Conservatism = Social conservatism?

I have become more and more unhappy with the idea that conservatism is defined by social issues. I have used the term traditionalist to describe those that promote social conservatism in a political realm.

Their arguments are consistently along the lines that society should not just change for the sake of changing. It is a simplistic and often useless observation. Society doesn't JUST change for the sake of changing. People didn't wake up and decide that children should be in charge, they abdicated their responsibilities over several generations.

Further, they will often suggest that long history has determined what works and we should not just toss those workable solutions - the most common time for this argument is in the area of marriage and their opposition to gay marriage. But no one is suggesting straight people have to start marrying gays, or that straight people have to get divorced.

Social conservatives have been in the GOP because they oppose the Democrat/liberal positions - NOT because they are politically conservative. Seldom do they make their arguments from a perspective of individual/constitutional rights. They use history, tradition, and very infrequently except by inference, Scripture.

If you support socially positions, great. I think you should be active in your support. Just don't call it conservatism, especially in the political arena.

HATE and the Fruit Tree

From Powerline:

Barack Obama gave his "More Perfect Union" speech in Philadelphia on March 18 to tamp down the furor caused by the release of videos excerpts of his pastor's sermons. Obama himself had proclaimed the importance of his pastor to his life over the past twenty years in books and interviews. Both circumstantial and direct evidence demonstrated Obama's knowledge of Reverend Wright's sick and indefensible views.

Rather than forthrightly condemn them in his Philadelphia speech, Obama chose to give the appearance of transcending them. Obama reviewed American history going back to the founding, provided autobiographical reflections, and presented himself as the man come to redeem racial relations in the United States. Obama denied familiarity with the statements whose revelation gave rise to his speech and suggested that they unfairly represented the man. Obama's speech provided the larger context for understanding Wright. Here is the key passage:

Why associate myself with Reverend Wright in the first place, they may ask? Why not join another church? And I confess that if all that I knew of Reverend Wright were the snippets of those sermons that have run in an endless loop on the television and You Tube, or if Trinity United Church of Christ conformed to the caricatures being peddled by some commentators, there is no doubt that I would react in much the same way

But the truth is, that isn't all that I know of the man. The man I met more than twenty years ago is a man who helped introduce me to my
Christian faith, a man who spoke to me about our obligations to love one another; to care for the sick and lift up the poor. He is a man who served his country as a U.S. Marine; who has studied and lectured at some of the finest universities and seminaries in the country, and who for over thirty years led a church that serves the community by doing God's work here on Earth - by housing the homeless, ministering to the needy, providing day care services and scholarships and prison ministries, and reaching out to those suffering from HIV/AIDS.

As long as they were black homeless, black needy, black HIV sufferers. Our personal experience with Trinity is that it is a racist, white hating, and clearly AMERICAN hating church.

The Reverend Wright is a hater. He HATES. It doesn't really matter what he HATES, a man of God would not HATE. Would he?

Barak Obama made a fine speech about supporting the man behind the public persona, now Obama claims to have bitten into the apple from the tree of knowledge. Now that we have all seen that man, we must question, no, we must HOLD Barak Obama to his claim:

I can no more disown him than I can disown the black community. I can no more disown him than I can my white grandmother...

By their fruits you shall know them. Apparently, after 20 years of being a student of the Rev Wright, we all better acknowledge that Obama is THE fruit that has fallen not far from the tree.
And like an apple just fallen from the tree, it is just a matter of time for the rot to appear.

Big Lie #1

A while back I made some predictions.

1. The first recession in 26 years will last between 8 and 11 months and cause widespread dislocations specifically in housing.

10. A major financial figure will expose one, maybe two flat out lies that the media had been reporting in financial matters that leads to a rout of the dollar on international markets. Only the complicity of the EU in the lie prevents the dollar from ouster as the currency of trade.

One thing that I have been aware of it that inflation is being manipulated. There are important reasons for this: first, most government entitlement increases are based on inflation. Keep it low and government spending is less. Second, businesses are often faced with demands from unions and employees to increase wages when inflation increases their costs, keeping inflation low reduces business costs. You might wonder how or why I think inflation is being manipulated. Let me offer both an illustration AND an analysis from my betters:



Subtract this inflation rate from our growth rate and you would have been in negative growth territory in the first quarter. We will see what happens today.

Individual Sovereignty

Please post this under the same title today if possible.

The object of this Essay is to assert one very simple principle, as entitled to govern absolutely the dealings of society with the individual in the way of compulsion and control, whether the means used be physical force in the form of legal penalties, or the moral coercion of public opinion. That principle is, that the sole end for which mankind are warranted, individually or collectively in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right. These are good reasons for remonstrating with him, or reasoning with him, or persuading him, or entreating him, but not for compelling him, or visiting him with any evil, in case he do otherwise. To justify that, the conduct from which it is desired to deter him must be calculated to produce evil to some one else. The only part of the conduct of any one, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.

from On Liberty, John Stuart Mill

The entire work can be found here.

300

One would think that after 299 posts, I would have said something that provoked more than a casual glance. With the exception of a discussion that was carried over to to this blog, nothing I have written has garnered much comment - and from the number of people that subscribe to the feed, it hasn't garnered much interest either.

BUT! I didn't start this blog to build a readership. I built it because after reading a lot, I have to have a writing outlet. I have a directory on my computer that is titled: Essays. It is over a gig and nothing there is much bigger than 100k. I like to write. But, frankly, I will probably never get paid to.

I am still not worried or interested in building a readership but I am going to change up how and what I post. In the past I have seldom linked to other sites, that will not change, generally. I am going to begin quoting - in some cases extensively - from the works of others and then comment on the items. In some cases it will be other bloggers, but more likely it will be written works.

I am going to start off this change by looking at On Liberty by John Stuart Mill. Enjoy.

From Chapter 1:

The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinion of others, to do so would be wise, or even right...The only part of the conduct of anyone, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.

I found this while looking for the last four words of this paragraph. I had seen them before and from a political and philosophical point of view, was just blown away. As a foundation stone for the United States, those 4 words capture the entirety of WHY America exists.

The individual is sovereign.

Think of this. Our government gets it's power because we give it to it. My life, liberty and pursuit of happiness is inherently MINE, not because of some grant or law or bequest. I am a monarch in and of myself. As you are. We co-exist based on a choice to recognize that inherent completeness in each other.

Society however, is not the result of monarchs reaching a consensus on what is acceptable to them...it is peer pressure on hyper-steroids. Mill had something to say about that also:

In political speculations 'the tyranny of the majority' is now generally included among the evils against which society requires to be on its guard. Society.... practices a social tyranny more formidable than many kinds of political oppression,... penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough; there needs protection also against the tyranny of the prevailing opinion and feeling; against the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them.

Society is not, nor should not be, the arbiter of what is acceptable behavior on an individual level. IF the individual is sovereign, then society needs to limit it's apparent willingness to interfere or be reigned in by those monarchs that recognize the folly or oppression.

(I almost hate that last comment. Oppression is a dangerous word that is too often misused by those that fail, or wantonly choose, to defy some community standard. If that sounds like I am in favor of society imposing some standards, or a community doing so, blame my inability to be clear. Society, a community, should have a means to stop the idiot that decides to walk down the street naked. While Mill would suggest that the action does no harm, I would wager that Mills sense of responsibility and respect would treat such a person with scorn and ridicule. That is not oppression, nor is it "tyranny of the prevailing opinion and feeling". It is an acknowledgment that while I am sovereign, I must respect the fact, FACT, that so is the next individual. Respect is not just acceptance, or allowance. It is an understanding that with sovereignty, comes responsibility, to oneself, and to others. Mill does not expound on this because it was inherent in the demeanor of the average 19th century adult. It is something we have obviously lost in the general society, I think, because we have abdicated our responsibility to personally judge the behavior of those around us. Society is unable to 'police' people, and our reliance on it to do it for us has led to a coarsening of general society that Mills would just not accept.

I must respect the right of the sovereign to behave as s/he sees fit. However, I can, and should, call a kettle black when I see one. If a person prefers to smoke cigarettes, I am certainly not suggesting that I have any right to deny them their vice - however, I can and should point out, in the normal course of our interactions, that such behavior is stupid, dangerous to them and self-defeating. And, in my sphere - my home, my office - such stupid behavior will not be tolerated as it limits my enjoyment.

The idea that I should join with many others and BAN such behavior fails to acknowledge the sovereignty of the individual and it encourages the tyranny of the 'majority'.

So, for the first time, I think I have a philosophical foundation for Tracyism's first rule:

Always act in your own best interest.

We'll see.

MY positions

I am a Conservative. There are many misconceptions about that term and I thought I would offer something concrete. Do you agree? Or disagree?

At the state level:

1. Abortion:

* freely available until week 20;
* Week 20-24, with doctor opinion on the non-viability of the baby
* after week 24, limited - baby is non-viable or already deceased, no other reason.

2. Gay marriage:

* all state licenses are issued for civil unions of any 2 non-related adults;
* Marriage is a religious institution - marriage can be performed or denied by any religious institution. Marriage by itself - no license - is not recognized by the state

3. Taxes:

* Property taxes are limited to .20/100 and assessments are based on most recent sales price
* State income tax is limited to 5% on income that exceeds the state median
* Sales tax:
o State is limited to 8% on all goods and services except: food, energy and medicine
o Local is limited to 1% with same exemptions as state
o taxes are not used in support of or defense of local/state businesses

4. Limited Government:

* Departments or agencies that support a subsection of the population of the state are banned. Exceptions: education.
* Advertising by government agencies is a waste of taxpayer money - banned
* No agency of the government has a right of eminent domain for non-government use. Green space is not government use.
* No government position may have retirement benefits, except
o judges (in office more than 10 years);
o police officers
o fire department officers
o teachers.
* No agency, nor legislature of the state may limit or infringe upon the freedom of a resident or citizen:
o on or in their private property;

5. Citizenship:

* A citizen of Wisconsin is any legal resident of the United States that has resided in Wisconsin for at least 90 consecutive days
* A child born in Wisconsin of a non-citizen or non-resident is not a citizen or resident of Wisconsin
* Non-citizens, except for petitions for asylum or admitance, have no standing before a government agency

6. Personal responsibility:

* No citizen or resident of Wisconsin may call upon the resources of any other citizen or the State for their general welfare, to include:
o housing;
o food
* No citizen or resident of Wisconsin may, by expression of a character or physical trait call upon the resources of any other citizen or the state without their expressed consent;
* No citizen or resident of Wisconsin may, by expression of a character or physical trait limit the rights or freedoms of another citizen or resident without their expressed consent;

I recently had several long discussions on some of the above with others on the American Conservative Party website. If you would like more information, or have an interest, stop by the site by clicking on the logo ----> over there...

Notice

Victoria has a diabetic ulcer on the bottom of her heel. It is VERY bad. A diary is up here. We see the surgeon this afternoon to see if the foot can be saved.

Quick pick

It was once said that the only true way to anticipate someone else's decision, is to know where it is going to be made. Gobbledgook, right?

John McCain has the opportunity to select his Vice Presidential running mate. There is a lot of speculation on who it might be, let me offer my POV.

Polls show that:

1. If Hillary is the dem nominee, 19% of Obama's supporters will go to McCain.
2. If Obama is the dem nominee, 29% of Hillary's supporters will go to McCain.
3. McCain is the GOP nominee inspite of the loss of Evangelicals and Conservatives, arguably the furtherest right of the party.

Even if the dems that do plan on jumping ship were only 25% of the claimed amount. McCain would handily beat either Dem....if he had the 'base' of conservatives and evangelicals. Or does he? Interesting question that I think NO ONE can know the answer to.

But consider this. The Dems have a long and bloody battle for the nomination. All kinds of people are hoping for some 'white knight' to come and save the day...bring the party together. I don't think someone will show up. Unless, you look in a different direction.

For years McCain has been the darling of the media and some on the left as a Republican that will stick it to Republicans. Many dems said that if McCain had been the nominee in 2000, they would have voted for him.

So, if McCain wanted to unite the MIDDLE, the moderate mainstream that is disgusted (or soon will be on the left as is the right) with the extremes of their own party, what better way to do that than to select a running mate, just like him. Someone from the dems side that is a maverick; someone that stands apart from the loony left.

Joe Lieberman fits that bill.

Too many people say that McCain has to pick a conservative to firm up the base. Why? He didn't need it to get the nomination and conventional wisdom has often suggested that a candidate had to appeal to the fringe of his party to get the nomination and then move to the center to win the general. McCain is at the middle already. He doesn't need the 'base' if he can pull 10% of the dems AND most of the independents. What better way to offer the country CHANGE in the way things are done in Washington than to offer a split ticket. I can see him picking up 60% of the vote against either Obama or Hillary. 70% of republicans and 80% of independents and 20% of democrats....works out to...ummmm, winner.

Annual Easter Post

Written on Palm Sunday, 2006:

“It is done.”

He closed his eyes and the pain simply stopped. There was no fading, no gradual lessening. The pain was just gone. His arms previously numb from hours of hanging felt neither tired, nor sore. Even the oppressive heat of the day was gone. He opened his eyes.

EVENING

It was night although far on the horizon a glow, signaling the start or end of another day, seemed partially hidden by fog. The sky lacked a moon, or even stars. He was sitting on the ground but felt neither its roughness nor cold. Standing, glorious as it was without pain, gave him no sense of firmness. It was as if the ground, even the night around him, lacked substance. His eyes sought some feature to focus on. His toes, wiggling, sought to distinguish between grass, or rock or sand with no success.

Finally, a sound like a low murmur heard through a wall. It was voices but he could not determine their source or number. Craning his head first one direction, then another did not change their volume or tenor. Like his eyes seeking something to see, his ears strained to catch a discernible sound.

Another sound, like the faint rustling of leaves in the softest of breezes came from behind him. A sigh made without breath. He felt no wind, no cool change in the air but turned, hoping.

No longer facing the horizon, he saw, campfires? In the distance the faint glows did not flicker nor flare. Steady points of unmoving lights seemed to stretch into the sky.

Was he in a valley? Looking back at the glow on the horizon, it did not offer any clue as to the shape of the land between it and his position.

The voice, when it came, was a whisper that sounded as if it were spoken directly into his ear. His quick turn towards the voice upset his footing and he fell over but did not fall down.

“You glow,” it said.

It was the voice of his mother yet; it was of the same spirit as his Father. That was not possible for he knew his Father’s voice and this was not it.

“You’re brighter than the others though.”

“What others?” he asked.

“The others that glow.” It was said so matter-of-factly that any question he may have had died before getting a chance to be spoken. He looked again at what he thought were campfires and realized they had shape and they were not as distant as he first thought.

“Why?” he asked.

“Don’t you know?”

He looked down at his hands. There was no pain, no bleeding, but a definite brightness that varied only slightly around the wounds. His feet showed the same variations. He did glow, but it did not add any illumination to the surrounding ground.

“I have my Father with me,” he proclaimed.

“No, you are alone.”

“He is with me always, even as you are now.”

“He is not, nor am I.”

He knew the second the other spoke that it was the truth. His Father was not here. He could not feel the comforting presence, nor hear the whisper of his approval. Even his eyes still sought focus onto the other with no success. And once again he felt the despair he felt on the cross. The pain had become his companion, his foundation. In the absence of his Father, he held onto the only thing he felt, his pain. And now, with it gone, the loss of his Father came rushing back to him.

“Why are you doing that?” the other asked.
The pain of the loss grew. He felt it in his chest and squeezed his arms together in a tight embrace.

“If you continue you will join the others.”

He did not want to listen, the pain spread and he fell to the ground.

“Was that him?” asked a new voice in the distance.
“No. See. The glow is fading already.”

The pain quieted the voices. The pain was familiar. He could feel the spikes again in his hands and feet. The shouts of the crowd boiled in his ears and he could feel the warmth of the blood on his face. The pain was like strength, it flowed back into the darkness.

A sharp scream turned his head, pain momentarily forgotten.

“NO, NO, it’s mine, MINE!”

A figure came running from the direction of the glowing horizon. It did not block the view of the horizon so he is not sure why he knew where it was coming from, but the outline of the figure was running very fast.

“MINE I tell YOU, MINE!” it shouted.

Like the voice that had been talking before, he knew this voice. Again, it was like the spirit of his Father but not his Father. He wanted to reach out to the figure as it ran closer. His pain forgotten, he could see and hear the pain coming from the shouts.

“NO ONE ELSE, MINE, LEAVE ME ALONE!”

He stood and moved towards the figure.

“No, don’t do that!” yelled the first voice he heard.

The figure slammed into him, knocking both of them down. He, he was sure now it was a man, was freezing. Every touch seemed to drain heat from his body.
“WHAT ARE YOU DOING? TRYING TO TAKE IT AWAY? IT’S MINE, LEAVE ME ALONE, MINE!!”

He was kicked and struck and the man jumped up and resumed running.

“FOREVER MINE, NO ONE CAN TAKE IT, MINE!”

The figure quickly was lost in the darkness but he saw others that were glowing move away from the direction of the shouts.

“What were you trying to do?”

“He was in pain.”

“So were you.”

His pain. Forgotten for the moment had fled again. This time he knew if he wanted he could bring it back but shook his head. Why seek out pain? Why take on pain when you did not need to?

“Because it was yours,” said the other. “You’re glowing again.”

He looked at his hands and feet and saw that the blood and spikes were gone, the glow had returned.

“But he…”
“Could not have been helped. He wanted his pain, he would not have given it up now. He can see and feel and hold it like a treasure of immense wealth. If he were to give it up, he would cease and he will not.”

“Do you know him?”
“No, but there are many like him. Soon you will see and hear them often.”

“How do you know?”
“I’ve been here awhile.”

“What is your name,” he asked.
“Name?”
“Yes, your name?”
“I had a name. It was…”
“Asrith. Your name is Asrith.”

“How do you know my name when I can not remember it?”

“I am,” he replied. And the glow grew.

MORNING


“Is he the one?” whispered the voice.
“Maybe,” replied Asrith.

“How long have you been here Asrith?” he asked.
“Time has no meaning here. I have been here. Before, I hunted. My brother and I were close to killing a wildebeest and I awoke here. I have been here since.”

“Where are you from? Palestine? Greece? Rome?”

“I do not know those places. My village is Antgara. It is by a river near the White Mountain.”

“There is another by your side,” he proclaimed.

“He was here before me, he does not have a name, or does not remember his name,” responded Asrith.

“I know him. He is Weiyou.”
“It is him!” exclaimed Weiyou.

“Who am I Weiyou?” he asked.
“You are the one the will end the night!” Weiyou said.


AFTERNOON


“How?” asked Asrith. “Can you?”

“The night is part of the day. To end one is to end the other. Why would I end the night?” he asked.

“So that we might wake up,” cried Weiyou. “The Sun sits below the horizon, not moving. No stars guide us, the Moon has failed. There is no warmth, no food. We do not sleep. We sit and wait. Some glow as yourself, but most sit and wait.”

“Except the runners,” added Asrith.

Weiyou seemed to move closer. His voice spat, “Runners, always runners. More and more. They burn if you touch them. And they make you tired. Not enough to sleep, but a lot.”

He could see an outline of both Asrith and Weiyou. Like a new moon on a clear night. Darkness on darkness. But neither drained heat away like the ‘runner’.

“Do the runners always run away from the horizon?” he asked.

“I have never seen any do otherwise. They always shout, although it is not always the same, but often it is. I have never seen one that glows run.” Weiyou added.

“How long have you been here Weiyou?”

“Why do you ask again? Asrith was here after, you were here after, others were here before. I have seen no sunrise, no moon. I was left by my tribe, I was here. Has more than a day passed? When were you here?”

“I just arrived,” he said.

“Really? I have known you longer than Asrith.”

This shocked him. He knew the truth of it. He had known Weiyou longer than Asrith but he met Asrith here first. But he knew both. Asrith had many children but Weiyou only had a daughter…she too was here. His eyes looked over towards the horizon and rested on someone with a glow within and knew it was Shuwei. He turned back to Weiyou and looked at him.

“I know you Weiyou,” was all he said.

Asrith turned and moved away.

“Where are you going?” he asked.

“Runners are coming.”

Weiyou and he turned towards the horizon and heard the shouts. “Many of them. We need to move out of their way.”

“Why?” he asked.

He followed them as they walked neither farther nor closer to the horizon. “Their pain will become yours and you will run with them if too many run into you.”

“How do you know this?”

“Did you not like your pain?” Asrith asked.

He thought of his embracing the pain and how easy it was to want to feel, something, anything, again. But he remembered that he stopped seeing and hearing everything else also. And he had a name for the pain.

“Sin.”

“Call it what you will. Pain. Sin. It is the same thing. It takes away the world from you. It becomes more important than anything else. It takes away from anyone that touches it. Runners never let go. They would rather have their pain than to give it up. Your pain did not belong to you. You welcomed it, but it wasn’t yours. If you had kept it, eventually it would have become yours. But when you heard the runner, it fled from you.”

He looked at Asrith. There was no glow in Asrith but he knew that Asrith understood. He reached out and touched Asrith.
Weiyou gasped and both turned to him.

“What have you done?” he yelled. Weiyou fell to his knees and appeared to be crying.

He and Asrith looked at him and then back towards each other. He was astonished. Asrith was glowing.


EVENING


They stood over Weiyou for a long time as he cried. When the crying became slow sobs Asrith knelt beside him.

“Come on my friend. Why are you crying?”

Muffled, but strongly, Weiyou replied, “My daughter. I see her in you. It is as if I see you and her as one. I know you are not her, but I know you as I know her. It is not sorrow, or it is but not pain, that I know that she glowed even in the brightest day. And I know now the source of the glow.”

He stood and put his hand on Asrith’s shoulder. “My friend.” Weiyou turned to him. “You are the one. You are the source. You will end the night.” He sat down but continued to look at him. “I can wait.”

Asrith looked first at Weiyou and then at him. “He is right. We can wait.” He said down next to Weiyou and looked expectantly at him.

He looked at the two men and sat next to them. The runners passed by shouting but he did not have the desire to go towards them. At first he thought he should be ashamed for not wanting to help but knew he could not even if he tried. They were lost in their pain.

He thought about the runner that had run into him. Why did he feel so strongly about that one. It was his voice. Like Asrith and Weiyou, his voice was familiar, but different. He knew their voices, but he remembered the runners….Judas.

The runner was Judas! NO! He bowed his head and started sobbing. Asrith and Weiyou waited for a time before speaking.

“You knew him.”
“I did.”
“His pain is his choice.”

“That does not make it any less.”

Asrith sighed. “Do not make his pain yours. Runners do not wait for the day. Their focus is turned inward. He had a chance to make a choice. He made his choice.”

“If I had given him more attention, maybe it would have been different.”

“And who would you have given less attention?” snapped Weiyou.

“Was that my choice? To give one more attention than another? To say this one is more worthy than another? I would rather none make that choice,” he cried.

“Really? Because it seems you did make a choice. You took all that pain and started to make it yours. Why didn’t you keep it? It was comfortable. You knew it well. Why did you choose not to stay in that pain?” yelled Weiyou.

“Because it was PAIN!” he yelled.

Weiyou stood up and leaned over him. “Right. Amazing how comfortable pain can be when you don’t think anything else is there. But you know there is something else, don’t you. Or do you? What are you waiting for?”

He was confused. “What?” he asked.

Asrith said, “Weiyou asked what are you waiting for?”

He looked at them both. “I….”

“We are waiting for you. What are you waiting for?”

MORNING

What was he waiting for? He looked at the horizon and then back to his companions.

“You have been good friends,” he said. “I would like to spend more time with you….”

“Oh really!? And how much time have you spent with us so far?”

He could see a smile on Weiyou’s face. Like Asrith, Weiyou had started to glow and the light from within he knew had always been there, became visable to Asrith also.

He turned to the horizon and knelt.

“My Father…”

“My Son…”

And dawn broke…

Anti-conservative, Conservative

In our debates, Travis noted that marriage as an institution had been around for "150,000" years. This is false. Pair bonding has been around for closer to a million years (maybe longer as it is clear that it occurs in many species). Marriage as an institution, formalized by society has probably been around for maybe 15,000 years, certainly for our recorded history of about 7,000 years.

Of course, whether it is 7,000 or 150,000 years, Travis' point is that the institution of marriage has been a man and a woman for a very, very long time. That debate also brought up this definition of conservatism - stolen from Gribbit's site:

a: disposition in politics to preserve what is established b: a political philosophy based on tradition and social stability, stressing established institutions, and preferring gradual development to abrupt change; the tendency to prefer an existing or traditional situation to change.

The problem of course is that this political philosophy is not based on individual rights. I brought up slavery as a traditional, established institution that was ended in this country not by gradual change, but by war.

Pair bonding among gays has been going on as long as our recorded history. The fact that a government institution imposes restrictions on it's benefits because of a prejudicial and anti-individual viewpoint should be cause for concern, not rejoicing.

I oppose the positions of anti-abortion and anti-gay marriage and anti-gay adoption because they are all positions where the state is used to enforce a moral viewpoint upon the liberties and freedoms of others. Any argument supporting those positions is inherently based on the premise that the state has a right, an obligation, to enforce a moral behavior by individuals on individuals in spite of their inalienable rights and I reject that premise as did our Founding Fathers.

Update: Last night I was working on the above post in my head...it actually kept popping up each time I stirred overnight. By the time I sat down this morning to write it, it was gone, but I tried to get it back and basically failed. The above was a flailing about a concept that seemed to have deserted me.

The point of my post last night, that I finally recalled upon listening to Rush while going for lunch, was traditionalism:

an established, or customary pattern of thought, action, or behavior: cultural continuity in social attitudes, customs, and institutions

After living and working with Victoria all these years, I have learned the legal concept: words have meaning. Isn't that Travis' point? That marriage means something that gay marriage does not? Maybe. Pair bonding has gone on, is going on, without any benefit of 'marriage'. People form bonds AND THEN get societies blessing in the form of a public marriage (wedding) and a legal marriage (license). Except in a few societies and cultures where marriages occur and then everyone HOPES there will be a pair bonding, the bond is the issue addressed by all the moral hand wringing.

Traditionalists want what has been good to be kept and what was bad to be left behind. But WHEN does something go from good to bad? How does anyone know except when others challenge the tradition/status quo?

People want traditionalists to reflect on the value of their customs on a more frequent basis. It is possible, even likely, that what might have been good 1,000 years ago, isn't now. Too long a time frame? It is possible what was good, slavery, 250 years ago, isn't now, or wasn't 150 years ago.

Pair bonding among gays has been going on as long as pair bonding among straights - that is MY opinion but based on recorded history, it is likely true. The fact that the number of same sex couples is small - then and even now - does not make it less 'normal' for a population. Interracial marriages were banned for centuries - still are in many places; inter-religious marriages were/are banned; They were/are banned because some tradition decided that pair bonding across some groups was detrimental to society. Some may argue that there is a qualitative difference between interracial/inter-religious couples and same sex couples and in general, I don't disagree. But as those banned marriages were in fact constructs, not functional differences, it is clear that traditionalists are not bound by simple things like gender and that the constructs were restrictions based on 'because we think it is wrong...'

Travis pointed out that gay couples don't procreate and therefore, don't work - in the sense they don't support the need for society to grow. This is a false argument. Society does not need every couple to replace itself. Society doesn't care if one couple has one child and another couple has 10 as long as in the end, there are sufficient children to grow society. Our, my, argument that couples past child-bearing age or non-capable couples do not result in society banning them from marriage. But that is beside the point, over thousands of years, gay couples continue to exist. It is a NORMAL variation in the species. You can't breed homosexuality out of the human genome (at least not yet). It is as ingrained as pair bonding.

To deny gays the same rights, because of a genetic difference, is at the heart of prejudice.

Travis complains that we seek to redefine marriage, an institution that is part of our genetic makeup. He is wrong. Pair bonding is what is at the heart of marriage. The institutions that society has created to formalize and bless those bondings are part of a tradition that NEEDS to be questioned and tested for relevance and value regularly.

Those traditions that deny the rights of one group are incompatible with our Constitution, incompatible with the principles set down by our Founding Fathers. That it took us 80 years to abolish slavery - the consequences of which are still with us today - speaks more to the intransigence of traditionalists than to the ability or inability of our institutions to change.

Our society is changing, it is only going to happen faster as we move forward. There are potential events on the horizon that will shake traditions and institutions to their core and unless we establish a foundation (already done for us, we just need to really embrace it) that has the ability to change with them, we will not survive, as a society, maybe as a species.

Time for traditionalists to embrace Conservatism.


Cross-posted with American Conservative Party (subscriber only discussion)

A three legged stool

You started here:

The gov't can do a lot of things, but it can't change the dictionary. Words mean things and at no time has marriage ever meant anything other than what it means.

It was clear over five or six thousand words, that the definition of marriage was the most important thing to you. Despite my repeated attempts to bring the discussion to rights - an area of conservative discussion - it kept coming back to this idea that the definition of marriage was historical, biological, sociological and psychologically ingrained in our makeup.

No amount of logic is capable of swaying what 150,000 years has set into genetic stone.

But. :)

In the mythical universe where I am the benevolent dictator (I know, God Forbid!) I really do think you would be pretty comfortable. If your partner died, you would inherit all custody rights, no one would cut off your retirement benefits from your partner if present. No one would take your kid away from you. No one would object to any special ceremony you would wish to perform, and there would probably be some simple way or form of legal paperwork that would allow you to live your life as you please and no one would threaten, fundamentally, your way of life. I would pretty much insist on it.

What would you call this benevolent offering of rights and priviledges?

I have stated, repeatedly, that I don't care about 'marriage'. I have been having several long chats on here about this issue - people can review them by reading the archived chat logs - and I have acknowledge there, and do here, that a significant MAJORITY of the left and some few on the right, are equally stuck on the 'marriage' issue. The left does, as you say, want you, you specifically Travis(!), and everyone else to proclaim "I now pronounce you ...whatever..." which I think is just a monumental waste of time and effort. First, there will be people on the lunatic, fringe, way out of their mind right that will SHOOT people coming out of a church. Their cousin on the fathers side never removed, will BLOW up the damn church. Now, just because some nutjobs will be criminals is not a reason do do something, it does however suggest a certain level of ingrained, social, biological inability to change that will always be with us.

You also said:

I am not against state's streamlining contract law, or procedures to make sure that visitation rights, rights of inheritance, or custody, etc. are honored, as in ANY contract, between ANY two people, gay or straight. I trust Federalism and the laboratory of the states, and the democratically elected legislatures (not the Judiciary or the Fed. Gov't) to work out the wheres and whys and hows.

Today, government licenses all couples that want to wed. A couple can go into a church and wed without that license and while the Church will recognize the marriage, the state will not. A couple can, once licensed, have a judge or justice wed them pretty much on the spot. The state will recognize the marriage, the Church will not.

With one exception, all the issues of divorce are handled legally, drawing from the 'contract' that the 'wedding' implied. The exception is adultery. Unless you get the Church to relieve you of your marital obligations, a legal divorce does not. Churches are different, and I don't want to get into the dogmatic issues there.

We are slowing getting to my point:

WHO, may I ask, is restraining your freedom?

There is a context to this comment that I have omitted, not to (hopefully) take you out of context, but to reduce the 10 paragraphs that preceded it when I don't think it will be necessary. That said, I linked it back to the original in case anyone wants to check.

I do think Gay marriage is wrong. I do not think it would be the end of the world as I know it. There simply aren't enough gays to matter frankly. That, and I trust in the family to survive any assault. We are already rebounding from the ruinous experiments of the sexual revolution. We can weather this too.

The comment I quoted 'out of context' and this one lead me a particular direction.

It led you there too:

It does not bother or diminish my marriage in any way because your relationship does not meet the requirements of marriage in any significant way. It is undoubtedly beneficial to you personally, but it does not provide anything like the same dynamic that my relationship does. And the evidence is that most gays are even less familial oriented than your partner and yourself.

The last line first. It is absolutely true. I don't understand, well, yes I do: it is not a bond of love as you have for your wife. This will sound WRONG to everyone but yours is not a bond of equals. You would be 1/2 the man you are, if you were not married. Your wife would be 1/2 the woman she is likewise. The joining of the two halves results in a sum greater than one. I know you UNDERSTAND this intrinsically because you are part of it. Gay relationships - the vast majority of them are the sum of their parts to one. The only gay relationships I have seen survive long term involves, very clearly, a pairing of unequals. Then, it works long term. Because most gay relationships fundamentally are based on a pairing of equals...now I will get shot at by both sides...

But the rest: our legal relationship will not diminish your marriage. Even if it were to be called marriage, it would not. First, as you say, we are too few. Second, if it did, your marriage would be a sham and it probably wouldn't deserve to survive. If the pairing is that dependent on outside comparisons that have zero to do with the couple, it is a dead relationship anyway. But it is not necessary to call our legal relationship marriage. Despite the loons that are stuck on the concept, it IS irrelevant to the fundamental goal - equal benefits under the law.

And you have already stated both your personal and fundamental support of those rights. Now all you have to do is give it a name you can live with.

We simply refuse to let you redefine the terms to suit your purposes.

You pick the term....

From a conversation on American Conservative Party

Lesser evil, or greater good...

Reading the Federalist Papers I realized how inadequate my education has been and that the Founders were, incredible.

It cannot have escaped those who have attended with candor to the arguments employed against the extensive powers of the government, that the authors of them have very little considered how far these powers were necessary means of attaining a necessary end. They have chosen rather to dwell on the inconveniences which must be unavoidably blended with all political advantages; and on the possible abuses which must be incident to every power or trust, of which a beneficial use can be made. This method of handling the subject cannot impose on the good sense of the people of America. It may display the subtlety of the writer; it may open a boundless field for rhetoric and declamation; it may inflame the passions of the unthinking, and may confirm the prejudices of the misthinking: but cool and candid people will at once reflect, that the purest of human blessings must have a portion of alloy in them; that the choice must always be made, if not of the lesser evil, at least of the GREATER, not the PERFECT, good; and that in every political institution, a power to advance the public happiness involves a discretion which may be misapplied and abused. They will see, therefore, that in all cases where power is to be conferred, the point first to be decided is, whether such a power be necessary to the public good; as the next will be, in case of an affirmative decision, to guard as effectually as possible against a perversion of the power to the public detriment.

Our choice is not to be the lesser of two evils, but greater good. These two posts I have made of the Federalist Papers excerpts are NOT meant to support John McCain. If anything, the Papers reveal a strong aversion to consider the personalities but rather to consider the principles espoused by the Constitution. I of course have a bias, even a prejudice, to consider the principle of the matter before even considering the positions for or against.

therefore, that in all cases where power is to be conferred, the point first to be decided is, whether such a power be necessary to the public good;

It is not whether the public good is being served, but whether the power is necessary in the first place. As a society, right now, we fail to even consider this.

Cross-posted to ACP

Why Hillary?

People...ok, men, need to be aware of this, because you may not get it. I noted elsewhere that Victoria is voting for Hillary because Hillary is a woman. I thought that was a bad reason to vote for her, and still do, but I did realize something this past weekend when all the pundits were all but calling Hillary dead in the water.

I would miss not having a woman as a potential Presidential candidate. Really, when you think about it, even Republicans are ok with the idea of a woman President. But other than Hillary, there are NO women even close to the point of running. THAT is what is supporting Hillary. For the first time we have a woman really, possibly, in a position to be President. If Hillary fails, it may be years, maybe decades, before another woman gets to the point of running with a serious chance.

I am opposed to Hillary on principled grounds, but anyone that dismisses the power of her run BECAUSE SHE IS A WOMAN risks pissing off 53% of the electorate. I apologized to Victoria.

Standing in line...

Ever go to a store and after wandering the aisles, head for the checkouts, and face 8 or 10 or 15 lines of varying sizes? Pick one that might be moving just a little faster than the others. Upon picking one that seems to be moving, you get in line and it seems that the clerk and everyone in front of you falls asleep. Meanwhile, the longest line has been reduced to the shortest. In total disregard for all the time you spent in the first line, you jump to the faster moving, shorter line. Only to have it stall and the line you were in, empty in record time.

Every time it happens you are reminded that you need to make your choice and stick to it. Well, Michigan and Florida are learning the hard way.

Disenfranchised by their own actions, they want something no one else is getting, a chance to do over their vote. And instead of actually doing the redo with the 8 or 10 candidates that existed at the time, there will be only 2 choices.

For years Republicans have complained that the Democrats were ignoring personal responsibility. It was only a matter of time before Democrats actually did so in a Presidential Primary Election (a P-Pee).

Foreclosure Bailout

Bumped: This is more important every day that banks clamor for some type of bailout:
A bill to allow the bankruptcy court to modify home loans is pending, HR 3609.

Much has been written about plans to help all the poor people facing foreclosure (What? You haven't seen anything? You must not be reading financial blogs...). The Fed is going to try to force mortgage servicers to freeze mortgage interest rates for people facing adjustments over the next year to 18 months.

The complaints about the plan are: only those people that are current on their payments but unable to afford future raised payments will qualify. Those that can afford higher payments or those already missing or late on payments will not qualify. One report suggested only 12% of people facing payment adjustments will qualify; the information necessary to make the determination includes income and expense details for all couple of million borrowers.

There is an easier way. Let anyone missing payments, or facing higher adjusted payments, file chapter 13 bankruptcy. The Federal Court requires detailed income and expense reports, a means test to determine how much is available for debt repayment and a single modification of the law will allow the court to freeze the interest rate on the mortgage for up to 5 years.

This way only those that really need the help get it, it is federally supervised, it helps borrowers get the rest of their finances in order and it is limited to 5 years.

Talk it up....

Something lighter

Victoria's father passed last week. We had to hop a plane and go to Florida to deal with the issues. We weren't gone long, left Wednesday night for Chicago, flew out Thursday, started driving his car back on Saturday, got home Monday.

On Saturday, before leaving Florida. We stopped by a gulf side beach and I collected a couple of shells for CJ, sticking my toes in the water for good measure. It was 70 degrees, the air, the water was low 60s I'd guess.

We came home to snow, zero degree temperatures and howling winds. Frankly, I don't remember a winter this cold or snowy (I know we set a record in Wisconsin, but I didn't always live here!).

So, as of yesterday, I am going to work to increase my carbon footprint by at least 20% by 2010.

Global warming....we really, REALLY, need to speed this up....

Immigration Enforcement and Recession

If you want to get some confirmation that the economy is going/gone into recession, look at the number of places that are beginning to enforce rules/laws against employment of illegals.

As people get nervous about their jobs, they are going to really get pissed off at an illegal still being employed. Enforcement of laws against employment of illegals is the political class trying to get ahead of a grassroots uproar over illegal employment when jobs are in short supply.

Watch...even democrats are going to jump on THIS bandwagon!

Free-Fall

The tech bubble caused a loss of about a trillion dollars in value in the stock market.

The real estate bubble is going to write off 3-5 trillion in value in real estate. Does that mean that the real estate bubble is 3 to 5 times worse. Would it be so simple, would we be so lucky. Most of the real estate is supporting debt obligations at the rate of 7-9 times the underlying value. That means 27 to 35 TRILLION in losses.

Our GDP is 13 Trillion so you think it is not possible? I will accept all the ridicule you want to heap on me, in 2010. Wait til then to unload on me.

Doom and Gloom Becomes a Debate of Ideas

The Doom and Gloom post of 2 days ago was prompted by a comment thread on Bizzyblog. The primary participant of that debate has asked to keep the discussion going in an open thread. Tom, the owner of Bizzyblog has suggested we move the discussion here and I am open to it.

I will post his first comment here and continue the discussion in the comments. I hope you follow along.


If we had to spend $150 billion, it should not be thrown up in the air to shower down aimlessly in the vain hope some of it will keep things going in a pump priming effort. Pump priming was always a failure in the long run since it never addressed the real economic issues, since it was throwing money at a problem instead of targeting the problem.

The problem as I understand it, is focused upon the solvency of the banking system to make home mortgages. Without the loans, essentially houses can not be bought or sold, few people have $300k in their pockets. The government would be better off injecting the $150 billion into Fannie Mae or Freddie Mac to undo the credit lock that has brought everything to a screeching halt. Secondly, any loans created by this injection would be disqualified from any derivative hedging action. It's ok to package a group of loans, but it's not ok to hedge them, the risk of default must be born by the mortgage borrower in the amount of the interest rate charged. In my mind, the amount of interest charged is no different than a credit card account, except with the important distinction of collateral. Then at least in 30 years time, we will get most of our money back ($150 billion) with interest.

American Conservative Party

NO!@ No one is invited to my place for pizza and beer!

Many Republicans, some independents and a bunch of other types have come to the general conclusion that the current two party system is well, not working for us.

So, a gentleman by the name of Bill Quick, the host and founder of The Daily Pundit, has given us space, encouragement and the opportunity to see if creating a new political party for conservatives is an idea whose time has come.

If you are a conservative, or are not a [insert variable here], come by and take a look.

Doom and gloom

Last week, in response to a post by a friend on the report of GDP, I posted an opinion about the size of the change. What followed on that blog was a long discussion that I am going to excerpt here. I am only including my comments as I do not have permission to quote someone else's. The discussion will illustrate some issues I have with the market and why I am generally downbeat about the near future.



I once had a book “How to Get Rich on the Obvious”. In it the author argued that looking at numbers in a stock market or an annual report meant nothing. He would go to a bowling alley and see lanes filled night after night - he bought bowling equipment providers - when the alleys’ starting having empty lanes, he sold.

For months, many months, housing has been declining. The empty developments, the run on for sale signs, has indicated at least a part of the economy wasn’t very rosy. The October employment figures showed an INCREASE in hiring in financial and real estate when mortgage brokers, lenders and real estate agencies were closing faster than locksmiths could change the hardware.

The housing ponzi scheme got interrupted in early 2007, the financial ponzi markets supported by housing ponzi got interrupted last August. With 687 TRILLION in financial derivatives outstanding and no one knowing how much they are really worth, lending - a necessary precursor to economic growth has locked up like Wisconsin lakes in January.

Sorry about being long, but a few of us were surprised that the GDP came in as HIGH as it did…!

a question asking about the quantity of derivatives

Nope, TRILLION. Derivatives are a nightmare behind the financial markets. The people that watch the financial markets are way beyond doom and gloom, they are just watching to see how far and how many are going to down the drain.

I will point you to this article.
http://www.minyanville.com/articles/index.php?a=15164

again, a question about what derivatives are used for...


The big use is interest rate hedges and risk on interest bearing paper hedges. Big changes in interest rates are bad for hedging - regardless of direction. And as most of the mortgage and commercial paper has been leverage 8-10x, meaning even small changes in the value of the underlying assets or changes in the interest rates can have big impacts. The financial market freeze in August was caused (primarily) but an unwillingness to roll over commercial paper that had mortgage paper as a underlying asset - no one knew the value of the underlying mortgages because the default rates were jumping. Remember default rates in the .5 or .6 range were ordinary, but defaults were increasing to .8 or .9 and have continued to climb.

As default levels continue to rise, the underlying valuations become questionable. The hedges, leveraged 8-10x, can not tolerate even small changes. Some of the underlying paper has been valued at 20 cents on the dollar. Such fire sale prices
call into question virtually everything of similar type. Everyone KNOWS that the valuations are higher than 20 cents, but everyone is scared that once things start hitting the market, no one can pretend that the paper they are holding at $1, is
worth that much. Another issue: the insurers of risk, the AAA insurers, have so little capital in comparison to their exposure, that losses of even 4 or 5 cents on the dollar will wipe them out. They lose their AAA rating, the paper they insure will lose theirs, and funds that require only AAA paper in their holdings will have to dump/fire sale those assets, leading to further price pressure down.


what is the impact of the Fed rate cut?


I have tried to avoid detail in my posts because, well, it would be long and I am trying to distill several months of discussions and posts. The issue in the financial markets is either one of liquidity or solvency. If there is a problem with liquidity, then the Fed injecting funds and lower the rates will help. However, if the issue is with solvency, then you will see lots of cash hoarding and adding funds and lower rates will just lead to inflation, but no real help in the markets. Right now, cash is sitting on the sidelines which is why things like the stock market are holding up really well…the cash has to go somewhere, preferably liquid and well defined as to value. You may recall some press about 6 weeks ago about the Fed and the European Bank injecting billions into the market…well, some digging revealed that the Fed did just the opposite, it TOOK funds out of the market. Our problem is solvency, not liquidity. No one trusts the value of the asset base and no one wants to lend based on assets they can’t determine the value of.

The Fed move calms the superficial markets, but it does nothing to the underlying problems…except maybe to give everyone some time to figure out how to put some trust back into the markets. But since last August, most of us have just been waiting for the other shoe to drop.

I will agree with Tom about this: there has been a lot of talking ‘down’ the economy. In some quarters, there is a desire to get the shoe to drop as quickly as possible, to get the drama and damage over. The alternative is to drag the problem out over many, many months, crimping the economy the entire time. It also gives the politicians more time to ’solve’ the problem by making it worse.

The derivatives issue has to be unwound, but there is almost no way around the damage it is going to cause. The question is: do you want 6 months of financial hell and serious asset deflation and then a slow recovery? Or would you prefer to have anemic growth for the next 3 years and then a very long, drawn out recovery that takes another 3 or so years just to get us back to today?

Frankly, from our point of view, there is no third choice. (I have one, but no one likes it - a nuke goes off in an American city. The financial markets force the s**tstorm during the chaos as a cover. See, no one likes that choice - can’t say as I blame them…but I don’t live near DC or NY either).


Thanks, this has been dragging on for almost 6 months. During that time we have seen a steady erosion in confidence in our ability to handle our economy. We are also seeing foreign creditors blaming the American people for financial misconduct leading to serious financial impairments in their own countries. The ’sub-prime’ mess has
hurt overseas banks almost as bad as our own. The result is the people that lend us money to finance our buying, are no longer confident that we are doing so honestly.

And, frankly, I don’t give a rats butt about which moron is in the White House, I care much more about Americans and our ability to live freely. Having a couple years of stagnant or little growth is NOT in our best interests. I don’t believe (based on research) that a recession - classical definition of 2 quarters of negative GDP, something we haven’t seen in 26 years - is possible. But it is possible to have .5 GDP growth per year for 5 years. Consider the limitations that would impose on our economy.

Without lending, there is no growth. America does not grow out of cash flow. You have probably heard many times in the last several months that mortgage applications continue to rise! Yea, right? What you haven’t heard is that mortgage FUNDING has dropped through the floor. Over 200 mortgage lenders have failed/closed their doors in the last 6 months.

In many places in the US housing prices did not skyrocket. But in more than 40 states, the median price of a home is beyond the range of a median income family - based on more traditional lending practices. Either incomes have to rise (not going to happen in a .5% GDP growth environment) or prices have to come DOWN…deflation. Reducing the Fed rate encourages INflation in absence of solvency.

Eating around a bad apple hoping to get good ones before they all go bad is as stupid as ignoring a wound because 99% of the rest of the body is fine.

I have privately said in the past that while the visible economy (the stuff we see in the news every day) appears to be fine, the foundation of our economy is rotten as all hell. Most people don’t know they have a termite infestation till the house falls down around them. Since August (and for some of us longer than that), the damage in our economy is apparent, if you are willing to look.


Failing to act will not change the facts that there is a very serious disconnect between our ability to earn and the debt that is out there, not just in the US but global. If we follow your plan, we are likely to see the same thing here that Japan has been dealing with for over a decade. The Fed is not looking out for the economy, it is looking out for it’s clientèle, the banks.

Because you don’t know me, let me state it: I am a fiscal conservative, (a registered independent - was a Republican for 25 years until 2005) and hold a degree in Economics. I work for a bankruptcy attorney (who happens to be my life partner, a raging liberal and a pretty smart lady in her own right).


Our problem is not liquidity, it is solvency.


Let me point you to a specific post that addresses the liquidity issues. Please, let me be clear. The problem in the financial markets is one of solvency - lenders do not know what the value of the underlying assets are. Default rates on mortgage lending have increased ‘dramatically’. Yes, a half a percentage point is a lot when you leverage the paper 10 times. Fed rate cuts help liquidity and only marginally, solvency (real cheap money makes even risky lending potentially profitable).



You are right that there is plenty of cash to lend. It is just no one is lending. So, I think you are getting a point about it not being a liquidity issue. But your point:

“So what I think you and Hussman are saying is the value of the securities used as collateral for the Repurchase Agreement to protect against default as the underlying basis for the transaction is of questionable value? But if that is the case, as long as a default does not occur, no one knows the difference”

This is the issue. For a long time, commercial paper that was issued using mortgage pools as part of the collateral was simply carried at par value and rolled over (most CP is short term - 6 months or less). As long as default rates were within parameters covered by the risk hedges, no one worried. When the default rates increased, the risk hedges started to kick in. In early 2007, the problem was ‘contained’ to small geographic areas, and specific types of loans, the so-called, sub-prime mess. But it wasn’t just sub-prime. Those mortgages were pooled with other prime mortgages and
sliced and diced and the returns sold off in chunks called trances. The trances were used as collateral for more loans, which in turn were sliced and diced and used as collateral. The paper was sold all over the world to financial organizations that had money to lend, but only would lend on AAA paper. As the defaults continued to rise, and spread, more and more people were finding out that a default in San Diego was affecting the default rate hedges on commercial paper being held in France. The more people looked at what they actually bought (instead of relying just on the AAA
rating), the more everyone began to realize that the sub prime mess was at the root of a lot of CDOs (collateralized debt obligations). The percentage wasn’t big, but again, when you have leveraged something 8 or 10 times, small gains are magnified - YEA! bigger returns!! - but so are small losses…BOO! People began to wonder just how bad the default issue was.

All through early 2007, the default rates continued to rise, .55, .56, .58, .60, .62 (examples, not exact). By July, the rate increase which had not shown any slowing, started showing up in places that were no where near residential mortgages. It started showing up in commercial loans. About 100m in CDOs were due to roll over in early August and the holders of the paper couldn’t get anyone to buy. Well, that isn’t true, they could get a buyer, at 20 cents on the dollar. WHOA! By the end of August, the problem had spread and the markets realized this was not a single issue.

Things have not ‘fallen’ apart because financial markets are doing what you suggest DC, they are pretending the value is still par because they are not selling, or lending, or defaulting - even when defaults are rising steadily - so that no one has to actually come up with a real market value. There have been lots of private placements of the paper, but most of it has been at an estimated 80 cents on the dollar (but some appear to be considerably worse). Where assets had to be sold, the price has been 20 cents or less.

The Fed did do one thing in November. It allowed banks to use whatever collateral THEY wanted to use to borrow from the Fed - before, it had to be bona fide AAA assets. Borrowing from the Fed grew a bunch in December. That helped loosen things a little.

Last point, some of the CDOs done in late 2006 and early 2007 have default rates approaching 50%, not 5 percent, not .5 percent, 50%. Those CDOs were sliced and diced and leveraged to the point where 10 million of CDO is supporting 60-90 million in debt. I have not seen any good estimate of how much of the CDOs were written then, but a couple of billions would not be off.

I wanted to address the issue of flipping and illegal labor leading to overbuilding. Flipping and speculation did fuel price bubbles in several areas, notably, California, Nevada, Arizona, and Florida. But as I commented earlier, 40 states
have median home prices above the median income level. I think California had the worse, only about 9% of the people in California had sufficient income to buy a median priced home. That means a lot of people buying homes did so in a way that risks default.

We were in Santa Barbara CA in late August. We went to an open house in a very generic neighborhood, no views, 6,000 sq ft lot, 1100 sq ft home, 3b/2b, small backyard. Nice home, nothing special. 1.3million. A family sized home in a Santa
Barbara ’suburb’ about 2 miles away from the 1.3m home, near the high school, 880k. Who can afford that?

Do you know where the people I hang with lay the blame? Greenspan and the Fed. You can afford a lot more home when the interest rate is 2% than you can when the rate is 6%. The significantly low interest rates helped build debt. When a home is appreciating at 5% or more a year and your loan is 2, or 3, or even 4%, you pile on the debt. Did you know that the Fed is offering interest rates now that are below inflation! What does that suggest to you?


If the Fed is offering rates below inflation, they must believe inflation is going to go down. Negative real interest rates usually lead to asset bubbles as cheap money seeks investments.

Retail commercial appears to be overbuilt and default rates on commercial loans have been going up for the last 6 months. Right now, almost every type of non-governmental debt is defaulting at increasing rates. California is already suffering from the housing mess with lower revenues. The likelihood of a state defaulting is next to zero, but smaller muni’s might have some problems soon. Credit card, auto loans, commercial real estate are all showing higher default rates.

4 years ago foreclosures were about 500,000 a year, we may hit 2.75m this year (my prediction last year was 2m, we hit 2.2m). Bankruptcies which were running about 1.3m prior to the bankruptcy reform law were just under 900,000 last year. I expect them to be close to 1.3m this year (and if things do go to hell in a hand basket, the number could be 1.6m, a record.

BTW, many consider the probability of a Citigroup bankruptcy at better than 50% this year.

Oh, maybe a final comment: you may be only minimally aware of the issue with financial insurers. Many bonds and other commercial paper are insured against losses. For many years these firms mainly insured bonds issued by municipalities. But several years ago, they branched out. Insuring CDOs and their many offspring led to nice new profits. The problem was their risk was growing from practically nothing (muni’s rarely default) to considerable but their capitalization was not keeping up. In many cases, a municipality with less than stellar rating, say A+, could purchase insurance from a AAA insurer and get an AA or better rating on the issue. The savings on interest would more than cover the insurance premium. The risk of default was transferred to the insurer. CDOs that are defaulting fall back on the insurers, several of the largest are MBIC and Ambac. About a week ago, Ambac was stripped of its AAA rating. Fitch, a credit rating agency, worried about the exposure. Ambac issued new debt earlier in January with a rate of 14%. A AAA insurer paying 14%
interest on it’s debt!? Worse, the price quickly dropped and the rate is now 19%. The paper insured by Ambac now has a risk of having their ratings also dropped. S&P quietly, around midnight Wednesday morning, indicated it had put over 500 Billion in bonds on a negative ratings watch.

Funds that are required to hold only AAA paper might be forced to sell assets that lose their ratings. 500 Billion in assets coming on the market would depress prices…deflation of assets.

While everything looks nice and bright in the economy, there is a storm of terrible size on the horizon. It is the structural issues that are a problem and it is getting little or no press because the financial markets are all standing around a bomb hoping it won’t go off, and trying to stay as quiet as possible while working very hard to figure someway out of the mess.


I appreciate the opportunity. The problem with unwinding, is the unwinding. Unlike futures contracts that can just expire, in most cases there is a value associated with both sides of the transaction. In most cases we have an underlying asset. Only if both parties to the transaction agree to the fiction of par, do we get a 'carefree’ unwind. Unfortunately, everyone wants their money back. Remember how this starts: I put a package of loans together, say 10m worth. I sell you that package for 10m. But there is risk. So, as a hedge to the risk, insurance is purchased or there is a corresponding interest or default hedge. If the package is AAA, then insurance is cheaper as the default likelihood is low. Now both I and the insurer have all but guaranteed AAA. You take your package and add it to 4 others you already own and sell all 5 to someone else looking for AAA paper.

I have kinda skipped over the tranches part. A lot of the paper is broken up this way: package of 10m is broken into 10 tranches. Each tranche is valued differently and has different rights. 1st tranche pays out first but has a lower rate, call it prime+.01; 2nd tranche pays out next, rate is prime+.015 with a slightly higher default risk, and so on. 1st tranche is AAA, second, maybe AA+, by the time we get to the 10th tranche, we have maybe C+, prime+1.

If the default rate increases, several things happen at once: the tranches start defaulting. Hedges start collapsing on the lower tranches and insurance kicks in on the higher ones. We lost several hedge funds last summer and fall - completely wiped out because the hedges turned and the funds had to cover. After the hedges started failing, the insurers started having capital problems.

Some of the big packagers made some promises to their buyers: if the defaults hit a certain point, the sellers would take back the packages at par. A safe thing under many circumstances, bad idea now. Because the sellers were banking entities, there are capital requirements and if the packages started coming back, they would need to raise capital….a lot of capital. So we have seen over the last several months some high profile capital raising. Right now both feds (FED and regulators) are letting a lot of the paper sit off the balance sheet. It can’t stay there forever.

Back to the unwinds: I sold you a package worth 10m. You took it with 4 just like it and sold them to Joe Sovereign Wealth Fund for 50m. JSWF is getting prime+1 for all his trouble…except, it is not prime+1 because 20% of the notes are defaulting. He either sucks it up and takes the loss, or he tries to pawn it off to someone else. Except no one else wants it. By the way, I took the 10m I got and went out and bought 42 more mortgages to make another package. So did you with your 50m. Only now, your buyers are not buying, and so you can’t. All of a sudden, I can’t buy more mortgages so the originators have to stop too. No one wants tranches, they want all AAA paper. Prime paper was fine in August and September, then prime paper defaults started rising in October and really got some steam up in November.

For the people that bought rights to the tranches, but not the underlying assets, they are fine except, well, they are sitting on a lot of money with no where to put it. They have to write off the income loss against other profits/income…unless their income is..oh, I don’t know…oil money or positive current accounts. Then the cash is still pouring in with no where for it to do but the mattresses. Lack of trust sucks. What happens when you have an abundance of something? It’s value declines.

For the people that bought the securities, they have a choice, hold them and wait or write them off. The only problem is that almost no one bought to hold them, they were used as collateral. And accounting rules are pretty strict in most places. Every once in a while, you have to say how much your assets are worth. Oh, and if you happen to be using said collateral to meet financial benchmarks, say to keep your AAA rating, or to keep your cash flow necessary line of credit…mark to market becomes important.

Repurchase agreements: if I borrow 10m from you and pledge my package, a package we both know now is worth 9m, or 8m, then you are going to want one of two things - repayment or a much higher interest rate. If I have to repay you, I have to raise 10m. How? The method I have used for the last 5 years requires me buying more mortgages and reselling them. A market that has dried up in several ways (property depreciation being one!). Or selling assets, assets everyone knows are worth less, but how much less? Put the paper on the market and get 20cents on the dollar? That is what is happening. The alternative is to agree to rollover the paper, but at a much higher interest rate. A serious impact on cash flow. And we still have to set a value (some currently at 89cents…a loss, but only on paper right now.

The big financial packagers haven’t really been making money on the interest earned, but on the fees for packaging and selling. Lose those fees and well, income drys up.

CDO’s are all but dead. There is no current market and with the exception of some private placements, none apparently have sold for months. Most repurchases are for less than 6 months, some considerably shorter, some, not a lot, for more than a year. For the banks with access to the Fed, the Fed is taking just about any collateral and the banks are using it. The collateral has to be redeemed at some point and it has to be redeemed at par which means somewhere the loss is going to show up.

You gave me 10m for my package. You will want your 10m back even if the package is only worth 2m. Worse, at some point, your people are going to want to know that the 10m loan you made is secured well. Right now, China holds a lot of paper and there is some belief that they are LOSING 4 billion a month because of the pricing issues. They are willing, up to the end of 2007 to tolerate it because of their exports to us helps their economy at home. Over the last 30 days, China appears to be ‘unhappy’ with the current situation.

All because of some flippers in Orange County California? Sub prime mess? Several things have happened. First securitization. Packaging of mortgages and selling them off let the originators and first packagers off the hook for quality. Who cared if they defaulted in 2 or 4 years? The originators got their fees (and nice they were) and the opportunity to sell more. The packagers were off the hook for the same reason. Everyone that was looking to add just a little bit more to their return could buy AAA paper and get .01% more…bump the volume to 5 or 10 billion and it adds up. Hedgers sprang up like weeds and made billions. Add really low interest rates, easy money all chasing an asset and it’s price has only one way to go. Make it easy to refinance and it doesn’t matter about no stinking payments! The financial gurus figured out how to take a $500,000, 30 year mortgage paying 5% and slice and dice and repackage it into a 5m package paying 5.1% and $500,000 in fees…just have to leverage it 8 or 10 times and know, know without a doubt, the value of the underlying asset was always to go to up…more than 5.1%. Oh, and you had to have a lot of buyers
convinced you were right.

Every ponzi scheme ends, eventually.

About my research. I do not believe a recession is possible. However, NO ONE could have foreseen 500 trillion in debt obligations. The number is staggering. A 1% loss wipes out our financial system. No one wants to do what the law and financial rules says has to happen, least of all the governments charged with enforcement. There
is going to be pain, and it is going to be very bad. But no one is willing to even guess how bad, or even to try to start slowly for fear that once started, the cascade will make Niagra look like a drippy faucet.

Predictions

I just posted this in the comments on another site, and decided I need a record so we can all snicker, laugh or cry in 4 years.

2/1/2008

The Republican Party is about to get exactly what it wants.

Predictions for 2008-2012:
1. The first recession in 26 years will last between 8 and 11 months and cause widespread dislocations specifically in housing.
2. Ford will declare bankruptcy. As wi