Understanding the Financial Crisis

Yesterday the House voted down the $700 billion bailout bill. The stock market tanked (although it's gained back about half of what it lost as of 1.30 pm today). No one really knows what will happen next.

I'm not an economist and I don't really know what to think about all of this. On the one hand, I'm horrified by the idea of handing out taxpayer money to banks and individuals who made bad investment decisions. As a friend in HR is fond of saying, people will keep doing what you reward them for doing. If you bail people out after they made risky investments, they have a pretty good incentive to do it again, and hope for another bailout. I'm also generally against increasing the reach of government and against government intervention in the markets. The bailout package reads to me like creeping socialism.

But. A lot of very smart people, including a lot of conservatives, are pretty worried about this crisis and are absolutely convinced that the government needs to intervene to prevent a worldwide crash. I don't know, maybe they're right. Maybe things will get a little clearer over the next few days, as Congress is on a break over the Jewish holidays and there won't be any legislative action.

For now, I'm just trying to learn a little more about where things stand, how we got here, what happens next. I thought I'd share a few useful links along those lines.

On how we got here: I'm pretty convinced that a large share of the responsibility lies at the feet of Democrats in government and elsewhere who forced banks to make high-risk mortgage loans to low-income, mostly minority populations. Fannie Mae and Freddie Mac were a major part of this system and fueled the risky subprime mortgages by securitizing the debt. Of course, there is blame to go around, and there were points at which Republicans were in the majority and could have pushed harder for better regulation of Fannie and Freddie. For the record, Bush and McCain among others worked hard to reform Fannie and Freddie but didn't manage to get anything through Congress. Links on this topic:

• Boston Globe
• Matt Lewis on Townhall
• Jay Tea on Wizbang
• Ed Morrissey on Hot Air

What the bailout actually contained: The Wall Street Journal has a fairly complete explanation, although it seems like a few of the details are a little thin. But I think that's because Treasury Secretary Paulson hadn't quite figured out how everything would work, not because the WSJ omitted details in its reporting. Ilya Somin has some thoughtful analysis and links on whether it was a good idea.

Playing politics: Like Glenn Reynolds said:

You know, it would be easier for me to believe this was a crisis, if the people in charge were acting like it was a crisis, instead of just an opportunity for graft. Then again, to some of these people, everything is just an opportunity for graft.

Other bloggers with good thoughts on the politics of the vote include The Anchoress and Besty Newmark. In particular, Nancy Pelosi and some other House Democrats seem to have gone out of their way to make the vote more, rather than less, partisan.

And don't miss the ACORN angle: ACORN, a liberal community organizing group with a record of voter registration fraud, actually gets government (taxpayer) money to help low-income people get mortgages. Over the past two decades they seem to have be part of the problem of encouraging the system to give mortgages to people who couldn't afford them. The original Democrat-proposed bill would have directed a bunch of the bailout money to ACORN and similar groups. ACORN has significant ties to Obama and other prominent Democrat politicians:

• Mona Charen on Townhall
• Ken Blackwell on Townhall
• New York Post, here and here

Democrats and the Housing Mess

If you follow politics at all, you've probably seen the clips of Obama attacking McCain and the Republicans over the problems at Fannie Mae and Freddie Mac. But he's not being very honest with these attacks. The truth is, Bush tried to reform these agencies in 2003, and McCain cosponsored a bill to provide more oversight in 2005. Democrats in Congress killed both attempts.

Ace of Spades has a GREAT post explaining what the Republicans have tried to do about this crisis over the past 5 years, and how the Democrats prevented any meaningful reforms. And don't miss the fact that at least 4 key players in the subprime mortgage industry are now top Obama advisors:

Penny Pritzker, "the Michael Milken of subprime mortgages," is Obama's Finance Chair.

Jim Johnson, disgraced former CEO of Fannie, was Obama's vice presidential search chairman, at least until he resigned under fire due to his role in providing subsidized sweetheart loans to Democratic Senators during his stint at CountryWide.

Franklin Raines, who participated in the accounting scandals to fix Fannie's books and deliver unwarranted bonuses to its top executives, is a top Obama adviser.

Obama Economics Adviser Austan Goolsbee continued defending and lobbying on behalf of the mortgage industry's no-money-down-no-credit-check policies at least until September of 2007.

Finally, Ace mentions that the Democratic Congress plans to adjourn for the season without doing anything to address the issue:

Congress Adjourning! Harry Reid admits he has no idea what to do. So he's packing it up, leaving yet another crisis on the table for more responsible people to figure out.

Actually, Harry Reid and the Democrats always knew what to do. They knew the problem was this trillion dollar giveaway to credit-poor homebuyers. They further knew that by making money for homes so cheap and so artificially plentiful, they were driving up the cost of homes to astronomical levels. That's the way it works -- the more cheap, devalued dollars chasing after goods, the more the good rise in price.

Ultimately people who were simply not credit-worthy enough to buy houses at all were not merely buying houses -- they were buying houses that were well beyond their means to purchase even in a normal market, but furthermore, were inflated in price to double their fair value. So ultimately these legions of bad-credit-risks found themselves paying mortgages valued at 150% or 200% or even more of what their actual homes were worth.

So what did they do? They did what anyone would do: They walked away from the mortgages.

They both hyperinflated the housing market and created the bubble, and put the American taxpayer on the hook for all the excesses they created. And would not check -- because they were too busy appeasing ACORN and taking money from Fannie, Freddie, Lehman Brothers, AIG, and Raines, Johnson, and Pritzker.

They created the housing bubble. They created the financial meltdown -- which occurred, inevitably, when the bubble burst.

And now they want to go home.

For more background on this crisis, check out Investor's Business Daily editorials here and here. In my opinion, IBD is a great source for economic news that doesn't get reported in the mainstream media. If you want to learn more about economic issues--including housing, oil, financial markets, government regulation of the economy--it's a great place to start.

A few thoughts on Sarah Palin

By Rich Bordner

Boy, t'ain't there uh mighty buzz about that thar Sarah Palin! I've been listening and watching the past few days, so I figure its a swell time to jump in with a few thoughts of my own. In no particular order:

1) There've been quite a few obviously biased smear attacks on Palin (example: compare the US Weekly covers). The other night at the MTV Music Awards, British host Russell Brand (like his opinion matters) took his own swipe, saying Bristol Palin's child was not a "boy or girl, but a P.R stunt." Things like this are low...very low indeed. But I hope the left and those sympathetic to it keeps it up. I seriously do. If they do, then January 20, John McCain will be taking the oath of office. In the process of their scard-ey-cat antics, they have managed to offend just about everyone except those in their little club. The average American citizen is a sleeping giant to the Dems, and if they continue the smears, they will manage to wake it on November 4...oops.

2) She's intelligent, capable, thoroughly conservative, ATTRACTIVE, and feminine. She appears comfortable being a feminine woman. I like that. Many feminists have trudged about telling us that women must act like men in order to be equal to them. Bullfeathers. Palin trashes this stereotype, and that makes me giggle.

3) Some Democrats are expressing concern about Palin being a mom (especially to a newborn special needs child) and potential V.P. That is a valid concern to raise. Despite what society tells us, you can't have/do it all. The awesome mom/thriving career woman thing is just not feasible. Ask around. Many women have tried, and are frustrated that the day care is raising their children. This doesn't disqualify her for the V.P position by any stretch, but lets not kid ourselves that a mom can feasibly be devoted to a high-demand career and be 100% devoted to raising her children. Life as a parent, as one blogger at Stand to Reason put it, is all about sacrificing your ambition for your family. Have some pulled it off? Probably. Is it feasible/wise? Nope.

4) Giuliani, in response to the questions, quipped that such family and career questions have never been asked about men. Refer to comment #2 and 3. I'm with Melinda at Stand to Reason; it's more natural to ask that question of women than it is to ask it of men. And besides, the question has been asked of men, though not as much. I have asked it about my own career. I haven't seen very many head wrestling coaches/teachers who have been great teachers, have built highly successful wrestling teams, and who have been devoted fathers. In fact, I have seen absolutely 0. Somethin's gotta give. Therefore, I am prepared to give up my dream of coaching a team if it infringes on my family life.

5) HOWEVER, since when has the Democratic party been the party of "family values?" Shouldn't they be the ones cheering the loudest for Palin's choices? Their concern rings hollow, to say the least.

6) Some have leveled a charge of hypocrisy on the Republicans' part. Supposedly, their defense of Palin's family (Bristol's pregnancy, etc) and their insistence on traditional family values are at odds with each other. But this is pure sophistry. One can do a knockout job as a parent, can instill good values in their children, and their children can still go off, sin, and make mistakes. Just because Bristol sinned doesn't mean Sarah Palin is a hypocrite. Bristol is an individual with her own mind. We just don't know how Sarah Palin raised her family, and its stupid to speculate. It would be quite different if Sarah Palin herself became pregnant out of wedlock, but that isn't the case. HELLO? Isn't this obvious? If anything, Bristol's decision about what to do after the pregnancy happened (keep the child, marry the father: two signs of repentance) affirms that mom did something right.

7) Despite Obama's claims, McCain can still play the "no-experience" card. Palin's executive experience is miles ahead of Obama's. Plus: Palin is a V.P. candidate. Obama is the Presidential candidate. Gigundous difference. Can I take my Captain Obvious cape off now?

Anyway, just my two cents.

Nancy Pelosi isn't having a good week

Not only is Nancy Pelosi very confused about the Catholic church's position on abortion, as I posted about below, but she doesn't seem to know what natural gas is. I'm pretty sure I learned in junior high science class that it's a fossil fuel, and that it's often found in deposits along with oil, but apparently the Speaker of the House isn't aware of that (via Betsy Newmark, who asks, "Does Nancy Pelosi know what she's talking about?"):

Ms. Pelosi appeared Sunday on NBC's "Meet the Press," where Tom Brokaw gently pointed out that the various Democratic alternative energy ambitions are "not going to happen overnight." Replied Ms. Pelosi: "You can have a transition with natural gas. That, that is cheap, abundant and clean compared to fossil fuels." Later, she again said that "I believe in natural gas as a clean, cheap alternative to fossil fuels," and that wind, solar, biofuels and "a focus on natural gas, these are the real alternatives."

Apparently Ms. Pelosi's new script is still being reworked, but it's a telling mistake. Not only is natural gas every bit as much a "fossil fuel" as oil or coal. More to the point, these concentrated organic compounds found beneath the earth's surface must be extracted by . . . drilling. And sometimes even drilling offshore, on the Outer Continental Shelf. But more drilling is what Ms. Pelosi had refused to allow just a few days ago.

And she's directing energy policy in the House of Representatives?

Democrats' Moral Confusion

I know I've posted a lot about abortion lately, but I just keep finding good articles. It is a pretty big political issue and it is a presidential election year, so I guess that explains it. Anyway, Newsweek actually posted a web article that is a pretty solid presentation of the pro-life side of the debate, and how this issue affects the Democratic party. It's a good read:

Throughout this lengthy campaign, the Democratic Party has worked hard to present itself as the party of intellect, competence and moral seriousness. Yet it's off to a very rocky start in addressing the substance of the abortion issue—which remains, 35 years after Roe v. Wade, one of the most volatile in our public life. Talk this week by Democratic leaders about lowering the incidence of abortion in America will rightly be welcomed by pro-life Democrats, including the large number of pro-life African-American Democrats. But the recent public record has to make committed pro-lifers of both parties wonder just how serious the Democratic leadership is about engaging the abortion debate.

The part of the article that caught my eye is about Nancy Pelosi:

Then there are the multiple confusions of House Speaker Nancy Pelosi. In her "Meet the Press" appearance Aug. 24, Pelosi was asked by Tom Brokaw whether she agreed with Senator Obama's statements on abortion at Saddleback. Pelosi, declaring herself an "ardent, practicing Catholic," told Brokaw that "this is an issue that I have studied for a long time"—and then got herself into a deep muddle, in which she seemed to confuse St. Augustine with St. Thomas Aquinas (neither of whom, in any case, knew anything about modern embryology); misrepresented the settled (and scientifically informed) judgment of the Catholic Church on when life begins by declaring it an open question, and concluded by suggesting that none of this really makes a difference, because what the scientists, theologians, and philosophers say "... shouldn't have an impact on a the woman's right to choose." The Speaker then misrepresented the legal impact of Roe v. Wade, arguing that the Supreme Court hadn't created a right to "abortion on demand"—which will come as news to those on both sides of the ongoing debates over partial-birth abortion and other late-term abortion procedures, parental- and spousal-notifications laws and regulatory oversight of abortion clinics.

Democrats who had hoped to persuade a good number of evangelicals and Catholics to return to their traditional 20th-century political home in November 2008 cannot be very encouraged by such intellectual disarray on the part of their party's senior federal official. For more than three decades, the abortion license created by the high court in Roe v. Wade has been an important factor in determining American voting behavior—in more than a few instances, the decisive factor. Yet, judging by her performance on "Meet The Press" (which seemed to surprise the usually unflappable Tom Brokaw), the Democratic Speaker of the House of Representatives is as ill-informed on the scientific and legal facts involved in the abortion debate as she is of the teaching of the Catholic Church. Speaker Pelosi is, like most "ardent, practicing" Catholics, a great admirer of the late Pope John Paul II. Was John Paul wrong, one wants to ask Speaker Pelosi, when he wrote in the 1995 encyclical Evangelium Vitae [The Gospel of Life] that "abortion ... always constitutes a grave moral disorder, since it is the deliberate killing of an innocent human being"? Was he wrong when he further stated that this moral truth could be known by reason, and was thus a matter of grave concern to public policy?

Obviously I understand that not everyone in this country is a practicing Christian and so not everyone will have the same moral stance on abortion that I do. But I find it beyond comprehension that someone like Nancy Pelosi (or Joe Biden) could claim to be an ardent, practicing Catholic and still support abortion. I guess it just demonstrates how confused and twisted their worldviews have become.

Obama/Biden: Biden on Abortion

So Obama announced his pick for VP: Senator Joe Biden of Delaware. It's not all that clear that the VP selection matters a whole lot, but informed voters should still probably do a little research on the VP's opinions. Biden might influence Obama's policies should he win the presidency, so you should know what he believes.

In that spirit, here's a few links with some information:

Biden, a Catholic, is a fairly strong supporter of abortion and stem cell research, although he did vote to ban partial-birth abortion. Here's an interesting article from a Catholic perspective about how his abortion views are in conflict with his faith.

Amanda Carpenter quotes NARAL's approval of Biden's record on Supreme Court confirmations:

"Most notably, Sen. Biden has a strong record of opposing judicial nominees with hostile anti-choice records. He voted against George W. Bush's two anti-choice nominees to the U.S. Supreme Court, John Roberts and Samuel Alito, and he opposed anti-choice Justice Clarence Thomas' nomination to the Court as well as multiple anti-choice nominees to lower federal courts."- NARAL statement

Biden has served as the chair of the Senate Judiciary Committee and was involved in the confirmation hearings of Bork, Thomas, Roberts, and Alito, among others. He voted against all four and was a big factor in the ugliness of the Bork and Thomas hearings. If he has any influence on Obama's Supreme Court nominations, it obviously won't be good for conservatives.

Top political links of the day

Here's a couple of quick links to some stories that might be interesting to more politically-minded readers out there:

Hugh Hewitt writes about the need to drill domestically for oil and what the Democrats are doing to prevent it:

"The Big Three Democrats are thus all agreed that their party has given up on bringing down the cost of oil and thus the cost of gas at the pump.

Because demand for oil isn't going to drop due to growth around the globe, the only way to bring the cost of a gallon of gas at the pump down is to increase the supply of oil. The only way to increase the supply of oil for the present is to explore for more oil and then bring it to market. that means drilling."

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In related news, at least one Democrat wants to nationalize part of the oil industry: “Maurice Hinchey (D-NY) said, ‘We (the government) should own the refineries. Then we can control how much gets out into the market’.”

Hinchey is actually the second Democrat to threaten nationalization; you might remember that Maxine Waters (D-CA) said the same thing a couple of weeks ago. Yeah, that will help. It worked so well in Venezuela, Russia, Mexico...

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Karl at Protein Wisdom has a great post summarizing Barack Obama's rather thin resume. Have you wondered what exactly a "community organizer" is? Karl has some information. Not all that impressive in my opinion.

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Carol Platt Liebau at Townhall links to this gem: A key foreign policy adviser told a British audience that “Winnie the Pooh seems to me to be a fundamental text on national security.” Winnie the Pooh????

Success in Iraq does not bode well for Democrats

Just like with the Vietnam War in the late 60's and early 70's, the Democrats have always tried to paint the dimmest of pictures regarding the war in Iraq. This emphasis served nothing more than a political smoke screen. The liberals will try anything to distract people from the central issues facing our nation. In a rare glimmer of the truth by the MSM, Tom Foreman reveals this fact in an article posted today on CNN.com:

Iraq is certainly not at peace, but it is undeniably much more peaceful than it was. And Democrats, it appears, desperately hope that American voters will not notice. Because if voters accept that Iraq is improving, perhaps they will no longer accept the idea that the Republicans need to be driven out of Washington.

And if the Holocaust of legal murder known as abortion is going to be stopped, it will only come through the appointment of Supreme Court justices by a Republican president.

Dem Candidates go Gay TV

Last Thursday evening, The Human Rights Campaign, the nation’s largest gay-left lobby, hosted a one-hour Democratic presidential debate on Logo, the Viacom gay channel and sister network to CBS.

Newsbusters reports:

Hillary Clinton and Barack Obama have confirmed their attendance. As a colleague joked yesterday about Democrat refusal to acknowledge Fox as a news network: "Oh, so the Democrats won’t go on networks with an agenda."

Read more.