A Simple Solution To The Mortgage Based Economic Chaos...

As to Treasury Secretary Paulson’s request for a $700 billion dollar blank check from the taxpayers: Absolutely NOT!!!

Yes, to a bankruptcy court’s ability to restructure debt secured by one’s home or property.

Property’s owner: keeps their property, if they are deemed fiscally qualified to pay the restructured loan.

Mortgage Holder: makes some money, less than they’d preferred, on the note.

Investors in risky ‘mortgaged-backed’ paper: get what modest return, or lack thereof, that one should expect from a risky investment.

Simple, straightforward and it costs the taxpayer, who wasn’t previously involved in any way shape or form, very little.

Mortgage woes to be billed to taxpayers, again!

Wall Street is suffering from mortgage loan abuse that it inflicted on itself, and the only thing that former Federal Reserve chairman Paul Volcker can think of is another federal bail-out like the Resolution Trust Company (RTC).

Remember that the RTC was created to use taxpayer money to fix problems created by the folks charged with home loans, the Savings and Loan (S&L) industry players. The charter of the RTC specified that the agency would not investigate, nor would it turn over to investigating agencies of the government, any evidence that a crime might have been committed in the razing of the S&L businesses.

A little over two decades have past and here, again, we are dealing with huge economic woes caused by players in the home loan businesses and Wall Street’s money (paper with monetary value; we’re told) manipulators. Once again taxpayers are being called upon to bail out the players, without consequences for said players!!!

I think not!

Home loans can, in a single transaction, put large quantities of money on Wall Street’s field of play, and that money is then toyed with; while lobbyists for the players successfully request the government regulators turn a blind eye.

A better solution to this problem is to let the Bankruptcy Court system restructure the debt that is secured by one’s own home; currently they are not legally able to do so. This is necessary because the loans that are the largest percentage of the failures have always been called sub prime; for known, good reasons. Another kind of loan that is prone to failure is the Adjustable Rate Mortgage (ARM), because it’s sold to less qualified borrowers at rates that will ultimately be most profitable to the lender; most burdensome to the customer.

These money manipulating players need serious regulation and accountability, because they have repeatedly proven their ability to throw prudence to the wind in pursuit of profit; then call for the taxpayers to save them from themselves (without consequence, of course).

How long will it take voters to realize that they are the customers (borrowers) being abused by this process? The voters must inform their legislators that this situation needs to be controlled, once and for all, or they’ll be replaced by those who will.

A couple of things to rattle your cranial capacity, again…

First:

The GOP campaign has already begun to issue statements to the effect of, “the Democratic majority in the US Congress is responsible for all that is wrong with the USA today.”

If you believe that, have I got a bridge for you!

The Democratic majority in the US Congress decided to put its foot in its collective mouth and promise that, starting in January of 2007, things would be different. If their brains had engaged before their mouths, they would have noted that they did not have a veto proof majority in either the House or Senate. Also, the super-majority parliamentary rule (used by both parties when they found themselves as a slight minority) in the Senate could, and did, stop all the Democrat’s initiatives before they ever would reach the President’s desk.

For those reasons the Republican party’s defective government (the W admin. plus a Republican majority in the House and Senate) from January 2001 till December 2006 is responsible for the financial crisis (that started as a problem with subprime mortgages), the incredibly huge federal budget deficit, the consistently large monthly trade deficit, the incomplete effort in Afghanistan, the wrong war in Iraq, the stagnant middle class income, the disparity in wealth twixt the rich and the middle class, mass job exportation, etc…

If Republicans are not willing to own the consequences of their actions, perhaps they should not have caused them.

Second:

How outsourcing tasks to contractors saves anyone any money, even as the contracting company makes a substantial profit:

First, do the outsourced task poorly.

Second, move the work to a country where the prevailing wage is substantially lower than in the USA.

Third, the aforementioned other country need have weaker (or selectively enforced) environment, health and safety laws.

Forth, (as in the current war zones) make no-bid contractors completely unaccountable; contracting already provides substantial cover from accountability.

That’s all it takes. How do the executives that make these outsourcing decisions sleep at night?

When it isn’t a noisy discussion Democracy is broken.

Democracy is a constant debate, amongst all citizens, about how to apply the rule of law most fairly, across the widest possible majority of the entire population, to create a stable, capably strong and prosperous society. This is a difficult task anywhere one tries, but it’s especially important that we do it for our ever-evolving society in these United States.

A few items that, when properly considered, might spark said noisy discussion…

First: those who are complaining that the Democrats are blocking access to drilling, for oil and gas, on the Outer Continental Shelf (OCS) should remember that the restrictions began in 1981, and involved only the California coast; enacted by, former CA governor, President Ronald Reagan. The protection was extended to the entire Pacific, Atlantic and eastern coast of the Gulf of Mexico (Florida’s gulf coast) by President George H. W. Bush.

Between January of 2001 and December of 2006 President George W. Bush could have rescinded the OCS protection, with the support of the Republican majority in both legislative branches of the federal government; didn’t seem so important while Jeb Bush was governor of Florida and the price of a barrel of oil was below $100.

Second: the US Supreme Court recently proved that a majority has not consulted a dictionary. There’s no singular noun or pronoun in the entire 2^nd amendment of the US Constitution. The plural noun, “people,” is modified by a phrase concerning the continued functioning of, “a well regulated Militia, being necessary to the security of a free State…”

Third: as a former, moderate Republican, I remember when debates were passionate and fiscal responsibility was paramount.

In the 1970s a movement of pseudo-conservatives took over the Republican party. Discussion was silenced and, “sound like us, shut-up or leave,” became the party line. I left, but I didn’t go away.

Government was bad mouthed, even as it was being hugely expanded. Fiscal responsibility was cast out. Prophesy of bad government was being fulfilled by pseudo-cons, in the guise of Republicans, who were governing badly.

I am officially aligned with the Democratic party these days, but would love to reach across the aisle and find the true, moderate Republicans to begin the process of cleaning up the enormous mess the pseudo-cons have made of our great country, these United States of America.

What to do about oil production?

The argument is being made by oil and gas industry representatives that it is time to open up the outer continental shelf (OCS) to drilling for oil and gas; the OCS has been placed off limits by the US federal government. When asked (during a US Congressional hearing) why there’s been no activity on the 68 million federally controlled acres that are available for drilling oil, those same industry representatives stated there was no drilling equipment capacity available. The turn around time for drilling platforms and supplies is approximately 5 years from order to delivery; we’ve got time to consider the ramifications.

The US uses 20.5 million barrels per day (b/d) of oil. The total estimated SWAG (Scientific Wild A** Guess) for the OCS is 27 billion barrels of recoverable oil. Add to that the ANWR oil reserves most optimistic SWAG of 11.8 billion barrels of recoverable oil and you get 39 billion barrels; 5.2 years of oil reserves untapped. The most optimistic projections of daily production from these reserves total about 3 million barrels of oil per day (b/d); about 15% of the daily US consumption. That brings us down to only 8 million b/d of imported oil; assuming none of the other US fields slow down at all. All this new capacity can be online in 7-10 years. What would you have the Sheik do with the money he’ll make from you in the meantime?

Year after year gas prices have spiked higher each summer driving season, and this year is no exception. The oil and gas industry says it doesn’t have the refinery capacity to change from producing winter to summer oil based products quickly enough. In the 1990s they sold a large chunk of the refinery capacity to independent operators; reduced their own capacity. Meantime, they optimized production at their remaining refineries to more than 90% utilization; great for profits, bad for flexibility or damaged (tornado, hurricane, industrial accident, etc…) capacity offsets (e.g., the BP refinery accidental explosion and fire here in TX).

So, can we get some help from auto manufacturers in conservation (autos consume the majority of oil based products in the US)? Nope. The association of manufacturers is suing to stop the California Air Resources Board (CARB) from imposing restrictions on automotive green house gas emissions (only way to do that is to use less fuel). In the 1990s CARB had imposed a requirement for cars that were zero emission vehicles (ZEV). GM leased multiple ZEV vehicles to California citizens while it lobbied the CA legislature to repeal the aforementioned requirement. When the lobbying effort proved successful the ZEV lease vehicles were repossessed at the end of the lease agreement (even though quite a few leaseholders wanted to purchase their cars) and GM scrapped them.

GM also displayed the Volt, a plug-in, full series hybrid car (moved by electric motor only, using an internal combustion engine to crank the generator exclusively), but said batteries to make the car feasible weren’t commercially available. However, the folks at General Dynamics Land Systems had already field demonstrated a four ton Humvee replacement that was a full series hybrid truck (getting 250% better mileage than the Hummer).

I hear the cry to, “let the markets work,” but the markets have discovered that profitable is more fun than responsible activity. We were on this road in the 1970s and are here again (see other posts), because we’ve demonstrated an ability to forget the past. To quote Bill Engvall, “Here’s your sign!”

Back to the 1970s at the fuel pump!

In a previous post I stated that history was repeating itself in the form of a debt driven economic crisis; the 1986 S&L debacle becomes the subprime mortgage fiasco of today.

We return to the past once again, 1972 this time, to relive that well-marketed, short-term supply problem that drove prices at the gas/diesel pump sky high, this time in the form of developing world economic demand straining the producers ability to supply enough fuel.

The oil and gas industry once again states that the solution is to let them drill for crude oil wherever and whenever they want.

That answer is as wrong this time as it was the last time. What brought the price of hydrocarbon based fuels down, by 1985, was conservation. The problem rears its ugly head again, because after the price of a gallon of gas/diesel went way down, due to sub $10 per barrel crude oil, all the conservation measures were quickly thrown away; replaced by pseudo-conservation methodologies.

Enter the Corporate Average Fuel Economy (CAFE) standards that would hold the line on fuel consumption without price controls (that had failed earlier in the crisis).

The first problem that arose was the cheap price of fuel; concerned citizens subdued themselves when they paid less at the pump. Those still concerned about overt consumption were labeled tree-huggers, whiners, nut-cases, etc…

The second problem with CAFE was the light truck exemption, deemed necessary for the folks who needed a truck on the job. Except that CAFE was met by eliminating large family sedans and station wagons, that were replaced by Sport Utility Vehicles (SUVs) and mini vans; family vehicles covered by the light truck exemption (allows these new types of vehicles to remain beyond the reach of CAFE).

Those of us who thought the price of gas/diesel should remain higher, by means of increased state and federal taxes on consumption thereof, were scoffed at generally. The tax revenue generated could have been used to operate, update and maintain state and federal road and ground transport infrastructure that was being worn out, by heavy usage, at a much faster rate than it was being serviced.

Well, we’re at it again! Supplies seem to be meeting demand; no station closures or waiting lines yet. Still, the price per gallon of fuel is exceeding $4 at the pump; excuses roll out as profits roll in to oil and gas industry coffers.

Once again the hydrocarbon providing companies are demanding that they be able to go wherever they want and to do as they please, without pesky taxes or regulatory oversight.

Of course, there are those of us saying (after, “I told you!”) that conservation and alternatives need be applied first. Then, maybe open some access to previously protected places to the hydrocarbon producers: taxes and regulatory environment fully operational at every site and company involved in petrochemical associated industries.

Education in TX needs serious attention...

A great education can give our children the building blocks they need to become confident and the incentive to create the basis for the ‘next big thing’ that will drive the world’s economy; from right here in Texas.

The extraordinary expansion of the world’s economy, upon which many a Texan has thrived, has been driven by advances in the Industrial Revolution and the beginning of the Information Age. The most recent century of developments in both economic drivers originated here in the USA. Texas has been a partner in these expansions, but the main innovative force has almost always been associated with the education strongholds of the east and west coasts of these United States.

There is a need to build a foundation that will allow leadership in economic growth (the next big thing) to be drawn primarily from right here in the Lone Star State. The foundation is education; from pre-K right through post-doctoral studies.

Here are some ideas to ponder for investing in education in Texas:

*Three trimesters per school year; two or three weeks break between trimesters and a week break in the middle.
* Pre-K through 12th grade would normally take 14 years, but could be accelerated to as few as 12 years or increased to as many as 16 years, as needed.
* Technical/Vocational secondary school alternatives.
* GED programs could be made available at high school and community college campuses, as needed.
* Multi-media teleconferencing could make classes available statewide, so that every school need not provide every class curriculum for itself.
* Multi-media teleconferencing could also provide study assistance for students, during and after school hours, statewide.
* Electronic texts could make the best books available statewide, easier and less expensive than providing multiple hardcopies at each and every campus.

These are just a few of the ideas I have for making schools in Texas better and more affordable, so that folks will come to know that they can find the best educated workforce and brain-trust right here in Texas.