NASA Deadline Looms for Shuttle Ops

Reuters has an article today about the political back-and-forth over the remnants of the shuttle program.

I hope they can find other things to do once the program shuts down.

It's happened before -- we throw away our technological lead because of politics. The shuttle program was a compromise because we evaporated space technology infrastructure beginning as soon as Apollo 11 landed on the moon. The "we can use the money down here" types took over Congress, and the national agenda, and much of the human capital investment went down the tubes. I've mentioned that Homer Hickam, the guy from "Rocket Boys" has been an advocate of infrastructure conservation in the past. He was a NASA guy for many years, maybe he knows what he's talking about. "Back to the Moon" was an interesting book.

Let's keep those folks in our hearts. Let's hope they find something to do with their talents that gives them their preferred lifestyle.

Treasury may have tough time divesting Citi without depressing price; there's a 12/31 deadline

The US Treasury has already made over $2B on its Citigroup investment (in 2 years) but it's slowed down sales of the shares (divestiture) to keep from upsetting the stock price.

Barney Frank slams Fannie for foreclosures

As an update to my 8/24 post on Barney Frank calling for Fannie and Freddie to be abolished, today it's reported that Frank has sent a letter to Fannie Mae slamming the folks there for having aggressive foreclosure policies.

Jon Stewart couldn't write this stuff. It just keeps getting better and better.

Mort Zuckerman on The American Dream

Has the American Dream become the Nightmare instead? As we were discussing in class just the other evening, Houston has been relatively sheltered in terms of housing troubles. We've been lucky, even with Hurricane Ike and its price spike.

But folks are noticing some empty houses in their neighborhoods these days, and students have told me about lending standards going up precipitously over the past year or so.

From the article:

The economics of home ownership could hardly be more disastrously opposite to the expectations of generation after generation. Millions of homes have been foreclosed upon. About 11 million residential properties, or about 23 percent of such properties with mortgages, have mortgage balances that exceed the home's value. Given the total inventory, and the shadow inventory of empty homes, many experts expect prices to fall another 5 to 10 percent. That would bring the decline to 40 percent from peak-to-trough and expose an estimated 40 percent of homeowners to mortgages in excess of the value of their homes.

The growing risk of disappearing equity invites more strategic defaults on mortgages. Homeowners with negative equity are tempted simply to mail in their keys to their friendly lender even if they can afford the mortgage payment. Banks don't want to take the deflated properties onto their books because they will then have to declare a financial loss and still have to worry about maintaining the properties.

Little wonder foreclosure has not been enforced on a quarter of the people who haven't made a single mortgage payment in the last two years. A staggering 8 million home loans are in some state of delinquency, default, or foreclosure. Another 8 million homeowners are estimated to have mortgages representing 95 percent or more of the value of their homes, leaving them with 5 percent or less equity in their homes and thus vulnerable to further price declines. A huge percentage will never be able to catch up on their payment deficits.

The pace of foreclosures was briefly slowed by loan modifications brought on by government programs. Alas, the programs have not been working as hoped. Half of the borrowers have been redefaulting within 12 months, even after monthly payments were cut by as much as 50 percent. The foreclosure pipeline remains completely clogged. As it unclogs, a new wave of homes will come on the market and precipitate additional downward pressure on prices. The number of foreclosed homes put on the market by banks will be a more powerful influence on the further decline of home prices than either consumer demand or interest rates.

A well-balanced housing market has a supply of about five to six months. These days the supply is more than double that, as inventory backlog has surged to about a 12½ months' supply this summer, up from 8.3 months in May. This explains why average sale prices have been declining for so many, many months. The high end of the market, in particular, is under great pressure.

To be sure, home ownership isn't all it's cracked up to be. It's expensive and time-consuming and risky. No question, it's not right for everyone at every stage of their life. And it's not right for every family.

Mr. Zuckerman decries the loss of such a wonderful asset to the middle class in this country. I'll continue to argue that there are politicians in Washington for whom THIS WAS THEIR GOAL. After all, we can't all be equal (or equally squalid and dependent on government largess) if one group of people can actually save and invest and have confidence in their own power to shape their future. Call me cynical, but I don't see any other way to explain the political behavior of the past several decades from Congress and others in Washington and around the country.

Take away our home values by diluting them, and some of those middle class types might just be forced to "fall in line" with the political current that says that we must have equality of outcomes. The only way to achieve equality of outcomes, in fact, is to take everything away and then carefully give it back.

Remember, "I'm from the government, and I'm here to help."

Nightmare, though? I'd argue that Mr. Zuckerman is REALLY going to be upset when we eventually get around to straightening out Freddie and Fannie.

WalMart takes John Lennon's advice

Saint John of Liverpool is known to have said "Follow the money." He was probably onto something.

WalMart has started following the money on its opposition. In particular, they've found that the "grass roots" movement against them goes back to competitors such as Safeway, and the unions that represent workers at competitor firms.

Ya think?

This is how this looks to the trained eye:

Safeway (and their union workers, evidently) can't actually compete with WalMart, so they use public opinion, propaganda, land-use consultants and a team of lawyers to fight them instead.

Welcome to the new America folks.

One of the consultants was quoted:

"The work we do helps to level the playing field as regular citizens try to fight back against the world's largest retailer and the impact of big-box development in their communities."

Right.

As we've discussed in class from time to time, you should always "follow the money." When you hear that WalMart or whatever company is ruining things for everyone, destroying a way of life, etc. you need to put on your Thinking Cap and figure out who stands to benefit.

Blockbuster files Chapter 11

Say it ain't so, Joe!

Blockbuster, the multimedia chain who has had it's lunch eaten by Netflix & RedBox of late, has filed for bankruptcy protection under Chapter 11.

If you've streamed video via Netflix, or paid $1 for a new release at RedBox lately, you understand why Blockbuster is on its way out.

It's all about the Business Model, yet again.

Chapter 11 filing means that they have to come up with a plan that gets the company turned around and back on the road to profitability. Which probably means coming up with a whole new Business Model. Again. Which isn't likely.

Up to this point, there's been talk of liquidation (Chapter 7), so this is a surprise in that respect.

Turnaround investor Carl Icahn divested his stock holdings starting last year, but has recently purchased a big block of Blockbuster's outstanding bonds, according to the Wall Street Journal. His plan? Being a debtholder will give him some say in the resolution.

Good news: they only have to convince a JUDGE that they can turn things around, and fend off arguments from creditors and other interested parties that will say "stick a fork in it, they're done" in a very convincing fashion. So maybe they've got a chance.

It will be interesting to watch, in any case. Check this space for updates.

Health Insurance Companies Follow Logic, Reason

There are reports that major health insurance providers are ending their child-only coverage in response to a new federal mandate that goes into effect tomorrow.

In other news, Earth is expected to orbit the Sun, etc.

This is what happens after regulation passes: people respond rationally. Insurance companies cannot refuse pre-existing conditions or other characteristics, so how could they possibly afford to offer coverage. The only way they could offer coverage to some would be to cheat others.

In the story, some advocacy type (moocher) is complaining that it's "immoral" on the part of the insurance company. Ahem - it would be immoral to pass costs on to everyone, too. Pick which one you want to see implemented.

I'm guessing that the plan is to pass these laws, push companies out of the market, and then say "look, markets don't work, we need a PUBLIC OPTION." That's how these guys think -- THEY know what's best, and THEY'RE going to give it to us.

The worst part is that the jerks in Congress who pass this kind of stuff are using "markets" to destroy markets. There's nothing market-based about a law that requires insurance companies (who are state-regulated, by the way) to cover certain people or to violate their own cost situation to cover pre-existing conditions. Regulation does not equal market.

Congress knows what it's doing, I'd bet. They're not stupid.

Maybe scary. But certainly not stupid.

Elizabeth Warren ends up in new Consumer Finance agency post

E Warren, Harvard professor and attorney, ends up running the newly created consumer finance watchdog group, the Consumer Financial Protection Bureau. She's been very vocal throughout the ongoing crisis, and she's been running the TARP oversight group.

All politics aside, it will be interesting to see if she can actually accomplish anything. She's very outspoken in her criticism of banks, but it's a different story when you have to stop complaining and start coming up with policy that has to fit a broad base.

Update:
E Warren is working alongside Geithner and others to change the disclosure requirements for mortgage lending under the Dodd-Frank mandate. More here.

Just as long as we track the race and gender of the loan applicants we should be in compliance.

== :- ) Gulf Coast Job Fair Next Week

This just in: People who go to job fairs have better chances of getting jobs than those who don't. Shocking, that.

UHCL Career Services is hosting the Gulf Coast Job Fair this time around, and it's next Wednesday and Thursday, 9/22 and 9/23. Wednesday is for Business & Liberal Arts, and Thursday is for Science & Technology students. It's open to alums too, but you have to go sign up on the Web site.

http://www.uhcl.edu/jobfairs

If you'd like to recruit there, or just wave the corporate banner some, they're taking table reservations too. Your contact is the lovely & talented Beth Borck ( borckb@uhcl.edu ).

Be There or Be Square. Good luck to all the job hunters.

1 in 7 in poverty

WashPo says Census will reveal that 1 in 7 in America live in poverty. We'll have to wait and see what the demographics break down to reveal.

Why am I not surprised that 1) poverty has "gone up," and 2) the Census found it more than ever before? Couldn't we expect that, given the shenanigans with Census data that have occurred over the past 10 months?

The Census is driving an agenda, it looks like, and that agenda is all about dividing us into little groups so we can have "group identity" and be herded like political sheep into little flocks.

Maybe I'm naive, but I thought "census" meant "count." Like in "how many there are." I wonder, too, if the definitions of poverty might have changed over the years. Maybe that's something to look into.

From the article:

[T]he official poverty rate takes into account the effects of some stimulus programs in 2009, such as unemployment benefits as well as jobs that were created or saved by government spending. But it does not factor in noncash government aid such as tax credits and food stamps, which have surged to record levels in recent months. Experts say such noncash aid tends to have a larger effect on lowering child poverty.

Beginning next year, the government plans to publish new, supplemental poverty figures that are expected to show even higher numbers of people in poverty than previously known. The figures will incorporate rising costs of medical care, transportation and child care, a change analysts believe will add to the ranks of both seniors and working-age people in poverty.


OK, I see. Not sure how they incorporate those "created or saved" jobs, because 'saved' would be plenty hard to measure. The Census workers I encountered downtown couldn't go anywhere without lots of erasers, so 'saved' might be tough for them. Nice folks though.

Curious: do you think of "scare tactics" a lot?

I'm always touting honor societies in class, because if you meet the criteria, you should join. It's an HONOR SOCIETY for goodness sakes. That usually means something.

Phi Kappa Phi, the international honor society (with a UHCL chapter) ran a solicitation for manuscripts for inclusion in their annual magazine in May. This year's theme was "Scare Tactics." The description reads:

"Phi Kappa Phi Forum seeks original, previously unpublished poetry from active members for its fall 2010 edition that will be devoted to the theme of “scare tactics.”

Potential topics for scholarly articles and columns include “Red Scares” that have gripped the U.S.; the notion of “Islamophobia”; Celtic origins of Halloween; horror movies; students who take stimulants to counter academic performance anxiety; how fear plays out in primates; why fear is useful and dangerous to the human psyche; Wall Street panics; stage fright.

Who spends time writing poetry about McCarthyism or the "notion" of Islamophobia? [Is that one a fear of an empire from the 14th century? Just checking.] Halloween, maybe I can see THAT one. Performance anxiety? Maybe we should dash off a haiku, or a limerick.

"There once was a history major from Clear Lake,
Who thought that they needed a break,
Their professor said "Write!"
and the student thought "Right!"
so they wrote about Sir Francis Drake."

It rhymes, so it must be poetry.

Anyhow, don't pass over honor societies lightly, business students. We all know about lemons problems, and honor societies (when not overplayed) can help fix lemons problems. AVOID those that take everybody with a pulse. And I guess you should consider a group's politics before joining. But I like PKP and I hope you'll join if invited, even if they maybe are thinking too hard (or following an agenda) with their poetry contest.

UPDATE:
PKP has a new contest for poetry, deadline December 5. The call for poems is

Phi Kappa Phi Forum seeks original, previously unpublished poetry from active Society members for its spring 2011 edition that will be devoted to the theme of “empathy.”

Potential topics for scholarly articles and columns include the neuroscience of empathy; why empathy is central to morality; teenaged bullying; dolphin-assisted therapeutic practices; the “Christmas Truce” in World War I; and sympathetic yawning.

I can't make this stuff up, folks.

Banks should share bite of bailout of Fannie & Freddie

Interesting take on it. And this from the guy that makes policy on F&F. So that may be how it comes to pass.

Of course, if it bankrupts the banking system to do this (as it already has with some small banks) then it won't do anybody any good.

Tea Party = Local Perot Effect

I'm just saying...

For those of you who can remember the 1992 election when Perot got Clinton in the White House for two terms, I'm starting to see parallels between the current situation and way back then.

Looks like the Tea Party is fragmenting more and more the Republican base. I'm not saying that's a bad or a good thing, but it sure would change things around a lot.

Too bad we haven't seen opposition like this on the other side - Ralph Nader is the closest it's gotten.

Interesting.

State Budget Shortfall may be bigger than expected

OK, first let me say that this is the HouChron, so be suspicious. Who KNOWS what they'll say.

But the article this morning says we may be approaching a $21B shortfall. Versus $18B we heard in May, and the $11B number we heard before that (this one is from The Dallas Morning News, so maybe more reliable).

In DC, that's nothing. They don't even flinch at borrowing Trillions with a capital T these days in Washington. But here in Texas we still think "billion" and go "doggone it."

Again, what will these numbers mean for UHCL, and our students: that remains to be seen. Enrollment is up, and that helps. Some faculty have expressed concerns about all of the new staff and admin positions created over the past 3-5 years. As in whole platoons of new people.

Students have asked me more than once who's paying for all those new people over in Student Services. Some of those positions are related to accreditation concerns, of course, but that's the only answer I can give on that one.

President and Provost Stockton are on top of it, and (honestly) there are no better folks for the job. And I can assure you, too, that Michelle Dotter knows her stuff as AVP Finance. Those are the folks running the show at school, and they will be the ones to shepherd us through it.

Also, budget considerations at UHCL run through the Planning & Budgeting Committee of "Shared Governance." I happen to be on that committee this year (oh joy). But the reason I mention it is that every meeting is open to anyone, anyone can come and ask questions or just listen. All of "Shared Governance" is like that. I recommend, to, that you students pay attention to budget and fee discussions in SGA. At least find out who your reps are (by major I guess) and let them know how you feel. Add them to your Facebook or LinkedIn. Can't hurt to stay abreast of things.

One final thing: you may already know this, but faculty and admin salaries, all salaries of everyone employed by State of Texas, are public record. The folks in Neumann library should be able to guide you to the most current version of what everyone makes every year. It's always been that way (used to frustrate my Dad, who worked at Employment Security Commission of North Carolina for 25+ years, some jerk would publish his take-home every year in the local paper). It's no big deal, but every few years some student groups says "LOOK how much they MAKE!!!!!" The next stop on the data trail needs to be the Web site of AACSB International, our accrediting body for business. They publish an annual salary survey showing how much people make in accredited programs.

What you'll learn is that UHCL is a "Goldilocks" institution when it comes to paying business profs (finance & accounting in particular). Our salaries are "just right." How do I know? We aren't leaving in droves. We never HAVE left in droves in finance & accounting at least, even in better times.

Maybe we actually LIKE our jobs. Some of us do, that's for sure. If you look at our numbers in finance, and accounting, and most of the business school folks, I'd say we're probably underpaid. Especially for all of the practical work experience we have. But if we were REALLY underpaid, we'd leave, right?

A lot of schools at the regional level have revolving doors for junior faculty. We've been relatively successful in recruiting and retaining a bunch of "good apples." So far.

Herb Simon, Nobel Prize laureate in economics, talked about the idea of "satisficing." W. Douglas Cooper, my Quant Methods professor back in the old days, used to say that everything was about satisficing. Most of us don't get around to maximizing, that's too costly. Or we suffer from "bounded rationality" problems that cause us to give up early and say "done." That may be the case for the next few years, anyway. We'll keep the quality education coming as long as the students will show up every semester, we promise.

DREAM Act up for debate in Senate, tacked onto military bill

The DREAM Act, a way for young illegals immigrants to end up with amnesty, has just come to my attention in the last few weeks, but I hadn't had time to really study it.

Turns out that Senate Majority Leader Harry Reid has decided that it needs to be on the Senate's pre-midterm agenda ASAP.

There's a lot to read on it, but it looks like most of the language has been around since 2001 or before. When something's been around that long, does it get stale? When you have to tack it onto a military appropriations bill does it mean that it's suspicious?

How is this relevant to UHCL, you axe?

Looks like the path to citizenship is conditional on graduating from college. So if this passes, in addition to keeping students from graduating, or making them take classes over, because they don't do enough work in a class, faculty will now be blamed for having someone deported. Actually, I've heard that from graduate students for years.

Now it will be that way for even MORE students: "But Dr. Michael, I have to get an A in your class or my GPA will be too low for me to graduate, and I won't get my citizenship." I can hear it now. We ALREADY get "I'll lose my scholarship if I can't pass your class." Bah.

I think amnesty is still amnesty. I know it's unfair that these folks are here as children, but isn't it also unfair that thousands of people every year wait and wait to come here LEGALLY? How is it OK to let these folks jump over all of those already waiting?

Military service? That path has been available for many years, but just for certain groups. Again, jumping ahead.

HOW ABOUT we have 1:1 reciprocity? We should perfectly mirror the immigration laws of Mexico, here. Isn't that a basic requirement of all ethical treatment - do unto others as you would have them do unto you? Sounds biblical huh? Not really. Reciprocity is a basic tenet of justice. If it's good enough for you, it should be required for you to treat others that way.

In other words, you cut the pie and I pick which piece I want. That rule smacks of reciprocity.

CRA all over again? HMDA certainly. New reg requires data collection on gender, race (?) of small business borrowers.

Don't take MY word for it, but it looks like we're headed down the same road again. Now we're collecting "racial" and gender data on who applies for "small business" loans, whatever that means.

I guess we'll use the race designations from the census form [as with other Census links, this one may go away too]. What does "race" mean anyway?

Note that the NEXT part of this section requires that no underwriter or loan approval person have access to this information, or ANY personal information for that matter. Right. That's how it works. We don't want anybody to have any access to personal information that might help determine whether the bank will be paid back or not.

Straight from the final version of the Dodd-Frank Act (big PDF):

SEC. 1071. SMALL BUSINESS DATA COLLECTION.

(a) IN GENERAL.—The Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.) is amended by inserting after section 704A the following:

‘‘SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.

‘‘(a) PURPOSE.—The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities, governmental
entities, and creditors to identify business and community
development needs and opportunities of women-owned, minority-owned,
and small businesses.

‘‘(b) INFORMATION GATHERING.—Subject to the requirements
of this section, in the case of any application to a financial institution
for credit for women-owned, minority-owned, or small business,
the financial institution shall—

‘‘(1) inquire whether the business is a women-owned,
minority-owned, or small business, without regard to whether
such application is received in person, by mail, by telephone,
by electronic mail or other form of electronic transmission,
or by any other means, and whether or not such application
is in response to a solicitation by the financial institution;
and

‘‘(2) maintain a record of the responses to such inquiry,
separate from the application and accompanying information.

That's all that matters, right? Incredibly, folks are again confusing social engineering with making bank loans. I've said for a few years now that SBA is the next debacle, and here we go.

We saw how SBA worked in the aftermath of Rita (in East Texas) and Katrina. There are trailers in East Texas with 3 and 4 businesses run out of them, for example. It's a big joke.

So now banks are faced with a huge reporting burden, yet again, and the mandate that this information goes nowhere except the government. We're in the Twilight Zone people.


A Personal Note:
I'm sorry, but collecting data on someone's race or gender (which is irrelevant to the lending process) borders on racism itself. What damned difference does it make what "race" you are, or what gender you are, when you ask for a loan?

Collecting information on race and gender is what got us to this point, isn't it?

As for collecting information: What difference does it make? you ask -Well, it's just another example of the institutionalization of race as some kind of divider of the peoples. Using race to divide us is just plain wrong, folks. Please tell your politicians that the next time you get a chance to vote.

The politics of division (rich/poor, race, intellect) have to stop.

NYT reporting that new Basel Agreement has been reached

Worldwide regulators have apparently come up with a new set of standards that reaffirms the OLD set of standards and strengthens them.

I'll look it over when I get a chance and update with some commentary.

Also, the Spring issue of McKinsey on Finance (Issue 35 is here as a PDF) had a good article on how the tangible common equity to risk-weighted assets ratio serves as a better predictor of distress than what regulators are already using. Interesting.

Kudlow calls for optimism

Kudlow at CNBC asks for a little optimism because people may be missing the big picture.

[I still think that the overarching problem here is uncertainty, all of the rest of this aside. But it helps to contemplate other perspectives.]

Cult Stocks from CNBC

Can anyone else remember Teddy Ruxpin? You know, the bear that TALKS? Really talks to you!

This article from CNBC is all about the business model. The company could have a tremendous product, but without the business acumen to back it up, they'll go broke. And sometimes that can crash the intellectual property, licensing, everything.

I've heard Apple described as a cult stock. Back in 1995 there's no doubt that it WAS a cult stock. But they've always seemed to pull it back from the edge.

Hard Rock Park is a good example of how NOT to do a theme park. Running out of money mid-stream isn't a good idea when all of the hard work (Hard Rock work!) has to be done up front.

Veggie Tales is another good example -- they couldn't scale and maintain their business model. Phil Vischer's discussion of his travails, online someplace and in his book, is a wonderful yet troubling read. The blog is definitely worth your time. It details the meltdown of Big Idea, the company behind Veggie Tales. I need to read the book sometime.

(For the record, I just never got the whole VT thing, so I'm not trying to sell it here - we have friends who swear by it, but I've never been able to watch a full episode. No disrespect if that's your thing. I'm convinced that Little Baby Jesus would probably laugh at Bugs Bunny too. Bubba and Sara watch Pixar and various Disney, no veggies)

Dr. Sunshine himself chimes in on recession

Dr. Nouriel Roubini, AKA Dr. Sunshine, weighs in on FDIC's announcement of the problem bank list.

[I refuse to let him take the name Dr. Doom -- that guy was in comic books, and doesn't look anything like Roubini.]

The good thing about saying stuff like this all the time is that if you do it enough nobody will pay attention to you until the Armageddon comes, and then you'll be right!

I agree with him on one point: it's going to have to get worse before it gets better, no kidding. Heck, there are still people in Washington who think that tax increases can help the economy. Really, I'm not kidding! They don't even know better than THAT.

More on Government, er, General Motors

Read that headline fast and you'll get at the core of what's happening with this brain trust.

Reuters has a story over the weekend that suggests taxpayers may actually lose money (ahem, MORE money) when the GM IPO happens. Whenever that is.

I thought it was interesting that nothing was going to happen before the election in November. No kidding? Maybe I have a future as a weatherman.

I've written about these guys before, but the gist that GM stole from bondholders and the taxpayer simultaneously to hand money to the UAW and its pension liabilities, in the process starting a NEW GM that has actually paid back US Treasury TARP monies from a slush fund made up from, you got it, US Treasury TARP monies.

So now the NEW GM is going to IPO.

The real question that Dr. Williams and I are asking is: what fiduciary in their right mind would buy anything from this NEW company? How can asset managers purchase this stuff, doesn't it violate the "prudent man" rule? Maybe if you discount the value of government largess and stimulus back to the present, exclusive contracts, etc. then I could see it being worth it.

Wesley Mouch would be proud.

UPDATE:

Article today that says the special IG for TARP reports that the IPO will have to be at least $134 per share for the US to be repaid. I haven't check the number here, so I don't know if that means the NEW GM will repay or EVERYTHING will repay. I bet it's just the NEW GM.

Venezuela, the Worker's Paradise, begins rationing food: Castro smiles.

The Chavez government introduced the "Good Life Card" in order to control shortages. It's being compared to Cuba's card system. What a great program to emulate!

Gotta love that snappy title: Good Life Card. Herr Goebbels would be proud. Papa Joe is laughing, and Chairman Mao wishes that HE'D have thought of that one. Propaganda just never gets old, does it?

Trouble is, this guy could get desperate. He could even start seizing businesses and nationalizing them.

Wait, that's already happened. I wonder how that's working out for them down there.

Next they'll be aligning themselves with lame-o washed up actors and kooks from Hollywood.

Wait, that's happened already too.

Man, these guys think of EVERYTHING.

I guess they forgot to think of the problem of INCENTIVES. Next time they hold a People's Revolution (coup d'etat, that is), someone had better think to bring some sandwiches and pop. They're gonna get mighty hungry, and hungry people can be made to do just about anything.

The History of the Crisis: NINJA Loans

Steven Pearlstein of The Washington Post had a great column about alternative loan types and how "No Money Down" stopped working. Check it out.

NYT article on Home Equity

From earlier last month, about the consequences of the current crisis.

Article on Chinese sat rendezvous, orbit denial in past

An article today details concerns about Chinese satellite tests and reminds us that China has a history of orbit denial by testing. If you destroy enough of your own satellites in a particular region of space, you see, you can make it extremely hazardous for anyone to put satellites there.

Hmm, didn't Sun Tzu talk about stuff like that?

I'm all for a Chinese space program. Welcome!

But we have to put things in their proper place -- creating a debris field in space is just like sowing land mines between North and South Korea. Denial of territory is the primary goal of international relations, right? I'm sure for every modern-thinking mind running China there are two or three of the old guys (or gals) that think in the same terms.

WV county pulls swing sets

Hey, what are they EXPECTED to do?

One county has found that just pulling the swing sets altogether is the only way to deal with the lawsuit babies. Kids fall down, kids do stupid stuff like "Superman" from swings.

Maybe they should reserve a big space on the playground where the swings USED TO BE and name it for the attorney that brought the lawsuit. Hey, it's not the KID'S fault that some attorney decided to sue, the kid was just being a kid.

Fed is now "super-regulator" for all "systemically important" institutions

Good summary on Bloomberg today of the new "systemic" provisions in the Dodd-Frank Act. Now the Federal Reserve has oversight of any institutions that it deems "systemically important".

I wonder if they'll start telling Freddie and Fannie what to do.

Dr. Robert Barro on unemployment extensions

Titled "The Folly of Subsidizing Unemployment". Wow. It's a quick read, and makes a great deal of sense with just a few numbers.

Is unemployment insurance prone to moral hazard? We know other types of insurance suffer from this problem.

The dissenting opinion is from Dr. Robert Reich (pronounced 'Rye-sh'). He makes good points too. I have a high regard for Dr. Reich, but he's been out of touch with reality so many times in the past that I don't take his economics seriously in most cases. Salon link here, the letters are priceless. Link to his Conan O'Brien video here.

Seems like Larry Summers is struggling with this too. Thank goodness he's getting more sleep these days.

This stuff is heating up the airwaves, folks.

(For the record, John Boehner (Repub leader in Congress) is usually a tool, in my humble opinion. He's mentioned in the first line. Meh.)

From a political standpoint, this is perfect! Throw it back at them! Does it make economic sense to limit unemployment benefits? Probably. Do people NEED it to go back to school and retrain and stuff? Sure. It's a tough question, just like welfare reform. But we can't argue, much, about the moral hazard issue, it's going to always be there.

Surprise! Bailed out banks spend money on lobbying!!!

As I say in class all the time, regulation is as much about politics, usually, as economic principles. Here's a great example.

Turns out that banks have lobbyists, and they STILL hire lobbyists once they have been bailed out.

Weird huh?