Along the way here, I have decided to blog for LikeTheDew.com. This will be my last post, at least, for a while. Hope to see you there… or, at least, on the way there.

The Bible tells us that all evil doers will just die a second death by being thrown into a lake of fire (Revelation 20:13-15). That’s a shame because I don’t feel all sinners are equal. It just doesn’t seem fair that Hitler, who started World II killing 72 million people including exterminating at least six million Jews should be treated the same way as someone like Mohandas Gandhi who resisted tyranny through peaceful civil disobedience and whose sin was being Hindu (more technically, for not being baptized).

I much prefer Dante’s Hell. (Damn. Just for writing that, I’m going to end up with Hitler and Ghandi.) Where things are divided into circles or levels spiral down with increasing pain and nastiness. With punishments so much more inspiring than the just being thrown into a a lake of fire. So let’s start at the top and consider where some of the famous and more notorious among us might end up in Dante’s vision.

Upper Hell

Circle 1. Limbo, but with green fields, a castle and filled with philosophers and poets. For the non-baptized and virtuous pagan. Sounds a lot like heaven.

Circle 2. For the lustful and adulterous. Windy and you never get to rest. Guarded by Minos. 

Circle 3. For the gluttonous. Freezing rain, black snow and hail. Guarded by the three-headed Cerberus. 

Circle 4. For the avaricious and prodigals (the greedy and wasteful). Here, you have to push really big rocks. Guarded by Pluto who makes no sense when he talks (like listening to Fox forever). 

Circle 5. The wrathful and sullen are submerged in a dirty swamp-like river here and guarded by Phlegyas.

Lower Hell – High walls guarded by devils, the Furies and Medusa.

Circle 6. For heretics who must live in this huge cemetery filled with open tombs with fire coming out of them.  

Circle 7. This circle is for the violent and has three three rings. The outer ring is for tyrants and murders who are submerged in a river of boiling blood to a level commensurate with your sin. In the middle ring, those who committed suicide are turned into thorny bushes and leafless trees and are joined by squanderers who are constantly chased by bitches (me thinks, the dog kind). The inner ring is for violence against nature and usurers (bankers, mostly) where they live in a desert of flaming sand and where fiery flakes rain from the sky.

Circle 8. This circle is for those guilty of deliberate, knowing evil and contains ten stone ditches. Ditch 1 is for pimps and seducers are driven to march by demons for all eternity. Ditch 2 is for flatters who are steeped in human excrement. Ditch 3 is for simony (paying for offices or positions) and these guys are stock head-first in a rock while flames burn the soles of their feet.  Ditch 4 are for sorcerers and false prophets who have their heads on backwards. Ditch 5 is for corrupt politicians who are immersed in a lake of boiling pitch. Ditch 6 is for hypocrites who have to wear lead cloaks and keep asking other hypocrites for directions. Ditch 7 is for thieves who eternally are chased by snakes and lizards and when bitten, mutate and undergo various nasty transformations. Ditch 8 are for fraudulent advisors who are encased in individual flames.  Ditch 9 is for sowers of discord and disseminators of scandal who are hacked over and over again by sword-wielding demons. Ditch 10 is liars, counterfeiters, perjurers and impersonators who afflicted by different diseases.

Circle 9. This level is special. It is for those who betray someone with whom they a special relationship with (ex: a priest to a parishioner; a politician to a voter; a soldier to an enemy; etc.). They are encased in ice to different depths dependent upon the gravity of their sin. Some only up necks so their tears will freeze their eyes shut. Some possessed by demon. Some completely encase in distorted and painful positions. In their center is Satan who is waste deep encased in ice so his beating wings create an icy wind that adds to the overall discomfort (hmm, hell has seemed to freeze over).

As I was researching and writing this, I expected that parsing morality (aka: guessing a divine justice) would be difficult. I had planned to list the 911 terrorists and Osama; Sadam and Kim Jong-il; Juvénal Habyarimana and Slabodan Milosevic;  W and Cheney; Limbaugh and O’Reilly; Elliot Spitzer and Mark Foley; Tom Delay and Rod Blagojevich; Jack Abramoff and Dick Cunningham; Ted Stevens and Bill Jefferson; the governors who might refuse the stimulus and those bankers who caused the need for it; the lobbyists and Haliburton; the power companies and the oil companies;  the pundits and the spinsters; and so on. But it seems that for simple crimes and misdemeanors, Hell’s levels are all to easy to place the sinners. And while we might be disappointed that we can’t mix and match the punishments to fit our ideals of pain, for the terrorists and Osama, they go to Hell’s circle number 7 (murderers and suicide) and 8 (false prophet and sower of discord) respectively. For all the rest, they clearly belong right next to Satan in the lowest level of Hell for they have betrayed their special relationship with the people they were to have served. 

Exactly when this economic crisis began is arguable. Republicans often suggest that it was left from the Clinton years and point to evidence including excess growth, albeit benign, in 1994 and evidence of excess fluidity being addressed in December 2002. While there was occasional discussion by pundits on talk radio and the Sunday shows, the impending crisis didn’t begin to make the headlines until the Spring of 2008. Noticeably limping before the Masters and coinciding with the Bear Stearns collapse. By mid June 2008, it became obvious that things were not going to turn around any time soon and Tiger Woods announced after his heroic limping playoff victory at the US Open, that he would undergo more reconstructive surgery and would be out for ten months. Reaction on was immediate and has continued. Indymac Bank was nationalized. $300 billion subprime mortgage guarantee was put into law. The Fed nationalized Fannie Mae and Freddy Mac. Bank of America took over Merrill Lynch. Lehman Brothers collapsed. The Fed lent $85 billion to AIG. Paulson announced a financial rescue. WaMu was nationalized. Citigroup took over Wachovia. Congress passed the $700 billion TARP bailout bill. The crisis spread around the world. Obama was elected to stand in for our multi-racial and multi-cultural role model superstar icon. The markets continued to tank. Millions lost their jobs. Millions lost their health insurance. Wars continued. And so on.

It’s finally officially over. Tiger Woods is back on the PGA Tour this week at the Accenture Match Play Championship in Arizona (Sen. McCain, R). While experts believe it may be many more months before the recovery is complete, all the world awaits the markets’ reaction.

Contrary to cable news opinion, the automakers don’t want a bailout. The want to make and sell cars. The problem, of course, is that their capacity to make cars grotesquely exceeds their ability to sell them. The economy is bad, so consumers have stopped buying (they will be back when their cars wear out). Their businesses got too big not to fail. 

Whether it is their fault or not seems an almost silly debate. Was it the dinosaurs fault they became extinct? Sure, the were too big when the meteor hit that brought on the ice age and they couldn’t find enough food. Same thing is going on now. Big change, though, when Dino died, there weren’t people around to try to say they are cute, appreciate their diversity and save him. But based on the movies I’ve seen, I think we are pretty lucky that they didn’t all make it. But I digress. 

The working plan in Detroit and in DC is for the industry to get very lean and mean. We, the government, make their current cash flow, while the industry cuts overhead, workers, benefits, suppliers, dealers, investors and lenders, such that their capacity is realigned with demand and they can sell the cars they produce at a profit. The problem, okay, the problems include the incredible cost to the taxpayer to provide this soft landing; the punishing pain to their stakeholders that only delays the inevitable demise; the lack of funding for re-tooling; and that once scale is reduced, the auto industry won’t make enough cars to make enough money to be globally competitive.

So just how do we help Detroit survive, re-tool to make innovative new vehicles that people actually want, have adequate capital to manufacture, inventory, sell and generate a profit? Send out an RFP. I propose that we send out a request for proposal for purchase of a new fleet of vehicles for use by federal, state and municipal government – a couple of hundred thousand a month (no one knows how many we buy at all levels, but if the total cost of the Detroit bailout is $130B, that would buy 200,000 $20,000 cars a month for almost three years). Not the $300 million golf carts the stimulus bill called for, but highly efficient cars that get 50 to 100 mpg and use alternative energy. High tech. Low maintenance. Small cars. Light trucks. And vans. Similar in concept to the joint strike force fighter program. Accept the contract that gives us the best ratio of price and efficiency (cost of vehicle divided by fuel and five-year maintenance cost works for me, but there may be a more complicated and better formula). Offer the incentive to pre-pay part of contract to help with tooling and provide working capital. Require that most of the jobs are here and weight the deal as fairly as possible so that our dinosaurs have a chance at competing with other worldwide dinosaurs. Watch the consumer markets to ensure that we are benefitting from innovation and lowest cost. Coordinate this RFP with our allies around the world, hoping that they will buy in and increase the scale and the worldwide effect. Let the companies answer it the way they think is best and let the best ideas and the fittest companies survive. What we’d have left are industries producing clean, modern transportation products that we need and should want. 

Not for what his career (can’t really forgive him for that), but for what he did last week. Cancer survivor Arlen Specter  (rhymes with Lector) of Pennsylvania traded his stimulus vote to the Dems for $10 billion in increased funding to the NIH (which had been starved of funding during recent years) most of which will go toward funding 15,000 additional research grants (34% increase). Specter, who has been publicly threatened by Republicans with a primary challenge for doing so, was unapologetic when he said, “I think it’s scandalous that we haven’t done more to cure cancer.”

Bravo. Way to go Arlen. This is a big deal. Doing something of tremendous importance toward curing the diseases that are truly non-partisan. As a reward, I promise to try and quit pronouncing your name “Sphincter.”

The Atlanta Journal today reports that Gov. Sonny Perdue is going to provide property tax relief to homeowners. Sounds good, right? Not really. His scheme is use the $460 million in Medicaid stimulus money Georgia’s to get, cut what Georgia would have provided to our most needy citizens, cut $99 million from K-12 education and another $20 million from Georgia’s universities (K-12 and the universities we cut $150 million this year already), and borrow $150 million from Georgia’s reserves to do it. Robbing our children. Robbing our sick. Robbing our potential. Robbing our competitiveness. Make me hope there’s a hell.

According to the Washington Post, the Obama administration’s homeowner plan will be announced today:

President Obama will unveil today a $75 billion foreclosure prevention program, which the administration expects to reach up to 9 million homeowners.

“The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it,” Obama will say at a speech in Mesa, Ariz., according to an advance text released by the White House.

The Homeowner Affordability and Stability Plan includes measures to allow homeowners to refinance into loans with cheaper payments, according to a summary of the plan. For example, if a lender agrees to lower a borrower’s payment so that it comprises no more than 38 percent of his income, the government would pay to lower the payments further to 31 percent of income. The aim would be to make the payments affordable.

The plan offers incentives for lenders that modify troubled loans, with up to $1,000 for each modification and then another monthly “pay for success” fee as long as the borrower stays current, according to the summary. If the lender reaches an at-risk homeowner before they miss a payment and modifies their loan, the lender would be eligible for another incentive payment.

Homeowners will also be eligible for incentive payments. Those that stay current on their loans could qualify for a “monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan,” according to the summary. The homeowner could receive up to $1,000 a year for five years.

The Obama plan does not include provisions to help investors and is focused solely on owner-occupied homes. Officials said the administration is trying to provide enough help to stem foreclosures while not rewarding borrowers who purposefully stop paying. At the same time, Obama’s team wanted to risk only as much taxpayer money as absolutely necessary.

The plan “will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans,” Obama will say, according to the text of his speech.

The administration estimates that the plan could stop the slide in home prices by up to $6,000 per home, simply by reducing foreclosures. “The effects of this crisis have also reverberated across the financial markets. When the housing market collapsed, so did the availability of credit on which our economy depends,” Obama says in the prepared text. “As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs.”

Other sources: Politico, HuffPo

The true genius of our so-called founding fathers was more luck than wisdom and more about fear than courage. Rich white male industrialist entrepreneur New Englanders in the same room with rich white male planter slave owner Southerners designed a government to protect the best of themselves from the worst of each other. Land owners knowing they would never vote to tax themselves, set it up so only they could vote. Worried that a president could too easily usurp power to become monarch, they balanced the powers not once, but twice, and added the electoral college just to make sure. Worried that a government sponsored religion could force them to tithe and attend church, they mandated separation of church and state. Worried that a central government would trump their regional fiefdoms, they held on to their state powers. Worried that population could trump state standing and regional culture they created the Senate. Our union has succeeded not for what it has done, but for what it has not. And how could it? Ours is a government where bold, decisive action should not be possible except, and temporarily, in time of war. 

For example, the “legal basis” of Lincoln’s executive order abolish slavery, the Emancipation Proclamation, was the implicit powers given to the President as Commander-in-Chief “as a necessary war measure”.  (Same basis for interning the Asian-Americans during WWII and the wiretapping, torture and legalized corruption of the Bush Two presidency, etc.)

No, our founding fathers, wanted our government weak, decentralized and anything but bold and decisive. Where change would come slowly and poorly. Where the best laws and actions from our national government would be the lowest common denominator*. Fear-based, paranoia-based government because they only trusted themselves, but not so much as a group. 

So what changed? A lot. The founding fathers died and the amateurs were replaced with professional corrupt politicians. The landless, the non-white and the non-male, got the vote (power to the people). More states, each with two senators changed the make up of the regional coalitions of power. Lobbyist were invented. People became more educated and better informed (newspapers, telegraph, radio, television and the internets) and population became more mobile (trains, cars and planes). New industries displaced the old wealthy powerful elite with a new wealthy powerful elite. The world became a village, then a town, then a city, then a metropolitan area complete with individualized slums and slumlord millionaires. Corporations replace partnerships, but without the personal responsibility. Wall Street was created which finally and formally gave structure to the brave new greedy, powerful elite. Self-fear gave way to self-interest. Not necessarily in that order, but that sort of thing.

Now, we have the crisis-to-end-all-crisis de jour and need for bold, decisive action, but are saddled with a government designed to do the opposite. So we get a stimulus bill with little stimulus. We get green baby steps to solve global warming and our dependence on oil. We save a half of million teacher layoffs, but no answer for our education failings. We reach out to bipartisanship with diplomacy and compromise and get three to take the hand of our new President. We embrace change we can believe in and get a Congressional camel with hundreds of humps, but little to get over ours.

I am reminded of my father jokingly remarking that “a benevolent dictatorship was the perfect form of government” even as I can’t get the memory of the Bush empirical presidency out of my head. Could it be that the dark underlord Cheney was right? Could we pretend that our founding fathers designed our republic to act as a 4-year renewable dictatorship during crisis? Until Congress says otherwise, we are, after all, at war. Obama is our Commander-in-Chief and has implicit powers with eventual limits defined only by the Bush Court, 60 votes in the Senate and our finding out. Could he, should he, use these powers to issue executive orders as Lincoln did “as a necessary war measure” and mandate bold new initiatives? 

• For instance, the import of foreign oil jeopardizes our war effort by harming our economy (air, climate, etc.), could he, should he require cars to meet much higher fuel efficiency or use alternative fuels? Or maybe just ration gas and let the markets deal with it? Could he, should he require corporations be dramatically more fuel efficient? Or power companies cleaner?
• For instance, the import of foreign steel, plastics and raw materials jeopardizes our war effort by harming our economy (air, climate, landfills, etc.), could he, should he require the use of recycled materials and ration the use of new materials? 
• For instance, the lower wages used to manufacture imported goods jeopardizes our war effort by harming our economy (higher unemployment, lower taxes revenues, etc.), could he, should he require the use a living wage here and apply tariffs in the manufacture of imported goods to offset the imbalance? 
• For instance, the lack of access to healthcare jeopardizes our war effort by as our young people may not be healthy enough to fight (or go to school), could he, should he freeze prescription prices and mandate universal healthcare and pay for it out of war funding? 
• For instance, the lack of bank credit jeopardizes our war effort by harming our economy, could he, should he require banks to make loans and rework mortgages? 
• For instance, unemployment jeopardizes our war effort by harming our economy (people lives, too), could he, should he require full employment by mandating government work projects, expansion of Americorp, etc. and pay for it out of war funding? 

Sounds like a dictatorship, albeit benevolent, doesn’t it? Don’t get me wrong, I don’t wish nor want for a benevolent dictatorship. Like our founding fathers, I fear too much how rich white males might abuse it. But until something gives, the best we can strive for is the lowest common denominator. And that’s, what we got.

* Wikipedia offers this definition for Lowest Common Denominator: the least common multiple of the denominators of a set of vulgar fractions. 

Beneath the fold in Paul Krugman’s column today, was this little tidbit, “The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn’t nearly enough to bridge that chasm.” Last your our GNP was about $14.3T, so it represents about 20.2%.

Having aced Economics 101, this sounds like the perfect capitalist storm. But before we go there, consider what it means to society and in people terms. Society will lose the benefit $2.9T of good and of wealth that could be produced. A loss to be written off and will not happen. In people terms, it will be a decrease of $2.T in our standard of living that could have been. These things are tragic results and should be mourned.

From a Capitalism 101 point of view, its impact can be devastating and difficult to turn around. Unit costs of manufacturing will go up. Low demand will mean prices will be down. Which will mean profits will be down. Which will mean employment will go down. Which will mean consumption will go down. Which will mean capacity will go down. And it repeats. Until we turn turn it around or become third world. 

So what is the right stimulus amount and is $800B not enough? Good question. Second things, first. The $800B is actually spread out over many years (source: CBO) – including tax cuts and outlays, it works out like this:

That works out to our government buying $718B of the $2.9T or roughly 25%. Sounds like a good middle (2010: $399.4B), but hardly sounds like enough now (2009: $184.9B). And least we forget that $286B is in tax cuts – teensy tiny little incremental tax cuts, much of which will be used to pay finance charges (I seem to remember a few trillion we’ve already committed to help the banks), not buy capacity. My answer, no, $800B is not nearly enough.

First thing, last. I really, really believe that we need to spend (not tax cuts*, but to buy capacity) another $Few Hundred B or so in 2009. And just how do you spend another $400B this year? Won’t be easy and won’t be right, but it needs to be done. We could and should buy into more infrastructure projects, but by now, we all know they’ll be spread out over years before the shovels are ready or paid for. We could, just buy anything and give it away, but that would that decrease consumption further making things worse. We could just burn it, but that doesn’t seem rationale. We could and should give one-year grants to municipal and state government to buy stuff they need: furniture, computers, cars, trucks, pencils and the like – remember, we are just trying to increase consumption. Ditto healthcare providers, schools and job re-trainers. We could and might should, create a loan pool for small business to do the same if we could police it – say, interest free for a couple of years. And we should, get some really smart people to come up with a better list than I have.

The bottom line is we must front load this stimulus: turning it around this year will be easier and cheaper than turning it around later. That, and why wait? Unless you just want people to suffer longer.

* According to Mark Zandi, chief economist of Moody’s Economy.com (and hundreds of other economists and studies), investments by government in infrastructure programs that create jobs would generate an increase in one-year GNP of $1.59 for every $1 spent whereas tax rebates generate $1.02 for $1.00 spent. All to say, we can’t cut taxes our way out of this problem (the wealthy will have enough losses from Wall Street this year).

Standing in the hallway of the White House, while smiling as if he were sharing a private story, Rahm Emanuel, the Cheshire pit bull of the Obama Administration, leaned to the ear of Judd Greg and whispered, “Vote for the stimulus or I’ll break the legs of your children, pull your wife’s eyes out and stick them up your ass.” That, according to imaginary sources close to the situation, is what Greg was referring to when he abruptly withdrew Thursday as the nominee for commerce secretary, saying he had “irresolvable conflicts” over the economic stimulus plan.

Rahm Emanuel, who had been a strong proponent of Mr. Gregg’s nomination, sought to play down his decision to withdraw. “It is better that it happened now,” Mr. Emanuel said, “than when you have someone in the government.”

What would a successful economic turnaround look like?

Flash forward. Still President Obama lands our helicopter directly in from of the New York Stock Exchange and walks triumphantly onto the floor surrounded by jubilant traders and takes his place on the balcony with a sign behind him reading, “Mission Accomplished.” “The recession is over,” he announces to the cheering throng. Our GDP has grown for two straight quarters (all that is required to claim victory). The markets are bullish. The Dow creeping steadily toward 10,000 again (for those who can afford to be in the market). Loans are being made (to those with good credit). Housing sales are up (for those who have down payments, a good job and unscarred credit). Unemployment down (but many millions are still unemployed). Happy days, again (for the audience of the stock exchange).

Shallow Victory.

When Bush announced victory, all that had happened was we had toppled a government and destroyed or disbanded everything that allowed the Iraqi people to take care of themselves. We replaced self-sufficiency with pallets of cash. Tossed a few seeds of freedom and democracy on the scorched ground and expected the spring would take care of the rest. Shock and awe when the seeds all but died.

This time, the drumbeat of fear are the weapons of mass financial destruction. The smart bombs we are using are being used strategically for maximum effect. Save Wall Street – BOOM. Save the banks – SHABOOM. Prop up the unemployed for a while – TA DA DING DONG. More, but temporary funding for Medicare – LING A LING A LING. OH LIFE COULD BE A DREAM.

Where is our David Petraeus?

The change of strategy in Iraq came five years late. The price in dollars and lives is incalculable. Whether we should have done it is debateable. But can we learn a lesson? What did we do differently? We changed focus to clearing and securing neighborhoods and protecting the local population to give the people time to provide their for their own security.

We need the economic surge here, now, not five year from now. Before we lose the peace. We need to focus on people, not the institutions, the politics, the factions of the powerful and their constituents. We must stop rewarding the corrupt and fighting with mercenaries. We need clear the damage. Get people to a safe place. Feed them. Treat their wounds. Train them to provide for their own security. We must go neighborhood by neighborhood. We are big country. We must get the religious groups to stop fighting us and begin helping us. We must be visible. House to house. Letting people know we are there to help. And we must do it for years until the victory is more than a made-for-tv event.

ta da de ding dong ta ling a ling a ling

don oh da ling a ling a ling

Oh Life could be a dream, (Shaboom)

If I could take you up in paradise up above, (Shaboom)

If you tell me I’m the only one that you love (Shaboom)

Life would be a dream sweetheart

Hello hello hello again Shaboom I’m hoping we’ll meet again

Oh Life could be a dream, (Shaboom)

Before our precisous plans are coming true(Shaboom)

If you would let me spend my whole life lovin’ you(Shaboom)

Life would be a dream sweetheart

Now very time I look at you something is on my mind

If you do what I want you to, baby we’d be so fine

Oh Life could be a dream, (Shaboom)

If I could take you up in paradise up above, (Shaboom)

If you tell me I’m the only one that you love (Shaboom)

Life would be a dream sweetheart

Shaboom, shaboom, yada da da da da

Shaboom, shaboom, yada da da da da

Shaboom, shaboom, yada da da da da

Shaboom

Shaboom, shaboom, yada da da da da

Shaboom, shaboom, yada da da da da

Shaboom, shaboom, yada da da da da

Shaboom

Every time I look at you something is on my mind

If you do what I want you to, baby we’d be so fine

Life could be a dream, (Shaboom)

If I could take you up in paradise up above, (Shaboom)

If you tell me I’m the only one that you love (Shaboom)

Life would be a dream sweetheart

Hello hello hello again Shaboom I’m hoping we’ll meet again

Hello de ding dong da ling a ling a ling

(originally recorded by the Crew Cuts)

One of the many bad things about men running the world is that size does matter. How you use it is for losers and wannabes. Take this particular economic crisis (please). The banks, insurance companies and Wall Street firms were bailed out because they were too big to fail. It was scale of the stimulus, not so much the details, that mattered to Obama. It wasn’t that we needed $700B for TARP, it was, according to Bernanke, just about the right size for the markets to react to it. Bush was against government intervening in the markets until the size of the crisis was known. Our Treasury is only going to stress test and buy toxic mortgages from banks of the right size (>$10B – there are only 13 of them). 

Sure, maybe it’s just pecuniary envy, but those average among us are having problems, too. Small businesses are flaccid and needing a stimulus. We are teased nightly on the news, but all we get to do is watch. While taking something for our economic dysfunction has side effects (our hearts might stop working; sudden hearing loss, blindness, surges in blood pressure; and the chance of our excitement lasting longer than 4 hours which could do permanent harm), we are willing to take the risk to feel young, vibrant and powerful like those who have been endowed larger. We promise to love our politicians in the morning even if they end up (bleeping) us.

A house was purchased a couple of years ago for $100,000 and got a $100,000 mortgage. If the homeowner sold it today, they could get about $75,000. The $3,000,000,000,000+ question is, how much is the “asset” worth? 

Scenario #1:  Every mortgage payment has been made on time.

• The homeowner knows that their house is worth $75,000, even though, they owe $100,000.
• Under current rules, the banks and the mortgage backed securities which own the mortgage, are required to say the house is worth about $75,000. Since banks have strict capital requirements by the Fed (unbelievably complicated), writing down this asset by $25,000, generally, means the bank will have to raise capital to make it up by selling about $1,000 in new stock or attracting subordinated debt (or other methods) which may be really hard to do when your stock is in a spiral.
• Meanwhile, investors in the banks and the mortgage backed securities which own the mortgage, buy or sell based on their guess whether they think the companies are telling the truth on a timely basis, and, generally, don’t believe anything leaving the stock and securities prices in the toilet.
• The banks, Wall Street firms, the Treasury and the Fed want to value it at $100,000 and have our government guarantee that it is. The mortgage is performing as if it is worth it is worth $100,000 and if held until maturity it would be, therefore, it is.

Scenario #2:  The mortgage is behind, but not technically in default.

• Same as above.

Scenario #3:  The mortgage is in default.

• The homeowner is probably living somewhere else, thieves have gutted the house for appliances and copper and the house is no longer inhabitable and has a market value of about $40,000.
• Under current rules, the banks and the mortgage backed securities which own the mortgage, are required to say the house is worth about $40,000, but they really don’t know what the market is or the condition of the house and would likely just take their time reporting an optimistically guess to the value. When the Fed finally finds out, the bank would be required to write down the asset, and, if the bank had enough of them and can’t raise enough capital, the bank would become insolvent forcing the Fed to “nationalize” it or force a merger with another bank to big to fail until we run out of banks.
• Investors left the house, the bank and the securities long before the former homeowner and isn’t planning to come back until something fundamentally changes.
• If the bank was lucky enough to be one of the 13 banks with more than $100 billion in assets, the Treasury and the Fed (announced yesterday – see: Giethner’s Remarks and the new FinancialStability.gov website) would give the banks “a carefully designed comprehensive stress test” and mortgages, or, in this case, the asset, would be purchased for about $75,000 by the Public-Private Investment Fund they call the “Financial Stability Trust” which they plan to capitalize with $500,000,000,000 of tax-payer money. The banks and the mortgage backed securities which own the mortgage would be out about $25,000, but no longer have the mortgage and could go back to doing whatever really big banks and and really big mortgage backed securities do.
• If the bank was one of the 9,446 small banks that haven’t yet been forced to merge with one of the lucky 13, the house would eventually be sold for about $40,000 and the bank and the mortgage backed securities which owned the mortgage would be out about $60,000.

Now if my simple answers made this seem incredibly complicated, which it is, you might be wondering why the Fed and the Treasury didn’t just tell the banks to re-work the mortgages, send the government the bill (let’s use the term stock so it could be sold later when things are better), so consumers could stay in their homes? Me, too. 

Here’s the simple math: 

• Total US Mortgages: $12 trillion
• Mortgages that are 60 days or more late: 4% or $480 billion
• Cost to re-work/write down mortgages by 30%: $144 billion

Even if my figures are off by 1,000 per cent, the cost would be far less than what we are doing, but this is the path we’ve gone down and is better than letting the house of cards we live in, fall on us.

Finally, it’s working. Sorry for the delay.

With the “stimulus” bill in the semi-final stages of the congressional truth or dare tournament, I was just wondering what is really important to us? We (one of the variations of the greater “we”) are in a crisis. Do we vote our personal self-interest? Do we vote what’s “best” for America? Do we vote “what would (insert your role model de jour here – i.e. Jesus, Ghandi, Dobbs, Limbaugh, Reagan, Lincoln, Phelps, MLK, Palin, Hillary, Oprah, Paris, etc.) do”? Please rank your choices from the star list below (anonymous – you don’t have to register), hit submit in each section (it will post and the button will disappear), then go to the next section (skip section you don’t think rates a star). Results will be published automatically in each section. [starratingmulti id=22] [starratingmulti id=23] [starratingmulti id=21] [starratingmulti id=24] [starratingmulti id=39] [starratingmulti id=26] [starratingmulti id=27] [starratingmulti id=28] [starratingmulti id=29] [starratingmulti id=30] [starratingmulti id=31] [starratingmulti id=32] [starratingmulti id=33] [starratingmulti id=34] [starratingmulti id=35] [starratingmulti id=36] [starratingmulti id=37] [starratingmulti id=38] By now it probably pretty obvious that there are a lot of important things. Please post your comments and share with me other things you feel are important.

You’ve heard and read the warnings. Not from nuts, but the Nobel Prize winners. Paul Krugman. Today in the New York Times, he wrote, “Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again. It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.”  

Spinning Out of Control. We’ve had serious warnings from serious experts, and yet, the Senate fiddles. Boehner whines. Costello puppets. Blitzer nods. Reid parses. DeMint spins. McCain, well, who cares? The point is, WHAT THE HELL ARE THEY DOING? THIS IS SERIOUS. Screw the bipartisan hope for change. Screw the pundits telling both sides for ratings and ego. We’re going off a cliff. What is it they don’t understand? There’s no bleeping election this year or votes to be won. Only millions of people suffering and the expectation of that many millions will soon. Dare a liberal question their patriotism? Damn straight. Empty Guantanamo for the Republic House and Senate members. They are much, much more dangerous. They have a bomb strapped to the American people and sabotaging us on nightly news with lies and deception. The Republicans are worse than any terrorist. No one will care for the details. Blame won’t matter. There will be plenty of credit if they act, but nothing but hatred if they don’t act now.

Write your Congresspeople. Call. Fax. Text. Twitter. Scream. Or all of this is going to change. This is real. Get it. Do something. There’s no time to wait.

I’m reminded of a famous scene in “The Paper”…

SPAULDING GRAY: Well, I hope you’re satisfied, (bleep)! You just blew your chance to cover the world!

MICHAEL KEATON: Really. Well, guess (bleeping) what? I don’t really (bleeping) care. You want to know (bleeping) why? Because I don’t live in the (bleeping) world! I live in (bleeping) New York City, so go (bleep) yourself!

I don’t live in (bleeping) Georgia. I live in (bleeping) Atlanta.

• Sunday’s Atlanta Journal reported that  (bleeping) firearm permits are up 79% in 2008 and attributed the increase to fear “that it might become harder to get a permit during the Obama administration.” I am sincerely hopeful their fears are  (bleeping) justified, but am embarrassed and apologize for (bleeping) Georgia.
• They also reported that our (bleeping) Federal government has asked for an $8.2 million refund from three (bleeping) Georgia school districts that included (bleeping) Atlanta who wrongfully received the millions in per-pupil aid for victims of (bleeping) Katrina. Shame on (bleeping) Georgia. Shame on (bleeping)  us. I apologize.
• The (bleeping) Atlanta Journal reports that our (bleeping) governor, (bleeping) Sonny Perdue, has recommended eliminating all school nurse positions to save money. I can only presume that he feels (bleeping) Georgia is ranked too high on the number of healthy kids. What a (bleeping) jerk. I apologize for Georgia.
• The (bleeping) New York Times reports that during 2008 (bleeping) Georgia’s welfare rolls shrank by 11% last year and by 70% since early 1990s. I remember reading something about the (bleeping) economy recently. What was it? Oh, yeah, it was the (bleeping) worst time since the (bleeping) depression. Way to go (bleeping) Georgia. I apologize.
• Even in (bleeping) Georgia, every (bleeping) criminal defendant has the right to be represented by a (bleeping) attorney and if they can not afford one, the (bleeping) court appoints an (bleeping) attorney. The problem in (bleeping) Georgia, is that we don’t provide enough (bleeping) money to pay the (bleeping) public defenders. Sure the (bleeping) high-profile Brian Nichols’ case sucked $1.5 million out of the (bleeping) system last year. But in (bleeping) Georgia, we don’t fund indigent defense with (bleeping) taxes. Since 2004, we fund what we fund with fees and fines imposed on criminal sentences and those filing civil cases. By itself, that is a (bleeping) nasty way to fund it and I apologize for (bleeping) Georgia. But in the “wisdom” of our (bleeping) legislature, we raise too much, so they suck off (intentional) millions each year for other (bleeping) purposes. I apologize for  (bleeping) Georgia. And I apologize for defendants not receiving a speedy (bleeping) trial because they have to wait in line to get a (bleeping) attorney. And I apologize to the (bleeping) attorneys for (bleeping) Georgia randomly paying them reduced (bleeping) fees because that’s all the (bleeping) money on hand. Shame on us.

And for all the worst lists that (bleeping) Georgia leads or is among the bottom (here’s a quick, but partial list: Worst (bleeping) Senators; Worst (bleeping) Legislature; Worse (bleeping) Governor (it is a close race to the (bleeping) bottom); Worse (bleeping) Plan for Draught; Worst (bleeping) State Flag; Worst Places to Cast a (bleeping) Vote; Least Progressive (bleeping) State; Worst Infant Mortality; Worst (bleeping) Nursing Homes, Worst (bleeping) Schools; Worst (bleeping) Graduation Rate; Worst (bleeping) Foreclosure Rate; Worst (bleeping) Poverty Income Tax Threshold; Worst in Number of (bleeping)Uninsured; Worst (bleeping) Syphilis and Chlamydia Rates; Worst Funding for (bleeping) Public Health (one might wonder if they are (bleeping) connected); Worst Funded (bleeping) Medicaid Program; Worst (bleeping) Credit Laws; Worst (bleeping) Speed Traps; Worst (bleeping) State for Knowledgeable (bleeping) Drivers; Worst (bleeping) Peanut Plant; Worst (bleeping) Power Plant Pollution; etc. ), I (bleeping) apologize, but I live in (bleeping) Atlanta.