Friday, October 10, 2008

Political bullshit.

So I've been having some pretty spirited Exchanges with my family over the last few days as we get closer to the election. Emma suggested that I throw these up on the blog, and always willing to feed my own ego, I am obliging...hope this will generate at least one comment. I know I get about 40 hits a day looking for "Video Game Boobs"...but someone out there might hit be tempted to wade into the wall of text below:

First my Dad sent out this:

Sorry, I'm reading too much. But Raleigh's been asking a few questions, so here's some more info on the amazing stuff going on. When you're 95 you can tell your great grand kids about this, so keep your eyes open...

Bailout Cost: $17,000 Per American Household

Mike Swanson
October 6, 2008

We are on the edge of pure fear and panic when it comes to the stock market. By just about every indicator you may use to measure the market it is extremely oversold and ready for a bottom. The number of stocks below their 20, 50, and 200 day moving averages are at extremely low levels not seen in decades.

The ratio of down to up volume on the Nasdaq was over 95% two days last week, hitting 97% last Monday, which is a level I've never seen before. The VIX is above 40 and has been at an elevated level for the past three weeks. According to the Investors Intelligence Survey there are more bears than bulls in the market, which is a positive from a contrarian standpoint.

I read through lots of commentaries and listened to several podcasts over the weekend and just about everyone is saying this. And when it comes to the general public the fear is out there. I have had several people call me out of the blue worried about their retirement funds and mutual funds. These are people who never call me about the stock market.

The fear is growing and this is the type of fear you see at important bottoms. The technical indicators are off the charts.

I do expect some sort of bottom to come in sometime this week, but I am concerned that this bottom may come after a waterfall decline. The fear and panic could morph into terror. This would be something I had never seen happen before, but we saw a glimpse of last Monday.

I believe the President, Treasury Secretary, and Fed Chairman may have created an extremely dangerous situation. All three of them - and throw in the Democratic Congressional leadership - claimed that the stock market would collapse and the economy would go into a depression if the Wall Street bailout bill did not pass. This talk succeeded in terrorizing Congress into caving in to Wall Street and has also disturbed the American people. It has created a sense of unease and insecurity in the United States. Some desperate people have convinced themselves that all will be fine when the bailout bill passes. FOX News has been running 2-hour news "specials" with titles like "Saving the American Economy" in support of the bailout bill this weekend. If the stock market falls hard in the next few days it is possible that these people will panic. The fear created by those in support of the bill could turn into terror and irrational panic as unreasonable expectations have now been created for what the bailout bill can do.

George Bush played with fire when he gave a primetime speech to the American people in which he said if you do not pass the bill the stock market will crash. He may have created a self-fulfilling prophecy.

I was against the bailout bill, because I do not believe it will fix the situation and believe that it will pile up so much more debt on to the Federal government that we may see a full blown dollar crisis down the road.

We have already seen multiple bailouts this year and not a single one of them has stopped the credit crisis or put an end to the bear market in stocks. At this moment the costs of all of the bailouts totals $17,000 per every single American household. You will pay for this through higher taxes or higher inflation.

Take a look for yourself and these are conservative estimates, because I believe the bailout of Fannie and Freddie and last week's bailout bill will cost in the trillions. No one knows how much it will cost in the end. But this is how things stand as of now:

Check out the bailout type and the cost to taxpayers:

Financial bailout package approved this week
up to or more than $700 billion

Bear Stearns financing
$29 billion

Fannie Mae and Freddie Mac nationalization
$200 billion

AIG loan and nationalization
$85 billion

Federal Housing Administration housing rescue bill
$300 billion

Mortgage community grants
$4 billion

JPMorgan Chase repayments
$87 billion

Loans to banks via Fed's Term Auction Facility
$200 billion+

Loans from Depression-era Exchange Stabilization Fund
$50 billion

Purchases of mortgage securities by Fannie Mae and Freddie Mac
$144 billion

$1.8 trillion+



The bailout bill is not going to fix the economy. As Reuters reports, "experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again."

The problem is that housing in the United States is in a bear market and the bear market in housing is not over. There is still too much excess inventory in what were the "hot markets". You can find actual ghost towns outside of San Diego and in Nevada. Take a trip from Las Vegas to Laughlin Nevada and you can go off the main road and find a ghost town.

When the Fed lowered rates in 1998 to bailout the Long-Term Capital hedge fund on behalf of Wall Street they created an artificial bubble in the stock market. They pumped excess money into the economy and that money flowed into technology and Internet stocks. As a result they created an unsustainable bubble and when that bubble burst the Nasdaq went into a two and a half year bear market.

That bear market ran its course despite the Fed lowering interest again to the lowest levels seen in decades. The rates were so low that banks went crazy lending money. As a result a bubble in real estate formed in the United States as speculators bid up the price of condos and homes in a dozen or so hot markets. Prices went to irrational levels and of course when this happens a bear market follows.

That bear market will not end just because the Fed bails out banks. It will end when the excess inventory created by this real estate bubble is slowly bought off the market and prices come down to a level that makes sense from an investment standpoint. Home prices are not going to bottom because people all of a sudden start to throw money at houses with the thought they are going to make a big return when they appreciate in value. The bottom will come when investors can buy properties with the intention of making a profit fro m renting them. The condo flipping game is over and is not coming back.

We are probably a year away from the bottom in real estate.

What this means is that the bailout bill will do absolutely nothing to help the real economy.

That is why after the bill passed the stock market fell anyway.

To which I responded with the following:

All I can say is that the value of my 401k has lost 900 bucks in a week, and the value of my stock portfolio has gone from about 6000 to 1000 in the last year. Granted a lot of that is in the same stocks most of which are in the video game industry which analysts indicate will be recession resistant...but the short term means Christmas is cancelled...fuck dinner might start getting canceled if this keeps up.

Still I've been riding my bike to work and eating lean cuisines...I've cut my spending by about 600 a month and I'm still biting my nails here. I had heard the Bailout cost was 2300 on Bill Maher's show over the weekend...I wonder what the true cost will be.

Then I added: As long as we're talking politically charged topics, I thought I'd share a little birthday present I bought for myself. Poor Dad, here's his first born riding to work on the bus with a bunch of illegal immigrants, and then enjoying a no emissions ride home sporting this little number:

Well that really pissed my dad off. I won't reprint what he wrote here, but it was pretty scathing. Anyway, I responded to his ire with this:

OY, Dad, I'm just teasing you. Sheesh.

But seriously, if you want to know what I think it's don't' think this situation has a little bit to do with deregulation of the banking industry? Doesn't this have a little something to do with "letting the market work things out"? The government is going to have to nationalize the banking system before this mess gets sorted out. And even if they don't do that explicitly, then it'll happen in a round about way because the government will be deep into all these banks after they have to start paying up for FDIC coverage.

So then where has all the deregulation lead us to? Big Government right? Socialism...all those idiots driving SUVs and buying houses they can't afford are going to get saved for their greed by the government and I'm going to have to pay for it. Why not let the market sort it out? I'll tell you, my opinion is that that shit doesn't work. These fucking hypocrites wanted deregulation and they wanted the market to take it's course so they could make shit loads of money off of bad loans...but now they want socialism and government handouts and I have to pay for it. McCain is going to de regulate health care next. He's going to tax my health benefits. He's going to give money to the fucking Oil companies.

I'm sorry, but my priorities are in a different place than yours. I want clean renewable energy, I want affordable health care, I want more money for education, less money wasted on bull shit wars. I'm not afraid to pay more taxes if the taxes I pay go towards shit I think is worth while. Given that, I just don't see McCain as the right guy for me.

Honestly, I think that 2nd amendment stuff is a red herring. It's a bullshit divisive issue. It's in the constitution already. Why do I need to worry about it? I'm a lot more worried about 4 dollar a gallon gas, and global warming, and the economy. If you can forward me one piece of non partisan evidence (maybe something from the BBC?) that shows that Obama has said, "I will get rid of the 2nd Amendment and ban all guns" then I'll concede your point, but to me it seems like it's just a distraction.

If nothing else, I'd say you went wrong by giving us the intelligent independent genes that well all share. You look at the issues and come to one conclusion and I look at them and come to another. But that's the great thing about America, we have the right to have different opinions.

I love you Dad, I hope I'm not disappointing you too much, please keep forwarding me the emails you've been sending...I like to read all sides of the issues...but, I'll be damned if I'm voting for McCain.


To me this picture probably means as much as would a picture of McCain holding an AK would mean to's just a matter of different priorities. Still, his back tire is looking a little flat that's just bad bike maintenance.

That sort of killed of that thread. But then dad started a new topic by sending me the following email:

Here is some interesting information on the history of the problems at Fannie and Freddie and the cause of this whole financial distaster. This is what makes me so mad and causes me to be extremely frustrated that intelligent people like my kids can't see this. The whole goddam mess was caused by government efforts towards social welfare primarily the Democrats. McCain and some Republicans tried to avert the Fannie/Freddie financial disaster in 2005 and it was derailed by the Democrats all to line their own pockets and consolidate their financial and governmental power. Why can't the Republicans stand up for the truth? It's the facts. The Republicans have been ballless weenies for a long time instead of standing up for what is right. Please read this and realize that the US will fail due to efforts towards socilistic causes. The stupid war is a factor, but nothing when compared to the attitude that politicians should give away the farm to the non-deserving in exchange for votes, money and power.

Because Ryan said he would look at some objective information if I sent it to him I am assembling some stuff which I'll mail to you when I can get the transmittal letter written. I think there is little doubt that Obama will be elected, so this may not make any difference, but it's my parental duty that I try to give you some understanding. I owe it to my mom and dad at least that I pass it on, and because I love you and care about you as always.

da ol' man

To this email he attached a PDF file that was basically a power point presentation from some economics class that laid blame for the countries economic woes on the Democrats. I'll try to find some way to embed this, but for now it'll just have to be refered to as the PDF.

So anyway then I responded with this:

Alright everyone (I'm including the bean and beeb in the CC list),

I haven't had time to digest this 100% yet, but this argument focuses primarily on the housing market. It's my opinion that the current financial crisis is not due solely to the Housing bubble bursting. Here's some other factors:

1. Fed's lowering of interest rates after the Dot Com bubble burst.
2. Individuals looking to the housing market to prop up the economy post dot com bubble.
3. General over availability of credit and gross consumerism. Look I'm not anti-capitalist, but didn't dad always say pay your bills and live on what's left over?
4. Higher Energy costs
5. 10 Billion a month going to Iraq.

This deal is a hard thing to over simplify. It really can't be blamed on any one side over the other. There are a lot of people "responsible".

In regard to the housing market specifically you have greedy home speculators, greedy real estate agents, greedy lenders, corrupt (or clueless) politicians, and a great deal of the stock market trading in all this "virtual money" created by people obtaining and using credit they can't afford. In the end, I'm on the hook. Becca and I never bought a house because we couldn't afford one. But all those dumb asses who did are basically going to have their mortgages nationalized and are going to get a bailout for being greedy. So it's not really accurate to say it's the fucking democrats or the poor republicans, because honestly there isn't a clear right or wrong person.

Having said that, here's where I get partisan about it. I don't know about Idaho, but in Sherman Oaks, the kind of people who were greedy and bought houses, SUVs, and electronics with credit they couldn't afford were the same folks who have McCain stickers on their trunks. They are the same people who want the market to sort it out. And it is pretty hypocritical to me that these people are going to get a bail out for being greedy. I think to my self. Well fuck, I should have bought a 500k house and now I'd have a house. But instead I just get to help pay off those houses for those greedy MF'ers. Maybe somewhere there are "welfare moms" and "illegal immigrants" getting sweet deals on houses, but not in LA. All the "illegal immigrants" and "welfare moms" I know live in rented apartments and clean the houses of "credit rich" individuals who are going to have their houses paid for by me and Calvin and Calvin's kids.

OK. so back on topic. Fannie Mae, Freddie Mac. I've been digging around and the closest I could come to non biased info on this was at

It's pretty long but it's a good read, here's what it does say about Fannie Mea / Freddie Mac:

It's true that key Democrats opposed the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have established a single, independent regulatory body with jurisdiction over Fannie and Freddie – a move that the Government Accountability Office had recommended in a 2004 report. Current House Banking Committee chairman Rep. Barney Frank of Massachusetts opposed legislation to reorganize oversight in 2000 (when Clinton was still president), 2003 and 2004, saying of the 2000 legislation that concern about Fannie and Freddie was "overblown." Just last summer, Senate Banking Committee chairman Chris Dodd called a Bush proposal for an independent agency to regulate the two entities "ill-advised."

But saying that Democrats killed the 2005 bill "while Mr. Obama was notably silent" oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it.

By the time McCain signed on to the legislation, it was too late to prevent the crisis anyway. McCain added his name on May 25, 2006, when the housing bubble had already nearly peaked. Standard & Poor's Case-Schiller Home Price Index, which measures residential housing prices in 20 metropolitan regions and then constructs a composite index for the entire United States, shows that housing prices began falling in July 2006, barely two months later.

Also, it goes on to list the following "causes" of the economic crisis:

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and down payment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
I'm going to try to dig up some other items, but this should fuel debate for a little while. I still believe in social programs. There are a lot of places that all the money in Iraq could be going. Bike paths for one. But I'm sure everyone has their own pet issues they care about. Fuck what about investing in better solar power? Lithium Battery technology for cars? Eh? Eh? Anyone?

Oh well here's a picture of Choco doing a "hand to face" when he heard that Bush is nationalizing the banking system:

Also, I have attached a PDF that was linked from fact check about the housing crisis. Enjoy!

And Dad replied with this:

Good summary Ryan and nice, quick research. Also, enjoyed picture of Chocco.

It is certainly correct that both parties are responsible for the financial meltdown. And I'm glad that you recognize that it is primarily govrnmental policies fouling up the capitalistic system and not capitalism itself which caused the mortgage problem. When government policies removed the responsiblity for decision making from the loan officers and credit managers and set up the system for mortgage-backed securities and inflated bond rating agencies and the crazy idea that credit default swap type insurance policies could somehow make the collateralized debt obligations creditworthy, the government replaced the free market capitalism with government socialism.......... and we're all stuck with the consequences.

Not to be contentious, but it seems pretty clear to me that the "Parental Party", the "give us your votes and let government take care of you" attitude is traditionally and historically associated with the Democrats. The Republicans have always espoused (and often not acted) towards smaller Govt., lower taxes, and less govt. intrusion into private lives. Then GW Bush came along and spent like a drunken sailer and pissed off Raleigh with the Patriot Act which clearly was a "big govt. solution" to a problem. I agree with Raleigh and hate that govt. intrusion, but please check, if I remember correctly it was Clinton who expanded the effect of executive orders and also opened the door to NSA monitoring of private phone calls and e-mails. I don't remember for sure about this, but I do know that America's policy of international expansionism and empire building goes back to Woodrow Wilson; the New Deal or taking care of the people largely started with FDR and was expanded with The Great Society of Lyndon Johnson. In the words of Jim Hardester, "If there are too many people riding the wagon and not enough people pushing the wagon, then the wagon breaks down!" Raleigh said that was too simplistic, but I think it's right on. We are in the process of seeing the wagon break down, if not totally now, it certainly will over the next 15 or 20 years. Who was the president associated with the policy of "Mainifest Destiny"?

Good thinking!

But I couldn't leave well enough alone so this morning I sent this little baby off basically out lining some other things I was thinking about:

Hi Guys,

Sort of a slow day at the office (all of our X-Mas games are shipping soon, so it's slowing down). Here's some more rambling political musings:

Something that I know Dad is not a big fan of is "entitlements", "government handouts", "social programs", and the fucking "welfare moms" and god damned "illegals". It's the part of his argument against Obama that I can understand. I mean I have always felt that Dad isn't so much socially progressive as he is socially oblivious. It's not so much that he hates gays, he just hates gays getting federal funding for their "god damned gay parades or whatever".

I've lived in California off and on for the better part of 20 years now. In Fresno, we lived in a neighborhood that was predominantly filled with destitute Asian immigrants for Laos and Cambodia. In Hanford, it was like a John Singleton movie where half the kids were rich kids who's parents owned huge Agri-Business super farms and the other half were the kids who's parents were migrant farm workers on those same super farms. There was an uncomfortable atmosphere there between the have and have nots. I can remember Vickie looking at my year books and going "There's not a white face on the page!" as if it were something to either be ashamed of or horrified by. I had a brief waspy interlude at UCSB, but now that I'm in LA, I've been surrounded by diversity of all kinds. So much so that I feel uncomfortable when I go to Idaho and see white people every where. It feels kind of un natural not to be in a resturaunt (except maybe chapala's) where you don't hear at least three different languages being shouted around simultaneously.

A lot of my experiences have given me an appreciation for social programs and government funded initiatives. For example, I ride the bus every day. I wish it came every 10 minutes instead of every 30 minutes. Maybe if it came more often more people would ride it, traffic would get better, pollution would get better. A lot of the people on the bus are not as fortunate as me. They mostly all ride because they have no alternative. I could drive if I choose to, but I do not do so because I'd rather save money and do my part to help the environment and ease traffic congestion in the city.

I feel very strongly that these types of programs are worth paying for. I feel very strongly that public funds should be available for schools, infrastructure, HEALTH CARE, and civic programs which benefit us all. Let's look at something near to Dad's heart. Music in the public school system. I think that Greg and Genvieve could attest that funding for public school music programs is non existing. At schools where kids do have band they are likely required to raise thousands of dollars on their own to participate. And I think that that is a failure of government. I believe that we as Americans have a responsibility to provide these programs. And provide funding for them. We are wasting 10 billion a month in Iraq! That's my tax money too! And I'd a lot sooner have it go to programs that will benefit American school kids. If their interested in Art, Science, Literature, Technology, Sports, whatever...these programs should be funded like crazy.

Unlike some (I would assume) I wouldn't even mind paying more taxes if I knew I was going to get things like improved wireless internet architecture, better roads with bike paths, more emergency rooms, better opportunities for kids, more Museums, Libraries, Adult Public School education. But I think that we need to re-evaluate what we're spending money on in the first place. I do believe that government should play a part. Not as a faceless beaurocracy, but as a powerful force for good. I'm not so sure that things will get better if schools, health care, and public transit gets privatized. I just don't know if allowing the market to sort out every facet of human life is the answer.

But anyway, the REASON I wrote this is that I read an (admittedly biased) article about Obama's 3 Million dollar over head projector and it illustrated exactly how I feel:

The projector in question was installed in a planetarium in Chicago. The article goes in to great detail, but I think it can best be boiled down by a comment it contains from a Scientist who works at the Planetarium. He says:

I find it appalling that Sen. McCain would call a science education tool for public (largely children) for a historic planetarium with millions of visitors a year a wasteful earmark. The planetarium's focus, as stated on their website ( is "on inspiring young people, particularly women and minorities, to pursue careers in science." Is an investment in such public facility at the time when US competitiveness in math and sciences is a constant source of alarm a waste?

It's unclear to whom the closing paragraph is coming from (it is either the author or a continuation of a quoted Congressman from the paragraph before), but it esentially puts a bow on my feelings regarding "social programs" and "investing our tax dollars in the future of America":

Considering such investments "wasteful earmarks" today, even in the face of the financial crisis, will severely cripple US economic competitiveness in the increasingly high-tech world down the road.

As someone working in the high tech industry today, I often wonder if our kids are going to be ready to lead America into the future given McCain's hostile attitude towards funding education, health care, and social programs.

Haven't heard anything back yet, but it's only a matter of time.

1 comment:

AaronFlux said...

This made me dizzy.

At least you don't have a cousin who said she's not voting Democratic this year because Obama is black and has a terrorist middle name.

That's the bs I get to deal with.