For those of you worrying and wondering what the New Year will bring, you have come to the right place. It is time for your favorite scribe to reveal his Top Eleven Predictions for 2011. After consulting a crystal ball, here's what you can expect in the coming months:
1. The unemployment number hits 10 percent by the end of February after thousands of out-of-work job seekers, who previously have been uncounted, now try to find work in the new year.
2. After a brief year-end rally, home sales tank as mortgage firms and banks reach settlements with state attorneys general, unleashing hundreds of thousands of foreclosures that had been suspended by legal wrangling.
3. A spate of defaults by local municipalities send bond prices tumbling as states wrestle with ballooning budget deficits caused by public employee pension costs and faltering tax receipts.
4. The Volt, GM's much ballyhooed entry into the electric market, fizzles after initial sales driven by corporate purchases from the likes of GE fuel breathless media coverage about the robust market for alternative fuel cars.
5. The economy inches ahead as some industry sectors begin slow recovery but the GDP (Gross Domestic Product) falls short of the 3.5 percent growth rate needed to boost employment to post-recession levels.
6. Inflation briefly creeps up to two percent as prices for gasoline and food drive up consumer costs, but the Federal Reserve decides not to adjust interest rates for fear of crimping business lending.
7. Telecommunications firm Verizon finally offers Apple's IPhone on its 4G network after years of teasing customers, shareholders and financial analysts about its imminent introduction.
8. Before the primaries, at least one politician emerges from the Democratic party to challenge President Obama, while the crowded Republican field produces a clear front runner before the year ends.
9. After suffering one bitter defeat after another, Nancy Pelosi decides to give up her role as minority leader for the Democrats, avoiding an embarrassing revolt by more moderate Congressmen and women chafing under her leadership.
10. Despite millions of dollars in American social and military aid, Yemen becomes the powder keg of the Mideast, exploding in violence as the country becomes a haven for the export of terrorism, particularly to the U.S.
11. After federal court challenges produced mixed results, the final legal test for Obama Care lands at the U.S. Supreme Court, as the President and Democrats stave off Republican attempts to neuter the health care overhaul.
For those of you looking for happy news predictions, these forecasts are sobering, especially in light of your scribe's past record for success. But let not your heart be troubled. Good news is just around corner in 2012. You can bank on it.
Friday, December 24, 2010
Wednesday, December 22, 2010
FCC Decision: Another Government Power Grab
Most Americans likely stifled a yawn when they heard the news that the Federal Communications Commission (FCC) laid down new rules regarding the Internet. Consumers won't notice any immediate changes in the way they use the web, so the ruling will be quickly forgotten.
However, people need to pay more attention because this is just another attempt by the federal government to extend its tentacles into private enterprise. Whenever the government decides to place the heavy hand of regulation on an industry, the consequences usually end up harming consumers and adding to the price of services.
In its ruling, the FCC approved new guidelines for something called "net neutrality." The rules place additional burdens on telecommunications and cable companies for broadband, while offering little in the way of consumer protection.
Of course, President Obama supported the decision. No surprise there. He campaigned on a pledge to "preserve the freedom and openness" that have allowed the Internet to flourish. It didn't hurt that one of his campaign's biggest contributors, the evil empire known as Google, championed FCC intervention on "net neutrality."
Let's set aside the arcane technical aspects of the ruling for this article. No matter your position on the issue of "net neutrality," the FCC's foray into regulation of the Internet signals the commission's intent to expand its ever increasing role into every nook of communications.
Even those like Google, who are applauding the decision today, will come to rue the day the FCC ventured into Internet regulation. Once the President leaves office and a new FCC is installed, the Evil Empire will get a taste of what its like to be on the receiving end of bureaucratic meddling. Google will be the first to scream foul.
It defies logic that the FCC would tamper with arguably one of the greatest American business success stories. Left unfettered, the Internet has grown from a tiny industry into a behemoth that circles the globe, connecting people and businesses in ways once thought unimaginable. Innovation and massive investments by private companies have been responsible for the growth.
Why then does the Internet market need government regulation? What failures exist that can only be solved by Washington bureaucrats? Unless someone can show irreparable harm, then the rationale for regulation is non existent. Furthermore, the federal courts have already determined that the FCC has no jurisdiction over the Internet.
The FCC's eleventh hour decision at the end of a lame duck Congress is simply a pay-off to Google. There is no other way to view the action. With Democrats about to lose their grip on Congress, this was one last desperate grab for power that also allowed the President to placate his supporters in the Evil Empire.
It is easy to predict what will happen as a result of the FCC's action. The decision will make cable and telecommunications firms more reluctant to invest billions in broadband until all the rules are promulgated to implement the decision. With billions in dollars already sitting on the sidelines, this is just another example of the anti-business attitude in Washington that is clouding investment.
This decision will also add another industry to the growing list of businesses controlled by the federal government (automobiles, banks, investment firms, housing, student loans, etc.) As the government extends its regulatory footprint, the costs to taxpayers keeps mounting.
For instance, the FCC has already requested a $19.4 million increase in funding for 2011. In its proposal, the commission said it wanted to increase its payroll by 75 people. In 2009, the FCC's budget was $466 million. The commission had 1,899 full time employees.
To be fair, the FCC gets 90 percent of its budget funded by fees charged those its regulates. Still, those fees are simply passed on to consumers through higher prices for services. In the end, consumers always pay for the excesses of regulation, which goes unreported in the media.
The incoming Congress should haul the FCC commissioner into a hearing room and demand justification for his decision on regulating the Internet. After politely listening to his drivel, the Congress needs to defund the FCC, an agency established by the Federal Communications Act of 1934.
It is just one of many federal agencies that have outlived their usefulness. With budget axes looking for targets in 2011, we suggest the FCC should be the first bureaucracy to fall.
However, people need to pay more attention because this is just another attempt by the federal government to extend its tentacles into private enterprise. Whenever the government decides to place the heavy hand of regulation on an industry, the consequences usually end up harming consumers and adding to the price of services.
In its ruling, the FCC approved new guidelines for something called "net neutrality." The rules place additional burdens on telecommunications and cable companies for broadband, while offering little in the way of consumer protection.
Of course, President Obama supported the decision. No surprise there. He campaigned on a pledge to "preserve the freedom and openness" that have allowed the Internet to flourish. It didn't hurt that one of his campaign's biggest contributors, the evil empire known as Google, championed FCC intervention on "net neutrality."
Let's set aside the arcane technical aspects of the ruling for this article. No matter your position on the issue of "net neutrality," the FCC's foray into regulation of the Internet signals the commission's intent to expand its ever increasing role into every nook of communications.
Even those like Google, who are applauding the decision today, will come to rue the day the FCC ventured into Internet regulation. Once the President leaves office and a new FCC is installed, the Evil Empire will get a taste of what its like to be on the receiving end of bureaucratic meddling. Google will be the first to scream foul.
It defies logic that the FCC would tamper with arguably one of the greatest American business success stories. Left unfettered, the Internet has grown from a tiny industry into a behemoth that circles the globe, connecting people and businesses in ways once thought unimaginable. Innovation and massive investments by private companies have been responsible for the growth.
Why then does the Internet market need government regulation? What failures exist that can only be solved by Washington bureaucrats? Unless someone can show irreparable harm, then the rationale for regulation is non existent. Furthermore, the federal courts have already determined that the FCC has no jurisdiction over the Internet.
The FCC's eleventh hour decision at the end of a lame duck Congress is simply a pay-off to Google. There is no other way to view the action. With Democrats about to lose their grip on Congress, this was one last desperate grab for power that also allowed the President to placate his supporters in the Evil Empire.
It is easy to predict what will happen as a result of the FCC's action. The decision will make cable and telecommunications firms more reluctant to invest billions in broadband until all the rules are promulgated to implement the decision. With billions in dollars already sitting on the sidelines, this is just another example of the anti-business attitude in Washington that is clouding investment.
This decision will also add another industry to the growing list of businesses controlled by the federal government (automobiles, banks, investment firms, housing, student loans, etc.) As the government extends its regulatory footprint, the costs to taxpayers keeps mounting.
For instance, the FCC has already requested a $19.4 million increase in funding for 2011. In its proposal, the commission said it wanted to increase its payroll by 75 people. In 2009, the FCC's budget was $466 million. The commission had 1,899 full time employees.
To be fair, the FCC gets 90 percent of its budget funded by fees charged those its regulates. Still, those fees are simply passed on to consumers through higher prices for services. In the end, consumers always pay for the excesses of regulation, which goes unreported in the media.
The incoming Congress should haul the FCC commissioner into a hearing room and demand justification for his decision on regulating the Internet. After politely listening to his drivel, the Congress needs to defund the FCC, an agency established by the Federal Communications Act of 1934.
It is just one of many federal agencies that have outlived their usefulness. With budget axes looking for targets in 2011, we suggest the FCC should be the first bureaucracy to fall.
Friday, December 10, 2010
New Language Needed To Describe Wealthy
During the current debate over extending the Bush Tax Cuts, President Obama and the Democrats have used the language of divisiveness to scorn the "wealthy" and "rich." The echo chambers in the media have followed suit, equating tax breaks for upper income earners with moral corruption.
Unfortunately, the Republicans have been equally inept in the language of debate. Too many have lapsed into Democrat-speak, also referring to our most successful citizens as "wealthy" and "rich." It would appear they are frightened of being accused of siding with robber barons.
The problem is that no one inside the Washington Beltway or in media has ever identified who the wealthy are. They are nameless and faceless to most Americans. Pressed to name a wealthy person, many would tick-off the names of Bill Gates, Warren Buffett, Labron James or Oprah Winfrey.
But those are the super rich, who make up less than one-hundredth of one percent of the population. By the Democrats' definition, the "wealthy" are those whose incomes exceed $250,000 per year. Most are hard-working people who should be celebrated instead of reviled for making too much money.
Who are these "wealthy?" They are entrepreneurs, paper product salespeople, furniture store owners, motel owners, college deans, lawyers, doctors, community college presidents, city administrators, chiefs of police, authors, farmers, real estate brokers, newspaper publishers and even the President of the United States.
Two-income families make up the bulk of households earning $250,000 or more. In some cases, a husband and wife both have mid-level management jobs, hardly the career choice of millionaires. But when you combine the two incomes, the earnings throw the couple into the category of the "rich." Yet most would tell you they are anything but wealthy.
The Democrats and their president like to rail about how unfair it would be if these so-called wealthy got tax breaks. However, they always fail to mention that the top 50 percent of wage earners in the country pay 96.03 percent of all taxes. In addition, 51.6 million Americans paid no taxes in 2008 and their numbers are growing.
It is time for the media, the Democrats and the President to come clean. The wealthy already pay the lion's share of taxes in the country. They are carrying the burden of millions who pay no taxes. As a country, we owe these taxpayers a debt of gratitude, not a public flogging.
The way to change this debate is for Republicans and the rest of us to insist we stop calling people "rich" and "wealthy." We should refer to these high wage earners as "the most successful," the "smartest among us," the "go-getter's," "the finest entrepreneurs," or the "talented achievers."
If we are ever going to get true tax equity in the U.S., we need to exorcise the words "wealthy" and "rich" from our vocabulary. Otherwise, the nation will never rise above petty politics to address paying for the fiscal excesses of the Obama Administration.
Unfortunately, the Republicans have been equally inept in the language of debate. Too many have lapsed into Democrat-speak, also referring to our most successful citizens as "wealthy" and "rich." It would appear they are frightened of being accused of siding with robber barons.
The problem is that no one inside the Washington Beltway or in media has ever identified who the wealthy are. They are nameless and faceless to most Americans. Pressed to name a wealthy person, many would tick-off the names of Bill Gates, Warren Buffett, Labron James or Oprah Winfrey.
But those are the super rich, who make up less than one-hundredth of one percent of the population. By the Democrats' definition, the "wealthy" are those whose incomes exceed $250,000 per year. Most are hard-working people who should be celebrated instead of reviled for making too much money.
Who are these "wealthy?" They are entrepreneurs, paper product salespeople, furniture store owners, motel owners, college deans, lawyers, doctors, community college presidents, city administrators, chiefs of police, authors, farmers, real estate brokers, newspaper publishers and even the President of the United States.
Two-income families make up the bulk of households earning $250,000 or more. In some cases, a husband and wife both have mid-level management jobs, hardly the career choice of millionaires. But when you combine the two incomes, the earnings throw the couple into the category of the "rich." Yet most would tell you they are anything but wealthy.
The Democrats and their president like to rail about how unfair it would be if these so-called wealthy got tax breaks. However, they always fail to mention that the top 50 percent of wage earners in the country pay 96.03 percent of all taxes. In addition, 51.6 million Americans paid no taxes in 2008 and their numbers are growing.
It is time for the media, the Democrats and the President to come clean. The wealthy already pay the lion's share of taxes in the country. They are carrying the burden of millions who pay no taxes. As a country, we owe these taxpayers a debt of gratitude, not a public flogging.
The way to change this debate is for Republicans and the rest of us to insist we stop calling people "rich" and "wealthy." We should refer to these high wage earners as "the most successful," the "smartest among us," the "go-getter's," "the finest entrepreneurs," or the "talented achievers."
If we are ever going to get true tax equity in the U.S., we need to exorcise the words "wealthy" and "rich" from our vocabulary. Otherwise, the nation will never rise above petty politics to address paying for the fiscal excesses of the Obama Administration.
Monday, December 6, 2010
Tax Extension Debate Lacks Credibility
President Obama, feigning concern for budget deficits, has repeatedly argued that the government should not extend the Bush tax cuts to the "wealthy" because it cannot afford the $700 billion price tag.
This argument has been repeated time and again in the fawning news media, without so much as a hint of balanced coverage. As a result, most Americans believe the middle class tax cuts can be achieved without busting the federal budget. However, the tax breaks for the "wealthy" will bankrupt the country.
If you doubt this, search your newspaper or watch the television coverage for any mention of what the middle class tax cuts will cost taxpayers. You won't find the number anywhere. That's because the media is aiding and abetting the Obama charade. Class envy is the stock and trade of Democrats and their surrogates in the media.
It is not like the financial impact is difficult to find. More than a month ago, the Congressional Budget Office estimated that extending the middle class tax cuts over the next decade will cost $3 trillion. Raise your hand if you have seen or heard this number in any of the news reports during the current debate?
Extending the tax cuts for everyone, including the so-called wealthy, would cost the government $3.7 trillion over the next ten years, according to the CBO. That figure includes the $700 billion that the president is so fond of shoveling out to the lap-dog media. No one in the media ever mentions the $700 billion is for ten years.
This is only the latest example of media bias that many in the industry so passionately claim exists only in the minds of right-wingers. (My favorite example is the corrupt San Antonio Express News.)
If there is to be an honest debate over extending tax cuts, then all the facts should be weighed, not just those that favor the president's position.
This argument has been repeated time and again in the fawning news media, without so much as a hint of balanced coverage. As a result, most Americans believe the middle class tax cuts can be achieved without busting the federal budget. However, the tax breaks for the "wealthy" will bankrupt the country.
If you doubt this, search your newspaper or watch the television coverage for any mention of what the middle class tax cuts will cost taxpayers. You won't find the number anywhere. That's because the media is aiding and abetting the Obama charade. Class envy is the stock and trade of Democrats and their surrogates in the media.
It is not like the financial impact is difficult to find. More than a month ago, the Congressional Budget Office estimated that extending the middle class tax cuts over the next decade will cost $3 trillion. Raise your hand if you have seen or heard this number in any of the news reports during the current debate?
Extending the tax cuts for everyone, including the so-called wealthy, would cost the government $3.7 trillion over the next ten years, according to the CBO. That figure includes the $700 billion that the president is so fond of shoveling out to the lap-dog media. No one in the media ever mentions the $700 billion is for ten years.
This is only the latest example of media bias that many in the industry so passionately claim exists only in the minds of right-wingers. (My favorite example is the corrupt San Antonio Express News.)
If there is to be an honest debate over extending tax cuts, then all the facts should be weighed, not just those that favor the president's position.
Thursday, November 18, 2010
Big Sis Janet Issues New Pat Down Rules
Faced with a firestorm of public protests, Homeland Security Secretary Janet (Big Sis) Napolitano plans to issue a new set of airport screening procedures for TSA agents. Your faithful scribe obtained a secret copy of the changes, which are shared now before Wikileaks publishes it along with the plans for the Russian invasion.
ATTENTION: TSA AGENTS
Effective today, the following guidelines apply for the pat-down of passengers at all American airports, including the Republic of California:
1. Share a cigarette with passengers after each pat-down to assure them it was a mutually pleasant experience.
2. Refrain from using the word "but" during each pat-down, lest you be misunderstood.
3. If a female passenger refuses a pat-down, offer her a few cocktails, which usually gets rid of inhibitions.
4. You may grope male passengers during a pat-down, but assure them you "won't ask, if they don't tell."
5. Male agents should not pat-down female passengers, unless they are particularly well endowed.
6. After each pat-down, agents may offer passengers a free colon exam while they are waiting for their flight.
7. TSA agents should limit each pat-down to one hour, unless the passenger seems to be enjoying the procedure.
8. While patting down a passenger's groin area, please be respectful and do not ask for home phone numbers until the person has passed through the security area.
9. When running your hands over a female passengers legs, it is irresponsible to suggest the person get reacquainted with a razor.
10. Do not offer to sell full body x-rays of passengers to other TSA agents unless no one is looking.
By following these simple guidelines, you will make the airport screening experience much more enjoyable for the traveling public. As with any policy, there are a few "don'ts" you must observe, including:
1. Don't detain any bearded Imam shouting, "Death to America," unless you have reason to believe he might secretly be a Republican in drag.
2. Don't indulge in profiling, but do require pat-downs for underage children, 80-year old women and American military service men and women in uniform.
3. Don't pat-down Muslin women because your hands will wrinkle their burkas.
4. Don't ask embarrassing questions of passengers holding ink jet cartridges, sporting platform shoes and wearing wired underwear.
5. Don't consult the "No Fly" list because it will just confuse you in carrying out your assigned duties.
6. Don't display your copy of the Koran while you are on duty because people may assume the President is a Muslin.
7. Don't look anyone in the eye, especially if the passenger is unduly nervous, sweating profusely or incessantly fidgeting.
8. Don't open a passengers luggage if there is a sticker on the suitcase reading, "Fly Martyr Airlines."
9. Don't ask for identification of any passenger who claims to have voted for President Obama because he has already suffered enough humiliation.
10. Don't forget to remind passengers to have a "safe" and "tingly" flight after each pat-down.
Janet Incompolitano
ATTENTION: TSA AGENTS
Effective today, the following guidelines apply for the pat-down of passengers at all American airports, including the Republic of California:
1. Share a cigarette with passengers after each pat-down to assure them it was a mutually pleasant experience.
2. Refrain from using the word "but" during each pat-down, lest you be misunderstood.
3. If a female passenger refuses a pat-down, offer her a few cocktails, which usually gets rid of inhibitions.
4. You may grope male passengers during a pat-down, but assure them you "won't ask, if they don't tell."
5. Male agents should not pat-down female passengers, unless they are particularly well endowed.
6. After each pat-down, agents may offer passengers a free colon exam while they are waiting for their flight.
7. TSA agents should limit each pat-down to one hour, unless the passenger seems to be enjoying the procedure.
8. While patting down a passenger's groin area, please be respectful and do not ask for home phone numbers until the person has passed through the security area.
9. When running your hands over a female passengers legs, it is irresponsible to suggest the person get reacquainted with a razor.
10. Do not offer to sell full body x-rays of passengers to other TSA agents unless no one is looking.
By following these simple guidelines, you will make the airport screening experience much more enjoyable for the traveling public. As with any policy, there are a few "don'ts" you must observe, including:
1. Don't detain any bearded Imam shouting, "Death to America," unless you have reason to believe he might secretly be a Republican in drag.
2. Don't indulge in profiling, but do require pat-downs for underage children, 80-year old women and American military service men and women in uniform.
3. Don't pat-down Muslin women because your hands will wrinkle their burkas.
4. Don't ask embarrassing questions of passengers holding ink jet cartridges, sporting platform shoes and wearing wired underwear.
5. Don't consult the "No Fly" list because it will just confuse you in carrying out your assigned duties.
6. Don't display your copy of the Koran while you are on duty because people may assume the President is a Muslin.
7. Don't look anyone in the eye, especially if the passenger is unduly nervous, sweating profusely or incessantly fidgeting.
8. Don't open a passengers luggage if there is a sticker on the suitcase reading, "Fly Martyr Airlines."
9. Don't ask for identification of any passenger who claims to have voted for President Obama because he has already suffered enough humiliation.
10. Don't forget to remind passengers to have a "safe" and "tingly" flight after each pat-down.
Janet Incompolitano
Friday, November 12, 2010
No Closure on Foreclosures for Taxpayers
If you thought the housing mess was damping economic recovery, be warned that foreclosures will soon crater the real estate market. That may sound too alarmist for your tastes, but the facts suggest the coming tide of foreclosures will fuel another economic crisis likely to overshadow anything the country has witnessed.
Worst of all, the billions of taxpayer dollars spent by the Obama Administration to address the foreclosure problem have made only a tiny dent in the problem. By the Treasury Department's own admission, the Home Affordable Modification Program (HAMP) has not worked as foreclosures have steadily mounted, despite the massive bailout. The price tag for this failed government experiment is $50 billion.
Even that figure does not include the $148 billion the Treasury has invested in the government's version of Dumb and Dumber: Fannie Mae and Freddie Mac. Taxpayers have footed the bill for the mismanagement of these government-owned mortgage giants for more than two years. Although their losses have narrowed, taxpayers may have to come up with as much as $259 billion to stave off bankruptcy, according to the Federal Housing Finance Agency.
But the news only gets worse. Fannie Dumb and Freddie Dumber now own more than 240,000 foreclosed homes, as of September 30. That's more than twice as many foreclosed homes as they owned a year ago. In addition to the bailout money that's propping up the two lenders, the terrible twins have doled out more than $2 billion of your hard earned dollars to maintain more than $24 billion in foreclosed properties they own. The longer they own the properties, the higher the final bill for cleaning, maintenance, insurance, taxes and legal fees.
Those properties are likely to take many months if not years to sell. Freddie Dumber admitted recently that the sales of these foreclosed home could be prolonged by something no one in government or the media want to talk about.
The attorneys general of all 50 states have ganged up to challenge foreclosure filings by some of the country's biggest lenders, including government-owned GMAC Mortgage, Wells Fargo, J.P Morgan and a host of others. The states claim there have been defects in the documents submitted by the lenders to force foreclosure. While that issue is being litigated, the foreclosure legal machine has ground to a halt.
What that means is a glut of foreclosures are sitting in limbo. Some estimate the number is likely 200,000 or more foreclosures. Those on both sides of the issue are disputing the paper work involved in the foreclosure process. Hardly anyone is suggesting that most homeowners will not end up losing their property, even after the document faux pas is rectified.
Once those fifty attorneys general get their pound of flesh from the lenders, what do you think will happen to all those foreclosed homes the banks and mortgage firms are holding? No doubt, the property will be dumped on the market, further depressing real estate prices and adding to the already bloated inventory.
But don't take my word for it. The CEO of RealtyTrac, the leading online marketer of foreclosure properties, recently offered a somber warning. James Saccacio said if the foreclosure documentation issues are not resolved quickly, it would have a "chilling effect on the overall housing market."
Saccacio's cautionary caveat was part of the firm's U.S. Foreclosure Market Report for the third quarter. According to the report, there were 372,445 properties auctioned in the country during the quarter, the highest in the history of the firm's tracking. Bank repossessions also set a record in the third quarter, totalling 288,345 properties.
Think you've heard the worst of this sorry story? No way. Even before this embargo on foreclosures, banks and mortgage firms were already hoarding notices, waiting for the glut of foreclosures to dissipate before dumping more houses on the market. There are no available estimates on how many foreclosures are primed to be pumped into the pipeline, but it could be hundreds of thousands more. The results could be catastrophic for the real estate market.
Foreclosures are the economic beast no one in government wants to tame. However, the taxpayers are about to have their pockets picked again by Washington if nothing is done to manage the looming foreclosure nightmare. As each day passes without any action, the opportunity to avoid the crisis becomes more remote.
Worst of all, the billions of taxpayer dollars spent by the Obama Administration to address the foreclosure problem have made only a tiny dent in the problem. By the Treasury Department's own admission, the Home Affordable Modification Program (HAMP) has not worked as foreclosures have steadily mounted, despite the massive bailout. The price tag for this failed government experiment is $50 billion.
Even that figure does not include the $148 billion the Treasury has invested in the government's version of Dumb and Dumber: Fannie Mae and Freddie Mac. Taxpayers have footed the bill for the mismanagement of these government-owned mortgage giants for more than two years. Although their losses have narrowed, taxpayers may have to come up with as much as $259 billion to stave off bankruptcy, according to the Federal Housing Finance Agency.
But the news only gets worse. Fannie Dumb and Freddie Dumber now own more than 240,000 foreclosed homes, as of September 30. That's more than twice as many foreclosed homes as they owned a year ago. In addition to the bailout money that's propping up the two lenders, the terrible twins have doled out more than $2 billion of your hard earned dollars to maintain more than $24 billion in foreclosed properties they own. The longer they own the properties, the higher the final bill for cleaning, maintenance, insurance, taxes and legal fees.
Those properties are likely to take many months if not years to sell. Freddie Dumber admitted recently that the sales of these foreclosed home could be prolonged by something no one in government or the media want to talk about.
The attorneys general of all 50 states have ganged up to challenge foreclosure filings by some of the country's biggest lenders, including government-owned GMAC Mortgage, Wells Fargo, J.P Morgan and a host of others. The states claim there have been defects in the documents submitted by the lenders to force foreclosure. While that issue is being litigated, the foreclosure legal machine has ground to a halt.
What that means is a glut of foreclosures are sitting in limbo. Some estimate the number is likely 200,000 or more foreclosures. Those on both sides of the issue are disputing the paper work involved in the foreclosure process. Hardly anyone is suggesting that most homeowners will not end up losing their property, even after the document faux pas is rectified.
Once those fifty attorneys general get their pound of flesh from the lenders, what do you think will happen to all those foreclosed homes the banks and mortgage firms are holding? No doubt, the property will be dumped on the market, further depressing real estate prices and adding to the already bloated inventory.
But don't take my word for it. The CEO of RealtyTrac, the leading online marketer of foreclosure properties, recently offered a somber warning. James Saccacio said if the foreclosure documentation issues are not resolved quickly, it would have a "chilling effect on the overall housing market."
Saccacio's cautionary caveat was part of the firm's U.S. Foreclosure Market Report for the third quarter. According to the report, there were 372,445 properties auctioned in the country during the quarter, the highest in the history of the firm's tracking. Bank repossessions also set a record in the third quarter, totalling 288,345 properties.
Think you've heard the worst of this sorry story? No way. Even before this embargo on foreclosures, banks and mortgage firms were already hoarding notices, waiting for the glut of foreclosures to dissipate before dumping more houses on the market. There are no available estimates on how many foreclosures are primed to be pumped into the pipeline, but it could be hundreds of thousands more. The results could be catastrophic for the real estate market.
Foreclosures are the economic beast no one in government wants to tame. However, the taxpayers are about to have their pockets picked again by Washington if nothing is done to manage the looming foreclosure nightmare. As each day passes without any action, the opportunity to avoid the crisis becomes more remote.
Wednesday, November 10, 2010
Factoids That You Can Use
Old-fashioned readers who enjoy the printed word on paper are fast becoming dinosaurs. According to Forrester Research, 17.6 million consumers this year will spend $966 million on digital e-books. Next year, the research firm estimates those numbers will triple, with 60 million readers shelling out $2.8 billion for the privilege of thumbing through a digital book. Publishers remain nervous about the sea change because paper books produce more revenues than their electronic cousins. However, the firms that manufacture multipurpose devices, such as tablets and smartphones, are expected to be the big winners. Today about 35 percent of people who read electronic books use a laptop computer. Another 32 percent get their books delivered on Amazon's Kindle. But Apple's iPhone and iPad have made a huge dent in the market in a brief period. Today about 15 percent of consumers use an iPhone to download a digital book, while 9 percent are reading on their iPad. That does not bode well for companies, like Amazon, Barnes & Noble and Sony, who retail e-readers. Faced with the prospect of more competition, Amazon has slashed the price of its new Kindle, which should attract more consumers. But the gains will likely be short-term. At least for the foreseeable future, experts predict consumers are likely to prefer devices that do more than function as a dedicated reader.
Monday, November 8, 2010
Has Ben Bernanke Gone Bonkers?
Nothing puts people to sleep like Federal Reserve Bank monetary policy. The Ambian of all Fed maneuvers is the arcane practice of quantitative easing or QE. Yet Americans better start paying attention because a crisis of epic proportions may be brewing.
Fed Chairman Ben Bernanke recently announced a plan for the central bank to buy $600 billion of government debt. During the financial crisis, Bernanke has overseen the purchase of $1.7 trillion in government and mortgage bonds. The decision to embrace quantitative easing was greeted with benign news coverage which cheered the effort to boost the weak recovery of the U.S. economy.
However, the mainstream media as usual failed to grasp the significance of the Fed's move. The economic morons in the media were content to talk about the central bank's effort to increase the amount of credit available to borrowers. To do that, the bank issues new money to purchase assets from other banks, the media reported. Theoretically,at least, the banks then have more money to lend to businesses and consumers.
While the coverage is factually accurate, it obfuscates what is really going on here. Bernanke, who seems to have bought into President Obama's economic theories, has fashioned his own stimulus package. With Republicans poised to oppose any more billion dollar stimulus boondoggles, Bernanke decided to take matters in his own hands to circumvent the Congress. It is a maneuver fraught with high-stakes economic risks that far outweigh any expected benefits.
Bernanke's roll of the dice must first be understood for what it is. The Obama Administration's efforts to inject life into the economy have failed miserably by any measure, including the most important one, employment. With interest rates near zero, the Fed's latest move amounts to a show of financial resolve on the part of monetary policy makers. That's why defenders of the policy argue that QE has psychological value. For example, investors have driven up stock prices in the wake of the Fed's action. However, $600 billion dollars seems a steep price to pay for good feelings on Wall Street.
Meanwhile, the central bank is spending money it has created out of thin air. Increasing the money supply will create the likelihood of out-of-control inflation. While once the Fed was the staunch last line of defense against inflation, Bernanke seems to have forgotten the chief mission of the central bank in order to please his White House masters. So much for an independent Fed.
In addition, the Fed is purchasing assets, such as mortgage-backed securities, that run the risk of default. There are other questions surrounding the QE maneuver, including what happens when the Fed decides to sell the assets it has purchased through QE. When the central bank exits with its cash, this will tighten the supply of money, leaving less dollars for banks to lend.
Another victim of QE is the American dollar. It has gone into free fall since the Fed pulled the rug out from under previous efforts to shore up the currency. As a result, the currency has been seriously weakened. This makes American exports less costly, but drives up the cost of goods and services the country imports from other countries.
All that said, the most glaring weakness of the Fed's action has gone unreported. QE is based on a faulty premise that the asset purchase will spark borrowing by businesses and consumers, thus lifting spending to spark real economic growth. The assumption is bankrupt of any logic.
Businesses are sitting on something like $1 trillion in excess cash. The problem is not that corporations can't get money from lenders. In fact, many are using the low interest rates to borrow funds to restructure current debt. The overriding issue is that no business will begin investing until there are signs that consumers are spending again.
Bernanke has fallen prey to Harvard academic economics while ignoring common-sense pragmatic solutions. Putting money in consumers pockets is the one and only way to jump start the American economy. QE won't do that. If interest rates near zero for almost two years haven't convinced consumers to borrow money for homes, cars and other big ticket items, then easing credit further won't matter one iota.
While Bernanke continues to defend the Fed's policy shift, others have not been kind in their assessment of the central bank. The German finance minister hit the nail on the head when he said, "With all due respect, U.S. policy is clueless." Can we get an "Amen" to that?
Bernanke, once hailed as a genius molded in the image of his predecessor Alan Greenspan, has charted a controversial new path for economic recovery. His approach does not have history on its side. Other nations that have infamously tried versions of QE are Zimbabwe and Germany. In both cases, hyperinflation gutted the economies of the countries.
The new incoming Congress needs to reign in Bernanke before his strategy implodes, dragging the U.S. economy into decades of soaring inflation, staggering deficits and high unemployment.
Fed Chairman Ben Bernanke recently announced a plan for the central bank to buy $600 billion of government debt. During the financial crisis, Bernanke has overseen the purchase of $1.7 trillion in government and mortgage bonds. The decision to embrace quantitative easing was greeted with benign news coverage which cheered the effort to boost the weak recovery of the U.S. economy.
However, the mainstream media as usual failed to grasp the significance of the Fed's move. The economic morons in the media were content to talk about the central bank's effort to increase the amount of credit available to borrowers. To do that, the bank issues new money to purchase assets from other banks, the media reported. Theoretically,at least, the banks then have more money to lend to businesses and consumers.
While the coverage is factually accurate, it obfuscates what is really going on here. Bernanke, who seems to have bought into President Obama's economic theories, has fashioned his own stimulus package. With Republicans poised to oppose any more billion dollar stimulus boondoggles, Bernanke decided to take matters in his own hands to circumvent the Congress. It is a maneuver fraught with high-stakes economic risks that far outweigh any expected benefits.
Bernanke's roll of the dice must first be understood for what it is. The Obama Administration's efforts to inject life into the economy have failed miserably by any measure, including the most important one, employment. With interest rates near zero, the Fed's latest move amounts to a show of financial resolve on the part of monetary policy makers. That's why defenders of the policy argue that QE has psychological value. For example, investors have driven up stock prices in the wake of the Fed's action. However, $600 billion dollars seems a steep price to pay for good feelings on Wall Street.
Meanwhile, the central bank is spending money it has created out of thin air. Increasing the money supply will create the likelihood of out-of-control inflation. While once the Fed was the staunch last line of defense against inflation, Bernanke seems to have forgotten the chief mission of the central bank in order to please his White House masters. So much for an independent Fed.
In addition, the Fed is purchasing assets, such as mortgage-backed securities, that run the risk of default. There are other questions surrounding the QE maneuver, including what happens when the Fed decides to sell the assets it has purchased through QE. When the central bank exits with its cash, this will tighten the supply of money, leaving less dollars for banks to lend.
Another victim of QE is the American dollar. It has gone into free fall since the Fed pulled the rug out from under previous efforts to shore up the currency. As a result, the currency has been seriously weakened. This makes American exports less costly, but drives up the cost of goods and services the country imports from other countries.
All that said, the most glaring weakness of the Fed's action has gone unreported. QE is based on a faulty premise that the asset purchase will spark borrowing by businesses and consumers, thus lifting spending to spark real economic growth. The assumption is bankrupt of any logic.
Businesses are sitting on something like $1 trillion in excess cash. The problem is not that corporations can't get money from lenders. In fact, many are using the low interest rates to borrow funds to restructure current debt. The overriding issue is that no business will begin investing until there are signs that consumers are spending again.
Bernanke has fallen prey to Harvard academic economics while ignoring common-sense pragmatic solutions. Putting money in consumers pockets is the one and only way to jump start the American economy. QE won't do that. If interest rates near zero for almost two years haven't convinced consumers to borrow money for homes, cars and other big ticket items, then easing credit further won't matter one iota.
While Bernanke continues to defend the Fed's policy shift, others have not been kind in their assessment of the central bank. The German finance minister hit the nail on the head when he said, "With all due respect, U.S. policy is clueless." Can we get an "Amen" to that?
Bernanke, once hailed as a genius molded in the image of his predecessor Alan Greenspan, has charted a controversial new path for economic recovery. His approach does not have history on its side. Other nations that have infamously tried versions of QE are Zimbabwe and Germany. In both cases, hyperinflation gutted the economies of the countries.
The new incoming Congress needs to reign in Bernanke before his strategy implodes, dragging the U.S. economy into decades of soaring inflation, staggering deficits and high unemployment.
Tuesday, November 2, 2010
Democrats Lawyering Up For Recounts
Today's mid-term elections are guaranteed to produce some razor-thin victory margins in many of the races. Polling shows many contests have tightened in the last week, particularly in previously safe Democratic strongholds. As a result, the difference in more than a few races could be hundreds of votes.
Among the contests that could produce cliff-hangers are the Senate races in Alaska and Nevada, where majority leader Harry Reid is in a desperate battle to save his seat. Alaska features a crowded field, including a write-in candidate campaign being waged by the incumbent. Throw in the mix the race in Washington, where the Senate contest has become a dogfight, and the voters can mail ballots up until today. That means the final count in Washington state probably won't be known until at least Friday.
As a result, these elections have the earmarks of down-to-the-wire races. Democrats are secretly sending out hordes of lawyers to places like Nevada to skulk around for voting irregularities in hopes of overturning the public will. Don't discount the Democratic Party's ability to snatch victory from the jaws of defeat by using the courts and voting challenges to save its hide. Can anyone forget Al Gore's fight to overturn Florida's 2000's presidential election results?
Now that you have been warned, don't act surprised when Democratic election antics continue well into November.
Among the contests that could produce cliff-hangers are the Senate races in Alaska and Nevada, where majority leader Harry Reid is in a desperate battle to save his seat. Alaska features a crowded field, including a write-in candidate campaign being waged by the incumbent. Throw in the mix the race in Washington, where the Senate contest has become a dogfight, and the voters can mail ballots up until today. That means the final count in Washington state probably won't be known until at least Friday.
As a result, these elections have the earmarks of down-to-the-wire races. Democrats are secretly sending out hordes of lawyers to places like Nevada to skulk around for voting irregularities in hopes of overturning the public will. Don't discount the Democratic Party's ability to snatch victory from the jaws of defeat by using the courts and voting challenges to save its hide. Can anyone forget Al Gore's fight to overturn Florida's 2000's presidential election results?
Now that you have been warned, don't act surprised when Democratic election antics continue well into November.
Thursday, October 28, 2010
What Happens After The Mid-Term Massacre?
Soothsayers, political pundits and media mush mouths are having a field day predicting what will happen when the Republican tide swamps Democrats in the mid-term elections. As you might expect, it is mostly conventional wisdom being preached as gospel by those with political axes to grind. And most of it is sheer nonsense.
Now it is time for a forecast you can bank on from a source you trust. In looking beyond the landscape of the Mid-Term Massacre, here is what you can expect in the weeks and months leading up to the seating of the new Congress in January:
First, President Obama can be counted on to thumb his nose at the results. There will be no statesmanship or conciliatory tone in the face of humbling defeat. Expect the President to do everything but admit the election results are a rejection of his policies. Instead, he will yak about how this is just something that happens in every mid-term election when the party of the president suffers losses. He will take no responsibility for voter anger, instead laying blame on his failure to communicate his achievements effectively and on Tea Party loyalists who lied about the state of the country without providing specific proposals. Count on him to also blab on about how outside money carried too much influence in the elections, robbing Democrats of a victory they richly deserved. (Never mind that unions dumped millions into campaigns, giving many Democratic candidates huge war chests that dwarfed their Republican opponents' funds.)
Conventional wisdom, as practiced in left-wing media such as The New York Times, argues the President will lurch to the center, a la Bill Clinton. It won't happen. Obama believes the country is wrong, not the other way around. He will continue to push his agenda. His secret weapon against the Republican onslaught will be his deficit reduction panel that has promised to produce a list of proposals for reducing the federal debt before the end of the year. The recommendations will surely contain massive tax increases. Obama can then point at Republicans and say, "Your own base wants to lower the deficit. You have to be willing to raise taxes to do so." Once the Republicans reject his proposals, the President will accuse the GOP of being disingenuous about lowering deficits.
Many of the nattering nabobs of negativism in the NPR world of fraudulent journalism are chattering about a few Republicans promises to "work with the president." Hogwash. Republicans have no incentive to join hands with a President who has spent the entire election cycle bashing the party like a birthday party pinata. Obama can expect a chilly reception for his agenda, which will send the media on a frenzied witch hunt to destroy Republican opposition by painting them as obstructionists. Expect the mainstream mouthpieces to cry foul at what it will call regressive partisanship--the same kind practiced with a vengeance by Democrats for the past two years.
As the president sees it, the Republican resurgence positions him strongly for the 2012 Presidential Election. Since this next election he cannot run against George Bush, he will lay blame for the country's lack of economic progress at the feet of the GOP to avoid the issue of his own failures. His rant will be that the "Party of No" has fought him tooth and nail on more aggressive government spending that would have produced millions of jobs. I know, it sounds like political suicide. But this is a President with a tin ear when it comes to listening to the body politic.
And don't expect the lame-duck Democrats to stand idly by as they abdicate their throne of power to the loathsome Republicans. Nancy Pelosi and her minions will be spoiling to punish the GOP for having the temerity to takeover their hallowed chamber. As a result, don't be surprised when Princess Pelosi and her Democrat Fiefs decide to build a fence around Obama Care to prevent the Republicans from overturning the law. Their last gasp power binge will also include a plethora of earmark legislation to help Democrats up for election next year. It also is a sure bet that the House will not extend the full Bush Tax cuts, electing to raise taxes on top wage earners. Pelosi's Bataan-like death march on Democracy will also include legislation aimed at citizenship for illegal Mexicans. Conventional wisdom says that Democrats won't try something like that because of the public outcry over a lame-duck Congress' attempts to ignore voters wishes. Hooey! Power-mad Pelosi will damn the torpedoes of criticism as she shoves the legislative medicine down the throats of Americans too stupid to vote Democratic. If that wasn't enough to raise your blood pressure, expect the Democratic-controlled investigations of fellow collaborators Charlie Rangel and Maxine Waters to go quietly into the night with only a polite slap on the wrists for abhorrent ethical lapses.
As a result, the remainder of this Congressional session will go down as one of the nastiest in history. Bad legislation will belch from the bowels of Congress while the President wags his finger and lectures the country on its failure to recognize his political greatness. The American public will be left dazed in disbelief at all these shenanigans. It's not a pretty picture. But these are ugly political practitioners with chips on their defeated shoulders. You should expect nothing less than the worse.
Now it is time for a forecast you can bank on from a source you trust. In looking beyond the landscape of the Mid-Term Massacre, here is what you can expect in the weeks and months leading up to the seating of the new Congress in January:
First, President Obama can be counted on to thumb his nose at the results. There will be no statesmanship or conciliatory tone in the face of humbling defeat. Expect the President to do everything but admit the election results are a rejection of his policies. Instead, he will yak about how this is just something that happens in every mid-term election when the party of the president suffers losses. He will take no responsibility for voter anger, instead laying blame on his failure to communicate his achievements effectively and on Tea Party loyalists who lied about the state of the country without providing specific proposals. Count on him to also blab on about how outside money carried too much influence in the elections, robbing Democrats of a victory they richly deserved. (Never mind that unions dumped millions into campaigns, giving many Democratic candidates huge war chests that dwarfed their Republican opponents' funds.)
Conventional wisdom, as practiced in left-wing media such as The New York Times, argues the President will lurch to the center, a la Bill Clinton. It won't happen. Obama believes the country is wrong, not the other way around. He will continue to push his agenda. His secret weapon against the Republican onslaught will be his deficit reduction panel that has promised to produce a list of proposals for reducing the federal debt before the end of the year. The recommendations will surely contain massive tax increases. Obama can then point at Republicans and say, "Your own base wants to lower the deficit. You have to be willing to raise taxes to do so." Once the Republicans reject his proposals, the President will accuse the GOP of being disingenuous about lowering deficits.
Many of the nattering nabobs of negativism in the NPR world of fraudulent journalism are chattering about a few Republicans promises to "work with the president." Hogwash. Republicans have no incentive to join hands with a President who has spent the entire election cycle bashing the party like a birthday party pinata. Obama can expect a chilly reception for his agenda, which will send the media on a frenzied witch hunt to destroy Republican opposition by painting them as obstructionists. Expect the mainstream mouthpieces to cry foul at what it will call regressive partisanship--the same kind practiced with a vengeance by Democrats for the past two years.
As the president sees it, the Republican resurgence positions him strongly for the 2012 Presidential Election. Since this next election he cannot run against George Bush, he will lay blame for the country's lack of economic progress at the feet of the GOP to avoid the issue of his own failures. His rant will be that the "Party of No" has fought him tooth and nail on more aggressive government spending that would have produced millions of jobs. I know, it sounds like political suicide. But this is a President with a tin ear when it comes to listening to the body politic.
And don't expect the lame-duck Democrats to stand idly by as they abdicate their throne of power to the loathsome Republicans. Nancy Pelosi and her minions will be spoiling to punish the GOP for having the temerity to takeover their hallowed chamber. As a result, don't be surprised when Princess Pelosi and her Democrat Fiefs decide to build a fence around Obama Care to prevent the Republicans from overturning the law. Their last gasp power binge will also include a plethora of earmark legislation to help Democrats up for election next year. It also is a sure bet that the House will not extend the full Bush Tax cuts, electing to raise taxes on top wage earners. Pelosi's Bataan-like death march on Democracy will also include legislation aimed at citizenship for illegal Mexicans. Conventional wisdom says that Democrats won't try something like that because of the public outcry over a lame-duck Congress' attempts to ignore voters wishes. Hooey! Power-mad Pelosi will damn the torpedoes of criticism as she shoves the legislative medicine down the throats of Americans too stupid to vote Democratic. If that wasn't enough to raise your blood pressure, expect the Democratic-controlled investigations of fellow collaborators Charlie Rangel and Maxine Waters to go quietly into the night with only a polite slap on the wrists for abhorrent ethical lapses.
As a result, the remainder of this Congressional session will go down as one of the nastiest in history. Bad legislation will belch from the bowels of Congress while the President wags his finger and lectures the country on its failure to recognize his political greatness. The American public will be left dazed in disbelief at all these shenanigans. It's not a pretty picture. But these are ugly political practitioners with chips on their defeated shoulders. You should expect nothing less than the worse.
Friday, October 15, 2010
Banking Bubble About To Burst
While the nation still struggles with the economic fallout from the housing carnage, a potentially more lethal explosion is bubbling just beneath the surface in the banking industry. Yet nothing is being done by the Obama Administration to address the issue.
Many small to medium-sized banks, the bedrock of thousands of communities throughout the country, are facing increasingly tough times. Slumping housing prices, rising foreclosures, high unemployment and commercial real estate loan defaults are eating into bank reserves and drying up loan demand.
The Federal Deposit Insurance Corporation (FDIC) has closed the doors of 129 banks this year. Nearly all have been small and medium-sized banks. At this time last year, bank failures had reached 98. For all of last year, the FDIC shuttered 140 banks, the most since the Great Depression. This year's total will easily eclipse that number, based on the current rate of failures.
For these community banks, the news may get even worse soon. Here's why: When the government coughed up $700 billion of taxpayer money to bailout the financial industry, a total of 707 banks received funds, including many small and medium-sized banks. Today many of those banks are struggling to repay the government, putting more pressure on their balance sheets and reducing their financial flexibility.
To date, a total of 80 banks have repaid the government in full. The amount comes to $140 billion, about 75 percent of the total Troubled Asset Relief Program (TARP) money lent to the banks. The remaining 627 banks owe $65 billion. That doesn't sound like a lot of money, when compared to the billions repaid by the likes of Bank of America and Goldman Sachs. However, for small and medium-sized banks the debt is weighing down their long-term prospects for recovery.
Banks were expected to repay most of the funds by 2011. The chances look grim for the remaining 627 financial institutions. As a result, most analysts predict that the banks will be forced to raise capital or sell out to the highest bidder. Raising capital for a weak bank in this economy is like trying to find an Obama supporter at a Tea Party Rally. Won't happen. That leaves the second option. There are some regional banks still circling like vultures, snapping up failed banks. However, there aren't many attractive banks left for the picking, even at today's distressed prices.
Many of the TARP banks are paying dividends to the government today as part of the repayment plan. However, those dividend payments will rise from five percent to nine percent on the fifth anniversary of the TARP loan in 2013. If banks are having a hard time making dividend payments today, any increase in the amount will drive the institutions closer to the financial cliff. A Congressional Oversight Panel recently came to the same conclusion.
In its report, the panel criticized the Treasury Department and warned that many of the banks that have not yet repaid their TARP funds could face rising challenges to meet obligations in the coming years. When dividend rates increase in three years for the TARP repayments, there will be almost no chance for the banks to pony up the money, the panel predicted.
Officials at many of the weakened banks are tap dancing with regulators to try to work out a repayment plan that will allow them to keep their doors open. However, the regulators, while sympathetic, have not budged. Further delays in payments and dividends could have dire consequences for the banks on the TARP repayment list.
That is only the beginning of the banks' problems. All financial institutions are dealing with stronger capital requirements forced on them by the Dodd-Frank Act passed this year with the support of the Obama Administration. These new requirements will only hinder the banks' efforts to try to renegotiate repayment schedules.
This is not a pretty picture for the community banking industry. While the Obama Administration has shored up the financial balance sheets for the banking Goliaths, the smaller Davids are suffering. Ultimately, the inability of many small and medium-sized banks to repay TARP funds will led to record numbers of failures and send a shock wave through communities stretching across the nation.
How long will the Treasury Department and President Obama dither before the issue is addressed?
Many small to medium-sized banks, the bedrock of thousands of communities throughout the country, are facing increasingly tough times. Slumping housing prices, rising foreclosures, high unemployment and commercial real estate loan defaults are eating into bank reserves and drying up loan demand.
The Federal Deposit Insurance Corporation (FDIC) has closed the doors of 129 banks this year. Nearly all have been small and medium-sized banks. At this time last year, bank failures had reached 98. For all of last year, the FDIC shuttered 140 banks, the most since the Great Depression. This year's total will easily eclipse that number, based on the current rate of failures.
For these community banks, the news may get even worse soon. Here's why: When the government coughed up $700 billion of taxpayer money to bailout the financial industry, a total of 707 banks received funds, including many small and medium-sized banks. Today many of those banks are struggling to repay the government, putting more pressure on their balance sheets and reducing their financial flexibility.
To date, a total of 80 banks have repaid the government in full. The amount comes to $140 billion, about 75 percent of the total Troubled Asset Relief Program (TARP) money lent to the banks. The remaining 627 banks owe $65 billion. That doesn't sound like a lot of money, when compared to the billions repaid by the likes of Bank of America and Goldman Sachs. However, for small and medium-sized banks the debt is weighing down their long-term prospects for recovery.
Banks were expected to repay most of the funds by 2011. The chances look grim for the remaining 627 financial institutions. As a result, most analysts predict that the banks will be forced to raise capital or sell out to the highest bidder. Raising capital for a weak bank in this economy is like trying to find an Obama supporter at a Tea Party Rally. Won't happen. That leaves the second option. There are some regional banks still circling like vultures, snapping up failed banks. However, there aren't many attractive banks left for the picking, even at today's distressed prices.
Many of the TARP banks are paying dividends to the government today as part of the repayment plan. However, those dividend payments will rise from five percent to nine percent on the fifth anniversary of the TARP loan in 2013. If banks are having a hard time making dividend payments today, any increase in the amount will drive the institutions closer to the financial cliff. A Congressional Oversight Panel recently came to the same conclusion.
In its report, the panel criticized the Treasury Department and warned that many of the banks that have not yet repaid their TARP funds could face rising challenges to meet obligations in the coming years. When dividend rates increase in three years for the TARP repayments, there will be almost no chance for the banks to pony up the money, the panel predicted.
Officials at many of the weakened banks are tap dancing with regulators to try to work out a repayment plan that will allow them to keep their doors open. However, the regulators, while sympathetic, have not budged. Further delays in payments and dividends could have dire consequences for the banks on the TARP repayment list.
That is only the beginning of the banks' problems. All financial institutions are dealing with stronger capital requirements forced on them by the Dodd-Frank Act passed this year with the support of the Obama Administration. These new requirements will only hinder the banks' efforts to try to renegotiate repayment schedules.
This is not a pretty picture for the community banking industry. While the Obama Administration has shored up the financial balance sheets for the banking Goliaths, the smaller Davids are suffering. Ultimately, the inability of many small and medium-sized banks to repay TARP funds will led to record numbers of failures and send a shock wave through communities stretching across the nation.
How long will the Treasury Department and President Obama dither before the issue is addressed?
Friday, October 1, 2010
Letters from O.H. Bama
Dear Princess Pelosi:
You were likely as surprised as I was when that intellectual giant Joe Biden recently declared in a public appearance that he was No. 2 in line for the presidency. I guess that makes you No. 1. Frankly, I wouldn't know because I've never read the Constitution. That document is so quaint and out of date. But I must admit that I was taken aback when when one of your limp-wristed staff members entered the Oval Office and began measuring for new drapes.
Just remember, whoever occupies the office is not only responsible for running the country, but also is on the hook for Michelle's credit card payments as well. When those overseas vacation charges begin showing up on the billing statement, you may pine for the old days as Speaker. I know Michelle's charges may seem a bit extravagant, but think of it in terms of the cost of just one of your plastic surgeries.
Perhaps, you should be more worried about keeping your job as Speaker of the House. Polling data shows our party will be booted out in the mid-term elections, despite all I've done to run up record deficits, saddle the country with a bloated health care system and sink the economy. My accomplishments aside, you are not helping matters with your recent decision to postpone a House vote on the Bush tax cuts.
However, I must admit that I liked the way you referred to the extension of the tax reductions as the "Obama" middle class tax cuts. Those stupid voters won't know the difference, particularly the ones who believed all that stuff about hope and change. On that subject, you better hope the Congress doesn't change hands in November because I will drop you from my Blackberry contact list faster than you can say, "Reverend Wright."
Guess you've heard that most of my economic team has abandoned the Good Ship Oh Bama. Good riddance, I say. It's not like they solved the economic crisis I inherited. Now even Rahm Emanuel, the country's real No. 2 in command, has decided to leap overboard. Imagine wanting to be Mayor of Chicago? The cab drivers there smell like the Potomac River after a fish kill.
On a lighter note, I appreciated the nice bible you sent me. I put it on my night stand next to the Quran. I will carry it over the next few weeks when I make carefully orchestrated appearances at churches to convince those dumb voters that I am not a Muslin. The folks at Fox News started that rumor. The First Lady got pretty steamed about it. She practically ripped off her burqa in anger.
No matter what happens in the elections, you will always be known as the first Madam Speaker of the House. Some day there be another woman in that job. But I doubt she will be a Madam. That title belongs to only you.
In closing, let me propose a coupling that might benefit us both. The Presidential Dog "Bo" is feeling a little frisky these days. Perhaps, "Bo" could mate with your bitch, "Tox." Imagine the offspring of "Bo"-"Tox."
Your Teleprompter in Chief,
O.H. Bama
You were likely as surprised as I was when that intellectual giant Joe Biden recently declared in a public appearance that he was No. 2 in line for the presidency. I guess that makes you No. 1. Frankly, I wouldn't know because I've never read the Constitution. That document is so quaint and out of date. But I must admit that I was taken aback when when one of your limp-wristed staff members entered the Oval Office and began measuring for new drapes.
Just remember, whoever occupies the office is not only responsible for running the country, but also is on the hook for Michelle's credit card payments as well. When those overseas vacation charges begin showing up on the billing statement, you may pine for the old days as Speaker. I know Michelle's charges may seem a bit extravagant, but think of it in terms of the cost of just one of your plastic surgeries.
Perhaps, you should be more worried about keeping your job as Speaker of the House. Polling data shows our party will be booted out in the mid-term elections, despite all I've done to run up record deficits, saddle the country with a bloated health care system and sink the economy. My accomplishments aside, you are not helping matters with your recent decision to postpone a House vote on the Bush tax cuts.
However, I must admit that I liked the way you referred to the extension of the tax reductions as the "Obama" middle class tax cuts. Those stupid voters won't know the difference, particularly the ones who believed all that stuff about hope and change. On that subject, you better hope the Congress doesn't change hands in November because I will drop you from my Blackberry contact list faster than you can say, "Reverend Wright."
Guess you've heard that most of my economic team has abandoned the Good Ship Oh Bama. Good riddance, I say. It's not like they solved the economic crisis I inherited. Now even Rahm Emanuel, the country's real No. 2 in command, has decided to leap overboard. Imagine wanting to be Mayor of Chicago? The cab drivers there smell like the Potomac River after a fish kill.
On a lighter note, I appreciated the nice bible you sent me. I put it on my night stand next to the Quran. I will carry it over the next few weeks when I make carefully orchestrated appearances at churches to convince those dumb voters that I am not a Muslin. The folks at Fox News started that rumor. The First Lady got pretty steamed about it. She practically ripped off her burqa in anger.
No matter what happens in the elections, you will always be known as the first Madam Speaker of the House. Some day there be another woman in that job. But I doubt she will be a Madam. That title belongs to only you.
In closing, let me propose a coupling that might benefit us both. The Presidential Dog "Bo" is feeling a little frisky these days. Perhaps, "Bo" could mate with your bitch, "Tox." Imagine the offspring of "Bo"-"Tox."
Your Teleprompter in Chief,
O.H. Bama
Saturday, September 25, 2010
Economic Nonsense: How the Obama Administration is Prolonging the Recession
President Obama's economic team is jumping ship as it becomes clearer each day that the administration has botched attempts to recharge the flagging economy. The latest rat leaving the sinking ship of state is top economic adviser Larry Summers, who is better suited for academia than the rough-and-tumble world of politics. His departure hopefully is not the end of the housecleaning. Treasury Secretary Tim (Tax Cheat) Geitner needs to walk the plank, too.
Even the most ardent Obama supporter cannot defend the administration's spectacular failures in the economy arena. Despite spending trillions in bailouts and economic stimulus programs, unemployment has not budged. In fact, it has gone from 7.7 percent when the President assumed office to nearly 10 percent. Consumer spending has all but dried up as people prop up their savings and pay down credit card debt.
This economic reality has escaped the attention of the Obama Administration, whose only solution is to keep driving the country deeper into debt with frivolous government programs that do not address the real economic issue. In fact, this scribe is convinced the administration and its army of economic lightweights don't have a clue about what is the problem. Obama and his sycophants in the media believe it is about jobs. But joblessness is only the symptom of the larger problem.
For months, your faithful journalist has been pointing out that it is all about real estate prices, foreclosures and underwater mortgages. This recession was the byproduct of a real estate bubble that burst, sending ripples through the financial system. Liberals like to argue that it was all Wall Street's fault because the financial firms sold risky derivatives based on underlying housing mortgages. But, what they fail to acknowledge is that if the mortgages had been sound, then the derivatives would have paid off handsomely. Everyone would have won.
Fingering the derivatives is like blaming the sneeze for your cold. Outlandishly lax lending practices, championed by Freddie Mac and Fannie Mae, led to unhealthy homeowner speculation and saddled under qualified buyers with mortgages they couldn't afford. That is what drove the real estate market off the cliff and sunk the derivatives, leaving homeowners, banks and financial firms in dire financial straits. That shouldn't be too hard to understand, especially for anyone with an ounce of economic acumen.
Yet Obama's so-called economic dream team has spent precious few dollars and efforts on addressing this problem. Instead, they have bailed out billion-dollar banks, papered over financial loses at big Wall Street firms and doled out nearly a trillion dollars for wasteful programs designed to reward Democrats up for reelection under the guise of economic stimulus.
Until the administration addresses the real estate issue, the economy will continue to slumber. Here's why: For most consumers, their home is their biggest asset. When the price of this asset goes down, they rein in spending. They don't feel as "rich" when their home's market value dives 10 to 25 percent, as real estate prices have done in the past two years. When values fall, homeowners who might have been considering moving, put off plans for fear they won't be able to sell their domicile. Or if they do sell, they will have to take a bath, leaving them too little profit to put down on a new home.
There are broader ramifications for the economy. Many homeowners have mortgages that are underwater. That means they owe more on their home than the asset is worth. When this happens, consumers are less likely to spend money renovating their homes or buying new furniture or appliances. Their spending on big ticket items evaporates.
In addition, a depressed housing sector costs jobs. Construction workers, realtors, home builders, suppliers and others have been forced to lay off people. In some cases, industry firms have shuttered their businesses. Housing is a huge employer and when construction falls, there is an aftershock through the entire economy.
Until the Obama administration fixes housing, the economy will remain stalled. No amount of money thrown at big banks, small businesses, stimulus, job retraining and jobless benefits will change that. It is merely dumping taxpayer money down the drain without moving the economic needle.
So what needs to be done? Here are a few modest proposals for reversing the housing crisis and shock the economy into recovery:
ADDRESS UNDERWATER MORTGAGES: This should should have been the very first initiative of the Obama Administration when it assumed office. When home prices fell, lenders began demanding higher payments when mortgages dipped underwater. This sent many homeowners running for the cover of bankruptcy or drove them into foreclosure. The government could have given incentives for lenders to hold the line on payments by relaxing requirements on capital to shore up bank balance sheets. Then the feds should have required (not suggested) lenders to restructure the loans at prevailing interest rates, eliminating adjustable rates mortgages, which have been the scourge of the real estate recovery. If this had been done early on, not only would have more owners been able to remain in their homes, but the market would not have been flooded with foreclosed homes which in turn crippled home prices even further.
INCENTIVES FOR HOME BUYERS: The administration's lone attempt to boost home sales was to launch a program to reward buyers with tax credits. Under the plan, first-time homebuyers received an $8,000 tax credit, while repeat purchasers got $6,500. The program ends September 30, but sales contracts had to be signed by April 30 to qualify. Sales figures were impressive during the short-lived effort, but never reversed the housing slide. The program was too late to turn the tide and was too short in duration. Most realtors also will tell you that the administration's program suffered from paperwork logjams, delays in approvals and government blunders that forced some home buyers to make multiple applications. Many frustrated home buyers simply gave up. Instead of tax credits, the government could sweetened the deal by refunding the money directly to homebuyers upon completion of the sale. Tax credits are "soft" money because in many cases it probably will only reduce income taxes for the buyer. There is no guarantee of a tax refund which would put money in the pockets of buyers. Cash always works better than credits when it comes to buyer motivation.
STRENGTHEN EXISTING HOME SALES: When the housing market collapsed, the market was saturated with existing stock that was not moving. There were too few buyers and too many homes for sale. This is what tanked housing prices. As foreclosures mounted, that exacerbated the problem, causing the supply of homes to far outstrip demand. In this environment, prices plummeted. It's the law of real estate. The administration should have zeroed in on this issue by undertaking efforts to help reduce the supply. In addition to the refund idea mentioned above, the government should have funded a program to waive closing costs on existing homes. Under this plan, the government would send money directly to lenders to cover the costs.
SUBSIDIES TO BUILDERS: The final linchpin in this housing program should have included direct subsidies to home builders. The money would be used to reduce new home prices, while encouraging builders to continue construction. Lower home prices would have attracted buyers, which would have helped deplete the existing inventory of new homes on the market. As new home sales increased, fewer workers would have been laid off and construction would have continued, albeit at a reduced rate.
Like me, you probably are wondering what all of this would have cost the taxpayer. Whatever the price tag, I guarantee it would be far less than what the Obama economic gang has dumped into the stimulus boondoggle, car company and bank bailouts and a host of other programs. Liberals would tell you helping homeowners would not have solved the banking mess or halted the job losses. They are dead wrong.
Liberals don't understand the American economy. It is 75 percent driven by consumer spending. When consumers shut their wallets, no amount of economic pump priming will dig the economy out of its hole. The current problem is even consumers with jobs aren't spending. They look at their devalued homes and tighten their belts another notch. Sure, they are worried about their jobs too. But once consumers start spending, big companies will prosper, small businesses will rally, Wall Street will boom, new capital will flow into the market and the American enterprise system will grow.
However, don't hold your breath waiting for this to happen. The current administration, led by clueless academic classroom economists, are misguided and ill equipped to deal with the realities of our economic malaise. Only a change in administrations will brighten the outlook for economic recovery.
Even the most ardent Obama supporter cannot defend the administration's spectacular failures in the economy arena. Despite spending trillions in bailouts and economic stimulus programs, unemployment has not budged. In fact, it has gone from 7.7 percent when the President assumed office to nearly 10 percent. Consumer spending has all but dried up as people prop up their savings and pay down credit card debt.
This economic reality has escaped the attention of the Obama Administration, whose only solution is to keep driving the country deeper into debt with frivolous government programs that do not address the real economic issue. In fact, this scribe is convinced the administration and its army of economic lightweights don't have a clue about what is the problem. Obama and his sycophants in the media believe it is about jobs. But joblessness is only the symptom of the larger problem.
For months, your faithful journalist has been pointing out that it is all about real estate prices, foreclosures and underwater mortgages. This recession was the byproduct of a real estate bubble that burst, sending ripples through the financial system. Liberals like to argue that it was all Wall Street's fault because the financial firms sold risky derivatives based on underlying housing mortgages. But, what they fail to acknowledge is that if the mortgages had been sound, then the derivatives would have paid off handsomely. Everyone would have won.
Fingering the derivatives is like blaming the sneeze for your cold. Outlandishly lax lending practices, championed by Freddie Mac and Fannie Mae, led to unhealthy homeowner speculation and saddled under qualified buyers with mortgages they couldn't afford. That is what drove the real estate market off the cliff and sunk the derivatives, leaving homeowners, banks and financial firms in dire financial straits. That shouldn't be too hard to understand, especially for anyone with an ounce of economic acumen.
Yet Obama's so-called economic dream team has spent precious few dollars and efforts on addressing this problem. Instead, they have bailed out billion-dollar banks, papered over financial loses at big Wall Street firms and doled out nearly a trillion dollars for wasteful programs designed to reward Democrats up for reelection under the guise of economic stimulus.
Until the administration addresses the real estate issue, the economy will continue to slumber. Here's why: For most consumers, their home is their biggest asset. When the price of this asset goes down, they rein in spending. They don't feel as "rich" when their home's market value dives 10 to 25 percent, as real estate prices have done in the past two years. When values fall, homeowners who might have been considering moving, put off plans for fear they won't be able to sell their domicile. Or if they do sell, they will have to take a bath, leaving them too little profit to put down on a new home.
There are broader ramifications for the economy. Many homeowners have mortgages that are underwater. That means they owe more on their home than the asset is worth. When this happens, consumers are less likely to spend money renovating their homes or buying new furniture or appliances. Their spending on big ticket items evaporates.
In addition, a depressed housing sector costs jobs. Construction workers, realtors, home builders, suppliers and others have been forced to lay off people. In some cases, industry firms have shuttered their businesses. Housing is a huge employer and when construction falls, there is an aftershock through the entire economy.
Until the Obama administration fixes housing, the economy will remain stalled. No amount of money thrown at big banks, small businesses, stimulus, job retraining and jobless benefits will change that. It is merely dumping taxpayer money down the drain without moving the economic needle.
So what needs to be done? Here are a few modest proposals for reversing the housing crisis and shock the economy into recovery:
ADDRESS UNDERWATER MORTGAGES: This should should have been the very first initiative of the Obama Administration when it assumed office. When home prices fell, lenders began demanding higher payments when mortgages dipped underwater. This sent many homeowners running for the cover of bankruptcy or drove them into foreclosure. The government could have given incentives for lenders to hold the line on payments by relaxing requirements on capital to shore up bank balance sheets. Then the feds should have required (not suggested) lenders to restructure the loans at prevailing interest rates, eliminating adjustable rates mortgages, which have been the scourge of the real estate recovery. If this had been done early on, not only would have more owners been able to remain in their homes, but the market would not have been flooded with foreclosed homes which in turn crippled home prices even further.
INCENTIVES FOR HOME BUYERS: The administration's lone attempt to boost home sales was to launch a program to reward buyers with tax credits. Under the plan, first-time homebuyers received an $8,000 tax credit, while repeat purchasers got $6,500. The program ends September 30, but sales contracts had to be signed by April 30 to qualify. Sales figures were impressive during the short-lived effort, but never reversed the housing slide. The program was too late to turn the tide and was too short in duration. Most realtors also will tell you that the administration's program suffered from paperwork logjams, delays in approvals and government blunders that forced some home buyers to make multiple applications. Many frustrated home buyers simply gave up. Instead of tax credits, the government could sweetened the deal by refunding the money directly to homebuyers upon completion of the sale. Tax credits are "soft" money because in many cases it probably will only reduce income taxes for the buyer. There is no guarantee of a tax refund which would put money in the pockets of buyers. Cash always works better than credits when it comes to buyer motivation.
STRENGTHEN EXISTING HOME SALES: When the housing market collapsed, the market was saturated with existing stock that was not moving. There were too few buyers and too many homes for sale. This is what tanked housing prices. As foreclosures mounted, that exacerbated the problem, causing the supply of homes to far outstrip demand. In this environment, prices plummeted. It's the law of real estate. The administration should have zeroed in on this issue by undertaking efforts to help reduce the supply. In addition to the refund idea mentioned above, the government should have funded a program to waive closing costs on existing homes. Under this plan, the government would send money directly to lenders to cover the costs.
SUBSIDIES TO BUILDERS: The final linchpin in this housing program should have included direct subsidies to home builders. The money would be used to reduce new home prices, while encouraging builders to continue construction. Lower home prices would have attracted buyers, which would have helped deplete the existing inventory of new homes on the market. As new home sales increased, fewer workers would have been laid off and construction would have continued, albeit at a reduced rate.
Like me, you probably are wondering what all of this would have cost the taxpayer. Whatever the price tag, I guarantee it would be far less than what the Obama economic gang has dumped into the stimulus boondoggle, car company and bank bailouts and a host of other programs. Liberals would tell you helping homeowners would not have solved the banking mess or halted the job losses. They are dead wrong.
Liberals don't understand the American economy. It is 75 percent driven by consumer spending. When consumers shut their wallets, no amount of economic pump priming will dig the economy out of its hole. The current problem is even consumers with jobs aren't spending. They look at their devalued homes and tighten their belts another notch. Sure, they are worried about their jobs too. But once consumers start spending, big companies will prosper, small businesses will rally, Wall Street will boom, new capital will flow into the market and the American enterprise system will grow.
However, don't hold your breath waiting for this to happen. The current administration, led by clueless academic classroom economists, are misguided and ill equipped to deal with the realities of our economic malaise. Only a change in administrations will brighten the outlook for economic recovery.
Wednesday, September 22, 2010
Obama Administration Strong Arms Mortgage Firm
There is something fishy going on in the home mortgage arena and the stench stretches all the way to The White House. Yet it has received only a couple of paragraphs worth of attention on the business pages of the mainstream media.
Home mortgage giant Ally Financial, Inc. issued a quiet note to its brokers and agents this week, telling them to halt evictions tied to foreclosures in 23 states. No public announcement was made about the action.
However, one of the brokers leaked the two-page memo to the media. The note, marked "Urgent," ordered brokers to immediately stop evictions, cash-for-key transactions and lockouts.
On the surface, this appears to be good news in light of soaring home foreclosures. Repossessions rose a staggering 25 percent in August, setting a new record. A total of 95,364 homes were taken over by banks in the 30-day period.
August marked the ninth month in a row that the number of homes lost to foreclosure has increased on an annual basis, despite failed, multi-billion dollar efforts by the Obama Administration to stem the tide.
Here's what the media missed on this story. Not many people have heard of Detroit-based Ally Financial, Inc. That's because it was once known as GMAC, Inc., an arm of General Motors, until the automotive company went belly up and filed for bankruptcy.
This same GMAC, now masquerading as Ally Financial, is 56.3 percent owned by the government. It received more than $17 billion in federal bailout funds, courtesy of the U.S. taxpayer.
Now it shouldn't be so hard for anyone paying attention to connect the dots. But let me spell it out. The federal government is the majority owner of Ally Financial. Record home foreclosures are not good news for the Obama Administration and the Democratic Party, locked in a struggle for control of Congress. How difficult is it to imagine that someone in the administration strong-armed Ally Financial into halting evictions of foreclosed homeowners?
What could be worse for Democrats than stories on the evening news showing homeowners thrown out of their homes? It is a nightmare scenario for an administration and a party that has championed its bumbling homeowner assistance program that has made only a small dent in the problem.
When it was caught red-handed, of course Ally Financial's spin masters tried to wave off the whole episode. A spokeswoman claimed the action was necessary to "allow time to address a potential issue that was raised in a number of existing foreclosures." She claimed the company had been working on the problem for three months. However, the mortgage firm declined to provide any details to shed light on the issue.
Corporate double-speak aside, the timing is not coincidental. The mid-term elections are less than two months away. If evictions are stalled at one of the nation's biggest home lenders, it serves Democrats, who already are on the hot seat for their failures to restore the economic health of the country.
If you are still not convinced, check out the list of 23 states affected by Ally Financial's action. They include many with down-to-the-wire races for the Senate, House and Governor.
For example, Florida, New York, Pennsylvania and Ohio are on the list. Others include: Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Vermont and Wisconsin.
These are the kind of political shenanigans we have come to expect from the Obama Administration. Playing politics with home foreclosures smacks of the worst kind of meddling, even for an administration known for using bare-knuckled tactics, jiggered numbers and government muscle to bully corporate America.
There is a lesson here on why it is never a good idea for the federal government to own a private enterprise.
Home mortgage giant Ally Financial, Inc. issued a quiet note to its brokers and agents this week, telling them to halt evictions tied to foreclosures in 23 states. No public announcement was made about the action.
However, one of the brokers leaked the two-page memo to the media. The note, marked "Urgent," ordered brokers to immediately stop evictions, cash-for-key transactions and lockouts.
On the surface, this appears to be good news in light of soaring home foreclosures. Repossessions rose a staggering 25 percent in August, setting a new record. A total of 95,364 homes were taken over by banks in the 30-day period.
August marked the ninth month in a row that the number of homes lost to foreclosure has increased on an annual basis, despite failed, multi-billion dollar efforts by the Obama Administration to stem the tide.
Here's what the media missed on this story. Not many people have heard of Detroit-based Ally Financial, Inc. That's because it was once known as GMAC, Inc., an arm of General Motors, until the automotive company went belly up and filed for bankruptcy.
This same GMAC, now masquerading as Ally Financial, is 56.3 percent owned by the government. It received more than $17 billion in federal bailout funds, courtesy of the U.S. taxpayer.
Now it shouldn't be so hard for anyone paying attention to connect the dots. But let me spell it out. The federal government is the majority owner of Ally Financial. Record home foreclosures are not good news for the Obama Administration and the Democratic Party, locked in a struggle for control of Congress. How difficult is it to imagine that someone in the administration strong-armed Ally Financial into halting evictions of foreclosed homeowners?
What could be worse for Democrats than stories on the evening news showing homeowners thrown out of their homes? It is a nightmare scenario for an administration and a party that has championed its bumbling homeowner assistance program that has made only a small dent in the problem.
When it was caught red-handed, of course Ally Financial's spin masters tried to wave off the whole episode. A spokeswoman claimed the action was necessary to "allow time to address a potential issue that was raised in a number of existing foreclosures." She claimed the company had been working on the problem for three months. However, the mortgage firm declined to provide any details to shed light on the issue.
Corporate double-speak aside, the timing is not coincidental. The mid-term elections are less than two months away. If evictions are stalled at one of the nation's biggest home lenders, it serves Democrats, who already are on the hot seat for their failures to restore the economic health of the country.
If you are still not convinced, check out the list of 23 states affected by Ally Financial's action. They include many with down-to-the-wire races for the Senate, House and Governor.
For example, Florida, New York, Pennsylvania and Ohio are on the list. Others include: Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Vermont and Wisconsin.
These are the kind of political shenanigans we have come to expect from the Obama Administration. Playing politics with home foreclosures smacks of the worst kind of meddling, even for an administration known for using bare-knuckled tactics, jiggered numbers and government muscle to bully corporate America.
There is a lesson here on why it is never a good idea for the federal government to own a private enterprise.
Wednesday, September 15, 2010
Odds and Ends, But Oddly Entertaining
A new monthly feature of Drew's Diatribe debuts today with this column. It is called, "Odds and Ends, But Oddly Entertaining," a collection of news items which are designed to enlighten, enliven and engage. As the name indicates, there will be the occasional oddball piece of news too. Of course, expect a liberal dose of stinging commentary and reflection sprinkled throughout.
CLOSING IN ON YOUR WALLET : A recent survey by Bankrate.com illustrates the folly of government intervention in private industry. In its survey, the firm found that closing costs on home mortgages have zoomed 37 percent ahead of last year's average. These costs include appraisals, credit reports, settlement fees and surveys. Housing industry executives blame the rising costs on a new government rule which hiked the costs for all those appraisers, attorneys, surveyors and credit companies whose fees make up the closing expenses. The new law, which took effect January 1, requires a more accurate statement of closing costs to borrowers. It sounds like a good idea, but the new requirements are more complicated, which means more workers are needed to meet the government mandate. Lenders too have been impacted. They are having to hire more compliance people to make sure everyone else in the lending chain is producing accurate data for borrowers. No one argues the need for reliable closing cost information. However, as this illustrates, the heavy hand of government regulation usually leads to higher costs, which ultimately are passed on to consumers.
PARENTAL INDISCRETION: A child advocacy group has raised the red flag on the number of kids left in overheated cars. According to its findings, at least 41 children have died this year in enclosed cars on sizzling summer days. It is a tragic issue. However, the group now wants Congress and regulators to compel automakers to install warning systems to prevent parents from leaving children in cars unattended. This is the kind of logic that has led to an tsunami of regulations that add costs to cars. It is easier to punish automakers with added costs than to deal with the real problem of negligent parents. That's why this warning system is a bad idea. Instead, every state should enact legislation that makes it a crime to leave a child unattended in a car. If a few people went to jail for long stretches, a warning light would go off in every parent's brain before leaving a child in a closed car on a 100-degree day.
THIS IS TOO TAXING OF AN IDEA: A report by The Tax Foundation shows the harmful effect of higher tax rates on stock dividends. The expiration of the Bush tax cuts on January 1 of next year and the new Medicare taxes on investment income will push the top effective tax rate on dividends to 68 percent in 2011. That will give the U.S. the distinction of having the highest tax on dividends among all industrialized nations. The new Medicare taxes on investment income are designed to help pay for the bloated health care reform bill passed earlier this year. Economic experts predict the higher taxes will discourage productive capital formation, which reduces wages and living standards. Watch for a massive stock sell-off during the fourth quarter of this year as investors try to take advantage of the current tax rates before January 1.
DEBT BOMB: From 1789 through 2008--a period of 220 years--the United States government racked up $5.8 trillion in national debt. Since 2008, about $4.2 trillion has been added to the national debt, raising the nation's total debt to $9 trillion. The Congressional Budget Office, those folks who are rarely if ever accurate on their estimates, are guessing that the debt will hit a staggering $20 trillion by the end of the current decade. The CBO never errs on the high side for fear of angering its clients in Congress. But even if the CBO has it right, the result will be unprecedented government borrowing. Washington will need to borrow three times more than it did in the previous 220 years combined. The cost of all this debt will saddle taxpayers with heavy levies. By some estimates, the average household will have to pony up $7,000 in 2020 just to meet the government interest requirements on its debt. That's why the national debt is a ticking time bomb waiting to explode, destroying what's left of the nation's fragile economy.
JUMPING IN THE GENE POOL: One of the fastest growing professions is something called "certified genetic counselors." There are 2,800 professional counselors working today in the U.S. These people assist clients in deciding whether to be tested for genetic markers for such things as diseases, drug interactions and inherited medical anomalies. Once the tests are done, the counselors interpret the results for clients. The profession has weathered its share of critics, including a congressional subcommittee that conducted hearings on the providers of genetic testing to patients. These tests are at the patients discretion and usually are not ordered by physicians. Perhaps, the government can levy a tax on the certified genetic counselors, as it did the tanning bed industry. Taxes are Congress' way of dealing with those individuals and industries it considers out of the mainstream.
CHICKEN FRIED WEIGHT: Obesity rates have health officials worried as Americans pack on more weight each year. The Centers for Disease Control and Prevention estimates there are 72.5 million obese people in the country. That's roughly 27 percent of the population. The nine states with the highest obesity rates are all in the South with the exception of West Virginia. The highest rate is 34.4 percent in Mississippi. The CDCP had all sorts of explanations for the higher rates in these nine states: diet, exercise, climate and more. Anyone who has traveled to the South or grown up in that region (like your scribe) would not need a federal government survey to tell them why people are fatter in Dixie. It's called fried food. Any culture that eats fried dough for breakfast, fried catfish for lunch and fried green tomatoes at supper has earned every single pound. It's time for the government to stop studying and pass the fried okra.
IMAGINE THE FAMILY REUNIONS: Reuters reports that authorities have arrested a Paris man who claimed to have fathered 55 children by 55 different women. The man, who is 54-years old, was suspected of fraudulently obtaining nearly $1.27 million annually in benefits from the French social system to support his far flung family. In addition, the man is accused of obtaining residency permits for immigrant women who were listed as mothers of the children. No wonder the man opted to take the government dole. He was obviously too busy procreating to hold a regular job. But you have to shake your head and wonder at one point did the father run out of names for his brood of 55?
That's all the news that fits. Tune in next month.
CLOSING IN ON YOUR WALLET : A recent survey by Bankrate.com illustrates the folly of government intervention in private industry. In its survey, the firm found that closing costs on home mortgages have zoomed 37 percent ahead of last year's average. These costs include appraisals, credit reports, settlement fees and surveys. Housing industry executives blame the rising costs on a new government rule which hiked the costs for all those appraisers, attorneys, surveyors and credit companies whose fees make up the closing expenses. The new law, which took effect January 1, requires a more accurate statement of closing costs to borrowers. It sounds like a good idea, but the new requirements are more complicated, which means more workers are needed to meet the government mandate. Lenders too have been impacted. They are having to hire more compliance people to make sure everyone else in the lending chain is producing accurate data for borrowers. No one argues the need for reliable closing cost information. However, as this illustrates, the heavy hand of government regulation usually leads to higher costs, which ultimately are passed on to consumers.
PARENTAL INDISCRETION: A child advocacy group has raised the red flag on the number of kids left in overheated cars. According to its findings, at least 41 children have died this year in enclosed cars on sizzling summer days. It is a tragic issue. However, the group now wants Congress and regulators to compel automakers to install warning systems to prevent parents from leaving children in cars unattended. This is the kind of logic that has led to an tsunami of regulations that add costs to cars. It is easier to punish automakers with added costs than to deal with the real problem of negligent parents. That's why this warning system is a bad idea. Instead, every state should enact legislation that makes it a crime to leave a child unattended in a car. If a few people went to jail for long stretches, a warning light would go off in every parent's brain before leaving a child in a closed car on a 100-degree day.
THIS IS TOO TAXING OF AN IDEA: A report by The Tax Foundation shows the harmful effect of higher tax rates on stock dividends. The expiration of the Bush tax cuts on January 1 of next year and the new Medicare taxes on investment income will push the top effective tax rate on dividends to 68 percent in 2011. That will give the U.S. the distinction of having the highest tax on dividends among all industrialized nations. The new Medicare taxes on investment income are designed to help pay for the bloated health care reform bill passed earlier this year. Economic experts predict the higher taxes will discourage productive capital formation, which reduces wages and living standards. Watch for a massive stock sell-off during the fourth quarter of this year as investors try to take advantage of the current tax rates before January 1.
DEBT BOMB: From 1789 through 2008--a period of 220 years--the United States government racked up $5.8 trillion in national debt. Since 2008, about $4.2 trillion has been added to the national debt, raising the nation's total debt to $9 trillion. The Congressional Budget Office, those folks who are rarely if ever accurate on their estimates, are guessing that the debt will hit a staggering $20 trillion by the end of the current decade. The CBO never errs on the high side for fear of angering its clients in Congress. But even if the CBO has it right, the result will be unprecedented government borrowing. Washington will need to borrow three times more than it did in the previous 220 years combined. The cost of all this debt will saddle taxpayers with heavy levies. By some estimates, the average household will have to pony up $7,000 in 2020 just to meet the government interest requirements on its debt. That's why the national debt is a ticking time bomb waiting to explode, destroying what's left of the nation's fragile economy.
JUMPING IN THE GENE POOL: One of the fastest growing professions is something called "certified genetic counselors." There are 2,800 professional counselors working today in the U.S. These people assist clients in deciding whether to be tested for genetic markers for such things as diseases, drug interactions and inherited medical anomalies. Once the tests are done, the counselors interpret the results for clients. The profession has weathered its share of critics, including a congressional subcommittee that conducted hearings on the providers of genetic testing to patients. These tests are at the patients discretion and usually are not ordered by physicians. Perhaps, the government can levy a tax on the certified genetic counselors, as it did the tanning bed industry. Taxes are Congress' way of dealing with those individuals and industries it considers out of the mainstream.
CHICKEN FRIED WEIGHT: Obesity rates have health officials worried as Americans pack on more weight each year. The Centers for Disease Control and Prevention estimates there are 72.5 million obese people in the country. That's roughly 27 percent of the population. The nine states with the highest obesity rates are all in the South with the exception of West Virginia. The highest rate is 34.4 percent in Mississippi. The CDCP had all sorts of explanations for the higher rates in these nine states: diet, exercise, climate and more. Anyone who has traveled to the South or grown up in that region (like your scribe) would not need a federal government survey to tell them why people are fatter in Dixie. It's called fried food. Any culture that eats fried dough for breakfast, fried catfish for lunch and fried green tomatoes at supper has earned every single pound. It's time for the government to stop studying and pass the fried okra.
IMAGINE THE FAMILY REUNIONS: Reuters reports that authorities have arrested a Paris man who claimed to have fathered 55 children by 55 different women. The man, who is 54-years old, was suspected of fraudulently obtaining nearly $1.27 million annually in benefits from the French social system to support his far flung family. In addition, the man is accused of obtaining residency permits for immigrant women who were listed as mothers of the children. No wonder the man opted to take the government dole. He was obviously too busy procreating to hold a regular job. But you have to shake your head and wonder at one point did the father run out of names for his brood of 55?
That's all the news that fits. Tune in next month.
Friday, September 3, 2010
NFL Season Predictions
Americans will once again be able to feed their addiction to the NFL as another pro football season arrives just in time to end the boredom of a long summer of watching television reruns and baseball. Every season has its surprises and disappointments, as this one surely will, but only the foolhardy try to predict the winners and losers. Alas, no one every accused your favorite scribe of being a certified Mensa member.
After consulting a Ouija board and a gap-toothed tarot card reader, here are some predictions for the new NFL season:
OVERACHIEVERS:
SAN FRANCISCO: Coach Mike Singletary has remade the Forty-Niners into a tough, run-oriented team. They were close in a lot of game last season, only to let them slip away in the fourth quarter. This is a club with offensive firepower and a rugged defense. The experience of last season should benefit the Niners, if quarterback Alex Smith can deliver in the clutch. Look for San Fran to win the NFC West and make the playoffs.
NY GIANTS: The Giants played more like Midgets last season, especially on defense. They lost their defensive edge, something the Giants had built their franchise on in the past decade. Injuries didn't help but several stalwarts also underperformed. If the defense shows improvement, the Giants could surprise in the NFC East. They are flying under the radar right now, which makes the Giants dangerous, especially with a solid coach and tough running game.
TENNESSEE: The Titans began last season like a team looking for an early offseason vacation. They stumbled out of the gate and never recovered until their season was done. But in winning their last six games, the Titans proved they were still a championship caliber team. Vince Young led the late-season resurgence after almost burning his bridges in Tennessee. Coach Jeff Fisher is one of the NFL's best at preparing his team. This season he leads the Titans to a division title.
OAKLAND: No team has been more woeful than the Oakland Raiders with the possible exception of the Obama Administration. Al Davis' bunch has stumbled, bumbled and grumbled themselves through a lost decade of uninspiring football. The franchise biggest blunder was taking overweight, overrated Jamarcus Russell with the first pick in the draft and then installing him as their quarterback. He flopped bigger than a beached whale. The trade for Redskins' signal caller Jason Campbell was just what the Raiders needed to stabilize their offense. The defense was one of the best in the AFC last season. The Raiders might not make the playoffs but they will return to respectability.
DETROIT: The Lions' performance has been the only thing worst than Detroit's sagging economy. However, things are looking up, since ownership dumped the general manager. Two straight years of excellent drafts has armed the team with talent on both offense and defense. Matthew Stafford was impressive in his rookie reason. If he continues to improve, the future is bright in the bleak Motor City. The Lions might not even finish 8-8 this season, but at least they will be competitive. With a few breaks, they could even find the promised land of a .500 season.
UNDERACHIEVERS:
ARIZONA: After making the playoffs the last two years, the Cardinals are destined for a precipitous fall. Quarterback Kurt Warner, the heart and soul of the franchise, has departed for the retirement couch, leaving the Big Red with a gaping hole at this key position. Matt Leinart has already proven he can't handle the pressure and Derek Anderson is a stopgap measure. The penny-pinching Cardinals have lost too much talent to free agency over the last two years. Look for the team to be sub-500 and miss the playoffs.
DALLAS: No team attracts preseason hype like the Cowboys and no team disappoints its followers more often than the Cowboys. Expectations are high in Dallas, since the team hosts the Super Bowl. However, the Cowboy offense has gotten too predictable under former genius Jason Garrett. The defense gives up too many big plays and still is searching for a secondary to match its defensive front. Then you have coach Yuck-Yuck, Wade Phillips. No one is more uninspiring nor more ill prepared on game day. As a result, they lose games they should win on talent alone. The Cowboys will finish second in their division, make the playoffs as a wild card and make an early exit.
MINNESOTA: Drama queen Brett Favre is back at the helm and most prognosticators are anointing the Vikings as a Super Bowl team. Not so fast. Running back Adrian Peterson has slipped a notch, thanks to fumble prone hands. Favre will be 41 (or is it 61?) and the tank may finally be empty. Minnesota has flourished in a weak division, but a tough non-conference schedule will extract its revenge on their record. Look for Green Bay to replace Minnesota at the top of the NFC North Division.
NEW YORK JETS: The Jets shocked the NFL last season in Rex Ryan's debut. Their aggressive, swarming defense was the best in the entire league. However, the offense, handed over to rookie quarterback Mark Sanchez, was pedestrian. The Jets modus operandi was to win tight games with defense. The Jets upgraded on offense, but Sanchez is not the man to build an offense around. Teams will be gunning for loud mouth Rex this year. The defense will still be stout, but the Jets will need to shutout every team to finish ahead of New England and Miami. They are destined to finish in the middle of the pack.
SUPER BOWL PREDICTIONS:
In the AFC, the champion will be decided between Baltimore and New England. The Ravens, under second year quarterback Joe Flacco, have all the ingredients for a championship run: defense, running game and a quality leader. The Pats suffered a string of injuries last season that doomed their chances for another title. With a little luck in that area, they should return to their accustomed place in the championship game. However, the nod goes to the Ravens.
In the NFC, the Giants will return to their dominance, thanks to an improved defense and a healthy Eli Manning. Some are discounting the Saints because of their suspect defense, but defensive coordinator Greg Williams has made improvements on that side of the ball. Drew Brees has established himself as the best at leading a high octane offense. The Saints will repeat as NFC champs.
And the Super Bowl Champion is (drum roll): Baltimore Ravens.
After consulting a Ouija board and a gap-toothed tarot card reader, here are some predictions for the new NFL season:
OVERACHIEVERS:
SAN FRANCISCO: Coach Mike Singletary has remade the Forty-Niners into a tough, run-oriented team. They were close in a lot of game last season, only to let them slip away in the fourth quarter. This is a club with offensive firepower and a rugged defense. The experience of last season should benefit the Niners, if quarterback Alex Smith can deliver in the clutch. Look for San Fran to win the NFC West and make the playoffs.
NY GIANTS: The Giants played more like Midgets last season, especially on defense. They lost their defensive edge, something the Giants had built their franchise on in the past decade. Injuries didn't help but several stalwarts also underperformed. If the defense shows improvement, the Giants could surprise in the NFC East. They are flying under the radar right now, which makes the Giants dangerous, especially with a solid coach and tough running game.
TENNESSEE: The Titans began last season like a team looking for an early offseason vacation. They stumbled out of the gate and never recovered until their season was done. But in winning their last six games, the Titans proved they were still a championship caliber team. Vince Young led the late-season resurgence after almost burning his bridges in Tennessee. Coach Jeff Fisher is one of the NFL's best at preparing his team. This season he leads the Titans to a division title.
OAKLAND: No team has been more woeful than the Oakland Raiders with the possible exception of the Obama Administration. Al Davis' bunch has stumbled, bumbled and grumbled themselves through a lost decade of uninspiring football. The franchise biggest blunder was taking overweight, overrated Jamarcus Russell with the first pick in the draft and then installing him as their quarterback. He flopped bigger than a beached whale. The trade for Redskins' signal caller Jason Campbell was just what the Raiders needed to stabilize their offense. The defense was one of the best in the AFC last season. The Raiders might not make the playoffs but they will return to respectability.
DETROIT: The Lions' performance has been the only thing worst than Detroit's sagging economy. However, things are looking up, since ownership dumped the general manager. Two straight years of excellent drafts has armed the team with talent on both offense and defense. Matthew Stafford was impressive in his rookie reason. If he continues to improve, the future is bright in the bleak Motor City. The Lions might not even finish 8-8 this season, but at least they will be competitive. With a few breaks, they could even find the promised land of a .500 season.
UNDERACHIEVERS:
ARIZONA: After making the playoffs the last two years, the Cardinals are destined for a precipitous fall. Quarterback Kurt Warner, the heart and soul of the franchise, has departed for the retirement couch, leaving the Big Red with a gaping hole at this key position. Matt Leinart has already proven he can't handle the pressure and Derek Anderson is a stopgap measure. The penny-pinching Cardinals have lost too much talent to free agency over the last two years. Look for the team to be sub-500 and miss the playoffs.
DALLAS: No team attracts preseason hype like the Cowboys and no team disappoints its followers more often than the Cowboys. Expectations are high in Dallas, since the team hosts the Super Bowl. However, the Cowboy offense has gotten too predictable under former genius Jason Garrett. The defense gives up too many big plays and still is searching for a secondary to match its defensive front. Then you have coach Yuck-Yuck, Wade Phillips. No one is more uninspiring nor more ill prepared on game day. As a result, they lose games they should win on talent alone. The Cowboys will finish second in their division, make the playoffs as a wild card and make an early exit.
MINNESOTA: Drama queen Brett Favre is back at the helm and most prognosticators are anointing the Vikings as a Super Bowl team. Not so fast. Running back Adrian Peterson has slipped a notch, thanks to fumble prone hands. Favre will be 41 (or is it 61?) and the tank may finally be empty. Minnesota has flourished in a weak division, but a tough non-conference schedule will extract its revenge on their record. Look for Green Bay to replace Minnesota at the top of the NFC North Division.
NEW YORK JETS: The Jets shocked the NFL last season in Rex Ryan's debut. Their aggressive, swarming defense was the best in the entire league. However, the offense, handed over to rookie quarterback Mark Sanchez, was pedestrian. The Jets modus operandi was to win tight games with defense. The Jets upgraded on offense, but Sanchez is not the man to build an offense around. Teams will be gunning for loud mouth Rex this year. The defense will still be stout, but the Jets will need to shutout every team to finish ahead of New England and Miami. They are destined to finish in the middle of the pack.
SUPER BOWL PREDICTIONS:
In the AFC, the champion will be decided between Baltimore and New England. The Ravens, under second year quarterback Joe Flacco, have all the ingredients for a championship run: defense, running game and a quality leader. The Pats suffered a string of injuries last season that doomed their chances for another title. With a little luck in that area, they should return to their accustomed place in the championship game. However, the nod goes to the Ravens.
In the NFC, the Giants will return to their dominance, thanks to an improved defense and a healthy Eli Manning. Some are discounting the Saints because of their suspect defense, but defensive coordinator Greg Williams has made improvements on that side of the ball. Drew Brees has established himself as the best at leading a high octane offense. The Saints will repeat as NFC champs.
And the Super Bowl Champion is (drum roll): Baltimore Ravens.
Monday, August 30, 2010
Factoids That You Can Use
While the nation's spotlight has been focused on Arizona, the influx of illegal immigration is quietly swamping state resources in Texas. According to a report by the Center for Immigration Studies, there are an estimated 1.7 million undocumented aliens residing in the Lone Star state. By their estimates, illegal immigrants make up eight to nine percent of the Texas workforce. The cost to state government is a reported $4.7 billion, which includes expenses for education, medical care and incarceration. Those figures were compiled by the Federation for American Immigration Reform (FAIR). The organization calculated that it costs each Texas taxpaying household $725 per year to foot the bill. The breakdown of costs shows spending for educating the children of illegal immigrants costs the state $4 billion; the tab for medical care is $520 million; and, incarceration for lawbreakers works out to $150 million annually. Even those staggering figures are on the low side. The $4.7 billion does not include costs for local jail detention, increased law enforcement and judicial expenses, welfare benefits and special English instruction in schools. Likewise, it does not take into account the monetary cost of crime on law-abiding citizens. It's no wonder that states that border Mexico are calling on the federal government to step up enforcement to stem the tide of illegal immigrants flooding into the United States. Unless something changes, the soaring costs of illegal immigration will force more states to do like Arizona and tackle the issue head on, rather than penning their hopes on federal government solutions.
Thursday, August 19, 2010
iPad's Future: A contrarian view
At first blush, it may appear sheer lunacy to question the future of the iPad, Apple's wildly successful entry into the tablet computer market. In its latest update, the Cupertino, California-based maker announced it had sold three million units of the touchscreen device. That would suggest a bright future for the iPad as sales graphs resemble the proverbial hockey-stick.
However, here's a note of caution for Apple investors. The iPad rocketed off the launch pad on April 3, selling 300,000 units by the first weekend. Sales hit one million units less than one month into the introduction of the new product. Since then, reports continue to show steady gains, but nothing like the super-heated introductory phase.
Is the market getting Apple fatigue? Has the iPad fad run its course? Has the growth been driven by early-adopters instead of broad mass market appeal? Are sales about to reach a peak? And what about tablet computer introductions promised by Dell, Hewlett Packard and Lenovo? Only Dell has tiptoed into the category with a new product announcement earlier this month. If this is such a hot category, why are there so few imitators?
Those questions are likely causing heartburn for a few Wall Street analysts. This observer sees trouble ahead for the iPad, unless Apple ramps up unique applications for the device. Right now, most of the apps that run on the iPad are spiffed up versions available on the iPhone. As Apple demonstrated with its iPhone, it's all about the apps. Any manufacturer can produce a smartphone. What makes the iPhone unique is the applications that turn the device into a powerful personal assistant. The same applies to tablet computers.
A larger issue is defining the iPad for consumers and businesses. That may sound simplistic, but to what product category does this device belong? It does not have the processing power of a laptop. For example, it lacks media creation capabilities that computers have.
Furthermore, it cannot do things, like take pictures or handle voice calls, that smartphones can do. It has some appeal to gamers, but when compared with Xbox for example, it comes up short on gaming experience. While it has been hailed as a reader, it costs nearly twice as much as competitors' models, including Amazon's Kindle. And Apple's selection of e-books pales in comparison with Amazon's robust library.
To be fair, the Ipad is a useful device for reading, watching and browsing. It has a cool, high-definition touchscreen, but not much else to distinguish it from the competition. That's why it seems more of a complement for a personal computer, but does not replace a netbook, laptop or desktop. Its an orphan product looking for a niche to fill.
Apple CEO Steve Jobs didn't help matters when he introduced the new hand-held product as a tablet computer. Given the dismal history of tablet computers, that was not the most flattering market niche for Apple's slick new device. Jobs had an opportunity to define a whole new market in his introduction but blew it. And that name? High gag factor. It sounds like a feminine hygiene product.
Long term, Apple needs to find a market niche for the iPad. For starters, Apple should stop referring to the device as a tablet computer. That's like calling a $250,000 Porsche an automobile. The iPad is a souped-up, high-tech, eye-candy network explorer that excels at visual media.
(Personal Note: Yes, I purchased an iPad and use it mostly to access email and browse the net when I travel. It replaced my clunky, six-year-old laptop. But I don't need the processing power most heavy computer users expect and require.)
Apple should focus its marketing and application efforts in some basic categories to solidify its long-term prospects. Here are a few ideas:
1. HOSPITALS: Patient charts litter hospital wards. It's time to end the paper trail and hang iPads off patient beds. With the right software, doctors and nurses could enter patient data and transfer it instantly to the attending physician. That would allow doctors to check on patients without physically visiting hospitals so often. It would also streamline the way hospitals track drug treatments, medical observations and patient data. Medical record-keeping would be revolutionized. Even the lightest laptops are too bulky for the task.
2. RESEARCH: Research abounds in the country: from political polls to consumer mall research. Most research is done over the phone or with pen (or pencils) and paper. Why not fill out the survey on an iPad and then download the information to a server? The data could be tallied and available faster. In addition, clients could assess the data in real time, aiding the decision-making process. Another application is door-to-door surveys, such as the U.S. Census. Results could be released in months, instead of years.
3. STATE AGENCIES: State governments chew up paper like a first grader on Rendlin. Take one example: the Department of Motor Vehicles. Think of the time and money savings if agencies could use iPads to administer tests, collect information and record data. It would take some of the pain out of the citizen experience with government agencies and increase job satisfaction for state workers.
4. RESTAURANTS: Eateries with diverse menus and large dinning rooms could serve more people faster if waiters used iPads to take orders. The information would be inputted once and sent over a wireless network to a screen in the kitchen. Waiters could spend more time with customers, meeting their needs, and less time darting back and forth between tables and the kitchen.
5. DOCTORS OFFICE: A visit to the doctor's office--even your regular family physician--usually involves filling out countless forms. The paper documents are stored in files that clog up space in cramped quarters. Wouldn't it be a better solution to let patients complete the forms on an iPad and then push "send"? We vote that way today, so why does this seem like such a foreign concept to the medical profession?
Those are just a few of the uses for an iPad that come readily to mind. There are many more out there. The iPad is easily portable, can be operated with one hand and has the screen size (readability) and graphic definition to make it a superior device for inputting information, reading charts, graphs or MRI scans.
iPads could become ubiquitous in many settings because the cost is reasonable ($499 to $829), certainly cheaper than a high-end, awkward laptop that requires (most) users to be in a sitting position to pound the keyboard.
The future is there for the taking. But Apple must re-trench to take advantage of the opportunities. Tablet computers have a terrible track record. Apple thumbed its nose at market history and decided in its arrogance to show the world that its iconic logo could sell tablet computers where others have failed.
I know. I know. It's tough to argue with Apple's track record for success. But even a great company can make a bone-headed miscalculation. The corporate graveyard is littered with examples of once dynamic firms whose visions were clouded by cool technology while ignoring market realities.
It will be worth watching what Apple does next, especially if iPad sales begin to stall. Betting against Apple is always risky. The prediction here is that Jobs will swallow his pride and reposition the iPad. If he doesn't, there may be rough seas ahead for the much ballyhooed device that was predicted to save the tablet computer category from extinction.
However, here's a note of caution for Apple investors. The iPad rocketed off the launch pad on April 3, selling 300,000 units by the first weekend. Sales hit one million units less than one month into the introduction of the new product. Since then, reports continue to show steady gains, but nothing like the super-heated introductory phase.
Is the market getting Apple fatigue? Has the iPad fad run its course? Has the growth been driven by early-adopters instead of broad mass market appeal? Are sales about to reach a peak? And what about tablet computer introductions promised by Dell, Hewlett Packard and Lenovo? Only Dell has tiptoed into the category with a new product announcement earlier this month. If this is such a hot category, why are there so few imitators?
Those questions are likely causing heartburn for a few Wall Street analysts. This observer sees trouble ahead for the iPad, unless Apple ramps up unique applications for the device. Right now, most of the apps that run on the iPad are spiffed up versions available on the iPhone. As Apple demonstrated with its iPhone, it's all about the apps. Any manufacturer can produce a smartphone. What makes the iPhone unique is the applications that turn the device into a powerful personal assistant. The same applies to tablet computers.
A larger issue is defining the iPad for consumers and businesses. That may sound simplistic, but to what product category does this device belong? It does not have the processing power of a laptop. For example, it lacks media creation capabilities that computers have.
Furthermore, it cannot do things, like take pictures or handle voice calls, that smartphones can do. It has some appeal to gamers, but when compared with Xbox for example, it comes up short on gaming experience. While it has been hailed as a reader, it costs nearly twice as much as competitors' models, including Amazon's Kindle. And Apple's selection of e-books pales in comparison with Amazon's robust library.
To be fair, the Ipad is a useful device for reading, watching and browsing. It has a cool, high-definition touchscreen, but not much else to distinguish it from the competition. That's why it seems more of a complement for a personal computer, but does not replace a netbook, laptop or desktop. Its an orphan product looking for a niche to fill.
Apple CEO Steve Jobs didn't help matters when he introduced the new hand-held product as a tablet computer. Given the dismal history of tablet computers, that was not the most flattering market niche for Apple's slick new device. Jobs had an opportunity to define a whole new market in his introduction but blew it. And that name? High gag factor. It sounds like a feminine hygiene product.
Long term, Apple needs to find a market niche for the iPad. For starters, Apple should stop referring to the device as a tablet computer. That's like calling a $250,000 Porsche an automobile. The iPad is a souped-up, high-tech, eye-candy network explorer that excels at visual media.
(Personal Note: Yes, I purchased an iPad and use it mostly to access email and browse the net when I travel. It replaced my clunky, six-year-old laptop. But I don't need the processing power most heavy computer users expect and require.)
Apple should focus its marketing and application efforts in some basic categories to solidify its long-term prospects. Here are a few ideas:
1. HOSPITALS: Patient charts litter hospital wards. It's time to end the paper trail and hang iPads off patient beds. With the right software, doctors and nurses could enter patient data and transfer it instantly to the attending physician. That would allow doctors to check on patients without physically visiting hospitals so often. It would also streamline the way hospitals track drug treatments, medical observations and patient data. Medical record-keeping would be revolutionized. Even the lightest laptops are too bulky for the task.
2. RESEARCH: Research abounds in the country: from political polls to consumer mall research. Most research is done over the phone or with pen (or pencils) and paper. Why not fill out the survey on an iPad and then download the information to a server? The data could be tallied and available faster. In addition, clients could assess the data in real time, aiding the decision-making process. Another application is door-to-door surveys, such as the U.S. Census. Results could be released in months, instead of years.
3. STATE AGENCIES: State governments chew up paper like a first grader on Rendlin. Take one example: the Department of Motor Vehicles. Think of the time and money savings if agencies could use iPads to administer tests, collect information and record data. It would take some of the pain out of the citizen experience with government agencies and increase job satisfaction for state workers.
4. RESTAURANTS: Eateries with diverse menus and large dinning rooms could serve more people faster if waiters used iPads to take orders. The information would be inputted once and sent over a wireless network to a screen in the kitchen. Waiters could spend more time with customers, meeting their needs, and less time darting back and forth between tables and the kitchen.
5. DOCTORS OFFICE: A visit to the doctor's office--even your regular family physician--usually involves filling out countless forms. The paper documents are stored in files that clog up space in cramped quarters. Wouldn't it be a better solution to let patients complete the forms on an iPad and then push "send"? We vote that way today, so why does this seem like such a foreign concept to the medical profession?
Those are just a few of the uses for an iPad that come readily to mind. There are many more out there. The iPad is easily portable, can be operated with one hand and has the screen size (readability) and graphic definition to make it a superior device for inputting information, reading charts, graphs or MRI scans.
iPads could become ubiquitous in many settings because the cost is reasonable ($499 to $829), certainly cheaper than a high-end, awkward laptop that requires (most) users to be in a sitting position to pound the keyboard.
The future is there for the taking. But Apple must re-trench to take advantage of the opportunities. Tablet computers have a terrible track record. Apple thumbed its nose at market history and decided in its arrogance to show the world that its iconic logo could sell tablet computers where others have failed.
I know. I know. It's tough to argue with Apple's track record for success. But even a great company can make a bone-headed miscalculation. The corporate graveyard is littered with examples of once dynamic firms whose visions were clouded by cool technology while ignoring market realities.
It will be worth watching what Apple does next, especially if iPad sales begin to stall. Betting against Apple is always risky. The prediction here is that Jobs will swallow his pride and reposition the iPad. If he doesn't, there may be rough seas ahead for the much ballyhooed device that was predicted to save the tablet computer category from extinction.
Tuesday, August 17, 2010
Mosque Flap: Muslins Trump Christians
As the furor escalates over the so-called ground zero mosque, the St. Nicholas Greek Orthodox Church's request to rebuild its cathedral only blocks away has languished. The church's petition has been tangled in bureaucratic red tape, while New York's political elitists have rushed to approve the construction of a 13-story Muslim community center two blocks from the epicenter of the September 11th attacks.
St. Nicholas Church was buried under tons of rubble after it was crushed by the fall of the Twin Towers in 2001. Within a month of the attacks in New York City, Archbishop Demetrios pledged that the four-story church would rise again on the same spot it had occupied since 1922. The church filed a request with the New York Port Authority, the agency overseeing the reconstruction.
That was nearly nine years ago. The Port Authority has yet to rule on the church petition, despite the endorsement from then Gov. George E. Pataki. Issues have arisen over the size of the church complex and the amount of funding the Port Authority will contribute to the construction of the new building.
The seventy families who worshipped at the Greek Orthodox church now congregate at a cathedral in downtown Brooklyn. Church members have waited patiently for the rebuilding of their small cathedral in downtown Manhattan. A spokesman for the congregation says members are becoming "restless" over the stalled project.
When Mayor Bloomberg was appraised of the church's dilemma this week, he feigned surprise. He admitted the reconstruction had been "a bone of contention between the church and the Port Authority." The mayor, who did not hesitate to leap into the fray when an uproar ensued over the mosque, took a hands off approach, saying he did not want to "interfere" with the Port Authority's deliberations over the church's rebuilding project.
It appears, at least in New York City, it is easier for Muslims to construct a new community center with a mosque than it is for Christians to rebuild a church destroyed by the worst attack on American soil. The mayor's hypocrisy over the issue only underscores the rush to political correctness by city officials eager to use religious freedom and tolerance as an excuse to favor one group over another.
Even the Lecturer-in-Chief, Barack Obama, got into the act. At a Ramadan dinner in the White House State Dining Room, the President opined that Muslims had the right "to build a place of worship and a community center on private property in lower Manhattan." He wagged his finger and admonished his fellow countrymen, "This is America and our commitment to religious freedom must be unshakable."
The tone-deaf President was off the mark even wider than usual. No one on the other side of this issue has claimed Muslims, Christians or any other religion does not have the right to build a place of worship. The President just wants people to believe that is the issue. He knows better, but chooses to scold Christians about their lack of understanding of the U.S. Constitution.
Apparently, he is suffering from an awful memory lapse. Radical members of Islam piloted the planes into the Twin Towers, praising Allah all the way to their deaths. Would any Muslim nation--say Iran or Saudi Arabia--allow a Christian church to be built within sight of its holiest shrines? Of course not. Then why is it so unreasonable for Americans to suggest it is inappropriate to build a mosque near ground zero?
Most citizens just want the Muslims to show a little tolerance for our values. Ground Zero is a sacred piece of our shared experience as Americans. Out of respect, Muslims should heed calls from concerned voices that are suggesting the community center be built at another location. By the way, there are nearly 30 mosques in New York City alone. No one could argue that Muslims don't have a place to worship in Manhattan.
Muslims championing the community center have refused to bow to these reasonable requests. With the mayor of New York City and the President in their corner, why should they budge? However, the Muslims and the politicians have misjudged the depth of American outrage at their decision to move forward with the project at the current site. Surveys show 60 to 70 percent of Americans prefer the mosque to be built somewhere else in Manhattan.
Perhaps, supporters have been blinded by a recent endorsement for the project. None other than Mahmoud al-Zahar, the leader of the notorious Hamas terrorist group, announced his support for the building of the place of worship. There is no word on whether Bloomberg or Obama would endorse Hamas building a recruiting center in Manhattan.
Meanwhile St. Nicholas Greek Orthodox Church remains out in the cold. Church leaders continue to press forward while the Port Authority dawdles. It would be nice if Bloomberg and Obama could summon up what little courage they have to make sure the Greek Orthodox congregation obtains the same speedy approvals as Muslims did to build a house of worship in lower Manhattan.
Then again why should they change their tune? Bloomberg and Obama have already chosen sides in this debate. Based on their words and actions, Muslims' interests trump Christians in the building of worship houses.
St. Nicholas Church was buried under tons of rubble after it was crushed by the fall of the Twin Towers in 2001. Within a month of the attacks in New York City, Archbishop Demetrios pledged that the four-story church would rise again on the same spot it had occupied since 1922. The church filed a request with the New York Port Authority, the agency overseeing the reconstruction.
That was nearly nine years ago. The Port Authority has yet to rule on the church petition, despite the endorsement from then Gov. George E. Pataki. Issues have arisen over the size of the church complex and the amount of funding the Port Authority will contribute to the construction of the new building.
The seventy families who worshipped at the Greek Orthodox church now congregate at a cathedral in downtown Brooklyn. Church members have waited patiently for the rebuilding of their small cathedral in downtown Manhattan. A spokesman for the congregation says members are becoming "restless" over the stalled project.
When Mayor Bloomberg was appraised of the church's dilemma this week, he feigned surprise. He admitted the reconstruction had been "a bone of contention between the church and the Port Authority." The mayor, who did not hesitate to leap into the fray when an uproar ensued over the mosque, took a hands off approach, saying he did not want to "interfere" with the Port Authority's deliberations over the church's rebuilding project.
It appears, at least in New York City, it is easier for Muslims to construct a new community center with a mosque than it is for Christians to rebuild a church destroyed by the worst attack on American soil. The mayor's hypocrisy over the issue only underscores the rush to political correctness by city officials eager to use religious freedom and tolerance as an excuse to favor one group over another.
Even the Lecturer-in-Chief, Barack Obama, got into the act. At a Ramadan dinner in the White House State Dining Room, the President opined that Muslims had the right "to build a place of worship and a community center on private property in lower Manhattan." He wagged his finger and admonished his fellow countrymen, "This is America and our commitment to religious freedom must be unshakable."
The tone-deaf President was off the mark even wider than usual. No one on the other side of this issue has claimed Muslims, Christians or any other religion does not have the right to build a place of worship. The President just wants people to believe that is the issue. He knows better, but chooses to scold Christians about their lack of understanding of the U.S. Constitution.
Apparently, he is suffering from an awful memory lapse. Radical members of Islam piloted the planes into the Twin Towers, praising Allah all the way to their deaths. Would any Muslim nation--say Iran or Saudi Arabia--allow a Christian church to be built within sight of its holiest shrines? Of course not. Then why is it so unreasonable for Americans to suggest it is inappropriate to build a mosque near ground zero?
Most citizens just want the Muslims to show a little tolerance for our values. Ground Zero is a sacred piece of our shared experience as Americans. Out of respect, Muslims should heed calls from concerned voices that are suggesting the community center be built at another location. By the way, there are nearly 30 mosques in New York City alone. No one could argue that Muslims don't have a place to worship in Manhattan.
Muslims championing the community center have refused to bow to these reasonable requests. With the mayor of New York City and the President in their corner, why should they budge? However, the Muslims and the politicians have misjudged the depth of American outrage at their decision to move forward with the project at the current site. Surveys show 60 to 70 percent of Americans prefer the mosque to be built somewhere else in Manhattan.
Perhaps, supporters have been blinded by a recent endorsement for the project. None other than Mahmoud al-Zahar, the leader of the notorious Hamas terrorist group, announced his support for the building of the place of worship. There is no word on whether Bloomberg or Obama would endorse Hamas building a recruiting center in Manhattan.
Meanwhile St. Nicholas Greek Orthodox Church remains out in the cold. Church leaders continue to press forward while the Port Authority dawdles. It would be nice if Bloomberg and Obama could summon up what little courage they have to make sure the Greek Orthodox congregation obtains the same speedy approvals as Muslims did to build a house of worship in lower Manhattan.
Then again why should they change their tune? Bloomberg and Obama have already chosen sides in this debate. Based on their words and actions, Muslims' interests trump Christians in the building of worship houses.
Friday, August 13, 2010
Foreclosure Aid: Another Government Boondoggle
The Obama Administration's efforts to solve the housing foreclosure problem by throwing billions of dollars at it has been exposed as an unqualified flop. However, it took Wall Street analysts to force the government to admit the $50 billion Home Affordable Modification Program (HAMP) has failed to achieve its objectives.
In reviewing statistics released by the Treasury Department, some smart money folks noticed the numbers were out of whack with rising foreclosure rates. They asked Treasury to audit its numbers. Treasury passed the buck to Fannie Mae. The statistics were revised, which is government speak for, "We were caught red-handed with bogus data."
The new data released by Treasury raised eyebrows from Wall Street to Main Street. Here are just a few nuggets from the "revised" statistics about the HAMP program, which began in March, 2009:
1. More than 40 percent or about 1.3 million borrowers who started in the program have dropped out. Less than 30 percent have received permanent new terms on their loans.
2. Dropout rates among borrowers are increasing. About 91,000 borrowers dropped out in June, nearly twice the pace of those getting a permanent modification in their mortgage terms.
3. Borrowers with modified mortgages are defaulting on their liens at nearly twice the rate as it was originally reported by Treasury. For example, those borrowers who had their permanent modifications at least nine months defaulted at six times the rate the original numbers showed.
4. For loans permanently modified for at least nine months, 19.6 of those loans are now at least two months behind on their payments. On loans modified for at least half a year, 10.1 percent of homeowners are 60 days or more behind on payments.
These numbers come as no surprise. The government is bailing out people who should have never bought a home in the first place because they did not qualify. Does anyone expect that in today's lousy economy these same people will somehow find the new terms easier to meet?
Even these dismal figures are suspect. Consider that Realty/Trac, an independent research and tracking firm, says that lenders repossessed 92,858 homes in July, the second-highest monthly total ever recorded. Bank repossessions rose six percent from a year ago, when the housing market was in worse shape than today.
An objective review of the situation should convince Washington bureaucrats to quit throwing more money at the problem. That's what is wrong with rational thinking in today's environment dominated by an out-of-control Democrat-led spending spree that is creating a staggering mountain of debt.
The Obama Administration announced this week it would add another $3 billion in foreclosure aid to bailout homeowners. This is throwing good money after bad and expecting a different outcome.
But that's not the most insidious aspect of this new effort. Instead of spreading the money to homeowners across the country, the government in its wisdom decided to spend $2 billion in only 17 states and the District of Columbia. Those states, with two exceptions, are states that voted Democratic in the past election. Coincidence? Not in this administration.
Here's a prediction: when this newest effort fails, as it surely will, the Obama Administration will dump billions of additional dollars into already bankrupt Fannie Mae and Freddie Mac to permanently bailout irresponsible home borrowers. They will be given some sort of mortgage "amnesty" to allow them to live "free" in their homes just in time for the November mid-term elections.
Remember where you heard it first.
In reviewing statistics released by the Treasury Department, some smart money folks noticed the numbers were out of whack with rising foreclosure rates. They asked Treasury to audit its numbers. Treasury passed the buck to Fannie Mae. The statistics were revised, which is government speak for, "We were caught red-handed with bogus data."
The new data released by Treasury raised eyebrows from Wall Street to Main Street. Here are just a few nuggets from the "revised" statistics about the HAMP program, which began in March, 2009:
1. More than 40 percent or about 1.3 million borrowers who started in the program have dropped out. Less than 30 percent have received permanent new terms on their loans.
2. Dropout rates among borrowers are increasing. About 91,000 borrowers dropped out in June, nearly twice the pace of those getting a permanent modification in their mortgage terms.
3. Borrowers with modified mortgages are defaulting on their liens at nearly twice the rate as it was originally reported by Treasury. For example, those borrowers who had their permanent modifications at least nine months defaulted at six times the rate the original numbers showed.
4. For loans permanently modified for at least nine months, 19.6 of those loans are now at least two months behind on their payments. On loans modified for at least half a year, 10.1 percent of homeowners are 60 days or more behind on payments.
These numbers come as no surprise. The government is bailing out people who should have never bought a home in the first place because they did not qualify. Does anyone expect that in today's lousy economy these same people will somehow find the new terms easier to meet?
Even these dismal figures are suspect. Consider that Realty/Trac, an independent research and tracking firm, says that lenders repossessed 92,858 homes in July, the second-highest monthly total ever recorded. Bank repossessions rose six percent from a year ago, when the housing market was in worse shape than today.
An objective review of the situation should convince Washington bureaucrats to quit throwing more money at the problem. That's what is wrong with rational thinking in today's environment dominated by an out-of-control Democrat-led spending spree that is creating a staggering mountain of debt.
The Obama Administration announced this week it would add another $3 billion in foreclosure aid to bailout homeowners. This is throwing good money after bad and expecting a different outcome.
But that's not the most insidious aspect of this new effort. Instead of spreading the money to homeowners across the country, the government in its wisdom decided to spend $2 billion in only 17 states and the District of Columbia. Those states, with two exceptions, are states that voted Democratic in the past election. Coincidence? Not in this administration.
Here's a prediction: when this newest effort fails, as it surely will, the Obama Administration will dump billions of additional dollars into already bankrupt Fannie Mae and Freddie Mac to permanently bailout irresponsible home borrowers. They will be given some sort of mortgage "amnesty" to allow them to live "free" in their homes just in time for the November mid-term elections.
Remember where you heard it first.
Wednesday, July 28, 2010
Unmasking Media Bias
Media bias is a subject that is tossed around these days more often than a Frisbee on a California beach. Many people, especially politicians, have a hard time defining the term, but they certainly will vouch they know it when they see it. They argue that it must be bias if doesn't fit their political or world view.
However, real bias usually is harder to detect. The prejudice that pervades today's mainstream media flows mainly from the decision about what qualifies as news. Those editorial judgements, made behind the scenes, are reflected in the selection of what stories are assigned for coverage.
Once editors decide what merits coverage, reporters are given instructions on pursuing a predetermined news angle. After stories are written or videoed, they are reviewed and edited for display in print or broadcast. Then another set of editors decides placement, directing where the story runs in a newscast or print publication.
Reporters often are blamed for news bias because their faces or names appear next to the coverage. But the editors pull the strings. Reporters are mere puppets dangled about by editors who are making judgements every day about what to cover, how to report it, and where to display it.
With that as a primer, here's a personal story that better illustrates how bias reflects an editor's judgement. Once while working at The Dallas Times-Herald, yours truly was given an assignment to produce a story about car-pooling. At that time, circa 1970, car-pooling was catching on in a handful of big cities in the country.
Like a good reporter should, I conducted interviews with a myriad of sources, including corporate spokesmen, city transportation agencies, state highway department officials and the chamber of commerce. What I found was that no company, save for Texas Instruments, had shown any interest in car-pooling. It was virtually non-existent in Dallas except for two vans operated by TI.
When I turned in my article, the news editor blew a gasket. "This isn't the story I wanted," he bellowed. "I want a story showing how car-pooling is growing in Dallas. It's good for the city."
I went back to my desk, sufficiently chastened. I dug out my notes and rewrote the story, emphasising that only one company was backing car-pooling, but it was surely a trend. I used the same set of facts and just ignored those that did not support the notion that car-pooling was going to save Dallas' traffic clogged freeways. The editor loved it so much it ran on the front page.
Although this episode happened decades ago, editors and journalists are employing the same tactic today. Closely examine most articles and reports and you will be able to spot how "selective facts" are chosen to make a point or advance an agenda. From the media's viewpoint, that isn't bias as along as the report is factual. However,leaving out facts and choosing only quotes and sources in support of a viewpoint, fails the test of being fair and balanced.
The best way to illustrate today's media bias is by listing some recent examples. In some cases, editors ignored the same news they once covered with gusto. In other instances, editors elected to use select facts to change the tenor of the reporting. Their choices have neutered the media's once proud journalism standards.
Here are just a few examples to illustrate the point:
1. BANK FAILURES: When a few California banks went under during President Bush's final year in office, the major broadcast networks showed long times of depositors waiting to withdraw their money from the institutions. The scene was described as reminiscent of The Great Depression. For perspective, there have been only two years since 1934 when no U.S. banks failed. Both years (2005 & 2006) occurred during the Bush Administration. Bank failures this year are on pace to break all previous records. Already, 103 banks have shuttered their doors. Have you seen any pictures of long lines of anxious bank customers on the television news? Of course not. The media has decided the country wants to see the economy recover and therefore doesn't need to be reminded of impending disaster. The news "narrative" has changed to showing and reporting facts and sources that support that agenda. No one could argue that a new record in bank closures does not merit news coverage.
2. AFGHAN WAR: During President Bush's two terms, the number of Americans killed or wounded in action in Iraq and Afghanistan ran on the front pages of most newspapers. The broadcast news followed suit, often with graphic footage of the unloading of flag draped caskets as a grim reminder of the war's toll. Each milestone reached in war dead became a new headline. During Bush's eight years there were 630 Americans killed in Afghanistan. In less than two years of his presidency, Barack Obama has presided over a war toll that now stands at 577. Have you seen front page charts showing the rising number of soldiers killed? Where are those flag-draped casket photos? The media has obviously decided that Americans no longer care about the killing of young men and women in uniform. Their narrative calls for stories that show the war is winding down to a successful conclusion.
3. HOME FORECLOSURES: During the last fading light of the Bush Administration, the media covered home foreclosures as if every American would soon be homeless. Interviews dominated the news with sobbing single mothers and minority families thrown out of their homes because they couldn't make the payments. Many claimed they were duped by greedy mortgage companies. In yet another irony, home foreclosures continue to spike with hardly any coverage. There is the odd mention of the percentage of mortgages under water, but there have been no snapshots of vans parked outside the domiciles of homeowners who are moving out of homes that they can no longer afford. No homeowner tears are being shown on the nightly news. Judging from the coverage, one would assume foreclosures are no longer a problem for the country. Yet the country has experienced 26 consecutive months of year-over-year increases in home foreclosures. Home foreclosures among the most credit-worthy borrowers have risen an alarming 425 percent (yes, 425%) since January 2008, according to Lender Processing Services, a mortgage data firm. Wouldn't you think that merited a few teary eyed homeowners pouring out their heart about their bad luck?
4. PROTEST: During the Bush Administration, Democrats and the media championed dissent as a sign of the First Amendment right of every American to speak out on the country's ills. Overnight, protesters gained celebrity status, such as Cindy Sheehan, a mother of a slain U.S. solider, who camped out near Bush's Crawford ranch. Pictures of protest placards with unflattering images of President Bush were served up in print photos and on television. There was even the famous footage of the Iraqi journalist throwing his shoe at President Bush during a news conference. No less an authority that Hillary Clinton claimed disagreement with a president was a holy exercise of American patriotism. Protest seemed like a great American ideal until the Tea Party came along. Then the media decided protest was a bad thing after all. Noisy citizens with signs were called Nazis, racists and kooks. The tenor of the coverage went from fawning to frightful. The media began snooping for dirt on protesters, particularly after Democrats and the President were critical of the dissent. Today Tea Party protests go largely unreported, although often the numbers of people involved far exceed the "mass" demonstrations aimed at Bush's administration.
Is it any wonder that surveys show the public distrusts the media almost as much as politicians? For decades, the media has sold its soul to promote ideas, causes and viewpoints instead of using its resources to inform and educate the public.
As a result, the media industry has suffered crippling declines in viewership and readership. Captains of media conglomerates complain that people just don't read newspapers and consume news broadcasts like they once did. They point the finger of blame at the Internet and an uneducated, dumbed-down public who does not care about what's happening in their country.
Nothing could be further from the truth. The news media needs to quit looking elsewhere for scapegoats. Today's media have become the enemy of truth, accuracy, balance and fairness. They have dug themselves a deep credibility hole that threatens to bury the industry in a grave they will never escape.
However, real bias usually is harder to detect. The prejudice that pervades today's mainstream media flows mainly from the decision about what qualifies as news. Those editorial judgements, made behind the scenes, are reflected in the selection of what stories are assigned for coverage.
Once editors decide what merits coverage, reporters are given instructions on pursuing a predetermined news angle. After stories are written or videoed, they are reviewed and edited for display in print or broadcast. Then another set of editors decides placement, directing where the story runs in a newscast or print publication.
Reporters often are blamed for news bias because their faces or names appear next to the coverage. But the editors pull the strings. Reporters are mere puppets dangled about by editors who are making judgements every day about what to cover, how to report it, and where to display it.
With that as a primer, here's a personal story that better illustrates how bias reflects an editor's judgement. Once while working at The Dallas Times-Herald, yours truly was given an assignment to produce a story about car-pooling. At that time, circa 1970, car-pooling was catching on in a handful of big cities in the country.
Like a good reporter should, I conducted interviews with a myriad of sources, including corporate spokesmen, city transportation agencies, state highway department officials and the chamber of commerce. What I found was that no company, save for Texas Instruments, had shown any interest in car-pooling. It was virtually non-existent in Dallas except for two vans operated by TI.
When I turned in my article, the news editor blew a gasket. "This isn't the story I wanted," he bellowed. "I want a story showing how car-pooling is growing in Dallas. It's good for the city."
I went back to my desk, sufficiently chastened. I dug out my notes and rewrote the story, emphasising that only one company was backing car-pooling, but it was surely a trend. I used the same set of facts and just ignored those that did not support the notion that car-pooling was going to save Dallas' traffic clogged freeways. The editor loved it so much it ran on the front page.
Although this episode happened decades ago, editors and journalists are employing the same tactic today. Closely examine most articles and reports and you will be able to spot how "selective facts" are chosen to make a point or advance an agenda. From the media's viewpoint, that isn't bias as along as the report is factual. However,leaving out facts and choosing only quotes and sources in support of a viewpoint, fails the test of being fair and balanced.
The best way to illustrate today's media bias is by listing some recent examples. In some cases, editors ignored the same news they once covered with gusto. In other instances, editors elected to use select facts to change the tenor of the reporting. Their choices have neutered the media's once proud journalism standards.
Here are just a few examples to illustrate the point:
1. BANK FAILURES: When a few California banks went under during President Bush's final year in office, the major broadcast networks showed long times of depositors waiting to withdraw their money from the institutions. The scene was described as reminiscent of The Great Depression. For perspective, there have been only two years since 1934 when no U.S. banks failed. Both years (2005 & 2006) occurred during the Bush Administration. Bank failures this year are on pace to break all previous records. Already, 103 banks have shuttered their doors. Have you seen any pictures of long lines of anxious bank customers on the television news? Of course not. The media has decided the country wants to see the economy recover and therefore doesn't need to be reminded of impending disaster. The news "narrative" has changed to showing and reporting facts and sources that support that agenda. No one could argue that a new record in bank closures does not merit news coverage.
2. AFGHAN WAR: During President Bush's two terms, the number of Americans killed or wounded in action in Iraq and Afghanistan ran on the front pages of most newspapers. The broadcast news followed suit, often with graphic footage of the unloading of flag draped caskets as a grim reminder of the war's toll. Each milestone reached in war dead became a new headline. During Bush's eight years there were 630 Americans killed in Afghanistan. In less than two years of his presidency, Barack Obama has presided over a war toll that now stands at 577. Have you seen front page charts showing the rising number of soldiers killed? Where are those flag-draped casket photos? The media has obviously decided that Americans no longer care about the killing of young men and women in uniform. Their narrative calls for stories that show the war is winding down to a successful conclusion.
3. HOME FORECLOSURES: During the last fading light of the Bush Administration, the media covered home foreclosures as if every American would soon be homeless. Interviews dominated the news with sobbing single mothers and minority families thrown out of their homes because they couldn't make the payments. Many claimed they were duped by greedy mortgage companies. In yet another irony, home foreclosures continue to spike with hardly any coverage. There is the odd mention of the percentage of mortgages under water, but there have been no snapshots of vans parked outside the domiciles of homeowners who are moving out of homes that they can no longer afford. No homeowner tears are being shown on the nightly news. Judging from the coverage, one would assume foreclosures are no longer a problem for the country. Yet the country has experienced 26 consecutive months of year-over-year increases in home foreclosures. Home foreclosures among the most credit-worthy borrowers have risen an alarming 425 percent (yes, 425%) since January 2008, according to Lender Processing Services, a mortgage data firm. Wouldn't you think that merited a few teary eyed homeowners pouring out their heart about their bad luck?
4. PROTEST: During the Bush Administration, Democrats and the media championed dissent as a sign of the First Amendment right of every American to speak out on the country's ills. Overnight, protesters gained celebrity status, such as Cindy Sheehan, a mother of a slain U.S. solider, who camped out near Bush's Crawford ranch. Pictures of protest placards with unflattering images of President Bush were served up in print photos and on television. There was even the famous footage of the Iraqi journalist throwing his shoe at President Bush during a news conference. No less an authority that Hillary Clinton claimed disagreement with a president was a holy exercise of American patriotism. Protest seemed like a great American ideal until the Tea Party came along. Then the media decided protest was a bad thing after all. Noisy citizens with signs were called Nazis, racists and kooks. The tenor of the coverage went from fawning to frightful. The media began snooping for dirt on protesters, particularly after Democrats and the President were critical of the dissent. Today Tea Party protests go largely unreported, although often the numbers of people involved far exceed the "mass" demonstrations aimed at Bush's administration.
Is it any wonder that surveys show the public distrusts the media almost as much as politicians? For decades, the media has sold its soul to promote ideas, causes and viewpoints instead of using its resources to inform and educate the public.
As a result, the media industry has suffered crippling declines in viewership and readership. Captains of media conglomerates complain that people just don't read newspapers and consume news broadcasts like they once did. They point the finger of blame at the Internet and an uneducated, dumbed-down public who does not care about what's happening in their country.
Nothing could be further from the truth. The news media needs to quit looking elsewhere for scapegoats. Today's media have become the enemy of truth, accuracy, balance and fairness. They have dug themselves a deep credibility hole that threatens to bury the industry in a grave they will never escape.
Sunday, July 25, 2010
Ditch the Census
This year's U.S. Census already is the most expensive in the nation's history, even adjusting for inflation. Estimates for the total price tag are about $14.5 billion. That works out to be about $46.93 for every man, woman and child in the country, based on a projected population count of 308 million.
Even those bloated billion dollar figures are suspect. The non-partisan Government Accountability Office called the cost estimates "not reliable because it lacks adequate documentation." As if that wasn't damning enough, it added that the figures were "not comprehensive, accurate or credible." In other words, the estimates are meaningless.
In its summary, the GAO said without improvements, the Census Bureau's ability to manage its operations will be "hampered" and Congress' efforts to oversee the process will be "constrained." No kidding.
For some perspective, consider that the first U.S. Census in 1790 was conducted at a total cost of $44,377 or about 1.13 cents per person. That headcount was done entirely on horseback as census takers when house-to-house. With computers and sophisticated digital resources at its disposal, today's Census Bureau could not even approach that kind of efficiency.
There are some apologists who would argue that times have changed. The population is more spread out across the country. There are millions more people to count than the 3.9 million who were tallied in the 1790 census. Even acknowledging those facts, does not account for the wide disparity in costs.
In fact, figures for the latest census in 2000 underscore the point. The cost of the national count that year was $4.5 billion or $15.99 a person. In a decade, the cost has more than tripled. By comparison, the cost of the 2000 census was less than twice the figure for the 1990 population count ($2.4 billion and $10.02 a person).
One reason, albeit not the major one, the costs have escalated is the amount of information collected. Those early census were designed to count people. Today's modern census reaches for more details, including ethnicity and home ownership. Followup questions to a select sample are even more intrusive. Is all that data really necessary?
However, the real cost driver for the rising census expense can be laid at the feet of the Obama Administration. The President and his henchmen decided to use the current Census as a political tool. Thousands of temporary workers have been added to the payrolls to dress up the unemployment numbers. Reports have circulated about workers being "hired", trained and sent home. Other news accounts suggest workers were recycled through the same training several times to enable the Census Bureau to continue to keep the individual on the payroll, even though no work was being done.
Without such chicanery, unemployment would have reached double digits by now. Democrats were determined to avoid crossing that threshold at all costs, including using the U.S. Census to game the numbers.
That's another reason that it is time to end the charade. Once the current population count is completed, Washington needs to pull the plug on the decennial U.S. Census. It makes no economic sense to continue this costly exercise.
Federal and state governments already have boat loads of information on citizens. It exists in data bases maintained by agencies from the federal Internal Revenue Service to the state Department of Motor Vehicles. Mine the available data. Estimate a population headcount and then be done with it.
Does it really matter of the count is off by say a million or so people? Some politicians have argued for years that the current method under counts some groups of people. If that's the case, then no one can argue that an estimate based on available government data could be any worse and it certainly could done at a lower cost.
Even those bloated billion dollar figures are suspect. The non-partisan Government Accountability Office called the cost estimates "not reliable because it lacks adequate documentation." As if that wasn't damning enough, it added that the figures were "not comprehensive, accurate or credible." In other words, the estimates are meaningless.
In its summary, the GAO said without improvements, the Census Bureau's ability to manage its operations will be "hampered" and Congress' efforts to oversee the process will be "constrained." No kidding.
For some perspective, consider that the first U.S. Census in 1790 was conducted at a total cost of $44,377 or about 1.13 cents per person. That headcount was done entirely on horseback as census takers when house-to-house. With computers and sophisticated digital resources at its disposal, today's Census Bureau could not even approach that kind of efficiency.
There are some apologists who would argue that times have changed. The population is more spread out across the country. There are millions more people to count than the 3.9 million who were tallied in the 1790 census. Even acknowledging those facts, does not account for the wide disparity in costs.
In fact, figures for the latest census in 2000 underscore the point. The cost of the national count that year was $4.5 billion or $15.99 a person. In a decade, the cost has more than tripled. By comparison, the cost of the 2000 census was less than twice the figure for the 1990 population count ($2.4 billion and $10.02 a person).
One reason, albeit not the major one, the costs have escalated is the amount of information collected. Those early census were designed to count people. Today's modern census reaches for more details, including ethnicity and home ownership. Followup questions to a select sample are even more intrusive. Is all that data really necessary?
However, the real cost driver for the rising census expense can be laid at the feet of the Obama Administration. The President and his henchmen decided to use the current Census as a political tool. Thousands of temporary workers have been added to the payrolls to dress up the unemployment numbers. Reports have circulated about workers being "hired", trained and sent home. Other news accounts suggest workers were recycled through the same training several times to enable the Census Bureau to continue to keep the individual on the payroll, even though no work was being done.
Without such chicanery, unemployment would have reached double digits by now. Democrats were determined to avoid crossing that threshold at all costs, including using the U.S. Census to game the numbers.
That's another reason that it is time to end the charade. Once the current population count is completed, Washington needs to pull the plug on the decennial U.S. Census. It makes no economic sense to continue this costly exercise.
Federal and state governments already have boat loads of information on citizens. It exists in data bases maintained by agencies from the federal Internal Revenue Service to the state Department of Motor Vehicles. Mine the available data. Estimate a population headcount and then be done with it.
Does it really matter of the count is off by say a million or so people? Some politicians have argued for years that the current method under counts some groups of people. If that's the case, then no one can argue that an estimate based on available government data could be any worse and it certainly could done at a lower cost.
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