Yahoos and YoYo's!

George Will and I agree - when in doubt keep government divided. Electing McCain/Palin is important if only to dilute the partisan idiocy of Pelosi and Reid. (See 1 below.)

This was sent to me by a fellow memo reader and was ascribed to a ticked off Marine - Semper Fi my friend. Whether true or not it has much to commend it. (See 2 below.)

Who reads the nation's various newspapers and why. A little humor always helps relieve the strain of what we read in the newspapers and what we hear and see on TV. (See 3 below.)

A lot of things happened this past week. I am in N.C. right now. Cooler weather here, leaves not yet turning but plenty of heat coming from D.C. and the campaigners.

First of all, what do these politicians (yahoos) and/or corrupt executives have in common?

Mayors of Trenton and Detroit, Reps. Washington from La.,Rangel from N.Y. Frank from Mass., Sens. Dodd from Conn. and Obama from Il. and Messrs. Raines and Johnson from D.C.? They are all liberals, accused of stealing or benefiting at the expense of the public and/or recipients of money from agencies they oversee or lobbyists, ie. self-dealing hypocrites and, in some instances, outright cooks.

There is plenty of blame to go round regarding the financial meltdown and I would disagree with Sen. McCain's knee jerk response blaming Wall Street greed. The genesis of the problem has many legs holding up this toppling stool as I pointed out in previous memos and believe bears repeating.

First, Greenspan kept interests rates too low for too long. He can write all the books he wants disavowing his role but he is due for some of the blame. (TO GREENSPAN"S CREDIT HOWEVER, SEE LAST PARAGRAPH, 4 BELOW.)

Congress, and mostly those involved overseeing Fannie and Freddie were beholden to these companies because they were in their pocket receiving huge campaign contributions (Dodd,Obama,Frank)and proposing or buying into the argument these quasi-government organizations should be making home loans to those who could not repay them.

Third, The FASB changed accounting rules making financial institutions mark mortgages to the market as they once did oil company inventories and their known reserves. Why is this a problem? Marking to the market is intended to promote accuracy but in thin markets, valuations are often inaccurate and drive pricing and capital down even further. It is a practice that can feed on itself and so it did.

Fourth, Wall Street took advantage of low interest rates and devised leveraged financial instruments and engaged in other overly speculative activities that were time bombs waiting to explode - and they have.

Also, I suspect many hedge funds, all are un-regulated, played follow the leader and drove selective company stock prices up and down, like yoyo's, and linked their investment strategies to each other.

Fifth, the SEC can issue all the reports they want about the lack of correlation to price changes and the up tick and short selling rules but I am sure it will eventually be revealed hedge funds and other investment pools shorted stocks without borrowing securities as required and this had a cumulative pummeling or pile on effect.

Sixth,Corporate stupidity on the part of those who ran many of the banks and financial institutions starting with Wachovia, Merrill,Lehman,Goldman and the list is endless. Growth in earnings and that of competitors drove these imbeciles to leverage their balance sheets. They were playing with stockholder capital and receiving huge bonuses in the bargain. So much for an Ivy League education.

When the ball game ended the spill-over effect spread beyond containment and the melt-down began.

The tax payer has now been called upon to mop up the mess and pay the cost.

Let's also look at it another way. Democrats have been in control of Congress for two years and have done nothing. In fact, under the management of Pelosi and Reid, Congress is currently on vacation. These are the same twerps who lambasted GW for his failure to respond to the hurricane which devastated New Orleans and accused him of being asleep at the switch. More partisan hypocrisy.

Reid and Pelosi took over Congress and promised things would be different. They have. Matters have actually worsened.

Democrats are campaigning on the hope they will benefit from our lousy economy. In fact, Obama's entire campaign is based on a weak economy, the little guy suffering under GW and McCain being another 4 years of the same. Democrats have no incentive to improve the economy but Paulson and Bernanke have placed the demand for swift action on their doorstep. Will Pelosi and Reid respond? If they fail to do so the markets will really swoon. The choices are between bad and lousy but action is demanded because the patient is critical.

But, let's not leave it there. Let's turn to our two candidates and look at their responses. Obama received more money from those who ran Fannie and Freddie into the ground except for Sen. Dodd. Obama and Raines were in bed together and Obama sought Raines' help in selecting his VP. Another case of Obama's questionable associations and judgment? Seems to be a pattern.

McCain bought into the canard that greedy Wall Streeters were to blame. No doubt Wall Street, being inhabited by humans, comes in for its share of blame due to greed but no more or less than D.C.politicians, bureaucrats etc. McCain would be wise to keep his mouth shut and just run more ads associating Obama with Raines and Dodd and the Democrats with two years of "do-nothing" management of Congress which has now resulted in a "big something." Free lunches ultimately cost a fortune.

This raises the issue I have been pointing out in previous memos. Do we want- can we afford - the entire government controlled by an extremely liberal Democrat, with questionable judgment and virtually no executive experience, in the White House, aligned with a Congress run by the likes of Pelosi and Reid and whose committees are chaired by the likes of Rangel,Frank, Dodd, Schumer etc.?

It would be a no-brainer but voting back into office Republicans who proved to be prostitutes is not a comforting option. I have said repeatedly, Congress is "The Best Whorehouse in America" and lamentably both Democrats and Republicans persist in proving me right.

What about GW and his contribution? You can fault him for not knowing how to spell veto and learning how to spell it only after Democrats took over Congress and threw his own Party out - as they richly deserved to be. You can fault him for his inarticulate leadership and you can debate the merit of going to war in Iraq but you cannot deny the reckless spending that has brought us to the brink. We were in deep deficit long before GW assumed office.

In the final analysis, time will tell whether there are any left who not only understand the problem but also are willing to step up to the plate, offer appropriate and painful solutions and leave politics out of the equation.

When one has to depend upon "stuff your pockets" and pompous Chris, Charlie, who can't locate his checkbook to pay his taxes, Barney, who could not tell the truth if it hit him in the face, and Pelosi and Reid whose tongues must be sore denying what we all know to be otherwise, it ain't encouraging.

Then we have Obama - the Messiah. The agent of change. The more he talks the more we learn he is just another radical socialist leaning liberal politician from Chicago like his fellow Senator - Durben. Obama cleverly and quickly learned how to play the game and smooth talk the dunces amongst us. Obama played the get out of Iraq card until the Surge called his bluff, he played the populist tax cut card for the poor until that proved a divisive policy flop, he persisted in associations with those of questionable character and inflamed messages and only cut the chord when it became evident is was costing him votes. Finally, he has branded every question of his judgment as racial while hidding behind empty words wrapped in slick speech-ifying. Obama remains an empty suit inflated by hot meaningless air.

Obama's opponent may not be the complete answer to all that ails us but
McCain's character, service to our nation and long public record stand the scrutiny of time and to this biased voter McCain remains the better choice - and then there is Palin - a true breath of fresh -who has so befogged the liberal and biased press and media that I can't contain myself. I am giddy! (See 5 below.)

Dick


1) By George Will - Advice to McCain
Man is in love and loves what vanishes.
What more is there to say?
-- William Butler Yeats

WASHINGTON -- Conservatives, who reputedly have lumps of coal where their hearts should be, have fallen in love. So have many people who are not doctrinal conservatives. The world is a sweeter place because Sarah Palin has increased the quantity of love, but this is not a reliable foundation for John McCain's campaign.

The tech bubble was followed by the housing bubble, which has been topped by the Palin bubble. Bubbles will always be with us, because irrational exuberance always will be. Its symptom is the assumption that old limits have yielded to un-dreamt-of possibilities: The Dow will always rise, as will housing prices, and rapture about a running mate can be decisive in a presidential election. Palin is as bracing as an Arctic breeze and delightfully elicits the condescension of liberals whose enthusiasm for everyday middle-class Americans cannot survive an encounter with one. But the
country's romance with her will, as romances do, cool somewhat, and even before


November some new fad might distract a nation that loves "American Idol" for the metronomic regularity with which it discovers genius in persons hitherto unsuspected of it.

McCain should, therefore, enunciate a closing argument for his candidacy that goes to fundamentals of governance, concerning which the vice presidency is usually peripheral. His argument should assert the virtues of something that voters, judging by their behavior over time, prefer -- divided government.

The incumbent Republican president's job approval is in the low 30s but is about 10 points higher than that of the Democratic-controlled Congress. The 22nd Amendment will banish the president in January, but Congress will then be even more Democratic than it is now. Does the country really want there to be no check on it? Consider two things that will quickly become law unless McCain is there to veto them or unless - this is a thin reed on which to depend -- Senate Minority Leader Mitch McConnell has 40 reliable senators to filibuster them to deserved deaths.

The exquisitely misnamed Employee Free Choice Act would strip from workers their right to secret ballots in unionization elections. Instead, unions could use the "card check" system: Once a majority of a company's employees -- each person confronted one-on-one by a union organizer in an inherently coercive setting -- sign cards expressing consent, the union would be certified as the bargaining agent for all workers. Proving that the law's purpose is less to improve workers' conditions than to capture dues-payers for the unions, the law will forbid employers from discouraging unionization by giving "unilateral" -- not negotiated -- improvements in compensation and working conditions.

Unless McCain is president, the government will reinstate the equally misnamed "fairness doctrine." Until Ronald Reagan eliminated it in 1987, that regulation discouraged freewheeling political programming by the threat of litigation over inherently vague standards of "fairness" in presenting "balanced" political views. In 1980 there were fewer than 100 radio talk shows nationwide. Today there are more than 1,400 stations entirely devoted to talk formats. Liberals, not satisfied with their domination of academia, Hollywood and most of the mainstream media, want to kill talk radio, where liberals have been unable to dent conservatives' dominance.

Today, as usual, but perhaps even more so, Americans are in the iron grip of cognitive dissonance. It is a genteel mentaldisorder afflicting those people -- essentially everybody -- who have contradictory convictions and yearnings. Consider health care. Americans want 2008 medicine at 1958 prices, and universal coverage with undiminished choice -- without mandatory purchases or government interference with choices, including doctor-patient relationships. As usual, neither party completely pleases a majority of voters. That is why 19 of the 31 elections since World War II produced or preserved divided government -- the presidency and at least one chamber of Congress controlled by different parties.

Divided government compels compromises that curb each party's excesses, especially both parties' proclivities for excessive spending when unconstrained by an institution controlled by the other party. William Niskanen, chairman of the libertarian Cato Institute, notes that in the last 50 years,"government spending has increased an average of only 1.73 percent annually during periods of divided government. This number more than triples, to 5.26 percent, for periods of unified government."

By picking Palin, McCain got the country's attention. That is a perishable thing and before it dissipates, he should show the country his veto pen.


2) "The Axis of Idiots"



Jimmy Carter, you are the father of the Islamic Nazi movement. You threw the Shah under the bus, welcomed the Ayatollah home, and then lacked the spine to confront the terrorists when they took our embassy and our people hostage. You're the runner-in-chief.


Bill Clinton, you played ring around the Lewinsky while the terrorists were at war with us. You got us into a fight with them in Somalia and then you ran from it. Your weak-willed responses to the U.S.S. Cole and the First Trade Center Bombing and Our Embassy Bombings emboldened the killers. Each time you failed to respond adequately, they grew bolder, until 9/11/2001.


John Kerry, dishonesty is your most prominent attribute. You lied about American Soldiers in Vietnam . Your military service, like your life, is more fiction than fact. You've accused our military of terrorizing women and children in Iraq . You called Iraq the wrong war, wrong place, wrong time, the same words you used to describe Vietnam . You're a fake. You want to run from Iraq and abandon the Iraqis to murderers just as you did the Vietnamese. Iraq , like Vietnam , is another war that you were for, before you were against it.


John Murtha, you said our military was broken. You said we can't win militarily in Iraq . You accused United States Marines of cold-blooded murder without proof and said we should redeploy to Okinawa . Okinawa , John.? And the Democrats call you their military expert! Are you sure you didn't suffer a traumatic brain injury while you were off building your war hero resume? You're a sad, pitiable, corrupt , and washed up politician. You're not a Marine, sir. You wouldn't amount to a good pimple on a real Marine's ass. You're a phony and a disgrace. Run away, John.



Dick Durbin, you accused our Soldiers at Guantanamo of being Nazis, tenders of Soviet style gulags and as bad as the regime of Pol Pot, who murdered two million of his own people after your party abandoned Southeast Asia to the Communists. Now you want to abandon the Iraqis to the same fate. History was not a good teacher for you, was it? Lord help us! See Dick run.


Ted Kennedy, for days on end you held poster-sized pictures from Abu Ghraib in front of any available television camera. Al Jazeera quoted you saying that Iraqi's torture chambers were open under new management. Did you see the news, Teddy? The Islamic Nazis demonstrated another beheading for you. If you truly supported our troops, you'd show the world poster-sized pictures of that atrocity and demand the annihilation of it. Your legislation stripping support from the South Vietnamese led to a communist victory there. You're a bloated, drunken fool bent on repeating the same historical blunder that turned freedom-seeking people over to homicidal, genocidal maniacs. To paraphrase John Murtha, all the while sitting on your wide, gin-soaked rear-end in Washington .

Nancy Pelosi, Harry Reid, Carl Levine, Barbara Boxer, Diane Feinstein, Russ Feingold, Hillary Clinton, Pat Leahy, Barack Obama, Chuck Schumer, the Hollywood Leftist morons, et al, ad nauseam: Every time you stand in front of television cameras and broadcast to the Islamic Nazis that we went to war because our President lied, that the war is wrong and our Soldiers are torturers, that we should leave Iraq, you give the Islamic butchers - the same ones that tortured and mutilated American Soldiers - cause to think that we'll run away again, and all they have to do is hang on a little lo nger. It is inevitable that we, the infidels, will have to defeat the Islamic jihadists. Better to do it now on their turf, than later on ours after they have gained both strength and momentum.


American news media, the New York Times particularly: Each time you publish stories about national defense secrets and our intelligence gathering methods, you become one united with the sub-human pieces of camel dung that torture and mutilate the bodies of American Soldiers. You can't strike up the courage to publish cartoons, but you can help Al Qaeda destroy my country. Actually, you are more dangerous to us than Al Qaeda is. Think about that each time you face Mecca to admire your Pulitzer.

You are America's 'AXIS OF IDIOTS.' Your Collective Stupidity will destroy us. Self-serving politics and terrorist-abetting news scoops are more important to you than our national security or the lives of innocent civilians and Soldiers. It bothers you that defending ourselves gets in the way of your elitist sport of politics and your ignorant editorializing. There is as much blood on your hands as is on the hands of murdering terrorists. Don't ever doubt that. Your frolics will only serve to extend this war as they extended Vietnam . If you want our Soldiers home as you claim, knock off the crap and try supporting your country ahead of supporting your silly political aims and aiding our enemies.

Yes, I'm questioning your patriotism. Your loyalty ends with self. I'm also questioning why you're stealing air that decent Americans could be breathing. You don't deserve the protection of our men and women in uniform. You need to run away from this war, this country. Leave the war to the people who have the will to see it through and the country to people who are willing to defend it.


No, Mr. President, you don't get off the hook, either. Our country has two enemies: Those who want to destroy us from the outside and those who attempt it from within. Your Soldiers are dealing with the outside force. It's your obligation to support them by confronting the AXIS OF IDIOTS.

3) The Demographics of American Newspapers

1. The Wall Street Journal is read by the people who run the country.

2. The Washington Post is read by people who are running the country in the ground.

3. The New York Times is read by people who think they should run the country, and who are very good at crossword puzzles.

4. USA Today is read by people who think they ought to run the country, but don't really understand The New York Times. They do, however, like their statistics shown in pie charts.

5. The Los Angeles Times is read by people who wouldn't mind running the country, if they could find the time, and if they didn't have to leave Southern California to do it.

6. The Boston Globe is read by people whose parents used to run the country and did a poor job of it and still are. thank you very much.

7. The New York Daily News is read by people who aren't too sure who's running the country and don't really care as long as they can get a seat on the train.

8. The New York Post is read by people who don't care who is running the country as long as they do something really scandalous, preferably while intoxicated, and who like their news as pictures and/or cartoons.

9. The Miami Herald is read by people who are running another country, but need the baseball scores.

10. The San Francisco Chronicle is read by people who aren't sure if there is a country or that anyone is running it; but if so, they oppose all that they stand for. There are occasional exceptions if the leaders are handicapped, minority, feminist, atheist, dwarfs who also happen to be illegal aliens from any other country or galaxy, provided of course, that they are not Republicans.

11. The National Enquirer is read by people trapped in line at the grocery store.

12. The Seattle Times is read by people who have recently caught a fish and need something in which to wrap it.

13. The Savannah News is read by people who can't read but want to know which areas to avoid so they don't get robbed, raped or killed.

14. The Atlanta Journal-Constitution is not worth reading but it is read by those who have no choice.

4) False Signatures Aided Fannie Mae Bonuses, Falcon Says
By Kathleen Day and Terence O'Hara (Thursday, April 7, 2005; Page E01 - Washington Post)

Fannie Mae employees falsified signatures on accounting transactions that helped the company meet earnings targets for 1998, a "manipulation" that triggered multimillion-dollar bonuses for top executives, a federal regulator said yesterday.

Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, said the entries were related to the movement of $200 million in expenses from 1998 to later periods. The result of the changes was an increase in Fannie Mae's 1998 earnings per share and the release of a $27.1 million bonus pool for senior executives.

Fannie Mae reported paying the following executive bonuses in 1998: chairman and chief executive James A. Johnson received $1.932 million; Franklin D. Raines, chairman-designate, received $1.11 million; Chief Operating Officer Lawrence M. Small received $1.108 million; Vice Chairman Jamie S. Gorelick received $779,625; Chief Financial Officer J. Timothy Howard received $493,750; and Robert J. Levin, an executive vice president, received $493,750...

Falcon, during congressional testimony and in comments afterward, publicly drew a link for the first time between the falsified signatures, which his agency disclosed last month, and the accounting manipulations that led to bonuses, which OFHEO disclosed in the fall. A Fannie Mae employee has told investigators that financial records from 1999 to 2002 bore his name and signature but were not prepared by him, Falcon testified.

"We have identified several problems involving procedures for preparing, reviewing, authorizing and recording" Fannie Mae's accounting, Falcon said. His office has said it is sharing all information from its probe with the Securities and Exchange Commission and the Department of Justice...

A spokesman for Fannie Mae, Charles V. Greener, said the company had no comment. Lawyers for Raines and Howard did not return telephone calls seeking comment on whether they knew about the falsified signatures or other problems Falcon cited. Small declined to comment. Gorelick did not return a phone message. The company would not make Levin, who still works there, available...

The accounting scandals are being used by Rep. Richard H. Baker (R-La.), chairman of the subcommittee that held the hearing, and the Bush administration to move forward on legislation that would increase oversight and curb the growth of Fannie Mae and Freddie Mac. Baker and others have tried for years to pass such legislation, only to find it defeated by the lobbying efforts of the two companies.

The companies' accounting scandals have bolstered the position of critics, such as Federal Reserve Board Chairman Alan Greenspan. He told the Senate Banking Committee yesterday that the companies' federal subsidies may not benefit homeowners and that the firms' large size and dominance of housing markets could pose a threat to the nation's financial system if they ever fell into trouble.

While there is a general consensus in Congress that Fannie Mae and Freddie Mac need a new, stronger regulator, Greenspan's testimony focused largely on the most controversial aspect of the debate: the size of the companies' portfolios of mortgage assets. Together, the mortgages and mortgage-backed securities that Fannie Mae and Freddie Mac own total $1.5 trillion, a more than tenfold increase in the past 15 years.

The Fed chairman called on Congress to sharply reduce the two companies' massive mortgage portfolios "while we can," saying that without a reduction, they will "inevitably" have major financial problems, causing a crisis in the economy...



5) The Spending Explosion

Here's a prediction: The media will report today the federal budget deficit is big and getting bigger. What most of them won't report, alas, is that the cause of these deficits is an explosion in federal spending. The era of big government is back, bigger than ever.The real news in yesterday's Congressional Budget Office semiannual report is that federal expenditures on everything from roads to homeland security to health care will on present trends reach 21.5% of GDP next year. That's a larger share of national output than at anytime since 1992. If the cost of the federal takeover of Fannie Mae and Freddie Mac prove to be large and are taken into account, next year federal outlays could be higher as a share of the economy than at anytime since World War II. In this decade alone, federal spending has increased by almost $1.2 trillion, or 57%.The federal deficit is expected to hit $407 billion for fiscal 2008 (which ends at the end of this month) and $438
billion next year. Still, the deficit is expected to be only 3% of GDP, which is in line with the average of the last 30 years. We hope Congress and the Presidential candidates don't obsess over the deficit per se, because the real fiscal drag from government comes from how much it spends, not how much it borrows.The Bush tax cuts also aren't the budget problem. Until this year federal tax collections have been surging. In the four years after the 2003 tax cuts become law, tax receipts exploded by $785 billion. This year revenues have declined by 0.8%, but a major reason is the $150 billion bipartisan tax rebate that has hit the Treasury without spurring the economy. Without these nonstimulating rebates, federal tax payments would have climbed another 2.5%, according to CBO. Revenue is expected to be a healthy 18.5% of GDP next year without any tax increase.Another myth is that the war on terror has busted the budget. While operations in Iraq and
Afghanistan are expensive, defense spending is $605 billion this year, or about 4.5% of GDP. That only seems large by comparison to the holiday from history of the 1990s, when defense fell to 3% of GDP. As recently as 1986, defense spending was 6.2% of GDP.The real runaway train is what CBO calls a "substantial increase in spending" that is "on an unsustainable path." That's for sure. The nearby chart shows how much some federal accounts have expanded since 2001, and in inflation-adjusted dollars. This year alone, federal agencies have lifted their spending by 8.1%, with another 7% raise expected for 2009. There's certainly no recession in Washington. The CBO says that, merely in the two years that Democrats have run Congress, federal expenditures are up $429 billion -- to $3.158 trillion.The fiscal blowouts have included a record farm bill, notwithstanding record farm income; an aid bill for distressed homeowners, extended unemployment benefits, and
more generous veterans benefits. Next up: votes on $50 billion for Detroit auto firms, an $80 billion energy bill, as much as $50 billion for spending masked as a "second stimulus," plus $100 billion or more for the Fannie and Freddie rescue. Rather than sort through priorities, Congress is spending more on just about everything.Meanwhile, remember that "pay as you go" spending promise that Speaker Nancy Pelosi made in 2006? We called it a ruse at the time, and the last two years have proved it. Senator Judd Gregg (R., N.H.) has tallied up at least $398 billion in "paygo" violations so far. Earmarks were also supposed to be cut in half by this Congress. In 2008 there were some 11,000 at a cost of $17 billion, the second most ever, and far more than half the peak of 14,000 in 2006.The point to keep in mind is that this big spending blitz is coming even before a new President and Congress arrive next year with far more spending promises in tow. As they
contemplate their choice for President, voters might want to consider which of the candidates is likely to be a check on Congressional appetites, rather than a facilitator.


See my latest memo posting at http://dick-meom.blogspot.com/. Updated