Grey Matters

In the last few days, the Obama administration over-reacted to a video on the web and is blaming it on a blogger.

The video showed Shirley Sherrod addressing the NAACP’s 2010 Freedom Fund Banquet. She related a story of how, years ago, she had not done all she could to help a “white” farmer. At that point in the video, the audience responds favorably to that remark. That is, they seem to approve of Shirley Sherrod’s handling of this farmer.

Now, when this video was posted by a blogger, Obama administration folks saw it and fired Shirley. They didn’t take the time to find out the context of what she said in her address to the NAACP audience and assumed that Shirley Sherrod was behaving in a racist manner in her position as an employee of the U.S. Department of Agriculture. That assumption was incorrect.

Had she actually behaved as suspected as a U.S.D.A employee, she should have been fired, but she was relating a story from years ago when she did not even work for the U.S.D.A. and  the story she told was intended to show how she had grown as a person and put racist things behind her. It “… opened my eyes …” she said. Inspiring stuff.

The Secretary of Agriculture fired Shirley Sherrod without getting the facts. That’s not the fault of the blogger.

The blogger who posted the video is accused of “taking her words out of context.” That’s nonsense. The video he posted is not about Shirley Sherrod. It’s about the audience reaction to her statement that she did less then she could have to help a white farmer.

The NAACP, you see, claims to be free of racism. The blogger noted that the NAACP had made unsubstantiated claims of racism against the Tea Party movement. The blog post was about the NAACP and the context is perfectly clear to anyone watching the video in the context of the blog post.

As the blogger wrote: “Sherrod’s racist tale is received by the NAACP audience with nodding approval and murmurs of recognition and agreement.” That’s all the context necessary to make his point.

That he included the later part about how the incident had opened her eyes was going beyond the point he needed to make. When the Obama administration chose to ignore the point he was making, it chose its own context.

Lest I too ignore the point that the blogger was making, I would point out that the Congressional Black Caucus (CBC) claimed that two members had gone into a Tea Party crowd and been subjected to fifteen (15) instances of “the ‘n’ word” from fifteen separate people. The point of the accusation was that the Tea Party movement is racist.

Despite having found four videos of the incident, none of which include the ‘n’ word in the audio portion, and despite having been challenged to substantiate their version of the incident, the NAACP continues to use this alleged name calling as “proof” that the Tea Party movement is racist.

So, in case you missed it, the blogger’s point is that the NAACP are the real racists for alleging racism where there is none and for their apparent approval of giving a white farmer less than all the help Shirley Sherrod could have given him.

Another interesting note about this story: the Secretary of Agriculture told Sherrod that he had received pressure from the White House to fire her. The White House said that the secretary fired Sherrod on his own and it learned about the incident only after the fact. Once the Obama administration reversed itself on Sherrod’s firing, it was the agriculture secretary who took the blame.

Ironically, Shirley Sherrod is now some kind of poster child for… something, I’m not sure what, and this former racist is being pressed into service fighting racism within the agriculture department. She’s also thinking about suing the blogger.

(If I were a stand-up comic, this would be my bit on procrastination.)

Been meaning to write this for years, finally got around to it.

I’m a bit of a procrastinator. Let me amend that: I am quite the procrastinator. OK, OK, truth is, I’m a world-class procrastinator. There are few people on the face of this Earth that can put things off like I do.

In fact, if procrastination were an Olympic event, I’d be the reigning gold medal holder. Providing, of course, I’d gotten my application to join the team in on time, which, of course, I wouldn’t have done.

What would that look like? Olympic procrastination competition — bunch of people standing around with their hands in their pockets, doing nothing? Maybe sitting on a sofa… watching the game… having a brew? That’s weird. I procrastinate all the time but I’ll be darned if I can figure out how I do it.

My wife understands that I have a procrastination problem and, hoping to cure me of this debilitating condition once and for all, she bought me a cassette tape for Christmas: “Conquering Procrastination” by Dr. somebody-or-other, PhD of, I dunno, procrastination, I guess, if he knows enough about it to make a tape.

Listening to this cassette is supposed to help change who I am, make me more un-procrastination-y. Trouble is, the tape can’t help if you don’t listen to it and I haven’t listened to it. Yet. I’ll get around to it one of these days. If I can find it.

Did I mention she got me this tape for Christmas? When I say Christmas, I mean Christmas of, oh, ’91 or ’92 maybe. If she’d gotten it for me recently, It’d be in mp3 format and I’d be ignoring it on my iPod. Hey, I know, if I can find the tape, I’ll convert it to mp3 for my iPod. Gotta remember to put that on my to-do list.

A to-do list is a great tool for a procrastinator. Just putting something on my list makes me feel like I’ve accomplished something, you know, like the first step of actually getting it done. (“A journey of a thousand miles begins with but a single step…”) Once I get something on my list, well, that’s progress, you know? Put it on my list, then knock off for the day. I mean, hey, made progress, right? That’s a good thing.

My to-do list is all in my head. One of these days I’ll write it all down and prioritize things. Gotta put that on my to-do list too. Oh, hey, just did.

I’m such a procrastinator that I decided to write a song about procrastination. It’s to the tune of Carly Simon’s “Anticipation” and goes like this:

<this is me singing>Procrastina-ay-tion, procrastina-yay-tion is making me late… Keeping folks way-yay-yay-yay-yay-ting…

Poverty is defined by income rather than by standard of living. Government benefits don’t count as income. So, government could take the typical poverty-stricken family of four, put them up in the penthouse at the Ritz, feed them with free round-the-clock room service, chauffeur their kids to free public school in the hotel limo and give them free lunch at school, clothe them with with free stuff from the boutique in the lobby, give them unlimited pay-per-view TV and use of the fitness center and they would still be “poor” by government standards.

One note I found interesting some years back: Poor people spend, on average 1.5 times as much as the income they report. This is a government finding!

If “poverty” didn’t exist, Poverty Warriors (remember the War On Poverty?) would invent it. They don’t want to work themselves out of a job by ending poverty. That would be silly. No, they want to “serve” the poverty stricken. At least until they’re pension-eligible.

As is, poverty is defined in such a way as to ensure that there will always be “poor” people among us — job security for the bureaucrat class.

Fun With Numbers:

Let’s say that Jimmy Jones is in the lowest quintile (bottom 20%) income-wise. Jimmy invents a better mousetrap and sells the patent rights for millions of dollars. Suddenly, Jimmy is in the top quintile of earners and someone from the second quintile drops down into the lowest quintile to fill his place. The headline will read: “Rich Get Richer!”

Oh, and from the “Figures Lie and Liars Figure” department we learn that the the top “quintile”   which is supposed to be one fifth of the population — has a lot more people in it than the lowest “quintile” does. This, of course, has the effect of exaggerating the differences between “rich” and “poor” incomes because politicians compare the top quintile’s income to that of the bottom quintile.

I remember back some years ago, (Carter administration?) they loosened the eligibility requirements for food stamps. This allowed more people to sign up. They then promptly pointed to the huge growth in Food Stamp recipients as proof positive that people were poorer than ever (except for the “rich,” of course) and that the Food Stamp program needed to be further expanded. This happened within the space of a year and a half or so.

I have to admit, I am, without fail, just a bit incensed when the folks in front of me at the supermarket pay for their T-bone or Porterhouse steaks and such with food stamps and then pay for their whiskey and cigarettes with the cash they didn’t need to spend on food.

If you subsidize something, you’ll get more of it. Government subsidizes poverty. Hence, we have more of it than we would without the subsidies.

Think of it this way, thanks to subsidies, more people can afford to be poor. Without the subsidies, they’d have to increase their incomes by getting jobs and such. But the pressure to do that is relieved by the subsidies we provide poor people. It makes “poverty” affordable to more people.

In the case of State of Arizona versus Shelton, the prosecutor added multiple charges (4) after the arrest, hoping something would stick (and changed the original charge too, since there was no such offense as that with which Shelton was originally charged). The creative interpretation of the laws by both prosecutor and judge does not bode well for any of us.

I especially like the criminal nuisance charge.  The prosecution took the position that, since the officer’s car was parked in the street (albeit, up against the curb), this created an unsafe condition for passing cars due to the flashing lights and constricted roadway. That the officer’s patrol car was a hazard to traffic was, apparently, Shelton’s fault.

Here’s the law under which Shelton was charged. Necessary elements to have violated this law include: 1) That the officer suspect Shelton had committed, was committing or intended to commit a crime (the officer admitted that he suspected no crime) and 2) that the officer advise Shelton that failure to give his full name is unlawful (the officer never so advised Shelton). 

Despite the absence of these necessary elements, the judge let this charge go to trial, using his own interpretation of the law: that once a police officer is dispatched to a scene, that is, in and of itself, enough to constitute reasonable suspicion that a criminal offense is being or has been committed.

So, apparently, by this judge’s interpretation, any time a cop shows up, he can demand that everyone present identify themselves.

Something that should be noted (and of which this case presents an example) is that we already have enough laws on the books. Most every new law covering some criminal act, can already be prosecuted under existing law. The only purpose served by making yet more laws is that it enables prosecutors to pile on heaps of charges in the hope that something sticks. It’s also useful in adding up lots of potential jail time to give the prosecutor a stronger bargaining position when plea bargain time comes. He has more charges to drop in exchange for your acceptance of a plea. You’re more likely to roll over, if the prosecution has charged you with lots of different crimes. 

The easy thing for Shelton would have been to roll over and pay a fine or whatever (or just give the officer his name straight-away). It’s always nice to see someone — anyone — stand up for their rights.

I’ve said it before: the authorities don’t like it when we citizens know our rights. And they really hate it when we actually defend our rights, as Shelton did. “The authorities,” and this includes most police officers, would prefer that we all simply did as we are told. “Rights” just get in the way of them doing their jobs.

I’ve written previously regarding how a journalist’s world-view influences the manner in which that journalist reports a story, noting also that most persons drawn to journalism tend to have an anti-business, pro-government world-view. Thus it was that, true to form, the NBC Nightly news on February 23, 2009 ran a segment, reported by David Faber, which concluded that the housing crisis was caused by housing which became too affordable. And, of course, by the greed of Wall Street Bankers. And “lack of regulation.”

Into the transcript which follows, I’ve inserted my own commentary. To get the full effect of the segment, you may wish to read the segment, as aired, in its entirety, ignoring my comments, then re-read it with my commentary. Here’s how it went:

Brian Williams, in the show’s introduction said: “On our broadcast tonight… Meltdown: making sense of this financial crisis… Our special series begins tonight with a good, hard look at how we got where we are right now.“

Ah, wonderful. A “good, hard look” is exactly what’s required. 

Later in the broadcast, introducing the Meltdown segment, Brian said: “As you may know, all this week we’re teaming up with our friends at our financial news network. CNBC, to bring you a special series of reports aimed at making sense of this economic meltdown. We begin tonight with David Faber who takes us back to the roots of what ultimately became history’s biggest house of cards, and, David, you’re first and we thought it was helpful to kind of take a look back and see how we got here.“

I’m encouraged. David is going to take us back to the “roots” of the crisis. About time someone did. 

David Faber: “Sure, very important to do that, of course. The economic crisis, Brian, has many causes but the genesis can be traced to the U.S. housing market. It was there that a combination of greed and lack of regulation built the foundation for a house of cards.

Well, the part about the U.S. housing market is certainly true. But “greed and lack of regulation?” We’ll see how he explains this. 

“In the aftermath of 9-11, then Federal Reserve Chairman, Alan Greenspan, feared the shock to an already weak economy, could send the nation into collapse.”

So our look back — for the roots — is not looking back any further than 9-11? Well, this is where David went wrong. He should have looked back further — to the Clinton administration and beyond: to 1992. Here we find the Congress, controlled by Democrats at that time, requiring Fannie Mae and Freddie Mac to increase their purchase of sub-prime mortgages.  

Cut to a clip of Alan Greenspan: “I was very much concerned that we were… we were in the throes of something we had never seen before.“

David Faber narrating: “He oversaw a series of sharp interest rate cuts to ease borrowing and, for many, that cheap money came in the form of new mortgages.“

But low interest rates make homes more affordable. Surely David is not thinking this was a bad thing… 

There followed a series of clips of newscasts leading off with: “This week, 30-year, fixed-rate mortgages dropped to the lowest level since 1971…” and followed by numerous repetitions of the word “mortgage” from multiple clips.

We get it: Home ownership was more affordable than ever. 

David Faber: “Enter Wall Street bankers who smelled profits. They began to buy up mortgages, bundle them together and sell investors shares in the monthly payments those mortgages produced. By 2002, the number of mortgages Wall Street bought each month was exploding.“

So, low-interest loans, which pay lenders less than high-interest loans, caused Wall Street bankers to suddenly smell profits? 

Clip of Michael Francis, identified as a former Wall Street banker: “Once we saw 100 million dollars, we very rapidly moved right past it and within a six-month period, we were doing 500 million dollars.“

David Faber narrating: “To keep it up, Wall Street needed a constant stream of mortgages, so they encouraged lenders to ease their loan requirements.“

Ohhhh…, it was Wall Street exerting pressure on lenders, and not the fact that the Clinton administration required lenders to reduce loan requirements, under threat of discrimination lawsuits. The fact that Clinton required lenders to consider even unemployment benefits as income, for purposes of obtaining a home loan, had nothing to do with it? David really should have looked back further, to the time when political correctness replaced credit-worthiness. 

Michael Francis, former Wall Street banker again: “You’re not verifying any assets. That’s the breathe on a mirror, it’s the fog sort of get a loan.”

OK, I’m not sure what this foggy mirror business is about, but he’s apparently saying that people could lie on their loan applications and get away with it. 

Clip of a “Quick Loan Funding” commercial: “Quick Loan Funding can help put you in a low, 30-year, fixed rate program today.“

We get it: housing is more affordable than ever. Still not a bad thing. 

David Farber narrating: “Companies like Quick Loan Funding became experts at offering so-called sub-prime mortgages. Lou Pacific ran a sales force that wasn’t exactly seasoned.“

Clip of Lou Pacific interview by David Faber:

Lou: “With the loan officers, I mean, you’re taking a kid that used to sell pizzas, literally, and he’s making $20,000 a month, with no training.”

No training at all? Zero? You really expect us to believe that? “Here’s your desk. Here’s a pile of loan applications. Just have people fill ‘em out and we’ll pay you twenty grand a month.” Sure. 

David: “Pizza. Pizza delivery men…“

Lou: “Pizza delivery men.“

David: “… became loan officers.“

Lou: “Yes. Car salesman, pizza delivery man, uhhh, kids who worked in electronics stores, they’re helping people deal with the largest investment of their lifetime…“

And with no training at all. 

David Faber narrating: “It didn’t matter that many of those people were getting mortgages they couldn’t afford, as long as home prices kept rising.”

Excuse me? This statement really needs some explanation. What do rising (or falling) home prices have to do with whether or not folks can afford the monthly loan payment called for in their mortgage contract? If their all-time-low, 30-year fixed mortgage requires a payment of XXX dollars a month, how does the value of their home change anything? They can either afford the mortgage payment or they cannot. If they cannot, they should not be getting the loan. They should buy a home they can afford. 

“But when the demand for homes was finally satisfied, prices began to sink and mortgage delinquencies began to rise.”

Is David implying some sort of cause-and-effect? Home prices sank, therefore people could no longer afford their mortgage payments? Again, I fail to see the connection. 

“Investments backed by those mortgage payments collapsed, bringing banks tens of billions in losses.“

“The federal government has been pouring trillions of taxpayer dollars into efforts to support the financial system and rouse the economy out of recession. But despite the painful lessons we’re learning, Alan Greenspan fears, it’s inevitable, it will all happen again.“

Another Alan Greenspan: “Somewhere in the future, we’re going to have this conversation again. It will not be for quite a period of time but it will occur, because the flaws in human nature are such that we cannot change that… It doesn’t work.“

We’re not sure exactly what “it” here is, as there’s an edit and we can only guess at what “it” is. But it suited David’s purposes. 

David Faber wrapping up his report: “Of course, right now we’re still dealing with many of the significant losses yet to come at many of our nation’s banks, Brian. You heard Trish talking about that earlier.“

Brian Williams: “With deference to Mr. Greenspan, I was going to say let’s deal with this one first. Uhhh, thank you very much, David, for being with us. And David’s superb documentary called “House Of Cards” is going to re-air on CNBC this Wednesday night.“

Of course, I’m going to view the House of Cards documentary. It’s likely to be just as unbiased as this Meltdown segment from NBC Nightly News.

Here are the facts, as I understand them. The home mortgage crisis was in fact a sub-prime (high-risk) mortgage crisis. That is, people who were credit-worthy typically had no problems making their (prime) mortgage payments. There was no sub-prime mortgage crisis until the numbers of sub-prime mortgages suddenly burgeoned during the Clinton administration. It’s fair to ask why that happened. (Too bad David Faber didn’t look into it.)

As noted above, the Clinton administration required lenders to lower standards, so as to allow more poor and minority borrowers to qualify. Clinton’s H.U.D. (Housing and Urban Development) secretary Andrew Cuomo proposed the goal that mortgage giants Fannie Mae and Freddie Mac have 50% of their portfolios made up of these sub-prime mortgages by the year 2001. Clinton actually thought it was a good thing to make high-risk loans — such is the logic of politicians. 

In summary, government intervention in the housing market created a demand for high-risk borrowers to take out loans, so that Fannie Mae and Freddie Mac could carry out their instructions to obtain more sub-prime loans. Wall Street could not have sold these loans to investors if the loans did not first exist, and they did not exist in abundance — enough to sink the world economy — until Clinton required it. The housing and mortgage business was just fine until government tried to improve it for poor people. It was not a “lack of regulation” but an excess, that precipitated this mess.

Remember, most mortgages were sound and most people made their payments just fine. These were solid investments for Wall Street. But the increasing numbers of sub-prime loans, mixed in with the good loans, made entire portfolios unsound. When your Return On Investment is just a few percent, having even five percent of loans go bad due to delinquencies, makes the portfolio unprofitable. No one wants to invest in something that’s losing money.

The problem that began with sub-prime loans then spilled over into the rest of the mortgage market, as the economic downturn has led to massive lay-offs, with the result that many formerly credit-worthy people are now unemployed and cannot make their mortgage payments either. 

So, the relatively small numbers of sub-prime loans that go bad, because the borrowers were not credit worthy to begin with, can bring down an entire world’s economy. We’ve proven that. 

Rather than place blame on the politicians who required that loans be made to those who were not credit worthy, politicians, and journalists, blame the lenders themselves. 

Like Alan Greenspan, I fear that human nature — that desire of politicians to help the less fortunate — will continue to be our undoing and we will be having this conversation again.