pneumatik: Politics

pneumatik (

pneumatik) wrote,
@ 2008-03-27 20:29:00

Current location:	TKPK
Current mood:	excited
Current music:	Beat It - Fall Out Boy

Politics
I normally don't get too interested in politics, if for no other reason than any effort I expend is likely to have less impact on my life than if I were to expend that effort differently. But I do try to keep up with the current campaigns, and that's what pointed me to an article in the Washington Post about a speech McCain gave recently. I has been planning on voting for McCain, but that was mainly because I expected both Hillary and Barack to have plans I specifically didn't like. After reading this article, though, I'm happy to say that I'll be voting for McCain because I like him.

Seriously, it's like he asked me what his positions should be, and then took them. On the current economic situation: "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy ... I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense." Rockin'.

On foreign relations: "We cannot build an enduring peace based on freedom by ourselves, and we do not want to. We have to strengthen our global alliances as the core of a new global compact -- a League of Democracies -- that can harness the vast influence of the more than one hundred democratic nations around the world to advance our values and defend our shared interests. It would be an unconscionable act of betrayal, a stain on our character as a great nation, if we were to walk away from the Iraqi people and consign them to the horrendous violence, ethnic cleansing, and possibly genocide that would follow a reckless, irresponsible, and premature withdrawal. Our critics say America needs to repair its image in the world. How can they argue at the same time for the morally reprehensible abandonment of our responsibilities in Iraq?" Yes. Yes. Yes. Pure awesome.

So I'm started to get excited. Not that he's getting my money or anything - he's a politician, so taking my money is literally part of his job. Still, things look good. I think what I like the most is that McCain is coming out with straightforward conservative ideas that aren't crazy. It'll force Hillary or Barack to take their own clearly-defined positions, and then voters will get to decide based on positions. Well, they'll be able to, anyway.

(Post a new comment)

jeffxandra
2008-03-28 03:40 am UTC (link)

My concern was this portion of his speech

In financial institutions, there is no substitute for adequate capital to serve as a buffer against losses. Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.

1) That's straight-up Republican dogma. The banking problem (like all problems) is because of too much regulation. So he's already bullshat on the "no dogma" assertion

2) Deregulate further? Yeah.. that's the issue here.. right...

Obama actually made his speech this morning and did a good job, I thought, putting the regulatory issues into historical context. That said, I'm somewhat skeptical of his stimulus package, but I've not dug down into the details on how he plans to spend the money, as yet.

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pneumatik
2008-03-28 01:44 pm UTC (link)

1) It's not dogma because it agrees with what other people consider dogma. I suspect he honestly thinks that financial institutions needs more capital, and he thinks that regulations are why they currently don't have more capital. TBH, I'm not sure what accounting issues keep banks from owning more capital. Taxes I get, and regulation I think I could see.

2) Honestly, I think straight regulation is a solution of last resort. I'd rather see reporting requirements so that it's more difficult to hide what the company is doing from investors and customers, and give banks more freedom to do what they want. I'd only want to see regulation to ensure that the whole banking and economic system continues to function.

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jeffxandra
2008-03-28 02:29 pm UTC (link)

Here's the point concerning regulation. Regulation is the reporting and transparency you speak about. Regulation requires disclosure and demonstrates the risk to those outside the institution.

The point of regulation is so that high risk investors, which is exactly what Bears-Stearns was, aren't bailed out; they don't have to be. Bears-Stearns is specifically the kind of speculator McCain allegedly wants to punish, but when it the Fed bailed them out he, admittedly like the Dems which I'm not happy about, applauded the Fed's move to do so.

Regulation keeps the tax payers from having to foot the bill for these sorts of things. Yes, it can slow the growth of the economy overall, but slower growth is better than socialized welfare for big institutions like this.

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	jeffxandra 2008-03-28 03:30 pm UTC (link)
	One additional comment. In no way do I want to apply that the Fed had any option but to bail out Bears-Sterns (and open the trading window to other invesment firms). But the Fed should be asking for some stringent regulatory compliance in return to prevent further recurrence of these practices. Are they (so far)? No. (Reply to this)(Parent)

pneumatik
2008-03-28 05:41 pm UTC (link)

My dad explained Bears-Stearns to me pretty well last weekend. My binge-and-purge brain lost most of what he said, but one of the issues was that there was some personal enmity between Bears-Stearns and the rest of the financial community. And IIRC, Bears-Stearns was really just bought out on the super-cheap. There was some help from the Fed, but I thought it was a loan. JP Morgan owns Bears-Stearns now (I think) because if they could buy B-S cheaply enough they'd end up with more assets than they spent to buy them. I don't think this is the same as the S&L scandals in the 80s (again, I could be wrong).

As far as whether or not a particular item of regulation is good or not, I think it depends on whether the total wealth lost through slower economic growth is more or less than the corporate welfare required to bail out companies that screw up.

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jeffxandra
2008-03-28 06:09 pm UTC (link)

B-S was initially bought on the super cheap (though the price has now quintupled from the original offer). Furthermore the Fed agreed to absorb the first 30 Billion of JPM's losses from B-S assets (the revised deal has JPM on the hook for the 1st billion but the Fed holding the bag on the next 29)

i.e. B-S would have crashed and burned if the Fed hadn't one, made it possible for B-S (now JPM) to borrow up to $200 Billion in T-Bills using essentially junk as collateral (this program has been expanded to all the Street investment firms like B-S), and two, agreed to take the first hits of the fallout.

As far as whether or not a particular item of regulation is good or not, I think it depends on whether the total wealth lost through slower economic growth is more or less than the corporate welfare required to bail out companies that screw up.

I disagree. Total wealth should not be the concern of the Federal Government in this scenario. It should be concerned about the tax revenues it gains from laxer standards relative to the costs of bailing them out when things go bad. Now yes, that indirectly relates to total wealth, but only in that greater wealth can provide greater tax revenues. But certainly the two numbers do not equate. If there's 200 billion dollars out there in total wealth gained as a result of lax regulation, then the federal government shouldn't be shelling out 200 billion to save the organization. The government's aid should only be a fraction of what overall wealth was gained.

Also, how do you intend to calculate the effect of lax regulation in wealth creation? Certainly no CEO is going to say "Oh we made 1 billion in profit this year because of lax regulatory standards"

(Reply to this)(Parent)

	jeffxandra 2008-03-28 06:19 pm UTC (link)
	And, I do find it amusing that you bring up the S&L scandals given that McCain was one of the Keating Five (Reply to this)(Parent)

	elengul 2008-03-28 04:46 am UTC (link)
	I'm glad you're excited about a candidate. I disagree with his policies, but it's good to be excited about your candidate. (Reply to this)

	jeffxandra 2008-03-28 12:33 pm UTC (link)
	By the way, under pressure, McCain's campaign issued a revised statement sounding like oh yeah.. they would be open to bailing out "deserving" homeowners too and considering reregulating. So yeah.. quotes the dogma while allegedly not going with dogma in part 1. Then backtracks when it's unpopular, real "maverick" there. (Reply to this)(Thread)

	Also, elengul 2008-03-28 01:23 pm UTC (link)
	This site is very liberally biased, so you should probably take this with a grain of salt, but ... This has a somewhat scathing review of McCain's conversion from Maverick to mainline conservative. Read it if you want. I just wanted to make the article available. (Reply to this)(Parent)

pneumatik
2008-03-28 01:52 pm UTC (link)

I don't get what you're talking about. McCain came right out and said, "I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense." So he comes out with a plan, people criticize it, and he incorporates some of that criticism into a new and theoretically better plan. I think that's great.

I would expect his initial ideas to be based around his personal beliefs. Everyone's like that. What I like is that he's come out and said that his personal beliefs might not achieve the goals he needs to accomplish, so he'll change his position to achieve those goals. That's what I like.

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jeffxandra
2008-03-28 02:52 pm UTC (link)

First off, his plan remains "Welfare for the wealthy, everyone else is screwed"

His initial proposal was to bail out big investors and otherwise recycle the Bush Administration's Hope Now plan which, in essence, said "lenders and home owners you work it out, I'm too busy"

So far he's not brought a new idea to the table, or indeed change much of anything, except for make it easier for banks and the like to get themselves in more trouble, bailing the banks out from their worst decisions, and leaving homeowners with little. It's merely forestalling the inevitable and increasing distance to fall when it does happen.

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pneumatik
2008-03-28 05:36 pm UTC (link)

The ellipses in the second paragraph of my post cut out the following: "In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren't."

Now, he still might not do that. And to be honest, I don't really see why anyone who borrowed more money than they could pay for should get any help from me. But if you're going to help people, at least he's focusing on, IMO, the best people to help.

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jeffxandra
2008-03-28 06:14 pm UTC (link)

I agree, but that's no different than any other candidate's comments except they expect to spend federal money on it while McCain's proposals (to date) are "you go do it," except when it comes to the Fed being put on the hook for bad mortages (i.e. corporate welfare)

Indeed all three have been trying to tread the moral hazard tightrope in their own way.

But them I'd rather bail almost no-one out if it wouldn't throw the economy in the tank.

(Reply to this)(Parent)

	jeffxandra 2008-03-28 01:27 pm UTC (link)
	coming out with straightforward conservative ideas that aren't crazy By the way, depending on how you feel about Bush's craziness level, here's a great comparison of key excerpts from McCain's speech and some Bush policy speeches. Very similar (Reply to this)

	yerbrainondrugs 2008-03-28 11:11 pm UTC (link)
	It's fun to wind Jeff up and watch him go. Hey Jeff, I hear Obama doesn't walk on water after all! duck (Reply to this)(Thread)

	pneumatik 2008-03-29 02:18 am UTC (link)
	I'm really amazed at how emotional some people can get about politics. (Reply to this)(Parent)

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