Setting Us Up For The Next Great Recession

The next great recession in the U.S. is going to look surprisingly like the last one. The exact same policies that led to the 2008 recession are being followed - and indeed, in many cases strengthened - by the Obama administration.

One of the great tragedies of the left taking control of the Presidency and both houses of Congress in 2009 was that the nation never learned the reasons for our economic meltdown. That means the real problems haven't been fixed.

If you listen to Obama and the left, the sole causes of the meltdown were Wall St. greed, the derivatives market, and deregulation - though even that which they complained about, the repeal of the Glass Stegall Act, occurred under Bill Clinton in 1999. The true culprits, subprime lending, the disastrous Community Reinvestment Act that was used to eviscerate lending standards, ostensibly to cure racism, and a historic fraud perpetrated by bond rating agencies in collusion with our government, are never mentioned.

As I pointed out when Dodd Frank was first proposed, the terms of that bill actually strengthened the policies that gave rise to the housing bubble. The effects are now being felt. A month ago, AG Eric Holder bragged about strong arming thousands of bankers for imaginary racism in lending. Now this the other day from IBD:

Despite new evidence the Community Reinvestment Act led to riskier lending and played a key role in the subprime mortgage crisis, the Obama administration is broadening the anti-redlining regulation's authority and scope, spooking bankers.

A recent study by the National Bureau of Economic Research, the nation's pre-eminent economic research group, states that the CRA "clearly" had a major impact on the flood of subprime loans made in the late 1990s and 2000s, which directly led to the housing crisis.

By quietly expanding the regulation, analysts say President Obama is picking up where President Clinton left off in April 1995, when he rewrote rules for what had been a largely toothless law as first drafted in 1977. Through executive orders, Clinton set strict numerical lending targets for banks in "underserved" neighborhoods, while ordering regulators to crack down on alleged bank redlining.

The new rules for the first time mandated that banks use "innovative" or "flexible underwriting practices." Compliance required banks to pass a heavily weighted "lending test" or suffer holds on expansion plans.

The CRA overhaul "has been a disaster," said ex-BB&T CEO John Allison in his recent book on the financial crisis. He argued it's forced "banks to participate in making high-risk housing loans to low-income buyers who would not meet traditional bank lending standards."

Added Allison, who now heads the Cato Institute: "The default rates on these low-income loans are extraordinarily high."

Still, the Obama administration wants banks to step up approval of such low-income mortgages. And it's using the CRA to spur more lending, including:

• Forcing banks through threat of prosecution to expand their CRA assessment areas to include inner-city areas blighted by subprime foreclosures, where they are compelled to invest in new brick and mortar.

Many banks, in fact, are under direct federal orders to open new branches or ATMs in high-risk and unprofitable areas of Detroit, St. Louis and other cities hit hardest by the recession. . . .

• Ordering bank defendants accused of lending bias to underwrite riskier CRA loans at discounted rates.

For instance, Justice has ordered First United Security Bank of Alabama to "ensure that residential and CRA small business loan products are made available and marketed in majority African-American census tracts," while offered on terms "more advantageous to the applicant" than normal.

• Toughening CRA enforcement by bank examiners, . . .

• Broadening CRA examination guidelines to include loan "pricing discrimination," and instructing examiners to take a closer look at improper "steering" of minority borrowers into subprime loans with higher interest rates and fees.

• Using the threat of CRA "noncompliance" and denial of expansion plans to pressure bank defendants into settling "fair lending" cases, while scaring other banks into lending in low-income minority areas where the banks aren't located. . . .

• Pressuring banks to fund HUD's new $7 billion Neighborhood Stabilization Program to earn CRA credits under a new "community development" test.

And it is not just banks. The major bond rating agencies are still giving subprime mortgage backed securities AAA ratings. This is just pure fraud being driven by government policy. People should be in jail over this. But that is not the concern of our government when it comes to the bond rating agencies. They are only being punished when they threaten to downgrade U.S. government debt:

. . . when S&P finally downgraded the US one notch in August 2011, the SEC and Justice Department announced that S&P was under investigation, just two weeks later.

Egan-Jones, a smaller rating agency, has been even more aggressive, downgrading the US credit rating three times in 18 months. And while the federal government may not have imposed Diocletian’s death penalty, they are just as willing to squash dissent.

In a country that churns out thousands of pages of new regulations each week, it’s easy to find a reason to go after someone. As you read this letter, in fact, you are probably in violation of at least a dozen regulatory offenses.

In the case of Egan-Jones, the SEC brought administrative action against the agency within two weeks of their second downgrade. And a few days ago, the case was settled.

I’m sure you have already guessed the ending: Egan-Jones is banned from for the next 18 months from rating US government debt. They’ve effectively been silenced from telling the truth. . . .

We are being set up by the left for our next massive economic meltdown. This is beyond travesty.

Tweet

Read More...

Summary only...

Hang 'Em High - Fraud In Bond Ratings Leading To The Financial Crisis

One of the most insidious causes of the financial meltdown was the role of ratings agencies that gave triple-A ratings to tranches of subprime loans. I have been highlighting this issue for well over a year. You can read more of the background here. Finally, this issue is being addressed. And for possibly the first time in my life, I find myself in complete agreement with Democratic Senator Karl Levin. This from the NYT:

. . . The role of the rating agencies in the crisis came under sharp scrutiny Friday from the Senate’s Permanent Subcommittee on Investigations. Members grilled representatives from Moody’s and Standard & Poor’s about how they rated risky securities. The changes to financial regulation being debated in Washington would put the agencies under increased supervision by the S.E.C.

Carl M. Levin, the Michigan Democrat who heads the Senate panel, said in a statement: “A conveyor belt of high-risk securities, backed by toxic mortgages, got AAA ratings that turned out not to be worth the paper they were printed on.”

As part of its inquiry, the panel made public 581 pages of e-mail messages and other documents suggesting that executives and analysts at rating agencies embraced new business from Wall Street, even though they recognized they couldn’t properly analyze all of the banks’ products.

The documents also showed that in late 2006, some workers at the agencies were growing worried that their assessments and the models were flawed. They were particularly concerned about models rating collateralized debt obligations like Abacus.

According to former employees, the agencies received information about loans from banks and then fed that data into their models. That opened the door for Wall Street to massage some ratings.

For example, a top concern of investors was that mortgage deals be underpinned by a variety of loans. Few wanted investments backed by loans from only one part of the country or handled by one mortgage servicer.

But some bankers would simply list a different servicer, even though the bonds were serviced by the same institution, and thus produce a better rating, former agency employees said. Others relabeled parts of collateralized debt obligations in two ways so they would not be recognized by the computer models as being the same, these people said.

Banks were also able to get more favorable ratings by adding a small amount of commercial real estate loans to a mix of home loans, thus making the entire pool appear safer.

Sometimes agency employees caught and corrected such entries. Checking them all was difficult, however.

“If you dug into it, if you had the time, you would see errors that magically favored the banker,” said one former ratings executive, who like other former employees, asked not to be identified, given the controversy surrounding the industry. “If they had the time, they would fix it, but we were so overwhelmed.”

I am a big supporter of greed and virulently opposed to holding people criminaly liable for poor business judgement. But when it comes to fraud, I believe in the old adage of "hang 'em high." And it certainly sounds as if the practices involved in turning sub-prime loans into triple-A rated bonds crossed that line. I do hope Sen. Levin and his committee follow this one closely - though whether the answer is new regulation or merely enforcement of existing regulations as the answer is very much in question. The NYT also has a second article relating to this issue, Former Employees Criticize Culture of Rating Firms:

Perhaps the most riveting testimony came from Eric Kolchinsky, a former managing director at Moody’s who for most of 2007 oversaw the ratings of collateralized debt obligations backed by subprime mortgages.

“The vast majority of the analysts at Moody’s are honest individuals who try hard to do their jobs,” Mr. Kolchinsky said. “However, the incentives in the market for rating agency services favored, and still favor, short-term profits over credit quality.”

Mr. Kolchinsky added: “It was an unspoken understanding that loss of market share would cause a manager to lose his or her job.” He said he was suspended after warning in September 2007 that a batch of securities “being hyper-aggressively pushed by the bankers” had been given a rating that was too high because it was based on 2006 ratings that were about to be downgraded.

“I believe that to assign new ratings based on assumptions which I knew to be wrong would constitute securities fraud,” Mr. Kolchinsky said. . . .

Yes, it would. And heads really should roll over all of this.

Read More...

Summary only...

McCain, The Fannie & Freddie Crisis, & Obamafuscation

Obama needs a Sister Souljah moment to distinguish himself to independent and weak Republican voters who are agreeing with GOP claims that Obama is a classic liberal . . . Obama has a golden opportunity with the U.S. financial system falling apart at the seams.

Congressional Democrats were and remain the leading defenders of Fannie Mae and Freddie Mac, promising to resist efforts to shrink the companies, now under government control, and sell off their assets. Democrats had plenty of help from Republicans, to be sure, but it was mainly conservatives who have been warning for more than a decade that their public risk/private profit model was a disaster waiting to happen. . . .

Caroline Lochhead, S.F. Chronicle, 15 Sep. 2008

We are in a fiscal crisis today largely because of the sub-prime lending crisis. At the intersection of the crisis is Fannie Mae, Freddie Mac, and Democratic politics. It was Bill Clinton who set this time bomb in motion by forcing lenders into the sub-prime market. It was Clinton who used Fannie Mae and Freddie Mac as the center pieces of his strategy to extend home loans to marginal borrowers. And it has been largely Democratic lawmakers who have protected the scheme over Republican and Bush administration efforts to reign it in over the past eight years.

Thus the advice liberal commentator Ms. Lochhead offers Obama is sage indeed, but there is little chance of Obama taking it. There are certain lines Obama does not cross, and one of those is taking on his party. He and the entire Democratic party are attempting to disingenuously toss off the current fiscal crisis on the Republicans and George Bush. I don't think that they can accomplish that, even with the MSM fully on their side, unless John McCain continues to fumble about. John McCain, unlike Obama was calling for an overhaul of Fannie Mae and Freddie Mac years ago. He desperately needs to find his bearings on this one and go on the attack. He needs to be placing the blame for this mess where it belongs.
_____________________________________________________

This current financial crisis is a creation of govenment policy. More particularly, it is, at its point of inception, a creation of Democrat identity politics, pure and simple. John Lott gives us some background on how Clinton era regulations to force the lowering of lending standards, ostensibly to benefit minorities, came about:

Some of the very people who are now advocating new regulations were the same ones that forced through the regulations over a decade ago that caused the problems that we are facing today.

This all started back in 1992, when a Boston Federal Reserve study claimed to find evidence of racial discrimination. The Fed later used the study to produce a manual for mortgage lenders that: "discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower–income minority applicants."

So what is on the list of Fed’s "outdated criteria"? Such "discriminatory" factors as the borrower’s credit history, income verification, and the size of the mortgage payment relative to income.

But it turns out that the original study was mistaken.

Economists discovered that there were errors in the data the study used. Some minorities were listed as having wealth up to hundreds of times greater than they actually had, making it look like wealthy minorities were being turned down for loans. When the data errors were corrected minorities with the same financial background as whites had been at no disadvantage in getting mortgages.

Investors Business Daily has more on the origins of the current fiscal crisis rumbing through our markets today:

Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the "trickle-down" economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend.

But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.

The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today's nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.

What the IBD does not tell us is the efforts made mostly by Republicans and conservatives to reign in this travesty over the past decade, all of which have been successfully fought off by the left. The fact that Fannie and Freddie were time bombs waiting to explode was written on the walls well over a decade ago, and if there was any question, it should have been clear to all when it came to public attention that Fannie and Freddie were invovled in ENRON style accounting practices. The Bush administration took a hard line - Congressional Democrats did not - and it was they who won the day. This from the Washington Post:

In June 2003, Freddie Mac dropped a bombshell: It had understated its profits over the previous three years by as much as $6.9 billion in an effort to smooth out earnings.

OFHEO seemed blind. Months earlier, the regulator had pronounced Freddie's accounting controls "accurate and reliable."

Humiliated by the scandal, then-OFHEO director Armando Falcon Jr. persuaded the White House to pay for an outside accountant to review the books of Fannie Mae. The agency reported in September 2004 that Fannie Mae also had manipulated its accounting, in this case to inflate its profits.

The companies were humbled. The flaws of their business practices were laid bare.

The companies soon faced new bills in both the House and the Senate seeking increased regulation. The Bush administration took the hardest line, insisting on a strong new regulator and seeking the power to put the companies into receivership if they foundered. That suggested the government might not stand behind the companies' debt.

Fannie Mae and Freddie Mac succeeded in escaping once more, by pounding every available button.

The companies orchestrated a letter-writing campaign by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up.

The wife lamented: "But that could mean we won't be able to afford the new house."
Most of all, the company leaned on its Congressional supporters.

This from Hot Air, discussing what happened next:

The New York Times reported this five years ago:

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

This should have been a no-brainer, right? With hindsight, we can see that the Bush administration had accurately diagnosed the problem in the lending market and had a plan to address it. Fannie Mae and Freddie Mac reluctantly supported the plan. However, Democrats objected:

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Representative Melvin L. Watt, Democrat of North Carolina, agreed.
"I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing," Mr. Watt said.

Every single Democrat today is trying to toss this debacle at the feet of George Bush and the Republicans. You can read McCain's speech on this matter here. He blames Wall St. and greed, giving Democrats and Obama a pass. It is incredibly weak and unfocused. It does not refute the charges being laid against against he, Bush and the Republican Party. This is an immense strategic error. McCain needs to have a simple message. This is a Demorcrat debacle at inception. McCain, not Obama, was the only one who has previously called for reform of Fannie and Freddie. And now Obama, rather than admit the problems, is trying to hide the causes, protect the Democratic Party, and his own failure to foresee these problems. He is lying to America. You will only get straight talk from one side of the ticket. That is the simple message McCain needs to be conveying. And while he is doing it, he can note that the two greatest recipients of campaign contributions from Fannie and Freddie are Chris Dodd and Barack Obama.

Update: Pelosi, for her part, is trying to disclaim any Congressional responsibility for this mess, pointing instead to McBush. See links at Memorandum.

Update II: Hot Air has a complimentary post on this that memorializes McCain's speech on Fannin and Freddie in 2005, when he forecast the crisis that has now occurred. The legislation that McCain proposed was killed in committee by the greatest beneficiary of Fannie and Freddie largesse, Chris Dodd. The legislation that McCain proposes was notable for its lack of support from the second greatest recipient of Fannie and Freddie largesse, the junior Senator from Illinois.

Read More...

Summary only...

An Ominous Bear

Until recently, I was confident that our economy would weather the current storm without undue difficulty. With the fall of Bear Stearns, I am far less sanguine. The long-term policy of record low interest rates may have dug us into a hole that proves the worst recession since WWII.





_______________________________________________________

Bear Stearns, one of the big five investment banks, has gone belly up and the federal reserve has stepped in. This from the WSJ:

Yesterday's combined J.P. Morgan-Federal Reserve rescue of Bear Stearns is one of those judgment calls that are easier to second guess than they are to make in the heat of a financial panic. Regulators have to balance the risks to the larger financial system of letting a big investment bank fail against the discipline of seeing bad risk management punished by the marketplace.

These columns prefer the discipline of the market, but then we don't know all of the facts that regulators confronted as they looked at Bear's troubles. Specifically, we don't know if letting Bear collapse might have had a domino effect on others in the debt and derivative markets.

The Fed and J.P. Morgan are acting in concert to give Bear short-term access to the Fed's discount lending window that Bear couldn't access on its own. A big plunger in the debt markets but not a standard commercial bank, Bear's private sources of funds had dried up. The overriding public interest at the current moment is to maintain a functioning financial system, and regulators clearly felt this was at risk from a Bear failure. Just once we'd like to see what would happen if a big bank did fail, but the current general market panic arguably isn't the best time to have that experiment. Presumably Bear will now be shopped to private buyers. . . .

Read the entire article. Dinah Lord, blogger and former trader, reflects on a similar situation she lived through during her days on Wall St., as well as including links discussing the fall of Bear Stearns.

Dale Franks sees the Bear Stearns situation as dire news indeed. He writes in the QandO blog:

The market took a hit today. It was a body blow. And, whether you know it or not—although, if you're reading this, you'll know now—the economy took a body blow, too. The only thing we don't know is how much damage was caused. But there was damage, and it will become apparent before too much longer.

It's all about liquidity, you see. For the last several days, there's been concern about whether Bear Stearns, one of the Big Five investment banks, was going to be able to meet its financial obligations to client and creditors because of it's exposure to bad mortgage loans. Company executives have been saying, "Yes, we will," right up to this morning, when they said, "No, we can't."

Essentially, JPMorgan Chase will step in to provide financing for 28 days, and those loans, while coming from JPMorgan's coffers, will be underwritten by the federal Reserve.

If you're a Bear Stearns stockholder, by the way, you're screwed. What will probably happen is that, to prevent the firm from going under completely, JPMorgan will acquire Bear Stearns for pennies on the dollar. At the least, the chances of Bear Stearns continuing to exist as an independent entity are probably over for good. Bear Stearns' CEO admits as much, saying the firm is seeking a "more permanent solution".

And if Bear Stearns can't make it, you have to wonder what the actual position of Merrill Lynch, which is also exposed to the Carlyle fund problems, or Thornburg Mortgage, which failed to meet some margin calls earlier this week. Countrywide Home Loans is already involved in a bailout from Bank of America, and has had foreclosure rates double.

At the heart of the problem is an ongoing liquidity crunch. As exposure to bad loans causes foreclosures to increase, huge sums of money are just being written off—basically disappearing from the economy.

The primary effects of this disappearance—the failure of the banking institutions, is bad enough.

Beyond those effects, however, there are effects on the economy as a whole, because these large write-offs not only remove money from the economy in terms of the amount of the disappearing loan assets at the institutions themselves, individuals who do business with these institutions lose the ability to borrow money. Their credit lines disappear. the institution's borrowers lose their money as well.

This money supply shrinkage usually causes people to hoard cash, because they worry that they won't have enough cash to meet their future needs. They stop investing, for example, because they lose faith in the institutions. The dearth of available loan money causes people in the building trades to lose jobs, because new housing starts decline, so they have to begin saving up their own cash, and cutting purchases. And the effect ripples outward through the economy.

We generally call this widespread hoarding of cash a "recession".

That's certainly what the National Bureau of Economic Research calls it. Is calling it, in fact. And they say it may be the worst recession since World War II.

The worst recession in my lifetime was the back-to-back recessions in 1982, when unemployment rose to almost 12%. If we're in for a worse ride than that—well, I don't even want to think about that.

But, apparently, we have to. . . .

. . . Creating a lot of liquidity does not resolve an issue of solvency, which is now the driver of credit contraction. All the Fed will achieve is a dollar that will be further debased and inflation that will be higher. It cannot stop the process of deleveraging and asset price decline...

Prime brokers and banks are reining in credit to leveraged investors. This is a direct consequence of the damage done to banks' credit capacity by the writedowns of loans in other areas, such as structured finance and mortgages. This reduces their risk-free capital (value-at-risk ratios have doubled in the last year in the U.S.). In order to maintain adequate reserves as a proportion of risk assets, lending must be cut...

Credit contraction translates through the financial system into a reduction in available credit for the non-financial corporate sector, and thus into reduced investment and growth in the real economy. The size of that contraction can be estimated from the leverage ratios of the financial sector and their impact on real GDP growth.

We estimate that nonfinancial corporate debt ultimately will have to shrink by 11%-12%. This will generate a decline of five percentage points of real U.S. GDP growth and push the U.S. into recession. Europe's real GDP growth will contract by two percentage points.

Globally, total credit losses of $1.4 trillion will cause a contraction in world GDP of 2.5 percentage points, or half the current rate of global growth. So the global economy will become a gray, dull world of semi-recession and sticky inflation that will last a long time.

What has happened is that the liquidity crunch from mortgage credit problems—too many subprime loans, too many second mortgages, plus declines in housing values—have been amplified from bank lending up through securitized debt, then again amplified in the derivatives markets.

This decline in available credit—i.e. money—is not going to be fixed by a 3% drop in short-term interest rates. And it certainly isn't going to be fixed—or even noticeably ameliorated—by a one-time rebate of $600 per taxpayer.

I'm afraid we're in for an awfully bumpy ride. The problem with Bear Stearns today is not the problem. It is the most visible symptom, though, of the real problem with the economy and one that we'll be facing soon.

Read the entire post. Now I am concerned.

Read More...

Summary only...

Interesting News - 8 January 2008

The NYT engages in a grand exercise of raising form over substance. And this passes for a legitimate editorial? Even adding Bill Kristol won’t be able to save this rag.

The People’s Republic of Baltimore vs. Wells Fargo Bank. As the city which gave birth to Nancy Pelosi suffers a short fall in revenue, they go after banks for making subprime loans, primarily to African Americans, which are going into default. The proposed remedy the city seeks include "damages to cover the diminished property tax revenues and higher costs that the city said it had incurred. Additional costs include those for fire and police protection in hard-hit neighborhoods and expenditures to buy and rehabilitate vacant properties." This is both racist and a travesty.

My own perception is that playing not to lose and simply preserve a tenuous lead is rarely smart. That truism holds for sports as it does for politics. In this case, Clinton strangled her presidential bid by limiting access to the press, refusing questions, and giving non-answers to the few questions she took. That has all changed now. But is there enough time left on the clock?
Its always someone’s special interest that seems to be getting gored. Gender-baiting Gloria Steinem bemoans her belief that, while vote for Obama in Iowa seems to mean that institutional racism is no longer a significant problem, the failure to vote for Clinton means that we all suffer gender-bias. This is leftist identity politics at its worst.

I normally agree with Ralph Peters, but on this one, I thinking he is reading more into the effect of what happened with the Iranian speed boats threatening our warships than is justified. Having worked on hot borders before, this seems like little more than some idiocy hatched by the speed boat crew members and likely to have no long term ramifications . . . unless they should try such a stupid maneuver again.

Professor Fouad Ajami has an excellent article in the WSJ discussing the ‘Bush legacy’ in light of the recent history and current circumstance of the Middle East.

A good article on earmarks in the Daily Standard. "President Bush seems to grasp the issue. A year ago he publicly complained that "over 90 percent of earmarks never make it to the floor of the House and Senate. They are dropped into committee reports that are not even part of the bill that arrives on my desk. You didn't vote them into law. I didn't sign them into law. Yet, they're treated as if they have the force of law."" Earmarks are corrupting and, unfortunately, a wholly bipartisan addiction.

A public opinion poll in Pakistan sponsored by the Univ. of Md. shows troubling results.

Of all the countries in the Middle East, I probably know the least about Yemen. But when the country’s major newspaper fete’s a person for their liberal contributions to the country, it sounds promising.

A "Green attack" on the Inhofe Report is dissected at A Western Heart. All of this seems to have the Greens rattled. But the EU is poised to make its run at some economy busting climate change measures anyway. And as Richard North notes, he does not expect it to stop even "when we are sending icebreakers up the Thames as the world hurtles into yet another period of cooling."

Read More...

Summary only...