December 15, 2009 Leave a comment

I have been mostly absent recently and that will remain so for the next few days. Due to some family issues I am finding it hard to find time to write. I should be back to the usual moonbat smackdown soon though. Thanks for your patience.

Categories: Uncategorized

More denial of the “Climategate” controversy.

December 6, 2009 1 comment

A once well-respected scientific journal has forever tarnished it’s reputation in a manner not seen since…well since earlier this year when the Nobel Committee ‘jumped the shark’. The Scientific American published an article by David Biello titled, “Scientists Respond to ‘Climategate’ E-Mail Controversy”. Except that the only ones who responded were ones involved knee-deep in this scandal, Michael Mann and Gavin Schmidt, who I noted before as being disingenuous at best and have a knack for dancing around the issue to give a non-answer. Nobody outside the controversy weighed in the subject in this story.

In fact, very little attention was given to the actual impact of the leaked e-mails and was instead, a platform for which to dance around the issue.

With all the “hot air” surrounding climate change discussions, none has been hotter in recent weeks than that spewed over a trove of stolen e-mails and computer code from the Climatic Research Unit (CRU) at the University of East Anglia in England. Longstanding contrarians, such as Sen. James Inhofe (R–Okla.), who famously dubbed climate change a “hoax” in a 2003 speech, has pointed to the stolen e-mails as information that overturns the scientific evidence for global warming and called on U.S. Environmental Protection Agency Administrator Lisa Jackson to halt any development of regulation of greenhouse gases pending his investigation into the e-mails. And recent polls have found that fewer Americans today than just two years ago believe that greenhouse gases will cause average temperatures to increase—a drop from 71 percent to 51 percent.

Yet, Arctic sea ice continues to dwindle—as do glaciers across the globe; average temperatures have increased by 0.7 degree Celsius in the past century and the last decade is the warmest in the instrumental record; spring has sprung forward, affecting everything from flower blossoms to animal migrations; and the concentrations of atmospheric greenhouse gases continue to rise, reaching 387 parts per million in 2009, a rise of 30 percent since 1750.

Yes the sea ice continues to melt….except when it doesn’t. The article continues on with a basic explanation of the greenhouse theory, as though the readers are inept. Then we get this little gem.

In fact, nothing in the stolen e-mails or computer code undermines in any way the scientific consensus—which exists among scientific publications as well as scientists—that climate change is happening and humans are the cause. “There is a robust consensus that humans are altering the atmosphere and warming the planet,” said meteorologist Michael Mann of The Pennsylvania State University, who also participated in the conference call and was among the scientists whose e-mails have been leaked. “Further increases in greenhouse gases will lead to increasingly greater disruption.”

Some of the kerfuffle rests on a misreading of the e-mails’ wording. For example, the word “trick” in one message, which has been cited as evidence that a conspiracy is afoot, is actually being used to describe a mathematical approach to reconciling observed temperatures with stand-in data inferred from tree ring measurements.

What constitutes a “robust consensus” in the universe of Michael Mann isn’t the same as us unwashed peons in flyover country. Perhaps he is unaware of the tens of thousands of scientists who oppose this “consensus. Certainly they qualify as more of a consensus than 2400 politicians, business owners and scientists begging for grant money at the IPCC. Add to that the fact one of the e-mails details a plan to push a scientist out of the peer review process….you know….for the “consensus”.

I guess we’re just too stupid to understand what “trick” and “hide the decline” mean. Here I was thinking the “trick” referred to the manipulation of data to “hide the decline” in temperature readings. In other words, starting with a conclusion and pounding on the facts to make them fit the result YOU want. Maybe that’s what “reconciling observed temperatures” means when deciphered. Perhaps I’m not so stupid after all, Mr. Biello.

This is not the first time Biello has published an article with less than realistic interpretations of actual events. In an article he wrote on November 24th he tried to insinuate that there were no scientific opponents to the AGW theory. Only political ones.

You can judge the emails for yourself at this wonderful searchable database. While the revelations about pressuring the peer review process and apparent slowness in responding to an avalanche of requests for information unveil something below impressive scientific and personal behavior, they can also be seen as the frustrated responses of people working on complex data under deadline while being harassed by political opponents.

Note the adjective there. Political, not scientific, opponents. Because the opposition here is not grounded in any robust scientific theory or alternative hypotheses (all of those, in their time, have been shot down and nothing new has been offered in years) but a hysterical reaction to the possibly of what? One-world government? The return of communism? If that’s the fear, perhaps someone can explain why the preferred solution to climate change offered by former proponents of inaction is nuclear power. Has there ever been a nuclear reactor built anywhere in the world that didn’t rely on government to get it done? Sounds like socialism, doesn’t it? Hello France? USSR? USA?

Not only did this moron have the gall to insinuate that proponents of nuclear power were somehow hypocrites because the government rightly chooses to control the nuclear fuel and that’s allegedly socialism….or something, but he declared definitively, all contrary views to be debunked in some unnamed ethereal manner.

Just another in the long list of leftist moonbats that will do whatever they can to marginalize the significance of this scam on the world. Where do the liberals keep finding these morons?

Climategate, deja vu and the fork in the road.

November 22, 2009 6 comments

I told you that some would try to marginalize this and it has already started.

Michael E. Mann, who directs the Earth System Science Center at Pennsylvania State University, said in a telephone interview from Paris that skeptics are “taking these words totally out of context to make something trivial appear nefarious.”

Michael Mann, if you recall, is the one responsible for the nefarious and controversial hockey stick graph. Of course, global warming alarmist try to discredit the very real evidence against the graph by attaching the word “myth” to the argument, while simultaneously refusing to address the complaints of skeptics. I like to refer to it as, “The Art of Stigma“. If you can attach a stigma to any issue you can avoid debate and stifle the voices of your detractors. It’s like using the race card.

In a New York Times article Mann is quoted, once again, trying to downplay the relevance of the breach.

In a 1999 e-mail exchange about charts showing climate patterns over the last two millenniums, Phil Jones, a longtime climate researcher at the East Anglia Climate Research Unit, said he had used a “trick” employed by another scientist, Michael Mann, to “hide the decline” in temperatures.

Dr. Mann, a professor at Pennsylvania State University, confirmed in an interview that the e-mail message was real. He said the choice of words by his colleague was poor but noted that scientists often used the word “trick” to refer to a good way to solve a problem, “and not something secret.”

Well I guess that would hinge on what is meant by, “solving a problem”. If by solving a problem he means correcting errant data then fine, but he doesn’t have a great track regarding that. I believe he meant solving the problem of embarrassing data as opposed to errant data. It is a sentiment shared in some of the hacked e-mails. Remember this part?

Private doubts about whether the world really is heating up:

The fact is that we can’t account for the lack of warming at the moment and it is a travesty that we can’t. The CERES data published in the August BAMS 09 supplement on 2008 shows there should be even more warming: but the data are surely wrong. Our observing system is inadequate.

Suppression of evidence:

Can you delete any emails you may have had with Keith re AR4?

Keith will do likewise. He’s not in at the moment – minor family crisis.

Can you also email Gene and get him to do the same? I don’t have his new email address.

We will be getting Caspar to do likewise.

Sound familiar? That aside, I suppose CRU’s statement to, “assure this never happens again” is all about openness and transparency. Clearly not secretive. Yeah, I’ve seen this movie somewhere and I know how it ends.

The Times article continues with Mann’s defense of Voodoo science:

At issue were sets of data, both employed in two studies. One data set showed long-term temperature effects on tree rings; the other, thermometer readings for the past 100 years.

Through the last century, tree rings and thermometers show a consistent rise in temperature until 1960, when some tree rings, for unknown reasons, no longer show that rise, while the thermometers continue to do so until the present.

Dr. Mann explained that the reliability of the tree-ring data was called into question, so they were no longer used to track temperature fluctuations. But he said dropping the use of the tree rings was never something that was hidden, and had been in the scientific literature for more than a decade. “It sounds incriminating, but when you look at what you’re talking about, there’s nothing there,” Dr. Mann said.

In addition, other independent but indirect measurements of temperature fluctuations in the studies broadly agreed with the thermometer data showing rising temperatures.

Dr. Jones, writing in an e-mail message, declined to be interviewed.

This is a prime example of the scientists using only the data that supports their theories and refusing to acknowledge, even going so far as to hide, data that does not. Mann admits it in this article, but tries to trivialize the significance of engaging in censorship science.

More denial of reality:

Stephen McIntyre, a blogger who on his Web site, climateaudit.org, has for years been challenging data used to chart climate patterns, and who came in for heated criticism in some e-mail messages, called the revelations “quite breathtaking.”

But several scientists whose names appear in the e-mail messages said they merely revealed that scientists were human, and did nothing to undercut the body of research on global warming. “Science doesn’t work because we’re all nice,” said Gavin A. Schmidt, a climatologist at NASA whose e-mail exchanges with colleagues over a variety of climate studies were in the cache. “Newton may have been an ass, but the theory of gravity still works.”

Gavin Schmidt just tried to detract from this event by proclaiming that not all scientists are nice guys. This goes back to what I said about “refusing to address the complaints of other skeptics”. In no way does the attitude of scientists diminish the content of these e-mails.

You see, Gavin, the difference between you and Newton is his theories are sound and beyond reproach. They can be demonstrated easily and are proven by reality. His theories are simple and to the point, not a duct taped patchwork of uncorrelated graph data, woven together by editing out that which is inconvenient.  Skeptics want you to prove them wrong. Skeptics are skeptical because they desire real unaltered knowledge. They are a fickle bunch. They see a problem — an inconsistency — and they want it solved, not swept under the rug.

All this reminds me of a few historical figures I learned about in my school days. Several men over the centuries dared to question accepted science. They were often chastised and ridiculed for their beliefs. Some were killed for it, others were exonerated, though only long after their deaths. They were brave men who dared say man was not the center of everything. They had the gall to believe that there are things in this existence that are far larger than humanity. Things that lend no compassion nor contempt to pitiful little creatures like us. You see men like Copernicus, Galileo and Bruno dared stand against the might of the Vatican. They are born only once a generation and have the capacity to see issues, not as scientists, but as realists — as skeptics.

So here we are, full circle, poised to repeat history. We have our own Galileos and Brunos, threatened with violence for having the nerve to question accepted science of our new religion — the boldness to act contrary to the mandated narrative our New York Vatican has imposed with their elite group of Cardinals. And yet again, we have those who believe humans are the center of the universe and that whatever happens, human were the only reason for it. The more things change, the more they stay the same, I guess.

In the end, we are faced with a simple choice. Will we continue to make the same mistakes of our past or will we choose to heed the lessons of our predecessors?

Global warming fear-mongering “scientists” e-mail hacked.

November 21, 2009 Leave a comment

This is kind of hilarious, if you ask me. It still is even if you don’t. First, NASA had to amend errant temperature data, now this. Apparently, some computers at the University of East Anglia’s Climate Research Unit were hacked and some e-mails and documents were placed on the internet. Some of the more incriminating text seems to indicate that data was tampered with and there may have been an effort to marginalize or discredit dissenting scientists.

From James Delingpole’s blog:

Manipulation of evidence:

I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (ie from 1981 onwards) amd from 1961 for Keith’s to hide the decline.

Private doubts about whether the world really is heating up:

The fact is that we can’t account for the lack of warming at the moment and it is a travesty that we can’t. The CERES data published in the August BAMS 09 supplement on 2008 shows there should be even more warming: but the data are surely wrong. Our observing system is inadequate.

Suppression of evidence:

Can you delete any emails you may have had with Keith re AR4?

Keith will do likewise. He’s not in at the moment – minor family crisis.

Can you also email Gene and get him to do the same? I don’t have his new email address.

We will be getting Caspar to do likewise.

Fantasies of violence against prominent Climate Sceptic scientists:

time I see Pat Michaels at a scientific meeting, I’ll be tempted to beat
the crap out of him. Very tempted.

Attempts to disguise the inconvenient truth of the Medieval Warm Period (MWP):

……Phil and I have recently submitted a paper using about a dozen NH records that fit this category, and many of which are available nearly 2K back–I think that trying to adopt a timeframe of 2K, rather than the usual 1K, addresses a good earlier point that Peck made w/ regard to the memo, that it would be nice to try to “contain” the putative “MWP”, even if we don’t yet have a hemispheric mean reconstruction available that far back….

And, perhaps most reprehensibly, a long series of communications discussing how best to squeeze dissenting scientists out of the peer review process. How, in other words, to create a scientific climate in which anyone who disagrees with AGW can be written off as a crank, whose views do not have a scrap of authority.

“This was the danger of always criticising the skeptics for not publishing in the “peer-reviewed literature”. Obviously, they found a solution to that–take over a journal! So what do we do about this? I think we have to stop considering “Climate Research” as a legitimate peer-reviewed journal. Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal. We would also need to consider what we tell or request of our more reasonable colleagues who currently sit on the editorial board…What do others think?”

“I will be emailing the journal to tell them I’m having nothing more to do with it until they rid themselves of this troublesome editor.”“It results from this journal having a number of editors. The responsible one for this is a well-known skeptic in NZ. He has let a few papers through by Michaels and Gray in the past. I’ve had words with Hans von Storch about this, but got nowhere. Another thing to discuss in Nice !”

I can’t tell you how big this is. I am sure some will try to dismiss this and/or claim it isn’t real. I imagine the worthless mainstream media will ignore this and you won’t hear about it except on conservative sites, except the few liberal bloggers who will try to marginalize it.

Some more relevant links:




Moonbats abound at New York Times.

November 20, 2009 1 comment

Apparently denial of reality is commonplace at, perhaps, the best example of journalistic degradation formerly known as The New York Times. I once wrote about Ruy Teixeira trying to spin the disasterous elections earlier this month. Now his colleague, Nicholas D. Kristof, has attacked his readers as well. In attempting to discredit opponents of socialized medicine, Nicholas made several egregious errors. Unfortunately, I don’t think he cares that he was wrong. The propaganda piece starts:

Critics storm that health care reform is “a cruel hoax and a delusion.” Ads in 100 newspapers thunder that reform would mean “the beginning of socialized medicine.”

The Wall Street Journal’s editorial page predicts that the legislation will lead to “deteriorating service.” Business groups warn that Washington bureaucrats will invade “the privacy of the examination room,” that we are on the road to rationed care and that patients will lose the “freedom to choose their own doctor.”

All dire — but also wrong. Those forecasts date not from this year, but from the battle over Medicare in the early 1960s. I pulled them from newspaper archives and other accounts.

Not only were those people right, but it’s apparent Nicholas is ill-equipped to speak on such matters. The facts are medicare is broke and draining the budget, so it is a cruel hoax. It was the beginning to socialized medicine, because here we are arguing about inflicting this abomination upon the entire country. Bureaucrats have invaded the examination room and rationed care to recipients as well as restricting who qualifies.

I guess those facts don’t matter to Mr.Kristof. Unabated he continues:

Yet this year those same accusations are being recycled in an attempt to discredit the health reform proposals now before Congress. The heirs of those who opposed Medicare are conjuring the same boogeymen [SIC]— only this time they claim to be protecting Medicare.

Indeed, these same arguments we hear today against health reform were used even earlier, to attack President Franklin Roosevelt’s call for Social Security. It was denounced as a socialist program that would compete with private insurers and add to Americans’ tax burden so as to kill jobs.

Daniel Reed, a Republican representative from New York, predicted that with Social Security, Americans would come to feel “the lash of the dictator.” Senator Daniel Hastings, a Delaware Republican, declared that Social Security would “end the progress of a great country.”

John Taber, a Republican representative from New York, went further and said of Social Security: “Never in the history of the world has any measure been brought here so insidiously designed as to prevent business recovery, to enslave workers.”

In hindsight, it seems a bit ridiculous, doesn’t it? Social Security passed, and the republic survived.

Of course, the fact that these two programs have over $100 trillion in unfunded liability is of no consequence. Not to mention that some historians contend that the institution of the Social Security Act triggered the 1937-1938 Roosevelt Recession. I suppose if you’re from the Austrian school of economics, like Paul Krugman, you can afford to make disingenuous connections that really make no sense in the grand scheme of things. Krugman’s article sounds a lot like this Kristof character’s in its complete disregard of context.

Similar, ferocious hyperbole was unleashed on the proposal for Medicare. President John Kennedy and later President Lyndon Johnson pushed for a government health program for the elderly, but conservatives bitterly denounced the proposal as socialism, as a plan for bureaucrats to make medical decisions, as a means to ration health care.

The American Medical Association was vehement, with Dr. Donovan Ward, the head of the A.M.A. in 1965, declaring that “a deterioration in the quality of care is inescapable.” The president of the Association of American Physicians and Surgeons went further and suggested that for doctors to cooperate with Medicare would be “complicity in evil.”

The Wall Street Journal warned darkly in editorials in 1965 that Medicare amounted to “politicking with a nation’s health.” It quoted a British surgeon as saying that in Britain, government health care was “crumbling to utter ruin” and suggested that the United States might be heading in the same direction.

“The basic concerns and arguments were the same” in 1935 against Social Security, in 1965 against Medicare, and today against universal coverage, said Nancy J. Altman, author of “The Battle for Social Security,” a history of the program. (The quotes against Social Security above were taken from that book.)

These days, the critics of Medicare have come around because it manifestly works. Life expectancy for people who have reached the age of 65 has risen significantly. America is no longer shamed by elderly Americans suffering for lack of medical care.

Again, Mr.Kristof doesn’t understand context. If you can keep putting off paying the electric bill by constantly adding to an unlimited credit line, then I suppose that “manifestly works” too. Reasonable people understand you can’t continue to do this. Add to that the fact that we may be taking that very care away from our elderly under this plan.

Yet although America’s elderly are now cared for, our children are not. A Johns Hopkins study found that hospitalized children who are uninsured are 60 percent more likely to die than those with insurance, presumably because they are less likely to get preventive care and to be taken to the doctor when sick. The study suggested that every year some 1,000 children may die as a consequence of lacking health insurance.

It’s true that preventative care helps survival rates, but there is no reason to assume that these procedures would be covered or that these children in question qualify for the insurance. Remember what I said about disingenuous connections?

Why is it broadly accepted that the elderly should have universal health care, while it’s immensely controversial to seek universal coverage for children? What’s the difference — except that health care for children is far cheaper?

I knew it would happen. In the attempt to marginalize dissenting voices the elderly card was used, but when faced with the obvious issue of rationing their care if we extend coverage to everyone, those same elderly are thrown under the bus. Now we have the Kristof version of “justification” for the rationing of healthcare from the elderly, and again the entitlement pimps use our children.

Pathetic. Yes America, you apparently deserve “free” healthcare and to hell with those who stand in your way. Get it at all costs. It’s “owed” to you.

Granted, there are problems in the House and Senate bills — in particular, they falter on cost-containment. In the same way, there were many specific flaws in the Social Security and Medicare legislation, but, in retrospect, it’s also clear that they were major advances for our nation.

It’s now broadly apparent that those who opposed Social Security in 1935 and Medicare in 1965 were wrong in their fears and tried to obstruct a historical tide. This year, the fate of health care will come down to a handful of members of Congress, including Senators Joe Lieberman, Blanche Lincoln, Ben Nelson and Mary Landrieu. If they flinch and health reform fails, they’ll be letting down their country at a crucial juncture. They’ll be on the wrong side of history.

Yes, let’s not worry about how to pay for it. The ends justifies the means. I mean, it won’t be us who has to foot the bill. We can just keep kicking it down the road indefinitely.

Those opponents were not wrong. Kristof is. Sometimes people just refuse to see how right they were. So I guess where you stand in history depends entirely on who is telling the story. For the longest time it was understood what ended The Great Depression. The war effort. Yet when faced with the obvious shortcomings of the Regressives economic policy, it became vital to rewrite that history. That’s exactly what Kristof is trying to do here.

Categories: Uncategorized

MediaMatters: Living a fantasy.

November 14, 2009 3 comments

MediaMatters continues to deny the facts about the subprime crisis.

A November 13 Wall Street Journal op-ed claimed that loans made “under the pressure of” the Community Reinvestment Act helped to “fuel the greatest housing bubble our nation has ever seen.” The claim that affordable housing initiatives were responsible for the housing crisis is a widely discredited myth.

Widely discredited? By who?

Bernanke: Experience “runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties.” In a November 25, 2008, letter, Federal Reserve chairman Ben Bernanke stated: “Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties.”

SF Reserve Bank’s Yellen: “[S]tudies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households.” Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco, stated in a March 2008 speech that “studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households.”

Oh, liberals. Gotcha’.
So Ben Bernanke and Janet Yellen comments constitute a widely discredited claim, apparently. A man who is trying to push trillions of inflated dollars out the door and a woman whose own speech contradicts MediaMatters assertions.

Perhaps the most notable change, however, is that in the last 25 years, consumer credit markets have shifted dramatically, moving from a credit rationing approach to a risk-based pricing system. In other words, today, far fewer applicants are denied credit—rather, they are offered credit at higher prices intended to reflect the greater risk posed by these loans. This shift, coupled with other innovations in the financial markets, has significantly increased access to credit, with both positive and negative effects.

On the positive side, expanded access to credit has greatly increased the ability of low- and moderate-income households of all races and ethnicities to become homeowners. None of us would want to turn back the clock to the days when the prospects of being approved for a loan were more limited in certain neighborhoods and for certain classes of borrowers. But, as has become apparent over the past year with the rise in mortgage delinquencies and foreclosures, the risks associated with the changes in the consumer credit markets were greatly underestimated, and we are now grappling with the consequences.

I guess MediaMatters didn’t want people actually reading the speech which is the reason for the cropped quotes. Maybe they were just hiding something….like the Democrats complete ignorance of all things concerning the subprime crisis.

BARNEY FRANK: “Those who argue that housing prices are now at a point of a bubble seem to me to be missing a very important point. Unlike previous examples we have had when substantial excessive inflation of prices later caused problems we are talking here about an entity, home ownership, homes where there is not the degree of leverage where we have seen elsewhere. This is not the dot-com situation. We had problems with people having invested in business plans of which there was no reality; people building fiber optic cables for which there was no need. Homes that are occupied may see an ebb and flow in the price at a certain percentage level. But you’re not going to see the collapse that you see when people talk about a bubble and so those of us on our committee in particular will continue to push for home ownership.”

OK, so that just proves Barney Frank is an idiot.

Nope…certainly there was nothing wrong with Fannie and Freddie buying billions in bad loans.

Neither Fannie nor Freddie has turned a profit in the past year, accumulating $14.9 billion in combined quarterly losses, largely related to bad subprime and Alt-A mortgage assets.

Yeah, got that MediaMatters? All this is directly tied to the CRA.

On top of that MediaMatters also ignores the fact that Obama and ACORN have repeatedly coerced banks to make bad loans as well and when the loans were defaulted on those same banks were accused of predatory lending.

Obama’s mendacity continues to amaze me in, among other things, his framing of the economic situation and sub-prime mortgage crisis as a failure of Republican policy, neglecting his own involvement as attorney for and subsequent association with ACORN (Association of Community Organizations for Reform Now); the donations he received from Fannie Mae and Freddie Mac; and the sequelae of “affirmative action” credit initiatives by the Carter and Clinton administrations in context of the Community Reinvestment Act, forcing banks to “distribute risk more broadly” by extending high-risk loans to low- and moderate-income borrowers “who would not have gotten credit otherwise”

ACORN: While not all subprime loans are predatory, predatory lending is concentrated in the subprime loan market. There is a place for responsible subprime loans, where somewhat higher interest rates balance the genuinely higher risk of lending to borrowers with past credit problems. Today, however, too many subprime loans include abusive terms or conditions, too many have rates and fees much higher than can reasonably be justified by the credit records of the borrowers, and too many are going to borrowers who could and should qualify for loans at significantly lower rates. A Freddie Mac study suggested that about one third of the borrowers who have received subprime loans could have qualified for prime loans, while Fannie Mae Chairman Franklin Raines estimated that as many as half could have.

What about the rest of those subprime loans? I guess we are to assume they were clean legitimate loans to low risk people.

Sorry MediaMatters, but Edward Pinto’s article was right on target. The part MediaMatters edited out of their cropped quote:

The 1992 GSE Act was the fuse, and the trillions of dollars in subsequent CRA and GSE affordable-housing loans would fuel the greatest housing bubble our nation has ever seen. But who lit the fuse?

The previous year, as Allen Fishbein, currently an adviser for consumer policy at the Federal Reserve, has noted, Acorn and other community groups were informally deputized by then House Banking Chairman Henry Gonzalez to draft statutory language setting the law’s affordable-housing mandates. Interim goals were set at 30% of the single-family mortgages purchased by Fannie and Freddie, and the Department of Housing and Urban Development has increased that percentage over time. The goal of the community groups was to force Fannie and Freddie to loosen their underwriting standards, in order to facilitate the purchase of loans made under the CRA.

Thus a provision was inserted into the law whereby Congress signaled to the GSEs that they should accept down payments of 5% or less, ignore impaired credit if the blot was over one year old, and otherwise loosen their lending guidelines.

The proposals of Acorn and other affordable-housing advocacy groups were acceptable to Fannie. Fannie had been planning to use the carrot of affordable-housing lending to maintain its hold over Congress and stave off its efforts to impose a strong safety and soundness regulator to oversee the company. (It was not until 2008 that a strong regulator was created for Fannie and Freddie. A little over a month later both GSEs were placed into conservatorship; they have requested a combined $112 billion in assistance from the federal government, and much more will be needed over the next few years.)

The result of loosened credit standards and a mandate to facilitate affordable-housing loans was a tsunami of high risk lending that sank the GSEs, overwhelmed the housing finance system, and caused an expected $1 trillion in mortgage loan losses by the GSEs, banks, and other investors and guarantors, and most tragically an expected 10 million or more home foreclosures.

As a result of congressional and regulatory actions, the percentage of conventional first mortgages (not guaranteed by the Federal Housing Administration or the Veteran’s Administration) used to purchase a home with the borrower putting 5% or less down tripled from 9% in 1991 to 27% in 1995, eventually reaching 29% in 2007.

Fannie and Freddie acquired $1.2 trillion of loans from banks and other lenders from 1993 to 2007. This amounted to 62% of all such conventional home purchase loans with a down payment of 5% or less that were originated nationwide over the same period.

Fannie and Freddie also acquired $2.2 trillion in subprime loans and private securities backed by subprime loans from 1997 to 2007. Acorn and the other advocacy groups succeeded at getting Congress to mandate “innovative and flexible” lending practices such as higher debt ratios and creative definitions of income. And the serious delinquency rate on Fannie and Freddie’s $1.5 trillion in high-risk loans was 10.3% as of Sept. 30, 2009.

This is about seven times the delinquency rate on the GSEs’ traditional loans. Fifty percent of the high-risk loans are estimated to be CRA loans, with much of the remainder useful to the GSEs in meeting their affordable-housing goals.

I guess the actual facts and figures weren’t important enough to mention to your readers. All that was necessary was to continue the defense of the embattled ACORN. Priorities, people. Get your head out of Soros’ ass.

What recovery?

November 13, 2009 Leave a comment

Much has been said about the economic recovery by the White House after the GDP grew by 3.5% despite rising unemployment and the fact the housing market is still in shambles.

The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.

The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help. In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.

Well that’s the problem with voodoo economics. When the government inflates a bubble the bubble will collapse without the government constantly funneling money into it. The Cash for Clunkers program was a prime example of this. From Forbes.com:

Growth was driven by consumption, exports, federal government spending, home building and inventories. Consumption contributed 2.4% of the growth, with a particular boost in autos. Thanks to the Cash for Clunkers program, motor vehicle output added 1.66 percentage points to GDP. But even without this particular stimulus program, consumption improved and the economy grew nearly 2%, a swift turnaround from the first quarter of 2009 when the economy was shrinking at a 6.4% rate.

Yeah, that’s nice. Except each car traded in cost taxpayers $24,000. So all you did was take from the deficit and add to the GDP.

The claim about exports is contradicted by an earlier Bloomberg article:

Oct. 9 (Bloomberg) — The U.S. trade deficit probably widened in August for a third consecutive month as imports and exports increased, pointing to a rebound in global growth, economists said before a report today.

The gap grew to $33 billion, the widest since January, from $32 billion in the prior month, according to the median forecast of 76 economists surveyed by Bloomberg News. The deficit widened as U.S. appetite for foreign goods outstripped demand for American-made goods abroad.

What about consumption? Did that really account for the remainder of the growth? Yes and No. Construction plays a huge role in any economy from a consumption of raw materials standpoint. It affects everything from the lumber industry to the paint industry to outlet stores. The job market is largely dependent upon it as well. According to the September numbers private construction was down 20.6% from a year ago and the only private sector gains were in power and manufacturing. Private sector residential spending was down 27% which seems to throw a monkey wrench into the idea that this is a sustained recovery.

However, there were gains in the public (government spending) sector. Public residential spending was up 5.6% and total spending was up to $326.4 billion. This artificially inflates the “G” variable in calculating the GDP (C=consumption; I=Investment; G=Government spending; E=Net exports; C+I+E+G=GDP). More fake voodoo economics.

With the horrible job market, GDP inflating incentives (voodoo dolls), and the weakening dollar what reason do I have to believe the economy is really improving? None that’s what. Rocky Vega says it all.

1. The money lost on stimulus spending – The 3.5 percent growth in GDP is roughly equal to an additional $112 billion dollars in output quarter-over-quarter, but we spent $173 billion on stimulus over that same period. Basically, GDP gained about 65 cents for every dollar spent on stimulus, not exactly a win.

2. The weak job market – In October the total number of people filing for some kind of unemployment rose to over 10 million for the first time in history, and no new jobs are replacing the ones that are lost.

3. Consumption is only up because of incentives – Cash for Clunkers, tax credits on energy-efficient goods, and other programs have only temporarily goosed shopping. US consumer spending has already fallen again in September… for the first time in five months and by the largest amount in nine.

4. Housing tax credits – The National Association of Realtors says nearly half of the increase in home sales this year was due to tax credit. Unfortunately, the credit cost about $30 billion to execute and only generated about $11.6 billion in tax revenue. Roughly speaking, about three dollars were spent for every dollar brought in.

5. The weak dollar – Two notable problems here. First, foreign countries have been able to cheaply borrow the weak dollar in order to finance useful capital projects in places far away from the US. Second, the Chinese yuan’s dollar peg causes it to weaken when the dollar does. This means that China keeps its cost advantages and the US fails to see increased exports.

With with the fact that people aren’t buying homes and younger families are choosing to rent instead of buy, I think we’ll see a stagnant growth rate for the near future. The holiday season will provide a temporary boost as conveyor belts fire up to replenish depleted inventories, but watch for the market corrections in late January.

Categories: Economy