American Elephants


If You Do Not like What Congress is Doing With Health-Care Reform, And You Shouldn’t, You Have to Let Them Know! by The Elephant's Child

I have been informed that Congressmen pay little attention to emails — and I have written lots of them — but they do pay attention to phone calls.  They are very worried.  Politicians read the polls, and they know that Americans do not like their efforts to reform health care.  If you make the effort to call, that makes a difference.

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The National Center for Policy Analysis and the Salem Radio Network have made an opportunity for you to call your senators and representatives toll-free.

www.actionarmy.org

Please take advantage of it!

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What About the “Fat Cats” in the United States Congress? by The Elephant's Child
December 15, 2009, 1:00 am
Filed under: Capitalism, Domestic Policy, Economy, Taxes | Tags: , ,

Obama met with Wall Street Bankers after announcing on 60 Minutes that he “did not run for office to be helping out a bunch of fat cat bankers on Wall Street.” Obama has made it clear that he prefers to blame Wall Street for the financial crisis; ignoring the real cause — which began with the Community Reinvestment Act passed in the Carter administration and was often amended to force banks to make more home loans to people who did not qualify for loans under normal prudent banking rules.

Those mortgages were bundled as in large packages as investments which were rated by the agencies that rate bonds who said they were good investments.  A big part here was played by misguided computer models  in the risk management area; the same sort of computer models that have been predicting the future of climate.

The Prudent Bear explains:  “Investment banks managed their risks based on the “Value-at-Risk” risk management paradigm, which assumed that the distribution of securities’ returns was approximately …normally distributed, with a very low probability of high losses.  The “Basel II” system of global capital adequacy standards for banks, which came into effect in 2008, just in time for the crash, was so impressed with these models that it ruled that any bank using such obviously sophisticated and superior modeling techniques could calculate risks on its own, without reference to the crude guidelines deemed appropriate for smaller, less mathematically attuned houses. The Securities and Exchange Commission (SEC) essentially agreed with the Basel Committee; from 2004, it allowed the largest U.S. investment banks to manage their own leverage, under the theory that no mere regulator could match the exquisite precision of a modern VaR-based risk management system.”

The gist of that is that predicting the future depends on very complex models, and nobody really knows enough to program adequate models.  Doesn’t work for investment banks, doesn’t work for climate science.  There are simply too many unknowns, and the math is too complicated.

In Wall Street’s case the faulty models led to losses in the financial system in excess of $1 trillion; and the costs to governments of moneys wasted in the futile attempt to stop “global warming” haven’t even begun to be totaled up.  It will reach shocking sums even if we manage to avoid cap-and-trade or the EPA’s ridiculous attempt to regulate carbon dioxide.

The banks should have known better, for they have had prior experience with faulty financial models, and governments should have known better than to bet their GDP on controlling something that we all exhale.

Obama’s anger is misplaced.  He voted for expansion of  sub-prime lending, he worked with ACORN, encouraging them to demonstrate and protest, to force banks to make more loans to unqualified borrowers.

What Obama is angry about are bonuses awarded to investment bankers.  He claims to be angry because it is so unconscionable when so many Americans are unemployed, but this is sheer hypocrisy when the government is spending money in the trillions of dollars in completely unaccountable ways.  The excesses of government salaries, often twice as much as the wage for the same work in the private sector, are all over the front pages.  The left has always been angry with Capitalism, their name for the Free Market.

The bankers listened politely, but they have no intention of making new loans to risky borrowers, in spite of the President’s urging in the hopes that they will loan to small business, getting the economy that Obama is doing so much to destroy, creating jobs again.  The left has never understood how to create jobs, but they sure know how to destroy them.




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