More conversations with George

I know it may be a cop out to use emails as content – but these discussions I have been having with my family have allowed me to articulate my feelings about the election. I have really enjoyed these adult discussion (not that kind of adult discussion – get your mind out of the gutter. Yes that means you GSM) with my Mom and Dad.

And isn’t New Media all about repackaging content 😉


So the conversation started with me pointing to this article in The New Yorker. It is an editorial supporting Obama. It is a long read, but a good read.


[Dad’s response]

I would submit that the author(s) were just a bit biased, Obama, it seems, can do no wrong and McCain no right.

Watched the debate last night. Obama has the ability to tell a good story. McCain didn’t do as well in my view in articulating what he proposes. That said, I am concerned that what Obama proposes is essentially socialism, tax those that have to give to those that don’t. While there are those who really need a hand up, there are also many who won’t take advantage of it when they get it and they will always be a day late and a dollar short. The policy of what I will generously call encouraging lending institutions to loan mortgage money those who have no hope of ever being able to pay it back has its roots in this sort of philosophy. It is also what got us into the financial mess we are in I believe. Bankers used to be known as hard hearted business men but that is what we want looking after the money we deposit with them to invest wisely. Subprime lending with all sort of encouragements to borrow beyond ones means does not in my view constitute good management of my dollar.

Quite frankly, I am concerned that while Obama talks a good line, some of what he is proposing may weaken the country more than strengthen it. On the other hand, I am not sure McCain will really promote a new vision, his ability to articulate his vision isn’t as good as I had hoped. If I had to prioritize my personal concerns, I guess it would be fiscal responsibility first, foreign policy tied with reform of the education system second. Energy policy is right up there at the top but I think it is thoroughly tangled up with fiscal responsibility and foreign policy.

Well, whoever is elected he is going to have a very rough time ahead.


[my response]

Random thoughts – too busy to be coherent.

I was trying to determine if the New Yorker was a left or right leaning publication – left is my guess 😉

Missed the debate last night – hope to watch it online this weekend.

Agree that there is a tough row to hoe for whomever is elected.

I think that we need to invest in our country. From what I know of the sub-prime mess, we might have gone too far to the left. Hopefully there will be some lessons learned that the future administration(s) will apply. But there is so much that needs focus – transportation infrastructure, medical, social security, energy – we have to find a way to focus and fund these items. As the “greatest nation on earth” why do we have so many people living in a world of hurt. Agree that some people will take advantage of the system but got to think more will be helped than “harmed”.

I am not proposing we go as far down the socialist road like we see in the Nordic countries, but it seems like in general the population is happy and well taken care of (Scott – please jump in on this one) [ed. – my brother, Scott, lives in Norway]

I am not proposing we become isolationist – there are a lot of wrongs in the world that we can affect in a positive way – but we need to get our shit together before we go off solving everyone else’s shit. Also think an administration that is more focused on diplomacy would be able to work with allies and leverage everyone’s resources to resolve a number of the world’s issues.

Everyone is talking about the need for change, but the pessimist in me says that by mid next year we will be back to more of the same. I don’t see a significant change taking place in the way Washington works. Too much $$. Too much greed. Too many lobbyists. Too much of doing what is good for my district so I can get re-elected. I mean come on – they added approx $150B on top of the $700B package so they could get the votes. What a load of crap. Managing by committee is a crappy way to do anything. Never works in business and sure as hell does not work in Government

Enough for now.

-Jess


[Dad’s response]

Maybe the New Yorker was just trying to make amends to Sen. and Mrs. O for the cartoon they ran a few months ago. My guess is that both the New Yorker and the NY Times are pretty left leaning in the view of us here in the west.

I too am of the pessimistic bent. More than likely by mid 2009 things will be back to business as normal in Washington DC. As you point out there are to many there who have as a first priority their own pocket book and getting reelected rather than doing things for the good of the country. One can pick just about any subject from energy to immigration to social security to health care to steroid use in the baseball world and find that little has been accomplished by the politicos in the past decade except talk and grandstanding. I don’t know what the solution is but I would advocate just throwing out the whole bunch of rascals and scalawags if I weren’t concerned the new bunch would probably turn to the same old group of lobbyists and other assorted ‘experts’ to figure out what they should be doing and things could easily be worse than before!! Not a happy state of affairs.

Dad


Well said Dad – well said. Not much more I can add to that.
It is interesting to find out that our political leanings are closer than I thought to be – like Father, like Son.

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6 thoughts on “More conversations with George

  1. To those who would call Obama a socialist, I ask you to guess who wrote the following:

    — quote —

    We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. … The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and … a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.

    — quote —

    Think you know? http://www.slate.com/id/2202950

    You might go read the full speech from which that is an excerpt: http://tinyurl.com/6n6jwn

  2. Re: “The policy of what I will generously call encouraging lending institutions to loan mortgage money those who have no hope of ever being able to pay it back has its roots in this sort of philosophy. It is also what got us into the financial mess we are in I believe.”

    This sounds suspiciously like the GOP talking point of blaming Liberals and the Community Reinvestment Act. It is wrong-headed though.

    I will quote liberally (no pun intended…) from http://www.slate.com/id/2201641/

    — quote —

    […]

    The thesis is laid out almost daily on the Wall Street Journal editorial page, in the National Review, and on the campaign trail. John McCain said yesterday, “Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread.” […] If only Congress didn’t force banks to lend money to poor minorities, the Dow would be well on its way to 36,000.

    […]

    Let me get this straight. Investment banks and insurance companies run by centimillionaires blow up, and it’s the fault of Jimmy Carter, Bill Clinton, and poor minorities?

    […]

    Let’s be honest. Fannie and Freddie, which didn’t make subprime loans but did buy subprime loans made by others, were part of the problem. Poor Congressional oversight was part of the problem. Banks that sought to meet CRA requirements by indiscriminately doling out loans to minorities may have been part of the problem. But none of these issues is the cause of the problem. Not by a long shot. From the beginning, subprime has been a symptom, not a cause. And the notion that the Community Reinvestment Act is somehow responsible for poor lending decisions is absurd.

    Here’s why.

    The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren’t regulated banks. They were outfits such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand in glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn’t apply. There’s much more. As Barry Ritholtz notes in this fine rant, the CRA didn’t force mortgage companies to offer loans for no money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on packages of subprime debt.

    Second, many of the biggest flameouts in real estate have had nothing to do with subprime lending. WCI Communities, builder of highly amenitized condos in Florida (no subprime purchasers welcome there), filed for bankruptcy in August. Very few of the tens of thousands of now-surplus condominiums in Miami were conceived to be marketed to subprime borrowers, or minorities—unless you count rich Venezuelans and Colombians as minorities. The multiyear plague that has been documented in brilliant detail at IrvineHousingBlog is playing out in one of the least-subprime housing markets in the nation.

    Third, lending money to poor people and minorities isn’t inherently risky. There’s plenty of evidence that in fact it’s not that risky at all. That’s what we’ve learned from several decades of microlending programs, at home and abroad, with their very high repayment rates. And as the New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor in subprime areas of New York’s outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, there have been fewer than 10 defaults on the project’s 3,900 homes. That’s a rate of 0.25 percent

    […]

    Look: There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb-lending virus originated in Greenwich, Conn., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington, D.C. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.

    […]

    Lending money to poor people doesn’t make you poor. Lending money poorly to rich people does.

    — quote —

  3. A couple more links re: the current crisis:

    http://bigpicture.typepad.com/comments/2008/10/greenspan-secur.html

    http://bigpicture.typepad.com/comments/2008/10/who-were-the-le.html

    http://www.nytimes.com/2008/10/24/business/economy/24panel.html

    Let me quote a bit from the latter:

    —quote—

    [O]n Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

    “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

    […]

    “You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

    Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

    […]

    He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.

    But on Thursday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.

    “This modern risk-management paradigm held sway for decades,” he said. “The whole intellectual edifice, however, collapsed in the summer of last year.”

    —quote—

    I think I’m beating a dead horse here — it wasn’t the Liberals forcing bankers via the Community Reinvestment Act to make bad loans, but rather it was *unrestrained* greed at all levels. And greed, unfortunately, crosses party lines.

  4. One final point, as long as I’m using Jess’s blog as my soap box (go ahead Jess, tell me to get my own blog 🙂 ):

    I am near certain that a vote for McCain means we will be at war with Iran during his term. If that’s not reason enough to vote for Obama, I don’t know what is.

    Vote wisely.

    j.

  5. I guess with this financial mess we are in there is enough ‘blame’ to smear most anyone in the financial world and in the world of regulators including congressmen. Perhaps if there is a bottom line, it is that greed seems to be the common denominator. In my view there are two kinds of wealthy people, those who use their money for the benefit of their community and those who only want more so they can live in a thoroughly decadent life style, that is where the greed part comes in. Greed is nothing new, it has been with us for ages, the thing that is new is ability to spread the impact of the greed in ever wider circles in this global society.

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