Month: September 2008

And Now For Some Good News . . .

Post author By David
Post date September 19, 2008
2 Comments on And Now For Some Good News . . .

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I’m sure there are many who would not see this as good news, but when I read about contracting credit in the lives of everyday people I was thrilled. Because I expect that many people would not share my positive outlook at this news, let me share why I think this is a good thing for our country.

Brad Rock is the chairman of the Smithtown bank and also chairman of the American Bankers Association. According to the article he views the situation with a similarly positive perspective as I do.

“With marginal lenders in trouble, we have more people than ever coming to us for loans,” said Brad Rock. “So all of a sudden, we can be much pickier in deciding what loans to make and how much to lend. . .

“Now people are going to actually have to have a job to get a loan and they are going to have to make installment payments that are already higher per dollar borrowed than they used to be,” he said, arguing that the debt-fueled prosperity of the bubble years was unsustainable.

The real cause of this crisis is not simply that bankers on Wall Street got greedy, it is that so many of us have become greedy as well. We insist on taking the largest loans we can get and living as far out over the edge of our incomes as possible.

The winners so far are the Brad Rocks of America, the bankers who have emerged unscathed, their capital intact and with enough retained earnings to support lending, on their terms. A residential mortgage from Bank of Smithtown requires 20 percent down and clear evidence of adequate income to repay the loan, as well as a good record of paying down debt. . .

“Now many of these lenders are gone,” Mr. Rock said, “and the small-business borrowers are coming to us, and we are doing good old-fashioned underwriting, and the result is that fewer people are getting loans.”

I see no evidence that the Bank of Smithtown has made substantial changes to their practices. What they are doing now, holding borrowers to higher standards, is the same thing they were doing before when it was easier for many people to get a loan elsewhere. They survived the boom times while playing it smart and now they are thriving in the bust because they stuck to sound practices when so many others were taking risks.

The article is focused on businesses thriving who played it safe, but the same is generally true of individuals. American Express may be lowering the credit limits of half their customers, but they are also raising the credit limits on the other half. Those who have exercised discipline in their spending habits when credit was easy to come by are the least likely to feel a credit crunch now.

I do not mean to suggest that there are not casualties to this credit crunch, but I am confident that the benefits of a nation where people are more aware of the need for wise financial decisions and less prone to living beyond their means outweigh the losses of good people who are having a hard time getting started (which, I suspect, account for the largest portion of those who are feeling the crunch through no fault of their own).

Tags economics, fiscal restraint, money

culture National

Something’s in the Air

Some of the people I work with like to dabble in trading stocks. They keep tabs on the stock market and they like to talk about their experiences. Through all the turmoil of the last few months their comments have indicated a challenging, but not incomprehensible market situation – until today. Suddenly this morning everyone was talking about the state of the markets and the failure (or rescue) of large financial institutions. The talk was not limited to those who follow the markets closely and the common refrain was "how much am I at risk and what should I do going forward?"

The turmoil of the last week has been so visible and surprising that people who have not been emotionally connected to the markets are feeling apprehensive about the market situation. It is an interesting and subtle shift to observe. (I don’t claim to be immune to this – I have felt concern for the markets since long before yesterday.) I stumbled across an article in the New York Times that seems to capture the feelings I heard expressed today.

. . . in this market, financial advisers agreed on Wednesday, consumers need to become their own chief investment officers, even when it comes to something as simple as finding a place to put their cash.

Taking primary responsibility for our own choices and situation rather than relying too heavily on the expertise or actions of someone else is always a prudent course of action.

Though I have been concerned about the economic position of our country, I remain optimistic that my family will be fine and also that our nation can weather this storm even if it is not always comfortable. I take comfort in the fact that the crisis is not (yet) universal throughout our financial system – it is primarily an issue with credit based financial institutions. The article tries to illustrate the difference between the types of assets at risk and those that are still safe by saying:

A money market deposit account . . . is an interest-bearing bank account that is insured . . . If you had been putting your money into a money market account because you wanted to avoid all risk, then you should consider the money market deposit accounts and other accounts insured by the F.D.I.C., like certificates of deposit and regular checking and savings accounts.

So long as enough liquid assets remain in the system (meaning those with assets do not freeze their money in panic) then the engine that is our economy may sputter and cough, but it should not seize up. Businesses may find it difficult to expand right now, but most of them should be able to maintain their status-quo while we weather this storm.

Tags economics, money, New York Times

National

Happy 221st Birthday

221 years ago today the Constitution was signed. In honor of that, today is known as Constitution Day (and also known as Citizenship Day). Unfortunately, the Constitution is treated by many as an aging parent that may deserve our respect and admiration for a lifetime of accomplishment, but only receives our occasional grudging visit and our concerted efforts to find a suitable retirement home where we can safely ignore its existence and go on about our lives.

Tags citizenship, Constitution, holidays

life National

Three out of Four (ain’t bad)

Post author By David
Post date September 17, 2008
No Comments on Three out of Four (ain’t bad)

What’s the point of having your own blog if you can’t toot your own horn occasionally? So this may be two weeks old, but I’m bored so I’ll share.

At BlueOregon there have been a few "Punditology challenges" where they invite their readers to predict what will happen in the political world (for example, what candidates will still be in the race after Super Tuesday and when will each candidate drop out – for both parties). I’ve only participated twice but I did pretty well on the Veepstakes Punditology Challenge which invited people to predict who the VP candidates would be and what dates they would be announced. Out of 268 participants:

Biden was the fourth most-popular prediction, with only 25 correct punditologists. Of those 25, just one person correctly picked the right date, August 23rd: David Miller. . .

Palin was a true surprise – with just one person correctly making that selection: Tony McCown, though he was off by two days on the timing. . .

Honorable mention goes to the three people that correctly picked the right announcement dates for BOTH Obama and McCain: David Miller, Mike Linman, and (sheepish grin) yours truly.

So I was the only person to get the date and running mate correct on the Democratic side and one of only 3 people to correctly name both announcement dates. It is interesting to note that almost 15% of the people participating named the correct date for the McCain VP announcement – many more than picked any other date. I guess the news-cycle implications were fairly obvious.

Tags connections, media, parties

National

Rethinking the Electoral College

Post author By David
Post date September 16, 2008
2 Comments on Rethinking the Electoral College

I have long been a staunch supporter of keeping the electoral college despite the weaknesses I see in having most states take a winner-take-all approach to their electoral college votes. The calls to abolish the current system in favor of a national popular vote have been growing for as long as I have been interested in politics. Today I started to wonder if we could honor the purpose of the Electoral college while using the support for a popular vote to institute reforms for the weaknesses that have grown in the current system.

The idea that I had in mind would be comparable to the way the BCS chooses a national champion for college football. (Stick with me here, I know the BCS is unpopular.) Consider our current system to be like the pre-BCS method of choosing a champion based on who the polls ranked as #1 at the end of the season. With the BCS, those polls become only part of a broader equation without resorting to a playoff (the equivalent of a national popular vote in my analogy).

My idea would be to implement a national popular vote where every vote counts equally and where the results weigh in as 82% of the final choice. Each state then has two representatives in the reduced electoral college with the electoral college votes accounting for the remaining 18% of the final tally. The reason for the 82% weight for the popular vote is because that represents 441members of the current 541 member electoral college which are supposed to be comparable to the representation in the House of Representatives. The states are represented as sovereign entities with the remaining 100 votes with the ability to apportion those votes as they see fit – winner-take-all or with a representative split (such as one vote for each candidate with more than 40% of the vote or both votes if one candidate exceeds 60% of the popular vote in the state).

The 18% weight from the reduced Electoral College would decide close elections, but it would do so in a way that would virtually eliminate any value in selective recounts for disputed elections. Recounts would not materially affect the 82% weight of the popular vote and would only be able to swing up to one vote of the remaining 18%.

I have not had time to consider all the nuances of this idea but I would love to hear what others thing of such a plan.

Tags elections, electoral college, ideas, questions, sports

culture

Cultural Vacuum

I got thinking after Carl asked why I don’t talk about how the government should be focused on supporting the family. Carl is absolutely right that the no-such-thing-as-standard modern family is at the root of all of our social problems. What I have been realizing as I have thought about how we can support the family as the social unit where values that lead to good citizenship and productive adulthood can be fostered is that we have created a Catch-22 for ourselves.

Carl wants to know how government can be used to support the family structure while I contend that only family can support and improve the family structure. As I tried to consider how we might go about removing government from meddling in family matters I realized that doing so would create a vacuum in our social structure because of how much we have come to depend on the government to lend any value to the family concept. Couples get married often for little other reason than to procure the legal or material benefits of marriage conferred by the government. Among the fundamental purposes of families is to provide an environment where children can be taught those skills which are necessary to make them into healthy and productive adults. (Productive being defined as having something to contribute to society.) We have turned over the responsibility for educating our children to the government on an almost universal scale. At the elementary level of education we have developed an opt-out model that is compulsory (you can’t simply opt-out, you must opt out on terms that the educational establishment has agreed to). In higher education the majority of institutions are state funded and state run. Even at private institutions, the largest individual source of funding for students is provided by the government in the form of grants and loans.

The more we receive from the government the more we begin to expect and demand from the government. The more we rely on the government the less we feel inclined to support and be supported by our families. As the government has come to provide all the necessities of health and retirement benefits for the elderly there has been less incentive for children to take any responsibility to care for their aging parents. On the other end, since the government is fully integrated in the family structure and responsible to provide the education, and fill the time of the children through school in place of parents, it becomes more and more common for children to abandon their families, through emancipation or by simply running away, before they are ready and able to take full responsibility for their own care.

As I write I realize that the solution is simple, though difficult. The solution is for families to shoulder the burden of responsibility for educating their children. This does not mean that they cannot have their children in public schools (although to a degree that adds some inherent difficulty to the process) but it does mean that they accept that they are the final authority on what should be taught and they must be willing to fill in the inevitable gaps in any education received outside the home. Besides taking back the responsibility for educating their children, families must also teach their children to demand less from their government – this is one gap that will always be present in a public school education. As each generation takes more of the responsibilities back from the government which naturally devolve to the family the government will have to shrink and the family will once again regain its rightful place in society.

If this practice of families bringing family responsibilities back inside the home were widespread for two generations we would once again have a limited government that provided the protections, structure, and services that had been outlined in the Constitution and we would have a healthy society that would be less prone to the excesses and instability that we see in our nation today.

Tags citizenship, discourse, family, learning, prediction, values

culture

The Other Side of the Sentiment

Post author By David
Post date September 12, 2008
11 Comments on The Other Side of the Sentiment

As I was walking to the bus stop this morning I saw an image attached to the garage door of one of my neighbors.

I’ve heard/seen that sentiment before, but with all my thinking about the flag and the meaning of patriotism lately it struck me differently. I appreciate the sentiment that we are not a nation that is afraid to stand up for what is right and to stick to a difficult task, but I think this sentiment cuts both ways. These colors should not run to create strife any more than they should run from an appropriate struggle. We have too much talk from the right about how strong the military is and ought to be. Instead we should be happy that our military is strong, and work on our nation to make sure it is worthy of such strength.

Tags flag, ideal, international, patriotism, war

culture National

Patriot Day

I appreciate the idea of Patriot Day as a way to mark our modern “day of infamy.” It is unfortunate that the event has been used so effectively to manipulate our politics. Once upon a time, America represented more to the world than simply a big bully who was allowed, because of might and wealth, to impose his will on others. Our only hope of regaining that once-deserved prominence is to fix our own government and stop worrying about the rest of the world. We need to ensure our own security as a nation wiht a government that adheres to sound financial principles rather than relying on smoke, mirrors, and the boundless faith of the rest of the world to prop up our economic place in the world.

Some will accuse me of being isolationist. They would be wrong. There is no reason that we cannot lend a hand to other nations and participate in the international community, but our foreign policy must focus on our own actions. In other words, we should be policing ourselves more than policing everyone else.

Being a patriot means doing what is best, rather than what is easiest or most popular. We need more patriots in the nation who are willing to talk together, identify the real serious problems we face, and find solutions rather than politically expedient (popular) patches. I still believe this is possible, but not if we run our nation in reaction to the events of the past. Let’s fix America and let the other nations ask for our help if they want it.

Tags connections, history, holidays, international, patriotism

National

Bureaucracy in Action

If you’ve ever wondered why smaller government is better government just look at this:

. . . the U.S. Dept. of Agriculture USDA tests about 1% {of slaughtered cattle} for BSE, or Mad Cow Disease. But Creekstone Farms wants to test 100% of the cattle they process, at their own expense. The USDA won’t let them . . . their larger competitors could feel obliged to do the same, and this additional expense may lower their profit margins or raise the price of beef.

Which do you think is more dangerous – Mad Cow Disease, or:

Mad Bureaucrat Disease – insane regulations that sacrifice freedom and the public good for the interests of a few powerful corporate lobbyists.

Tags bureaucracy, choices, economics, government, regulations

State

Third District Debate

I enjoyed going to the debate at the Sutherland Institute between Jason Chaffetz and Bennion Spencer. A one-on-one debate between the candidates is much different to attend than a “meet the candidates” kind of affair for city council when six candidates are seeking three seats without any specific match-ups. Until now those were the only kind of political “debates” I had ever attended in person.

In his opening remarks, Chaffetz said, “If I can’t build a grassroots network then I shouldn’t be your congressman.” I thought that was an interesting assertion but upon reflection it is true. A congressman should be firmly connected to the people he is representing. With senators we have double representation (in theory) and yet Senators should still be connecting with people but a congressman has no business trying to represent people if he cannot connect with them and be supported by them.

I was slightly surprised at how many things both candidates agreed on. They both support real immigration reform (verbally) – in fact they both listed it as the most important domestic policy issue facing the nation. They both want to see No Child Left Behind repealed. Chaffetz made the comment:

We don’t have a revenue problem (in the Federal government) – we have a spending problem.

Moments later Spencer repeated the same statement – verbatim.

Of course they differed in how they would approach many issues, but they seem to have comparable views on the basic issues that we need to confront for Utah and the nation.

When asked about what they saw as the most important improvement for our political system Spencer suggested term limits (without specifying any idea of how many terms he might have in mind) while Chaffetz listed transparency (he lists the names of all his donors no matter the size of their donations – as an example).

When they were asked whether they thought there was a Constitutional right to healthcare they both unequivocally stated that there was no such right in the Constitution. I was disappointed as Spencer went on to argue that although there was no “right” we should do it anyway because it was the right thing to do. That kind of attitude is detrimental to the rule of law. Just because it is the right thing to do does not mean that government is the right tool to do it. If it is the right thing, but not the province of government then the correct approach is to encourage people to do it – not force them.

Tags 2008, Utah