Short impression of the 2nd Presidential Debate:  Just like the 1st Presidential Debate, but with more walking around.

Not much new ground covered in this debate, even though there was ample opportunity for it.  The questions just teed up the candidates for the same stump speech excerpts we heard last time.  As such, Obama comes out of the debate in the driver’s seat since the pressure for a game changer was on McCain. 

A few notes:

Obama continued to lie about what brought about this financial crisis.  The wheels did not magically start to come off the day George W. Bush sat down in the Oval Office chair, and the party-line votes regarding Fannie and Freddie put the Democrats on the side against regulation of those institutions.  Even Bill Clinton has debunked this line.  That John McCain didn’t even bother to set the record straight on this is a huge missed opportunity, moreso because it was a carbon copy of Obama’s line in the first debate.

If I hear the phrase "fundamental difference" one more time, I’ll scream.

One bit of new ground that was actually covered was McCain’s 300 billion dollar bailout of people who bought more home than they could afford.  I was extremely disappointed in this.  As I said recently, huge federal debt is not the way to fix a problem that is debt-related.  This is a further example of how our politicians have been conditioned to go after votes by offering giveaways because we respond to giveaways.  McCain’s obviously looking to curry favor with those who think the government should protect people from the consequences of their decisions.  This makes as much fiscal sense as allowing me to refinance my car every year at its new, lower value.  No, I incurred a debt that I am morally obligated to pay.  This is another example of the faux "fairness" and class warfare our country has come to accept to a large extent. 

What about illegal immigration?  What about abortion?  What about judicial appointments?  What about a host of other issues that haven’t been touched on in 2 debates?  Mr. Brokaw, you fell down on the job.

If health care is a "right", Mr. Obama, is food now a right as well?  Which is more important; food that you need every day or health care you need once in a while? 

John, John, John…don’t crack jokes.  They really didn’t work.

Obama is suddenly for nuclear power?  I’m sure there were some environmentalist supporters of his who spewed coffee out their noses at that.

Anyway, so much for another debate.  Not very notable, and mostly a rehash. 

In both debates so far, all 4 candidates were asked which promises and/or programs that they’d proposed would they not be implementing due to the current financial crisis.  I don’t think any of them gave a satisfactory answer to this question, with Obama’s “scaling back” response being the only thing close.

If anything, this credit crisis should be teaching us one lesson: severely curtail borrowing.  Huge debt is killing us.  In the mortgage-backed-securities field, things were compounded when Bank A would take an IOU from Bank B and use it as collateral to get a loan from Bank C.  Repeat this with Bank C and continue until you can hardly follow the trail.

The same goes for the federal government, who, in addition to the national debt already run up, plans to be the final resting place of this toxic debt.  So now all are eggs will be in one unimaginably huge basket.  If the bailout bill doesn’t do the trick and if foreign investors call in their chips, who bails out the feds?

Make no mistake; we are not out of the woods yet.  Sarah Palin mentioned in the VP debate the need for American’s to do their part by not taking on excessive debt.  (Personal responsibility; what a concept!)  This should ring throughout Washington, DC as well.  Spending needs to be cut, deeply and immediately.  A trillion dollars in new programs are not what this nation needs at this moment in time.  Soaking the rich to pay for more big government programs is just kicking the problem down the road.  Soaking businesses to pay for them affects employment and prices in a negative way, so we all get hit by it (promises of aiding the middle class to the contrary).

What I am afraid will happen, however, is that once the current crisis is no longer front page news — when it’s financial concepts that the public doesn’t have time for — the politicians will continue their MO like nothing’s happened.  I wish at least John McCain would get real with this issue, but he won’t any more than Barack Obama will.

And that’s largely our own fault.  Too many of us have the “Ask not what your country can do for your” mentality.  We’re buying the line that if only the rich would pay their “fair share” we’d be out of this mess, but we’ve bought into an incredibly selfish definition of the word “fair”.  We say we want our politicians to tell us the truth, but our vote too often goes to the one promising us more and more for less and less.

The bill has come due.  Let’s cut up the credit cards and stop spending what we don’t have.  This is the first step to freeing up our politicians to tell the truth.

No matter who you are, the current credit crunch does affect you, even if you don’t have a penny in the bank or a stock.  Never mind (for now) the domino effect of the credit market seizing up, if you vote, it should affect you.

Item 1:  Rep. Barney Frank has called this current crisis two things that are both flat-out lies; a failure of the free market and the result of Bush administration policies.  Frank should, and likely does, know better, since he’s the chair of the House Committee on Financial Services.  There has been video all over the blogosphere, and linked here as well, that show he and his fellow Democrats denying any problems at all with Fannie Mae and Freddy Mac, and now he’s trying to solely blame Republicans.  There’s plenty of blame to go around in both parties, but he’s in a unique position, as committee chair, to pronounce the truth of the matter to us.  Instead, he’s politicizing this huge issue for partisan gain.  If you’re from Massachusetts and you vote, this should affect your vote.

Item 1a: Senator Joe Biden said the same thing about it being all about Bush administration policies.  This should affect your vote.

Item 2:  At the foundation of this crisis is an abandonment of free market principles, not the failure of them.  Republicans have (more often) been the keepers of the free market flame.  (That’s not been a constant by any means, but a good generality.)  The Community Reinvestment Act is a Carter-era program to basically force lenders to give home loans to those who would otherwise not qualify, and the default rate of these loans is higher than normal.  That, along with the Gramm-Leach-Billey act which allowed Fannie Mae and Freddie Mac to write or buy up these loans in a bigger way, released other banks from this higher-risk paper and continued us down the primrose path.  Again, videos highlighted here showed, one of Obama economic advisors Franklin Raines, who at the time of the video was CEO of Fannie Mae, insisted that home prices would always go up.  Now, there is no doubt in my mind that Wall St. greed fueled this as well, but with a government mandate to write high-risk loans, and a (for all intents and purposes) government agency ready and willing to buy them up, this was a recipe for disaster.

The point is, as honorable and as high-minded the intentions were to try to get more people into their own homes, it set more people up for failure.  You can say that the number of foreclosures wasn’t enough to be a problem, yet here we are, the engine of commerce about to seize up over securities backed by mortgages.  This started when Democrats decided that the free market wasn’t working and instituted policies to, in their eyes, fix things.  While it did get many into homes that might not have otherwise been able to, does it really help us in the long run when Congress has to eventually bail us out to try to avoid a recession or worse?  (And the jury’s still out on if the bailout will really do it, or if it’s just a short-term band-aid.) 

Those who think that the free market failed us then, and are now ironically blaming the free market again, are running for President in November.  This should affect your vote. 

It does affect you.  Or it should.

As my wife and I talked about the bailout failure, she wondered if there would be the catastrophe that pundits were predicting would come about.  I mean, some were giving the impression that the next day we’d be in The Great Depression 2.0.  The Dow Jones drop yesterday was a large absolute number, but it was just a little over 6%; less than a third of the percentage drop in ’86.  And over the past week the market has taken wide swings as emotion rather than reason has put it on the roller coaster.

But as the Hitchhiker’s Guide to the Galaxy reminds  us; don’t panic.

There are two reasons not to panic.  The first is that God is still in control, He knows what’s coming, and if we’re trusting in Him we don’t have to worry.  “And we know that in all things God works for the good of those who love him, who have been called according to his purpose.” (Romans 8:28)  Those “all things” may not all be pleasant and cheerful, but they’ll all work for good.  Likewise, this doesn’t mean we don’t have plans if disaster strikes — I have a savings account, a retirement account, and I backup my computer; this verse doesn’t tell us not to be careful — but whatever events come our way we need to trust Him to get us through it.  Panic, as human and as understandable as it may be, is a lack of trust.  A good article, “Fearing the Future”, is here at Crown Financial Ministries’ web site.  Don’t panic.

The second is that panic makes us do foolish things that calm consideration may warn against.  We react instead of respond to the events of the day.  Take the fuel shortage hitting my neck of the woods.  If every car in metro Atlanta were to top off their tank on the same day, we’d have a fuel shortage even if all the stations had gas to begin with.  But, true to (human) form, when we heard that hurricane Ike slowed the flow of gas into the southeast, and the governor said not to panic, Atlanta did anyway.  Worried about gas lines and higher prices, Atlantans created and implemented a self-fulfilling prophesy.  If folks with 7/8th of a tank all hadn’t decided to top off during the same few days, we may have been able to ease through it.  There would have been some disruption, no doubt, but not to the point where some folks trail gas tankers to their delivery locations. 

The stock market lost 6% yesterday?  Then today’s the day to jump in.  Other people panicked and bailed out of the market, creating bargains.  Some folks have dumped stock of companies that aren’t going to be affected, or affected little, by this situation, so their stocks are now artificially low.  This podcast episode from Crown Financial Ministries deals with this specific issue.  (And I recommend picking up the feed in your podcatcher of choice.  Good advice all the time.)  Don’t panic.

But could we actually wind up in The Great Depression 2.0?  Only God knows, and that’s not a cliche.  Whether we experience some pain now or if we kick the can down the road, it’s still all known to God.  Trust Him, and don’t panic. 

We have a new poll question today.  Do you approve of having some sort of bailout bill from Congress to deal with the subprime mortage crisis.  If so, what form would you like the bailout to take; buy the debt, insure the debt but don’t buy it, or some other option?  If you have a different idea, let us know in the comment section.  Or would you prefer to just let the chips fall where they may?

The proposed & amended bailout bill failed today, so the question is, what (if anything) now?  This is an open thread (aka “You Cry Out”) on what you think the next step should be.

Polls are opened until Friday night at midnight.

In the first Presidential debate, Barack Obama used the line more than once that this credit crisis we’re in stems from policies that “shredded” regulations, and that assumed that regulation is “always bad”.  But that characterization is simply not true, and in the cases of Freddie and Fannie, which are government sponsored enterprises (GSE), government oversight is especially required.

First of all, GSEs are a non-free-market concept, contrary to Rep. Barney Frank’s assertion that this credit crunch is a failure of the free market.  It is a government program to target certain sectors with cheap loans.  Overall, it has been fairly successful, but it is not a free market issue.  This is government stepping in to deal with a situation it wants to see changed.

The second issue is that when Democrats pushed Freddie and Fannie to create what became known as the subprime mortgage market.  That was the subject of the previous video I posted on this subject.  It became the late-20th-century version of “a chicken in every pot” promise.  Everyone gets a home!  Well, not really.  Everyone gets a mortgage, including some who couldn’t afford it.  But Freddie and Fannie took this mandate and went wild.  It was essentially a big-government solution being administered by a big-government program; again, not a failure of the free market. 

During this time, Republicans realized that more regulation of these types of loans and the securities backed by them was required, but Democrats did not believe there was a problem.  Those were their words; not a problem.

Roll the tape, and listen to their words.

So Obama’s sweeping contention that Republican consider regulation “always bad” is demonstrably false.  Less regulation is a hallmark of conservatism, true, but where it’s required, especially in a government program, it should be done.  But Democrats, when faced with tightening the purse strings on a constituency that they claim for themselves, will see no evil.  Being for the little guy does not mean setting them up for failure.  It’s partisan politics, pure and simple.

And by the way, where’s the MSM on this?  Quiet as a mouse.  FactCheck.org’s checking of debate facts is silent on this issue.  The objectivity on this issue is pointing out some glaring blind spots.

Update: Roger Kimball gives the roots of this crisis a closer look, with suitable linkage.  Short and sweet, but informative.

This is a 10-minute video that sets the Way-Back Machine to 1995 and documents, with quotes, news articles, charts & graphs, how we really got into this mess.  It also notes who contributed to it and who tried to stop it before it happened. 

Keep your mouse on the Pause button.  It packs a lot of information into those 10 minutes.

Yes, there could be profits made with the taxpayer-backed bailout funds for the mortgage-backed securities.  The government would be buying them at a discount, likely, and most folks don’t default on their mortgages. 

So who should get the profits?  How about, oh, the taxpayers?  It’s only fair; they (we) took the risk, they (we) should get the benefits.  But Washington Democrats, true to their view that any money in their vicinity is theirs (not the taxpayers), are already trying to lay dibs on it to fund other government programs.  They can’t even try to help the economy without sneaking in what amounts to a 20% tax.

Thanks, guys.

From the Patriot Post, a compendium of quotes regarding the current credit & mortgage crisis, and the bailout being debated.  Quite a number of different takes on it, looking at it from different aspects. 

(By the way, the Patriot Post can come to your inbox 3 times a week.  It’s a good read.)

“Financial institutions are not being bailed out as a favor to them or their stockholders. In fact, stockholders have come out worse off after some bailouts. The real point is to avoid a major contraction of credit that could cause major downturns in output and employment, ruining millions of people, far beyond the financial institutions involved. If it was just a question of the financial institutions themselves, they could be left to sink or swim. But it is not.” —Thomas Sowell

“The credit crunch and foreclosure problems are failures of government policy. In fact, what we see now is a market correction to foolhardy government policy. Congress’ move to bail out lenders and borrowers who made poor decisions will simply create incentives for people to make unwise decisions in the future.” —Walter Williams

“[A]s lawmakers debate buying up hundreds of billions in assets, they should realize that the government’s aggressive meddling in financial decision-making is what got our economy into this mess in the first place. The long-term answer isn’t more federal control, it’s a return to free-market principles.” —Ed Feulner

“Crisis is the friend of the State. The politicians are desperate to be seen as ‘showing leadership,’ so we’re surely in for a new round of government interventions.” —John Stossel

“When the Forbidden Fruit was handed to Adam and Eve, they were allowed the moral choice to accept or decline. I know people who have refused to feast on the money tree. They live simply, within their means, and seem far more content than those who are trying to horde their wealth while clinging to the ladder of ‘success,’ terrified to let go. That isn’t real living. The Puritans rightly saw that as covetousness.” —Cal Thomas

…in a single two-panel cartoon at Red Planet Cartoons.  The problem seems to stem from folks defaulting on home loans.  It’s easy to label the lending institution “greedy” and go from there, but there’s a whole lot more to it than that.  One big-government program has spawned this new big-government bailout. 

Those with short attention spans will miss the larger picture.  The larger picture is the more important one.

…by Francis Cianfrocca, aka “Blackhedd”, at Redstate.  His explanation of the situation that the Fed found themselves in with regard to AIG is, for the most part, readable by a non-financier. 

He also addresses the anger some are feeling about the government bailing out another huge firm, and against the top brass of that company.  In addition, he touches on how this affects free-market capitalists and the eggshells the government is now walking on in this regard.

A good read.

From Bruce McQuain at Q&O, comes a quiz:

1.  Who identified and tried to fix what presently ails Freddie Mac and Fannie Mae 5 years ago?

2.  Who opposed the plan, saying they were not in any kind of financial crisis?

McQuain gives a hint as to what the answer to #2 is; the same folks who say Social Security is just fine, and Medicare is doing well, too.  Bruce has a link to a contemporaneous New York Times article that explains the proposal and the smack down. 

Remember this when Dem…er, certain politicians try to place blame for this and try to use it as a campaign gimmick.

I was going to put a blog post together on this issue, but Dan Spencer at Redstate has done so, and with links to keep you busy for quite some time.

Among his list of things Palin has done on the earmark front, and contrasted with Obama:

• She ordered her administration to cut the number of earmarks (including the “Bridge to Nowhere”).
• He consistently supported said bridge, even refusing to redirect funds for it to Katrina victims.
• She significantly reduced the number and dollar value of earmarks to the state of Alaska.
• She vetoed nearly $500 million in government spending over 2 years
• He has requested nearly $1 billion in earmarks over 3 years.

It is beyond axiomatic that the solution to our dependence on fossil fuels is not to be found solely in tapping additional sources of fossil fuels. Nonetheless, it is also apparent that the solution, which will necessarily be multi-faceted and involve a fair amount of societal change, will not happen in the short run (i.e. next ten years). Accordingly, it seems that tapping additional sources to buy time to bridge to the long-term solution makes sense. It makes sense from an economic perspective, as energy costs are a supply side item, and lower supply costs are a boon to the economy, as well as from a national security perspective, money to the Middle East, or Venezuala, funds those who would rather see this nation perish. So, I join the many who say “Drill Here, Drill Now, Pay Less!“