Mark to Market or Fair Value Accounting has been identified as one of the principal villains in the credit crisis brought on by subprime loans. Essentially the rule requires accountants to revalue investment assets to reflect today's market value. With no market or at best a 'fire-sale" market, mortgage holders lose borrowing capability.

Lets let the Economist explain it:

From LGF:

Stanley Kurtz is digging into Barack Obama’s connections to ACORN, and ACORN’s part in the financial meltdown: O’s Dangerous Pals.

WHAT exactly does a “community organizer” do? Barack Obama’s rise has left many Americans asking themselves that question. Here’s a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit.

In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers.

In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.

THE seeds of today’s financial meltdown lie in the Community Reinvestment Act - a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.

CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.

Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.

In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.

P.J. Gladnick at NewsBusters exposes this liberal generalization:

From Tom Tancredo's website:
Tancredo Tells United Nations to Get Out

Legislation will seize U.N. property amid continual anti-American, anti-Jewish sentiment

( WASHINGTON, DC ) – U.S. Rep. Tom Tancredo (R-Littleton) introduced legislation today that would effectively move the United Nations headquarters out of the United States. The legislation is being introduced amid incessant anti-American
and anti-Jewish political grandstanding from the podium of the General Assembly.

“The U.N. has coddled brutal dictators, anti-Semites, state sponsors of terrorism, and nuclear proliferators – while excluding democratic countries from membership and turning a blind eye to humanitarian tragedies and gross violations of human rights around the globe,” Tancredo said. “The U.N.’s continued presence in the United States is an embarrassment to our nation, and the time has come for this ineffective organization to pack its bags and hit the road.”

The United Nations is hosting dictators from around the world this week, including President Mahmoud Ahmadinejad, Iran’s
brutal dictator. His speech has drawn thousands of protestors in New York City.

Tancredo’s bill, dubbed the U.N. Eviction Act, would direct
Attorney General Michael Mukasey to initiate condemnation proceedings against all United Nations properties within the United States, and sell the property to the highest bidder on the open market. The proceeds will be given to the Treasury Department to pay down the national debt. The bill would also bar the future purchase of property in the United States or U.S. territories by the U.N. or any of its agencies, and revokes the diplomatic privileges and immunities that U.N. officials and representatives currently enjoy.

“I refuse to sit idly by while Americans are forced to host Islamofascist dictators, like Mahmoud Ahmadinejad, so they can spew anti-American rhetoric just blocks from Ground Zero,” Tancredo continued.

The United Nations, an organization known for its bureaucracy and conciliatory actions, has become a showcase for anti-American dictators like Hugo Chavez, Fidel Castro and, of course, Ahmadinejad. The organization has also become little more than a rubber stamp for Chinese and Russian foreign policy initiatives – blocking membership by the democratic nation of Taiwan in the world body, and failing to take any meaningful steps to halt the ongoing genocide in Sudan or the illicit nuclear programs in North Korea and Iran.

“If the U.N. is so keen to accommodate the foreign policy demands of rogue nations and dictatorships, perhaps the world body might be more comfortable relocating to one,” concluded Tancredo. “I’m sure Ban Ki-Moon will have no trouble securing a new location in downtown Pyongyang or Tehran.”

Messrs. Paulson, Bernanke and Cox

This Jerry Bowyer article originally appeared on CNBC.com.

I just got off the phone with Ed Lazear (Chairman of the President's Council of Economic Advisors), and he made a good case for the severity of the crisis, especially negative interest rate on t-bills. It got bad last week. The sun turned to sackcloth, moon ran blood red, burning hailstone, etc....crazy stuff. Something had to be done.

The problem is that they are just beginning to understand what a few of us (including Larry Kudlow and Steve Forbes) have seen all along:

Over-regulation brought us to this crisis, not under-regulation. If we get the diagnosis wrong, then the prescription will be wrong too.

Think of the analogy of a 'bail out': someone knocks a hole in a boat and the water rushes in. The crew bails water out of the boat to keep it from sinking. If things are really bad, another boat comes and helps. This analogy points to the real problem: the hole! If you patch the hole early, no bailing is needed. If you patch it very late, the whole ship needs to go into dry dock. But the bailing out only makes sense in the context of patching the original problem. The worst thing to do would be to allow the ship to sink to make some kind of populist political point. No, revise that:

The worst thing to do would be to take the left's view and say "too much water in the boat, let's knock more holes into it so the water can get out."

That's what more regs would mean. Place salary ceilings on "every company that benefits in any way whatsoever from the bailout" as Barney Frank said today on CNBC, and you'll get a talent exodus. Give judges the power to obviate existing mortgage contracts with investors around the world - the dollar will plunge. Every one of those proposals is another hole in the boat.

The best thing to do is to patch the holes. Here they are:

Some are talking about putting a hold on the mark to market regulations. That's a start but not enough. Don't suspend mark to market, abolish it. It's part of the whole Sarbox, Spitzer, FAS 157 wave of punitive regulation after Enron. It makes no sense to impose and universalize temporary downturns, especially during panics.

Abolish the Bank Holding Company Act. It's a remnant of the 1920s before branch banking. Its only current effect is to keep private equity from buying majority stakes in troubled banks. Goldman's decision yesterday just illustrates the problem. They had to change structure in order to buy up other banks. This is nuts. Get rid of this dinosaur and private equity will start the capital infusions.

Abolish the Community Reinvestment Act. Forcing banks to make minority loans is the original sin out of which came the Subprime mortgage industry. Let banks decide where to loan; that's their job. Leave identity politics out of our credit system.

Do all of the above and I'm not at all sure that any bailout would still be needed. Before we subsidize these institutions, let's stop the things we are already doing to collapse them. Back to Hippocrates: First of all, do no harm.

If only life was simple and the current situation was such that the sly political foxes (Chris Dodd, Barney Frank, Harry Reid, Nancy Pelosi, Chuck Shumer, Barack Obama and yes, John McCain) were not once again counting the chickens. Farmer George Bush and his hired hands, Chris Cox, Ben Bernanke, and Henry Paulson are shouting "BAILOUT", and every financial institution in the county wants a piece of the trillion dollar givaway. Capitalism has been our strength, soclalism will bury us.

Tony Blankley at RealClearPolitics tells us how the media campaigns hard for Obama:

The mainstream media have gone over the line and are now straight-out propagandists for the Obama campaign.

While they have been liberal and blinkered in their worldview for decades, in 2007-08, for the first time, the major media consciously are covering for one candidate for president and consciously are knifing the other. This is no longer journalism; it is simply propaganda. (The American left-wing version of the Völkischer Beobachter cannot be far behind.)

And as a result, we are less than seven weeks away from possibly electing a president who has not been thoroughly or even halfway honestly presented to the country by our watchdogs — the press. The image of Obama that the press has presented to the public is not a fair approximation of the real man. They consciously have ignored whole years of his life and have shown a lack of curiosity about such gaps, which bespeaks a lack of journalistic instinct.

[...]

But worse than all the unfair and distorted reporting and image projecting are the shocking gaps in Obama’s life that are not reported at all. The major media simply have not reported on Obama’s two years at New York’s Columbia University, where, among other things, he lived a mere quarter-mile from former terrorist Bill Ayers. Later, they both ended up as neighbors and associates in Chicago. Obama denies more than a passing relationship with Ayers. Should the media be curious? In only two weeks, the media have focused on all the colleges Gov. Palin has attended, her husband’s driving habits 20 years ago, and the close criticism of the political opponents Gov. Palin had when she was mayor of Wasilla, Alaska.

But in two years, they haven’t bothered to see how close Obama was with the terrorist Ayers.

Nor have the media paid any serious attention to Obama’s rise in Chicago politics. How did honest Obama rise in the famously sordid Chicago political machine with the full support of Boss Daley? Despite the great — and unflattering — details on Obama’s Chicago years presented in David Freddoso’s new book on Obama, the mainstream media continue to ignore both the facts and the book. It took a British publication, The Economist, to give Freddoso’s book a review with fair comment.

The public image of Obama as an idealistic, post-race, post-partisan, well-spoken and honest young man with the wisdom and courage befitting a great national leader is a confection spun by a willing conspiracy of Obama, his publicist (David Axelrod) and most of the senior editors, producers and reporters of the national media.

Perhaps that is why the National Journal’s respected correspondent Stuart Taylor wrote, “The media can no longer be trusted to provide accurate and fair campaign reporting and analysis.”

The public will be voting based on the idealized image of the man who never was. If he wins, however, we will be governed by the sunken, cynical man Obama really is. One can only hope that the senior journalists will be judged as harshly for their professional misconduct as Wall Street's leaders currently are for their failings.

Think Progress!

According to Biden: "When the stock market crashed, Franklin Roosevelt got on the television and didn't just talk about the princes of greed. He said, 'Look, here's what happened.'"

Reason's Jesse Walker observes: "And if you owned an experimental TV set in 1929, you would have seen him. And you would have said to yourself, 'Who is that guy? What happened to President Hoover?'"

McCain is losing it. He wants to blame Chris Cox and the SEC for actions taken by Chris Dodd, Barney Frank and the Dems to block increased oversight of Freddie and Fannie. Worse, he wants to appoint lefty Dem Andrew Cuomo to head up Security and Exchange. Reason Magazine's Hit & Run says "Cuomo? Hell no."

Reason cites this damning expose by Wayne Barrett in (of all places) the Village Voice.

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why... the near-collapse of these dual pillars in recent weeks is rooted in the HUD junkyard, where every Cuomo decision discussed here was later ratified by his Bush successors.

Why is it too much to ask American politicians to be honest about the number of uninsured in this country? Sally Pipes, a columnist for The DC Examiner, sheds some light on our 45 million people without health insurance:

Officials at the U.S. Census Bureau recently released new health insurance figures purporting to show that the number of Americans officially classified as uninsured in 2007 was 45.7 million, down from 47 million in 2006.

Despite the decline, the new figure is being spun as proof positive that America's healthcare system is still in awful shape. Advocates of socialized medicine are repeating it ad nauseam, arguing that the main problem with the country's health system is the massive uninsured population. After all, if a whopping 15 percent of the population is uninsured, then the current system must be failing.

But it’s grossly misleading to use the Census Bureau number as an indication of a crisis. A closer look at the agency’s survey methods reveals that the situation isn’t nearly as bad as the pundits and the politicians would have you believe.

The Census Bureau doesn't tell us that 45.7 million people are chronically uninsured for the entire year. The agency has stated elsewhere that "the CPS estimate of the number of people without health insurance more closely approximates the number of people who are uninsured at a specific point in time during the year than the number of people uninsured for the entire year."

In other words, many of the survey respondents counted as "uninsured" may have experienced only a temporary interruption in their insurance. This circumstance is quite common. When workers quit or lose their job, they are technically uninsured. But they are usually in transition between one employer-provided insurance policy and another.

Despite the media’s tendency to depict the 45.7 million uninsured as a single, homogeneous group, the demographic character of these individuals cuts across age, ethnic, and socioeconomic categories. Many are uninsured for reasons unrelated to cost and don’t need to be “rescued” by mandatory socialized medicine.

We may be accustomed to thinking of the uninsured as low-income individuals and struggling families. But the Census Bureau data show that many are relatively affluent. Over 17.5 million -- 38 percent -- of the uninsured make more than $50,000 a year. And 9.1 million have an annual income of over $75,000 a year.

How can this be? In part, it's because a number of financially comfortable young Americans choose not to purchase health insurance. Known in the healthcare trade as the "invincibles" -- because they’re so sure they won't get sick -- these young singles would rather keep their money than shell out for expensive monthly insurance premiums because of the many mandates and regulations place on insurers by the states.

This intentional avoidance of health insurance is quite common. According to the Commonwealth Fund, Americans age 19-29 comprise one of the largest and fastest-growing segments of the uninsured population.

If the fact that over a third of the uninsured are pulling down more than $50,000 a year isn’t shocking enough, how about this: Nearly 10 million uninsured aren't even U.S. citizens!

It's certainly unfortunate that these individuals don't have health insurance, of course. But they can still get free treatment in emergency rooms. And even a fully nationalized healthcare system would be unlikely to provide them with health insurance.

Another 14 million of the uninsured are fully eligible for government assistance through programs like Medicare, Medicaid, and SCHIP.

How does that break down? A 2008 study by the Georgetown University Health Policy Institute showed that a whopping 70 percent of uninsured children are eligible for Medicaid, SCHIP, or both programs. And roughly 27 percent of non-elderly Americans who are eligible for Medicaid haven’t enrolled and simply live their lives without health insurance, according to the Urban Institute.

Is it really fair to say that such individuals don’t have health insurance? Further, if millions of Americans aren't availing themselves of taxpayer-funded coverage, why should we think that an even bigger government healthcare bureaucracy would solve the problem?

Of course, there are people who really do fall through the cracks. These are the chronically uninsured -- the working poor. They are people who struggle to hold down jobs and support their families. They earn less than $50,000 per year but too much to qualify for government help. They simply can’t afford
insurance.

There are roughly 8 million of these chronically uninsured. Any attempt to solve the problem of the uninsured should focus on this narrow slice of the 45.7 million person pie.

Stuart Browning at FreeMarketCure.Com provides additional insight in his 10 minute video above.

From Israel Insider:

Organizers of an anti-Iran rally today withdrew an invitation to Alaska Gov. Sarah Palin, indicating that controversy over the Republican vice presidential nominee's participation in Monday's planned rally again the appearance of Iranian leader Mahmoud Ahmedinejad at the United Nations was distracting from the unifying purpose of the rally. Tuesday night Sen. Hillary Clinton backed out of her commitment to come after learning that Palin would be attending, complaining that she did not know it would be a "partisan" event and had not been informed that Palin had been invited. But Republican presidential nominee Sen. John McCain blamed "Democratic partisans" for pressuring the organizers to disinvite Palin and criticized his Democratic rival, Sen. Barack Obama, for failing to participate in the event.

Governor Palin and I share a strong belief that a nuclear armed Iran poses a grave threat to the security of Americans and to our allies. Iran is the world's leading state sponsor of terrorism. The risk that Iran would provide terrorists with a nuclear weapon is too great for the world to ignore. Iranian President Ahmadinejad has denied the Holocaust occurred and called Israel a 'stinking corpse.' A nuclear-armed Iran would destabilize the entire region. Preventing Iran from acquiring nuclear weapons should be a shared goal of every American, not another occasion for partisan posturing. Governor Palin was pleased to accept an invitation to address this rally and show her resolve on this grave national security issue, regrettably that invitation has since been withdrawn under pressure from Democratic partisans. We stand shoulder to shoulder with Republicans, Democrats and independents alike to oppose Ahmadinejad's goal of a nuclear armed Iran. Senator Obama's campaign had the opportunity to join us. Senator Obama chose politics rather than the national interest.

Republican Jewish Coalition (RJC) Executive Director Matt Brooks issued the following statement today:

Iranian President Mahmoud Ahmadenijad has been quite clear of his intentions to acquire nuclear weapons; his anti-Semitic rants and desire to annihilate Israel are well-known. Today Senators Obama and Biden and their supporters have handed Ahmadenijad a big win. What should have been a strong effort by the Jewish community to stand up and show the world that we are united in our fight against this madman has instead been hijacked by those with a political agenda. This is a very sad day for the Jewish community. We are extremely disappointed that in response to political pressure from partisan organizations, Governor Palin has been disinvited to the "Stop Iran" rally. In addition, we are disappointed that neither Senator Obama nor Senator Biden chose to participate in this important event. Yet again they have missed an opportunity to stand up to Iran and have their voices heard.This is but another example of why Senator Obama continues to have a problem in the Jewish community," said Brooks. "In the more than 20 years I have worked in the Jewish community, this is one of the biggest black marks on our community that I can remember. That we can't put partisan differences aside to come together on something as important as this is absolutely outrageous. It is sad and disappointing. "The Obama campaign complained about what they claimed was their rival's attempt to politicize the event. "This is another dishonorable lie from John McCain. The Obama campaign had planned to send a surrogate to the rally," said Obama spokesman Tommy Vietor, although he did not mention who the supposed surrogate was, nor why Sen. Clinton withdrew.

But then I remembered The Suha (Arafat) Kiss. Hillary’s respect for Israel and committment to its survival may only be, pardon the expression, skin deep. As with so many politicians, it’s the self, the self, the self. In the face of any possible damage to her image, she thinks first of moi and second of the world. No wonder the presence of Palin appalls her. Can you imagine
Sarah the Barracuda bussing Suha Arafat?

As is pretty well known by now, the Jewish organizations protesting Ahmadinejad have rescinded their invitation to Palin. There is a Yiddish word for this - schande [such a shame].

Coyote Blog found this gem on Q and O:

Joe Biden cracks the door on the ideology which drives the Democrat ticket:

"We want to take money and put it back in the pocket of middle-class people," Biden said in an interview on ABC's "Good Morning America."

Noting that wealthier Americans would indeed pay more, Biden said: "It's time to be patriotic ... time to jump in, time to be part of the deal, time to help get America out of the rut."

Time to put your money in someone else's pocket.

It's the "patriotic" thing for your rich folks to do, according to "Mr. Charity". This is the "OPiuM" Palin talked about - the addiction to "Other People's Money". And here's Joe Biden, right on cue, telling others that their priority ought to be paying for the mess he and his cohorts have managed to get us into - "time to get America out of the Biden rut".

Who is it that has spent us into a 5 trillion dollar deficit? Not rich people. Nope - Senators who've been there for 36 years, that's who.

Would someone please pass along to this knucklehead that the patriotic thing for Congress to do is to dramatically cut spending?!

Has anyone seen any mention of that?

Despite reasoned editorials in Investment Business Daily and the New York Sun pointing to Clinton Administration actions which set off the sub-prime mortage crisis, some economists with Democratic ties want to blame George W. Bush (ho hum).

Writing on the Sun's editorial page way back in April, Jerry Bowyer had this to say:

The government compels banks to make loans in poor neighborhoods even if the applicants are not considered prime borrowers. You may not know bout that because the Community Reinvestment Act is not exactly a household (excuse the pun) name.

But the commercial banks do know about it. They have a CRA department. They get a CRA rating. They know that the way to get a high CRA rating is to make loans to poor applicants or in poor urban neighborhoods regardless of the financial prudence of the loans.

They know that if they don't do this, they will be punished severely by the regulators when they try to make any major change which is dependent on regulatory approval. And they know that pretty much every major change a traditional bank makes is, in fact, subject to regulatory approval. So, they grit their teeth and stamp a big inky "yes" on an application which they know, according to traditional financial standards, deserves a "no."

Up until 1995 the Community Reinvestment Act was largely a requirement to support "community groups" in poor neighborhoods. Of course, this often meant left wing groups like ACORN, etc. But after 1995 the scope of the law was dramatically increased.

Over the strenuous objections of the banks themselves and some Republicans in Congress, CRA was renewed and modified in such a way that it gave far more power to the federal government to punish banks for not lending more widely in poor neighborhoods.

The classic "fair housing" laws from the Martin Luther King Jr. era of civil rights were deemed insufficient. Under CRA, not only were realtors required to sell to qualified buyers regardless of race, which they should have been, but banks were accused of a new kind of "financial redlining" if they didn't provide the funds. Income, credit history, assets, debts were out. Urban neighborhoods were in. The Home Mortgage Disclosure Act pushed things along too by requiring banks to ask about and disclose the race of its mortgage applicants. In effect, banks were forced to provide the evidence of their own alleged discrimination.

Subprime loans to minority applicants exploded ten fold in the mid-1990s as a result. In fact the Clinton administration found a rapid increase in subprime loans in minority neighborhoods. Their principle worry was that, even then, not enough lending was going on in these communities. More was needed. And they got what they asked for. Under New Deal-era regulatory rules of Glass-Steagall, commercial banks and investment banks were separated. When that act was repealed as part of banking deregulation in 1999, commercial banks and investment banks were able to merge, subject to approval by regulators.

However, the banks' CRA rating was taken into account in the decision. This meant that a high CRA rating became an important prerequisite for mergers, which increased the pressure on the banks to make these risky loans. The banks also were given permission to put these loans into packages of securities that could then be sold into investment markets.

Last week, a front page Wall Street Journal article set off a national debate about the legacy of Alan Greenspan. Critics have been taking the former chief of the Federal Reserve to task for failing to see the alleged excesses of the marketplace and neglecting to issue new diktats to punish those excesses accordingly.

But it is not Mr. Greenspan's fault that Congress substituted identity politics for financial prudence, although his easy money in 2003 didn't help much. If anything, Mr. Greenspan regulated too much.

The fault lies with the small army of hard left political hustlers who spent the early 1990s pushing risky mortgages on home lenders. And the fault lies especially with the legislators that gave them the power to do it.

Via Curmudgeonly & Skeptical

The American Spectator reports that the Obama campaign confirmed Barack's discussions with Iraqi Foreign Minister Hoshyar Zabari concerning troop withdrawals.

The Obama campaign spent more than five hours on Monday attempting to figure out the best refutation of the explosive New York Post report that quoted Iraqi Foreign Minister Hoshyar Zebari as saying that Barack Obama during his July visit to Baghdad demanded that Iraq not negotiate with the Bush Administration on the withdrawal of American troops. Instead, he asked that they delay such negotiations until after the presidential handover at the end of January.

The three problems, according to campaign sources: The report was true, there were at least three other people in the room with Obama and Zebari to confirm the conversation, and there was concern that there were enough aggressive reporters based in Baghdad with the sources to confirm the conversation that to deny the comments would create a bigger problem.

Instead, Obama's national security spokeswoman Wendy Morigi told reporters that Obama told the Iraqis that they should not rush through what she termed a "Strategic Framework Agreement" governing the future of U.S. forces until after President Bush left office. In other words, the Iraqis should not negotiate an American troop withdrawal.

According to a Senate staffer working for Sen. Joseph Biden, Biden himself got involved in the shaping of the statement. "The whole reason he's on the ticket is the foreign policy insight," explained the staffer.

The Logan Act, passed in 1799 and amended in 1994, says this:

Any citizen of the United States, wherever he may be, who, without authority of the United States, directly or indirectly commences or carries on any correspondence or intercourse with any foreign government or any officer or agent thereof, with intent to influence the measures or conduct of any foreign government or of any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States, shall be fined under this title or imprisoned not more than three years, or both.

A couple of points:

Obama is not only irresponsibly meddling in the executive branch's constitutional authority to conduct foreign policy, he's blatantly playing politics with Iraqi policy in general and our troops specifically. Getting the troops home faster is what Obama wants, no? Not unless He gets credit for it, I suppose. As Ed Morrissey notes:

If Obama wants to negotiate a defeat for America, he needs to wait until Americans elect him to the White House before betraying our allies and our troops in the field.

Second: Congress should not "be involved in negotiations on the status of U.S. troops" — not under our Constitution, anyway. There's a reason why heads of state, and not 535 members of Congress, negotiate with foreign governments. The former is orderly and lawful. The latter is chaotic and unlawful. Congress is in its right to "negotiate" with the executive branch, not directly with foreign powers.

Is this pretty blatant violation of the Logan Act perhaps a tad more significant story than the non-scandal of Sarah Palin not banning books in Wasilla? And how can a man whose instincts are to put his political ambition above the national interest be trusted with the White House? Audacity, indeed.

From the Prowler:

When President George W. Bush nominated Henry Paulson to serve as Treasury Secretary, Republicans raised a red flag that Paulson, who, along with his wife, has strong ties to the Democrat party, would not be an honest broker with Republicans.

That seems to have been borne out, with sources inside of Treasury reporting that Paulson briefed Sen. Barack Obama and his campaign advisers on the Fannie Mae and Freddie Mac bailout plan before offering such a briefing to the McCain campaign.

In fact, the McCain campaign had sought a similar briefing several days ago as word spread that a bailout plan was to be unveiled and had been turned down by Paulson's senior staff.

The next question is: Why was the Obama campaign so keen on getting advanced word about the bailout?

"They have a huge problem with the mortgage and housing market story, and everyone is missing it," says a Republican political media consultant with ties to the Obama campaign due to the bipartisan nature of the firm he does work with.

"You look at Obama's economic advisers, the guys he has counted on from day one and who have raised him a ton -- and I mean a ton -- of money: Franklin Raines and Jim Johnson, both of them are waist to neck deep in the mortgage debacle."

Both Raines and Johnson have served as CEO of Fannie Mae, with Raines taking over from Johnson. Both are key political and economic advisers to Obama.

"How can Obama go out with a straight face and saw it was Republicans who made this mess, when it is his key advisers who ran the agencies that made the big mess what it is?" says a Democrat House member who supported Sen. Hillary Rodham Clinton. "It's his people who are responsible for what may well be the single largest government bailout in history. And every single one of them made millions off the collapse that are lining Obama's campaign coffers. If the McCain campaign lets this one go, they deserve to lose."

It isn't just Fannie Mae where Obama has a problem. Another close political adviser, in fact the one man responsible for rallying support for Obama early on among Congressional Democrats, is Rep. Rahm Emanuel, who served on the Board of Directors for Freddie Mac after leaving the Clinton White House. According to Freddie Mac insiders, Emanuel during his time on the board opposed every reform proposed by the Bush Administration that would have impacted Freddie and Fannie Mae.

Emanuel claimed to be neutral in the primary race between the wife of his old boss and his longtime Chicago acquaintance, Obama. But the chairman of the House Democratic Caucus, who would be first in line for the vacated Senate seat of Obama should he win the presidency, quickly dumped Clinton when it was clear Obama had a head of steam for the nomination.

"We ought to be able to -- rightly -- hang the Fannie and Freddie scandal around the neck of Obama, if they can get out in front," says a House Republican. "Middle-class folks' mortgages are probably safe, but the American taxpayer will also be paying for this scandal for years to come."

Holy Coast gives us IBD's succinct explanation of the current financial crisis:

Investor's Business Daily has a tough editorial on the Clinton Administration's policies which led to billions in bad loans and the collapsing sub-prime mortgage market:

Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it's dysfunctional, Democrats during the Clinton years are a prime reason for it.

Obama in a statement yesterday blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the "trickle-down" economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend.

But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street's most revered institutions.

Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.

The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but "predatory."

Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the '90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.

And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.

As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.

The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today's nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.

And the worst is far from over. By the time it is, we'll all be paying for Clinton's social experiment, one that Obama hopes to trump with a whole new round of meddling in the housing and jobs markets. In fact, the social experiment Obama has planned could dwarf both the Great Society and New Deal in size and scope.

There's a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we'll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road.

But the government-can-do-no-wrong crowd just doesn't get it. They won't acknowledge the law of unintended consequences from well-meaning, if misguided, acts.

Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause. For now, unarmed by the historic record, conventional wisdom is buying into their blame-business-first rhetoric and bigger-government solutions.

While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.

Market failure? Hardly. Once again, this crisis has government's fingerprints all over it.

The results of this meltdown will be predictable. Both campaigns are calling for more regulation, and yet it was regulatory overreach that gave us this crisis. The real problem is that markets weren't allowed to operate as they should. Homeowner's who couldn't afford the houses they wanted to buy were offered all kinds of "creative" lending to keep the Congress and Feds happy, and the people creating those programs made assumptions about home prices and other factors that proved terribly wrong.

To quote the Barack Obama's spiritual advisor Rev. Jeremiah Wright, the Clinton Administration's "Chickennnnnnsssss, are comin' home to roost".

H/T: Prairie Pundit

From Aces:



Barack Obama Cites Job Given to Him by Bill Ayers as a Qualification for His Election to US Senate.

From The Ludwig Von Mises Institute via Carpe Diem:

The Huntsville Times reported on September 12 that, in response to the looming threat from Hurricane Ike, Alabama Governor Bob Riley declared a formal state of emergency. The governor's declaration of emergency activated the state's price-gouging law, which makes "unconscionable pricing" illegal during times of emergency. The Times quoted Riley as saying that he thinks "a threat to public health is a strong possibility due to the shortage of fuels."

Hurricanes don't cause shortages, however.

Price controls do.

A "shortage" occurs when the amount of a good demanded exceeds the amount of a good supplied at the prevailing price. In other words, shortages happen when the price is too low. The market mechanism fixes this automatically by moving us forward along the supply curve and backward along the demand curve until we reach a price at which the quantity supplied and the quantity demanded are again equal.

Hurricanes along the Gulf Coast are likely to do two things. First, they are likely to increase demand for gasoline as people flee the storm and look for fuel to power generators. Second, a hurricane that hits a major oil-producing region will almost certainly knock supply offline in the short run. An increase in demand coupled with a reduction in supply means that the price will go up.

Higher prices tell people to economize on gas and other essentials by cutting out nonessential driving. They also have the benefit of attracting supplies from elsewhere: profit-seeking entrepreneurs in regions that are not affected by the hurricane would, in anticipation of higher profits, redirect their supplies from unaffected areas toward places where they are most desperately needed.

The process by which equilibrium is restored is rendered inoperable — indeed, made illegal — by price-gouging laws. This has several surely unintended but negative consequences. The first is that if people cannot pay for something with their money they will pay for it with their time. Thus, we will see long lines and rationing at gas stations. Second, since quantity demanded will far outstrip quantity supplied at the below-market price, supplies may very well dry up with little extra in the offing. people will spend their time and energy looking for gas supplies that aren't there instead of attending to what the market would reveal to be more urgent concerns if prices were allowed to increase.

Third, since there are criminal penalties associated with price increases, recovery will not be as swift as it otherwise would be. Parts of the Gulf Coast are still recovering from Hurricane Katrina after three years. This is due in no small part to price controls and other regulations that have impeded the rebuilding process. Recovery would be more rapid if prices were allowed to move freely.

There are also more subtle effects that aren't so apparent at first glance. Price gouging is very poorly defined as "unconscionable pricing." There is basically no way for a businessperson to know whether they are breaking the law or not; while there are benchmarks that states use to denote prima facie gouging, these are not exclusive. The added uncertainty associated with the post-disaster business environment means less investment, lower supplies over the long run, and slower, more painful recoveries.

Enforcing these statutes also requires resources. The time and resources that states spend prosecuting price gougers are time and resources they are not spending keeping order or assisting with disaster relief. It is hardly clear that hunting down gas-station owners who engage in vaguely defined "unconscionable pricing" is the best use of our resources.

Hurricanes reduce supply and increase demand, but it's price controls that create shortages. The additional misery of gas lines and long post-disaster recovery periods are tragic but easily avoidable. Laws against price gouging look compassionate and make excellent fodder for political crusaders, but they are based on incorrect economic reasoning. If we are serious about minimizing damage and maximizing recovery, price-gouging laws should be one of the first things to go.

From Fox News via HotAir:

The Atlantic Monthly, whose owner's wife, Katherine Brittain Bradley, donated $28,500 to committees supporting Obama, may have setup John McCain by offering a front page photo and story in the magazine. Whether the choice of photographer was a deliberate attempt to put the presidential candidate in the worse light possible is a matter of conjecture, but the outcome speaks for itself.

The photographer, Jill Greenberg is a Democrat who has admitted her bias against Republicans. "Some of my artwork has been pretty anti-Bush, so maybe it was somewhat irresponsible for them [The Atlantic] to hire me,” she said.

PDNPulse begins the story:

When The Atlantic called Jill Greenberg, a committed Democrat, to shoot a portrait of John McCain for its October cover, she rubbed her hands with glee.

She delivered the image the magazine asked for—a shot that makes the Republican presidential nominee look heroic. Greenberg is well known for her highly retouched images of bears and crying babies. But she didn’t bother to do much retouching on her McCain images. “I left his eyes red and his skin looking bad,” she says.

After getting that shot, Greenberg asked McCain to “please come over here” for one more set-up before the 15-minute shoot was over. There, she had a beauty dish with a modeling light set up. “That’s what he thought he was being lit by,” Greenberg says. “But that wasn’t firing.”

What was firing was a strobe positioned below him, which cast the horror movie shadows across his face and on the wall right behind him. “He had no idea he was being lit from below,” Greenberg says. And his handlers didn’t seem to notice it either. “I guess they’re not very sophisticated,” she adds.

The Atlantic didn’t select the diabolical looking McCain for its cover. Greenberg is hoping to license that image to some other magazine (she negotiated a two-week embargo with The Atlantic so she could re-license images from the shoot before the election).

Warned that the image is just the kind of thing that will stir up the anti-media vitriol in the conservative blogosphere, Greenberg said, “Good. I want to stir stuff up, but not to the point where I get audited if he becomes president.”

That said, she goes on to explain that she’s thought about replacing McCain’s mouth with bloody shark teeth and displaying the image on a billboard with the message that the candidate is a bloodthirsty war monger.

American Digest picks up the story:

As far as it goes [The Atlantic McCain Cover] is workmanlike enough and presents McCain, unlike the Obama covers we are used to seeing, without the halo. Given the level to which the owner and the staff of the Atlantic are in the tank for Obama, ...even the cover-lines are not half-bad if a bit half-hearted. I'd only remark that it is no accident that the Atlantic's editor approved the upper red slash bar with the words "Porn" and "Adultery" in it. Editors, especially those whose paycheck depends on displaying their bias for their boss, love those little gotcha games.

But that's not where the Atlantic cover story stops.

It's a question, you see, of the disposition of all the McCain "out-takes" from this shoot. Out-takes are images taken of a subject at a photo shoot that are not used for publication by the client commissioning them. Typically, when you hire a photographer for a shoot -- and I have hired dozens over the years -- the photographer delivers all the film or digital images taken to the editor and art director for their review and selection. In a professional shoot these can easily be dozens if not hundreds of images.

But there seems to have been a "leakage" of some images between Jill Greenberg and her clients at the Atlantic. How intentional this is, how much the staff of The Atlantic colluded or did not collude with Ms Greenberg I have no way of knowing just yet. But [these out-takes are displayed] at this moment on Ms. Greenberg's [website].

These images are, to any reasonably decent person, simply political pornography. There's just no other way to parse them.

Hat Tip: Doug Ross

A Fair and Balanced Paradox

The contention is not that the media shouldn’t investigate Palin, but whether they are doing it in the manner, spirit, and level of intensity that they
likewise explore Biden (and Obama).

So far that is simply not the case. And the voters know that. And it is hurting Obama’s efforts as the polls show. A weird paradox arises: the more the elite media wish to aid Obama, the more their bias and invective seem to turn off voters and help McCain—and the more they in turn redouble their anger, as if more smears and furor, not fewer, are the answer. Strange to say, they don’t seem to get it that they are, well, not liked or respected. If one thinks I exaggerate, then cf. the latest concerning the Atlantic Monthly, a creepy story that few would believe.

Don Lemon noted in this report about Barack Obama's 1996 run for the Illinois state Senate that: "If his very first political campaign is any indication, the Illinois senator isn't opposed to getting a little dirty."

Mark Steyn, one of my favorite columnists, deftly paraphased a familiar quotation thus:

As Martin Niemoller famously said, first they came for Piglet, and I did not speak out because I was not a Disney character and, if I was, I'm more of an Eeyore. So then they came for the Three Little Pigs, and Babe, and by the time I realized my country had turned into a 24/7 Looney Tunes it was too late, because there was no Porky Pig to stammer "Th-th-th-that's all, folks!" and bring the nightmare to an end.

Federal mismanagement of U.S. forests has increased the number, size and cost of wildfires over the past decade. Historically, the national forests have been logged to provide lumber for commercial activities, to promote forest recreation, species protection and management, and to prevent wildfires.

In recent decades this has changed. Pressure and lawsuits from environmental lobbyists have prevented or delayed both commercial and salvage logging, turning many of our national forests into tinderboxes.
Source: National Center for Policy Analysis