Stories by blackhedd
Posted at 7:52am on Jul. 11, 2008 Rethinking the Goals of a National Mortgage Bailout
An already-ugly problem gets worse
By blackhedd
Front and center this week have been the ill fortunes of Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that together own trillions of dollars’ worth of US home mortgages.
At this point in time, there really is no reason to own the stock of either company. The Administration is said to be looking carefully at whether and how to do a government takeover of one or both. The grand 35-plus year experiment in semi-public support for US housing may be coming to an end.
But that’s far from the only problem in the mortgage/housing sector. In fact, it may be the easy problem. The hard problem is what to do about all the homeowners that are falling behind on their payments.
This is a time bomb that continues to tick away, and Congress has been working hard to pass a huge bailout bill (the Dodd-Frank Act). President Bush has vowed to veto it, but he’ll break that promise.
But what are the objectives (both political and economic) of this enormously costly legislation? Can it actually meet those objectives? And are they the right objectives in the first place?
Keep reading.
Posted in Dodd-Frank Act | Economy | housing | Mortgage Bailout — Comments (45)/ Email this page » / Read More »
Posted at 9:49am on Jul. 10, 2008 Airline Industry CEOs Hoping You’re As Ignorant About Economics As Everyone Thinks You Are
Um, Guys? Speculators Aren’t Your Problem
By blackhedd
I’m going to avoid linking to this because you can find it yourself, and because I don’t know who the original authoritative source is. But you’ve certainly heard that a dozen CEOs of major US airlines, including all the big names, have put out a letter urging you, their customer, to agitate for more regulation of the commodities-futures markets.
Unfortunately time is too short to fully consider the issues raised in this carefully-written letter. The basic idea is something you’ve heard me discuss several times now: speculation in crude-oil futures and derivatives is raising the price.
That’s true enough, as I’ve said before. It’s also true that the airline industry is under as much pressure from high oil prices as anyone else (more on that in a moment).
What’s not true is that speculative pressure (or more precisely, buying pressure originating ultimately from institutional investors) is a permanent support for the price of oil. Thus, the conclusions reached by the airline CEOs are wrong, but they’re wrong in ways you wouldn’t expect from experienced business people.
Read on…
Posted in Airlines | CEOs | Economy | Oil Prices | regulation | speculation — Comments (19)/ Email this page » / Read More »
Posted at 8:12am on Jul. 8, 2008 So Tell Me, Mr. Immelt, Why Are You Killing American Servicemen?
Bill O’Reilly doesn’t let facts get in the way of a good story line
By blackhedd
Years ago, a large young man from Flint, Michigan with nothing better to do started stalking Roger Smith, who was then the CEO of General Motors Corporation. The young man, with a small film crew in tow, would stick a microphone under Smith’s nose and ask him all kinds of strange questions. Later, he assembled the pieces into what looked like a documentary but in fact was tendentious propaganda.
General Motors learned then that truth is no barrier to being smeared effectively. And young Michael Moore learned that craftily-packaged lies can change the world.
I was reminded of that when I heard that Bill O’Reilly, of Fox News, showed up last week at the National Governor’s Association meeting in Jackson Hole, Wyoming. And he appears to have gotten in front of attendee Jeffrey Immelt, who is the CEO of the General Electric Company of Fairfield, Connecticut.
What O’Reilly wanted to know from Immelt more or less boiled down to: Why are you still killing Americans in Iraq?
It turns out that this has been a hobbyhorse for O’Reilly for quite some time now. He’s generated several flaps about General Electric this year.
So this is my way of trying to cut off another one.
Keep reading…
Posted in Bill O'Reilly | Foreign Affairs | General Electric | Iran | nuclear weapons — Comments (30)/ Email this page » / Read More »
Posted at 1:52pm on Jul. 7, 2008 Commodity Prices Are Falling Sharply
Unusual Market Action
By blackhedd
Remember a few days ago, I suggested here and here that: A) commodity prices worldwide are in a bubble; B) bubbles always burst; and C) when this one does it’ll be bad news because so many global investors have piled on?
As I write at about 1:45pm EDT, every major commodity that is traded on world markets is down sharply. It’s been a long time since I’ve seen anything like this.
Keep reading...
Posted in Bond market | commodity prices | Economy | inflation | Stock Market — Comments (29)/ Email this page » / Read More »
Posted at 10:25am on Jul. 7, 2008 Toward an Understanding of the Obamian Language
A Compendium of Useful Words and Phrases for the Traveler, Student, and Businessman
By blackhedd
Here at RedState, we have more than our share of accomplished linguists, and the appearance of a new language in nature is a matter of great interest to us.
Today in America, we’re witnessing the birth of a language (“Obamian”) which borrows heavily from the grammatical structure of American English, but with a heavy influence in matters of linguistic construction from the writings of George Orwell. Like any truly distinct language, Obamian has been observed to be highly consistent in regard to vocabulary and syntax.
We’ll be watching the development of this new language closely, with the ultimate aim of producing a complete vocabulary and grammar.
For now, here’s an initial set of essential words and phrases for the traveler or businessman (pronunciation generally follows American English):
"Consistently": Whenever this word appears (typically in the formulation "My position on XYZ has consistently been..."), it signifies that a flip-flop will appear in the next sentence.
"Inartful": This term (often appearing as “I expressed myself inartfully”) is used ironically to give a subtle impression that the speaker is acknowledging a flip-flop, while in reality he's blaming journalists for it.
"Puzzling": The speaker uses this word when a mainstream press outlet calls attention to one of his flip-flops. The term signifies that the speaker is not amused, and is intended to convey a vague threat or menace.
"This isn't the person I've known for many years": This phrase signifies that the speaker is about to throw a long-trusted friend or political ally under the bus.
This is the first installment. Feel free to add additional citations or naturally-occurring formulations of actual Obamian speech in the comments.
-Francis Cianfrocca
Posted in Breaking News | flip-flops | Obama — Comments (4)/ Email this page » / Read More »
Posted at 8:02am on Jul. 3, 2008 Have You Been Wondering Why High Commodity Prices Haven’t Created a Wage-Price Spiral?
Dow Chemical: A Canary in the Coal Mine?
By blackhedd
I’ve been writing here about high inflation for nearly a year and a half. I think the Federal Reserve has been running an extremely accommodative monetary policy for quite a long time, much longer than the mainstream press has been screaming about high food and oil prices.
But why we aren’t seeing the classic sign of hyper-inflation, a wage-price spiral? Wage increases are the channel through which inflationary pressure metastasizes to the point that it can destroy an economy.
That isn’t happening this time, for a lot of reasons, all of which are interesting. But there is one in particular that is worth calling out because it illuminates a key aspect of tax policy.
In short, businesses are unable to pass increased factor costs on to consumers.
Keep reading…
Posted in Dow Chemical | Economy | federal reserve | inflation | wage-price spiral — Comments (14)/ Email this page » / Read More »
Posted at 2:09pm on Jul. 1, 2008 Don't Call Senator Obama a Born-Again Conservative [Updated]
It's important to set the record straight
By blackhedd
Since Barack Obama clinched the Democratic nomination, there has been a lot of confusion about where he stands on policy issues. It's important to set the record straight on such matters as using government funds for programs tied to churches and other religious organizations. Obama's position on this and every other issue is crystal clear.
With the single exception of expanded drilling for oil, Senator Obama is in favor of every policy position that is recognizably conservative, and he has been since the beginning of his public career.
This includes: gun control (against it), gay marriage (against it), faith-based initiatives (for 'em), the Iraq war (in favor of victory and a continued presence), public financing of political campaigns (against it), the death penalty for rapists (for it), lower taxes (for 'em), and the flag of the United States (for it).
The Senator has not yet announced his long-held and consistent position on abortion, but he does think the conservative Supreme Court is doing a darned fine job.
Update: And Obama adds welfare reform to the list of conservative policies that he's consistently been in favor of all along. H/T Brother Moe.
All characterizations of Senator Obama's consistently-held positions as "liberal" or "left-of-center" are either unfortunate misrepresentations by political opponents (which he regrets), or legitimate misunderstandings caused by hurried or inartful statements by himself or his associates (which he also regrets).
It has been alleged that Obama is a born-again conservative. This mischaracterization is also unfortunate, as the term "born-again" implies some kind of recent conversion experience. Nothing could be farther from the truth.
That is all.
-Francis Cianfrocca
Posted in 2008 | flip-flop | Obama — Comments (12)/ Email this page » / Read More »
Posted at 10:23am on Jun. 28, 2008 Fearing the End of High Oil Prices
Bubbles Always Burst
By blackhedd
One of this week’s big themes has been the role of speculators in the crude oil market. I’ve certainly played my role in the mini-flap. It’s absolutely true that buying pressure from non-traditional players has been supporting the price of crude oil, but the real picture is considerably more complicated than the one Barack Obama and the MSM have been retailing.
In short, there are a great many professional investors out there who now think of industrial commodities as an asset class, to be given its proper allocated weight in managed portfolios. This is where much of the structural price support for crude oil has been coming from.
And this has been giving me some very spooky thoughts.
Commodities prices are undoubtedly in a momentum-driven bubble. Months ago, I predicted in this space that crude oil would hit $150 or $180 a barrel during the summer.
Hold onto your hat and keep reading…
Posted in Dodd-Frank | Economy | institutional investors | oil pirces | speculators — Comments (20)/ Email this page » / Read More »
Posted at 9:32am on Jun. 24, 2008 Barack Obama on the Social Security Tax
Wrecking America’s Entrepreneurial Strength
By blackhedd
Senator Obama recently made an important proposal in regard to taxes. We’ve known for a long time that he intends to raise all kinds of taxes, including capgains taxes and income taxes on high earners. His specific recent proposal is to extend the FICA (Social Security) levy so that it will apply to all income above $250,000.
That may sound weird to you. It is, and here’s why: today the roughly 12.5% FICA levy is only applied to a bit more than the first $100,000 of income. Of course that makes sense because Social Security benefits are only based on that amount of income: if you make more than $100,000 in any given year, it doesn’t increase the retirement benefits you get.
Obama is proposing to charge the FICA tax on the first $100,000 of income (just as today), and then stop applying it to income between $100,000 and $250,000 (again, just as today), and then re-apply the tax to all income above $250,000.
Income above $250,000 will pay the Social Security tax, but will not contribute to the benefit calculation.
What is Superman trying to accomplish with this? What does he want us to think he’s trying to accomplish? And what will be the real effects?
Keep reading…
Posted in Economy | entrepreneurs | FICA | Obama | Social Security | taxes — Comments (20)/ Email this page » / Read More »
Posted at 8:09am on Jun. 23, 2008 The Audacity of Lies: Obama Takes on the Crude-oil Speculators
The Mouth Is Quicker Than the eye
By blackhedd
When you’re Barack Obama, you can pursue an Orwellian rhetorical style because you have several crucial factors in your favor: You’re young. You’re good-looking. You have a pleasant deep voice. And you can blunt any criticism, no matter how cogent, just by saying “You’re only beating up on me because I’m black.”
Now that Obama has thrown campaign-finance reform under the bus (it doesn’t suit his newly-affluent circumstances), he has to deal with the price of gasoline. He’s come out with a rather esoteric set of regulatory proposals to deal with the issue, which has remarkably become perhaps the most important one of the summer.
I’ll take you through a short explanation of what our Hero thinks he wants to do, but as you’ll see, his bottom line is rather different from what you might think it is.
Keep reading…