The hypocrisy is so rich. “Elected officials” grilling Wells Fargo CEO John Stumpf.

These are the same people who created the country’s $20 trillion debt, cannot get an honest accounting of the department’s finances, have 70% of the budget on automatic pilot because of entitlement programs, say the military is financially depleted yet the Us spends as much as the next nine countries combined on military spending, implemented Obamacare which made health insurance and medical service levels worse then they already were.

The Wells Fargo issue is a case of fraud. Laws and procedures are already on the books to deal with it.

Hey you gutless wonders in Washington, learn to manage your own affairs. Get your own house in order and stop trying to run the lives and businesses of the people.


Mark A. Calabria pours cold water on the proposal to make Fannie Mae and Freddie Mac give all underwater borrowers an automatic reduction in their interest rate.

The thinking, as illustrated by that world class economist Matt Yglesais, is “with a lower monthly interest payment, an indebted household can pay down other debts more rapidly. A less-constrained household will increase its consumption of goods and services.” What this misses is that a mortgage is one person’s liability, but another person’s asset. By replacing a mortgage that yields 6% with a mortgage that yields, say, 4%, you decrease the value of that mortgage (or mortgage-backed security). So whatever increase in consumption you get from making the borrower better off is reduced by making the investor worse off. There’s no magic in wealth redistribution.

Here. The market mechanism coordinates mortgage borrowers and investors to determine what those rates should be. Mandating it give a free ride for one party and coerces the other party. Mr. Yglesais does not take into account what is not seen. Mr. Calabria did.

Steve Goldstein is spot on:

The much-maligned government plan did stabilize the financial system, even if taxpayers are still on the hook for up to $130 billion in losses, but private-sector bailouts are better for the public at large.

It’s how it should be: if a private-sector bank is under capitalized, it should find a private investor to provide it with additional cushion, at a hefty price if necessary. And that’s what happened Thursday, just a day after Buffett dreamed up the idea in his bath tub, if CNBC’s account is correct.

Here. The investment adds to the firm’s capital.

Here. Only Rep. Paul (R-TX) has the ideas that will do something positive about the government’s financial problems. The others are just a variation on the same bankrupt theme of devalue the currency by keeping interest rates low and having the Fed monetize the debt by buying Treasury bonds. The Fed’s actions show it is not an independent agency from the rest of the Federal Government.

Here is an overview of Property Appreciation Rights:

These would essentially break mortgages into two pieces, one representing the prevailing market value of the home, with the remaining amount of the mortgage being a marketable claim that the lender would have on future home price appreciation, which could be pooled and administered by the Treasury without the need for subsidies.

Mechanics of PAR here.

After the downgrade of long-term US Government debt, the debate continues over its significance. One issue in the debate is to attack S&P, ie, the messenger. This article in the NY Post criticizes the lead analyst.

The Wall Street bean counter who trashed America’s global credit reputation is a New Yorker who never studied economics, majored in literature and philosophy, and has a master’s in English lit.

Yet John Chambers, 55, who lives with his wife, daughter and two dogs on Riverside Drive, has became the stern public face of Standard & Poor’s, the private agency that wreaked havoc Friday night by notching down the nation’s credit to double-A from triple-A.
. . .
David Wargin, an S&P spokesman, told The Post that Chambers, a chartered financial analyst, chairs the agency’s sovereign-rating committee, made up of “senior sovereign analysts” with various backgrounds.

Its more accurate to use the phrase Chartered Financial Analyst because it is a professorial credential that seems to require a series of difficult tests.

With 99 percent of precincts reporting, the vote was 57 percent against to 43 percent for the referendum, according to the Board of Elections website.
. . .
Opponents warned of property tax hikes and noted the borrowing over its 30-year life would cost some $800 million.
. . .
“We’ll continue to try to move forward with progress. We know something has to get built here,” he said. “I have thousands of guys sitting at home now,” out of work.

Here. Being out of work is horrible. Building the structures may create some temporary and permanent jobs but the investment has to pay off. Would the return on investment been more than the total expenses? It usually does not with publicly financed projects, so in this case the voters did the right thing.

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