Friday, May 25, 2012

Frank And Dodd Started The Mortgage Crisis, But Not For The Reason You Think

Frank And Dodd Started The Mortgage Crisis, But Not For The Reason You Think
Many conservatives correctly identify Barney Frank and Chris Dodd for their part in the mortgage crisis. Unfortunately, many conservatives also erroneously place the majority of blame for the crisis on the Community Reinvestment Act. I feel that it's my duty to set the record straight.

While Frank and Dodd's tinkering with the CRA forced lending institutions to make a quota of bad loans that certainly contributed to the mortgage crisis, the primary cause of crisis was Frank and Dodd's push to reduce mortgage buying standards at Fannie Mae and Freddie Mac, who provide liquidity to mortgagees by buying the loans they (the mortgagees) make to the public. Before Frank and Dodd were able to pass legislation weakening Fannie and Freddie's buying standards, all mortgages purchased off the primary market by these two Government Sponsored Enterprises adhered to Federal Housing Administration standards, i.e. they were "prime" loans. But Frank, Dodd, and their cohorts "rolled the dice" in regards to subprime lending, and, in effect, drowned Fannie and Freddie with junk mortgage paper. This began a series of cataclysmic events that eventually crashed the financial system and led to this unfortunate period of chronic unemployment and reduced standard of living.

What makes me so angry is that Frank and Dodd, who are directly responsible for much of the economic misery we've been experiencing in this country over the past four years, are still unscathed by the disaster they caused. They're not even bothered by Occupy Wall Street, which is especially ironic in Dodd's case, given that he is now the CEO of the Motion Picture Association of America. 28 million displaced workers, many for years. And these guys just walked.

Thursday, May 24, 2012

Return On Investment Of Higher Education In Two Simple Charts

How bad is the return on investment for a college education in this country?

Americans are borrowing tons more money to go to school...

Return On Investment Of Higher EducationIn Two Simple Charts - student debt chart increase their likelihood of being unemployed!

Return On Investment Of Higher EducationIn Two Simple Charts - college unemployment chart

Sunday, May 20, 2012

George Will: Feds Unlawfully Seize Motel As Part Of War On Drugs

George Will: Feds Unlawfully Seize Motel As Part Of War On Drugs
George Will wrote an excellent piece on government violation of private property rights for today's Washington Post. The situation he described in Tewksbury, Massachusetts is just the latest example of eminent domain abuse.

Russ Caswell, 68, is bewildered: “What country are we in?” He and his wife, Pat, are ensnared in a Kafkaesque nightmare unfolding in Orwellian language.
This town’s police department is conniving with the federal government to circumvent Massachusetts law — which is less permissive than federal law — to seize his livelihood and retirement asset. In the lawsuit titled United States of America v. 434 Main Street, Tewksbury, Massachusetts, the government is suing an inanimate object, the motel Caswell’s father built in 1955. The U.S. Department of Justice intends to seize it, sell it for perhaps $1.5 million and give up to 80 percent of that to the Tewksbury Police Department, whose budget is just $5.5 million. The Caswells have not been charged with, let alone convicted of, a crime. They are being persecuted by two governments eager to profit from what is antiseptically called the “equitable sharing” of the fruits of civil forfeiture, a process of government enrichment that often is indistinguishable from robbery.
The Merrimack River Valley near the New Hampshire border has had more downs than ups since the 19th century, when the nearby towns of Lowell and Lawrence were centers of America’s textile industry. In the 1960s the area briefly enjoyed a high-tech boom. Caswell’s “budget” motel, too, has seen better days, as when the touring Annette Funicello and the Mouseketeers checked in. In its sixth decade the motel hosts tourists, some workers on extended stays and some elderly people who call it home. The 56 rooms rent for $56 a night or $285 a week. 
Since 1994, about 30 motel customers have been arrested on drug-dealing charges. Even if those police figures are accurate — the police have a substantial monetary incentive to exaggerate — these 30 episodes involved less than 5/100ths of 1 percent of the 125,000 rooms Caswell has rented over those more than 6,700 days. Yet this is the government’s excuse for impoverishing the Caswells by seizing this property, which is their only significant source of income and all of their retirement security.
The government says the rooms were used to “facilitate” a crime. It does not say the Caswells knew or even that they were supposed to know what was going on in all their rooms all the time. Civil forfeiture law treats citizens worse than criminals, requiring them to prove their innocence — to prove they did everything possible to prevent those rare crimes from occurring in a few of those rooms. What counts as possible remains vague. The Caswells voluntarily installed security cameras, they photocopy customers’ identifications and record their license plates, and they turn the information over to the police, who have never asked the Caswells to do more. 
The Caswells are represented by the Institute for Justice, a libertarian public-interest law firm. IJ explains that civil forfeiture is a proceeding in which property is said to have acted wrongly. This was useful long ago against pirates, who might be out of reach but whose ill-gotten gains could be seized. The Caswells, however, are not pirates.
Rather, they are victims of two piratical governments that, IJ argues, are violating the U.S. Constitution twice. They are violating the Eighth Amendment, which has been construed to forbid “excessive fines” that deprive individuals of their livelihoods. And the federal “equitable sharing” program violates the 10th Amendment by vitiating state law, thereby enabling Congress to compel the states to adopt Congress’s policies where states possess a reserved power and primary authority — in the definition and enforcement of the criminal law. 
A federal drug agent operating in this region roots around in public records in search of targets — property with at least $50,000 equity. Caswell thinks that if his motel “had a big mortgage, this would not be happening.”
“Equitable sharing” — the consensual splitting of ill-gotten loot by the looters — reeks of the moral hazard that exists in situations in which incentives are for perverse behavior. To see where this leads, read IJ’s scalding report “Policing for Profit: The Abuse of Civil Asset Forfeiture” (, a sickening litany of law enforcement agencies padding their budgets and financing boondoggles by, for example, smelling, or imagining to smell, or pretending to smell, marijuana in cars they covet.
None of this is surprising to Madisonians, which all sensible Americans are. James Madison warned (in Federalist 48) that government power “is of an encroaching nature.” If unresisted, it produces iniquitous sharing of other people’s property.
I'm sorry the Caswells are going through this, but I am happy that they are being represented by the Institute for Justice.

VIDEO: Billionaire Libertarian Peter Thiel's Young Entrepreneurs Program

CBS aired this evening a fascinating 60 Minutes piece on billionaire libertarian Peter Thiel's young entrepreneurs program. The program, which is tailored to young Americans who have great business ideas but little experience in the business world, is billed as a "practical" alternative to traditional higher education, which Thiel correctly argues does little to prepare great minds for the real world. In addition to being incredibly entertaining, the 60 Minutes piece also introduced the concept of libertarianism to a whole new audience.

Unfortunately, CBS disabled embedding on the video, so I can't share it directly with you. Here is the YouTube link, and here is a piece from Nightline on the subject.

Here is a cut on Thiel's multimillion dollar support for Ron Paul, ripped from the 60 Minutes piece from a fellow blogger.

A Hole In The Per Capita CO2 Argument As Large As The Great Cement Wall Of China

A Hole In The Per Capita CO2 Argument As Large As The Great Wall Of China?
Despite the fact that China is the world's largest emitter of CO2, the American environmental lobby often justifies economy-crushing carbon legislation (such as "cap and trade") with the "fact" that the U.S. produces several times more CO2 per capita than China. There's one problem with that justification: The World Bank, the source of record for world environmental data, could be severely under-reporting China's per capita CO2 emissions.

According to the World Bank, U.S. per capita CO2 emissions is in steady decline, but is still several times higher than China's, which is steadily rising:

(Click to enlarge chart.)

A Hole In The Per Capita CO2 Argument As Large As The Great Wall Of China? - CO2 chart

But China's consumption of cement would lead us to believe that it's more closely-aligned with the U.S. in terms of per capita CO2 emissions. According to the World Bank, the physical production of cement is responsible for 7% of the world's CO2 emissions. The consumption of cement is a good indicator of construction activity, which is responsible for 10% of the world's CO2 emissions. The majority of cement consumed in China is used for transportation infrastructure, and the production of cement for transportation infrastructure is a good indicator of transportation activity, which is responsible for 30% of the world's CO2 emissions.

In other words, cement consumption is a yardstick for carbon emissions. And China's per capita cement consumption is almost off the chart!

(Click to enlarge.)

A Hole In The Per Capita CO2 Argument As Large As The Great Wall Of China? - cement chart