they need yet more control? I was trying to make a living in Nixon's wage and price controls and Carter's economy. No thanks! Not again! They will say what supporters of socialism always say, "It just wasn't done right" and "We need to go farther". Bull!

What to do?

Suspend or modify "mark-to-market" accounting for now. I don't know if it's for the best long term but it is causing problems in this situation. I think we need something similar long term.

Loosen up credit by lending to banks rather than buying bad assets. If banks have been imprudent them let them end up in other hands but don't let the lockup take down the healthy banks. Make it clear there will NOT be a buyout!

Ease concerns about mortgage backed securities by issuing insurance, which the holders will pay for, not the tax payers.

If people were hurt by recent purchases of homes at the inflated prices WE caused I wouldn't mind seeing a limited program to help share their loses, but strict oversight and control is needed. See the next point.

Put proper adults watching over these programs and dismantle them! Congress has shown it is not honest enough for this task. They can not have the power to interfere with the regulators. It should be obvious that the people charged with oversight CAN NOT TAKE MONEY from the people they are watching. Unfortunately this was not so obvious to our legislators.

Part of the problem here is that the economy was already staggering from high energy costs. We should immediately start developing and expanding the different energy and refining resources we have, not just removing the legal blocks but passing emergency enabling legislation that will keep the usual players from blocking these projects in court or in the regulatory agencies. The regulators need to do their jobs to protect us but these programs need to be exempted from the more onerous provisions that can be used to tie them up for years. The oil, coal, shale oil, and gas we have can supply the time and the prosperity we need to develop long term practical alternative energy sources. We need new refineries so we don't take a hit every time a storm blows through the gulf or something causes one to shut down for a while. We have not built a new refinery since the 1970s and we have no effective reserve capacity. Ending our oil imports alone could save more in a couple of years than the staggering amount they want to grab for the bailout. All that money pouring into our own economy would greatly help the recovery.

Given the hit our economy has taken from high energy prices and this market meddling we can not afford to hit it with higher taxes now. The tax cuts should be made permanent and expanded. Capitol gains tax should be greatly cut to encourage investment, and corporate taxes, which are among the highest in the world, should be reduced or eliminated. We have seen several times in my lifetime how powerful and robust our economy is when we let it operate properly. This would seem to be a good time!

This is my much oversimplified, under qualified opinion on this mess. The good news is that I am not part of the system making these decisions. The bad news is that we will all have to live with the consequences. This will not be fun.

On the other hand...

They could surprise me.



Ya, right!

The bailout.

The biggest issue at the moment seems to be the bailout. I don't think we can do nothing, but I am loathe to leave it in the hands of those who created the problem and now tell us we must give them open access to our financial markets and our wallets so that they can fix it. Anyone who voted to give Democrats control of congress and the senate or who sat aside and let the Democrats take control and lock out the adults have little to complain about. Of course the children had a kegger party and went wild. Nothing the Democrats did to the markets should be a surprise to anyone who has been watching them for the last thirty years. The warning was sounded several times but the Republicans had to be taught a lesson. While I agree there was reason to punish, this was like punishing them for getting drunk by making them drive home, with us in the back seat. Now something must be done and the people we must look to are the ones who got us here and have proven they can not be trusted to put our interests ahead of politics, even in a crisis. Not looking good. I have read what I can of the proposals and while I feel better about this than I did about the original piece of garbage I just don't know if it's good enough. The adults just have very little leverage.

The site I have the most respect for on these matters is Powerline. This is their take so far.

http://www.powerlineblog.com/archives2/2008/09/021634.php

I am not happy just now. I feel like I'm on the operating table for difficult surgery and the Doctors are half gassed and playing grabass as they cut inside me.

For Laurie!.An expert!

Laurie, at Homekeeping Heart is as sweet as the chocolate cakes she makes, and I hear she is really proficient at chicken dancing. I recommend her blog.

New Neighbors!

I have rarely interacted with anyone online except the community at Teh Squeaky Wheel and the personal blogs of the folks there. As all of them are on the side bar there I never listed any other sites but the Wheel here. I recently "met" some fascinating people at some other blogs and I am having a great time reading their blogs and wandering around to see the sites of their visitors. I have listed a few blogs on the side that I have really enjoyed visiting. I am so glad I found them and I am very grateful for their gracious hospitality and their patience. Thank you!

Energy. I wish!

As I get older and softer I find energy takes on a different meaning, but that's not what I have in mind here. I have recently found some interesting blogs with some interesting comments. I dropped in a comment on a post dealing with energy, among other things and another blogger left a thoughtful and interesting response. I responded to that but as this has also come up on Teh Squeaky Wheel and some other blogs by people on that forum, I thought I might put down some thoughts here. I tend to get long winded, as my patient friends know all too well, so I will try to get that out of my system here. Energy is the key to modern industrial civilization. The production, distribution, and use of energy is what fuels our economy today and without abundant, inexpensive energy we can not support the quality of life we have come to expect. For most of a century, coal powered western industrial society. It powered industry, transportation, and the military. It was cheap and abundant, well suited to powering mass transport such as trains and ships, powering industrial furnaces, and powering stationary steam engines as industrial prime movers or to generate electricity. It was relatively low tech in it's production, distribution and preparation. Dig it up, break it up, and throw it on the fire. It could even be used for home heating and it could be processed to produce lamp gas or coal tar.

Around a hundred years ago, oil began to supplant coal. It required more elaborate infrastructure to mine, refine, store, transport, and distribute, but it's refined products had much higher energy content and could be used in more sophisticated ways, allowing the introduction of the various types of internal combustion engines. This made possible individual self contained transport, machines, tools, and generators. This also made flight possible. Coal was not abandoned and the oil infrastructure developed. The oil infrastructure was built as technological progress and need made it practical. Coal fueled and powered this transition and is still in use today in those applications where it remains practical.

For most of the last century, oil was the key to industrial, economic, and military power. In the last half of the century only one viable rival has been developed. This is nuclear fission. Ironically it is strong in the same areas that coal was strong, ships and stationary power plants for generating electricity using steam engines. It does not have coal's advantage of low tech production and use. It does have good potential to generate electricity cleanly, safely, and economically. In our navy and in much of the modern world, hundreds of reactors are serving in this way every day and have been for decades. Oil is still needed for it's energy density and it's versatility for portable power production, plus nuclear fission uses scarce material and produces dangerous, long lasting waste that is hard to secure, store, and dispose of. The time for a better answer is approaching.

At this point the only technologies that have shown the potential for replacing oil as our prime energy source are geothermal and nuclear fusion. Both are virtually unlimited and almost non polluting. Unfortunately, neither is ready yet. Other energy producers such as solar, biofuel, wind turbines, and tidal are simply not practical as more than supplements to the others. None are ready to assume a significant share of the energy needs of our society in the near future. To give our industry and science time and resources to develop and produce the energy sources for the mid and long term needs of our society we must look to the resources we have now. This means nuclear fission, coal, and oil. We can not stop the exploration and exploitation of these resources without a collapse of our economy, our society, and our ability to defend ourselves and our interests in this very competitive world.

That's my outlook on energy today, for what it's worth. I'll go into more detail on specific areas or in response to comments if any. The sun is coming up so I hope I am coherent. Thanks.

Time to touch on politics I suppose.

I was a little dismayed at an attitude I heard expressed today that both sides just had to expect to be smeared because they have to be tough enough to take it. I didn't hear this from the Democrats when Hillary cried on the campaign trail, and I can't recall any smears against their families except by other Democrats, like the New Yorker cover.

The justifications I've heard recently for targeting Sarah Palin's family are,

1)--She should have known they would be targeted and stayed at home.
-This was best shown by Mark Shields, a nationally famous commentator and pundit, who questioned rather she should have accepted the nomination knowing her daughter was pregnant. In other words, What kind of mother is she, running for office when she knows that we in the media are going to slime her family?

2)--Because she brought her family on stage during the convention they became "fair game".
- I really read this from a person on a lefty site in response to criticism about attacking kids with lies.

3)--(today) She's tough and can take it. They both are tough and can take it.
-Reagan was tough enough that he was chopping wood a couple of weeks after being shot but that does not excuse or mitigate the offense in any way! If the attacks went both ways we could just deplore the passing or eclipse of civil discourse, but can anyone point out even ONE comment any Republican has made about Obama's children? They have been mentioned and displayed several times. They were used at the convention. Has any Republican called them or considered them "fair game"?? I do not even know their names. Would it be proper for Republicans to make up lies questioning their character, legitimacy, or chastity because Obama is tough enough to take it?


This is not new. Has any Democrat judicial or cabinet nominee EVER been subjected to the personal and racist smears that Thomas, Brown, Rice, Powell, Alito, Bork,or Roberts were?

One name? One finger? No? Then I go on.

Few people are taught that in our American Revolution there were as many or more Tories as Revolutionaries (excuse me, Patriots!). This is because Tory papers were often burnt and their editors tarred and feathered or "deported" on a fence rail. The winners in a civil war write the history books. In this case it would be nice if the Democrats were brought to shame afterwards for this iniquitous behavior but we have seen that the press will not reveal their shameful conduct because the press has been too complicit in the activities and too biased in reporting it. This means that win or lose the Democrats are rewarded for this terrible behavior as even if they alienate the moderate voters and lose they will not receive long term blame ("every body did it") and they will make it harder for principled candidates, the ones we should want and they most fear, to enter the race in future.

If I have been deceived by my own prejudices I stand open to correction but I can't think of an exception by any credible Republican and the blatant and one sided nature of the smears, even while the Democrats decry the "McCain smear machine" and the "Rove smear tactics" makes it hard for me to see the good will on the part of the candidate and his campaign. If indeed there are many Democrats that do not approve of the tactics of their nominee they must face the fact that by standing silent and giving him their vote and money they are approving of and encouraging these methods. They can not wash their hands of this while supporting the ones who do it.

Condemn it and stop it or own it.