Saturday, March 14, 2009

Obama's strange mortgage plan

President Obama and his big spenders are moving quickly, to the relief of those who are facing foreclosure on their mortgages. But the program they are offering will do nothing for those most in need. In the fine print, Obama's plan provides no relief for any homeowner whose mortgage exceeds the total value of his home. But these folks are the ones who have been conned into taking sub-prime mortgages so loaded with brokerage commissions, interest rate subsidies, bank fees and lawyer and title-company charges that the amount of the mortgage has ballooned. These high mortgage amounts, coupled with declining property values, have turned about 20 percent of American mortgages upside down, so that the debt exceeds the value of the property.

By excluding these homeowners from help, Obama is guilty of a holier-than-thou hypocrisy. Was it not Fannie Mae and Freddie Mac that encouraged such over-mortgaged properties? Was it not the Democrats in Congress who passed legislation urging Fannie and Freddie to weaken the standards to allow more low- and lower-middle-income families to buy homes?

How can Obama suddenly pretend to be so shocked - shocked - that about 20 percent of America's home mortgages are now worth more than the property they finance? It was the insistence of liberal Democrats that made it so. When Housing and Urban Development Secretary Henry Cisneros demanded that Fannie and Freddie invest 42 percent of their assets in buying low- and lower-middle-income mortgages, and when his successor Andrew Cuomo raised the quota to 50 percent, what did they think would happen? When they explicitly told Fannie and Freddie not to insist on down payments in the mortgages they purchased, how did they think the purchase would be funded? Obviously, if you don't require the borrower to put money down, the full purchase price must be covered by the mortgage. To now, piously, refuse to come to the rescue of those who fell for your party's seeming generosity and bought homes on the terms it suggested is hypocritical at best.

But it is not only the over-mortgaged whom Obama will ignore, but those who have lost their jobs! If you do not make enough money such that your mortgage payments come to 31 percent of your income, you can't get your mortgage refinanced. If your income has dropped to a point where your monthly payments on your loan consume a greater part of your earnings than 31 percent, you are stuck.

So we have Obama rushing to the aid of those who have been hurt in this bad economy, but exempting from his proposed relief anyone who has lost his job and seen a cut in income or whose property values have dropped below the amount of his mortgage. In other words, he'll help anyone but those most in need.



Trading Places with China?

For years, the Communist Chinese have been the butt of American jokes for their Maoist principles and centralized government planning. They've also received scathing international criticism for their at times brutal suppression of human rights - and deservedly so. But in the years since Tiananmen Square, China has moved steadily towards a market-based economic system while America has racked up increasingly large deficits for centralized, socialist spending - with a growing percentage of our accumulating public debt held by Chinese creditors. Also, China has taken steps to improve its human rights record in recent years, while American liberties have gradually eroded under the weight of an ever-expanding federal government.

Clearly repression and communism are still the laws of the land in China, but it is worth noting how one nation waxes and the other wanes - particularly when crisis comes. Just look at the divergent approaches taken by the American and Chinese governments with respect to their economic "stimulus" plans. Like our country, China is operating under the flawed assumption that investing in additional government will somehow bring about economic revival. But, there are critical differences in these two superpowers' positioning and plans which could make the economic downturn much easier for China to manage.

Supporters of the "American approach" like point to the fact that China is ballooning its deficit from 0.4 percent to 3 percent of its national income to pay for its plan - but that argument ignores the fact that America's deficit currently stands at 12 percent of its national income. We also have an $11 trillion (and climbing) national debt - of which China was holding $681 billion prior to the most recent U.S. bailout. China, meanwhile, entered 2009 with nearly $2 trillion in foreign currency reserves.

There are also huge differences in the "meat" of the two plans. In China, the majority of the stimulus package was actually devoted to bricks and mortar. Huge chunks were also devoted to business tax breaks, and a full quarter of the package was devoted to rebuilding an area of the country devastated by the Sichuan earthquake last May. Has it worked? Few trust China's optimistic estimates of 8 percent growth in 2009, but the country's lending, spending and consumer confidence has largely stabilized.

By contrast, America has poured billions of dollars into the same failed financial institutions and government bureaucracies that conspired to create its current crisis - not surprisingly, to no avail. The first bailout failed miserably to stimulate lending or lift the Dow Jones out of its doldrums, while the second bailout resulted in another massive selloff on Wall Street over fears that it "didn't do enough to stimulate the economy." Talk about the understatement of the millennium.

While China at least pursued its flawed interventionist philosophy (it's still a communist country, remember) with a modicum of common sense, America has plunged herself deeper into big government insanity. For example, billions of dollars intended for small businesses were stripped from the final version of the "stimulus" package, which ended up as a liberal special interest goodie bag routed through the same old inefficient, unaccountable agencies.

Also, China pumped in its "stimulus" money immediately where it would have the maximum effect, whereas the U.S. approach is to engage in a protracted, multi-year federal spend fest on government programs with no immediate economic benefit.



Obama Proposals Put Six Million Jobs at Risk

By Bob McCarty

President Barack Obama will increase U.S. reliance on foreign oil by eliminating the deduction for drilling in the U.S. and put at risk up to 6 million jobs directly and indirectly reliant on the industry. That's the message being delivered to all who will hear it by official and unofficial representatives of the American Petroleum Institute, according to a recent article in Business Week.

More specifically, the magazine reported that the national trade association representing all aspects of America's oil and natural gas industry is battling President Obama's proposals to reduce the industry's tax breaks through presentations to newspaper editorial boards and visits to Washington by top oil company executives and employees, plus drop-ins by ordinary shareholders.

When contacted about the article via e-mail, API spokesperson Jane Van Ryan said editorial board visits and drop-in visits are part of API's ongoing lobbying effort and then went on to discuss the main premise of the Business Week article that deserves attention.

"It implies that various businesses and industries are very concerned about the administration's tax proposals," Van Ryan explained. "That is correct. "The oil and natural gas industry is very concerned because of the possible impact on everyone who lives and works in the U.S.," she continued. "If the administration makes the U.S. an exceedingly expensive place to do business and continues to keep the best energy resources impossible to access, the impact won't be helpful to anyone. "The energy business is global, and the companies must answer to their shareholders. Therefore, if they can get a better return on investment elsewhere, why shouldn't they reduce their investments here and go overseas?"

The result of going overseas, of course, would be that thousands of Americans would lose their jobs, billions of dollars in tax revenues would go away and the United States would become even more dependent on foreign oil and experience more market volatility.

"No one wants that to happen - certainly not the oil companies and the 6 million people who depend on them for direct and indirect jobs," Van Ryan added. "So it's fair to say that the oil companies will not merely accept these huge tax increases. Rather, they and API will try to have meaningful discussions with a variety of people in hopes of explaining what I've just said to you."



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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