Guns on the Border

With people turning to gun violence during times of desperation and with the recession increasing incidents of desperation the MSM has been covering incidents of gun violence frequently lately. Of course in the MSM this topic always is an opportunity to discuss gun control. At the same time the Obama administration has been discussing gun control in relation to Mexican drug cartel violence on the border. In the MSM this leads to discussions that assume the return of the Brady Ban. I get the feeling that this is a wag the dog situation. Especially since it seems that reports in the MSM of violence on the boarder are inflated beyond all proportion.

My suspicions are raised even more that the MSM is just getting their gun control rocks off when Homeland Security Secretary Janet Napolitano says that a renewed assault weapons ban would not be effective in reducing Mexican drug cartel violence.

Ben Franklin Report: The Mark to Market Rule

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As if in direct response to Colbert's challenge to create something, anything to believe in to turn the recession around, the Financial Accounting Standards Board changed the Mark to Market rule. Unfortunately this was actually in response to intense pressure from Congress and the Banks. This lets banks revalue their toxic assets before reporting them on their books. (Which makes me wonder why this was done just after the end of the first quarter.) The banks that took on more risk than they could manage don't just get to value these assets at whatever they want, they get to value these pieces of steaming crap at whatever they think someone would pay if anyone was interested in buying a steaming pile of shit just because someone called it golden.

Of course this looks exactly like what we have been doing so far in relation to this banking fiasco. We looked at the disaster and saw that the people in charge had established a system of perverse incentives that encouraged highly risky acts and called them extremely safe because of a complete lack of regulation. Our response has been to give even more huge shit tons of cash these very same people that fucked us for fun and profit and by removing any other regulation that insists we call a spade a spade. I am finding it harder and harder to resist the urge to call for murderous mobs to converge on Wall Street.

The Wall Street response to the reduction of regulation was obvious. Though, two years ago, if you said that Dow 8,000 would be good news people either would have thought you were crazy or they would have been terrified.

In this article, John Berry tries to criticize the negative reaction to the rule change that I outlined above. But he is comparing apples to oranges when he says,

The family doesn’t have to put up money to cover the difference between the mortgage and the lower market value. Nor should the Atlanta bank have to take a big hit on its reported income because some other mortgage-backed securities owner sold in a depressed market.

He is comparing the effect on banks that have to back their lending by having 10% of that value on their balance sheets. Which of course home owners don't do. And the family that is upside down on their mortgage will have to pay that money on the mortgage that is more than the value of their home just because they bought at the wrong time.

Lots of pundits and apologists for the financial industry keep trying to accuse home owners that face loosing their residence of buying beyond their means. Through this argument they try to push some of the moral culpability for this fiasco on people who only wanted a nice house. They didn't buy above their means, they listened to the market. The market told them what they were worth. It's not their fault the market lied to them because they couldn't have understood the market. Seriously, if huge banks couldn't see this coming when they specialize in finance, then its simply irrational to accuse home buyers of wrongdoing just because the effect of their actions is to further reduce the property value of their neighbors.

Berry does make a legitimate point about the removal of reality in accounting. He asserts that the Atlanta bank he is referring to in the above quote intends to hold on to its mortgage backed securities until they mature. Meaning the bank will be getting all the money from the mortgagees. This is the family in his apples to oranges scenario who has to pay the full value of the mortgage even though the house is worth less. (But hey, at least it still provides the same amount of warmth and shelter. Its just that breakfast nook they added doesn't mean they can afford to send the kids to college.) This means that the banks assets are really worth nearly their full value because the bank will get paid what it originally bargained. So the accounting rule lets them value their assets at what they can reasonably expect to still get paid over 30 years and they can lend out more money to consumers and businesses which increases liquidity and gets the markets moving again and leads to more manufacturing, more jobs, and more spending. Everyone's happy.

Except that just brings us back to where we started last November. No one knows how many mortgages will go into arrears or how many will be devalued through the proposed new bankruptcy rules. The short of it is we don't know if the mortgage backed securities will be worth what they were originally bargained for in 30 years when they run their course. All we do know is that they will be worth less. If not become worthless.

Comments

We have recently decided to moderate a comment for the first time. Being advocates of not just free speech but offensively free speech this decision burns us like white phosphorous. I often say that if people aren't trying to take your freedom of expression away from you, then you aren't actually using it. However, we here at the Fringe Element agree that this is not the place for unrestrained purely profane textual outbursts.

We like to think that every time we use an offensive word it is as carefully chosen as every other word we use in our works of expression here. When we swear or present an offensive concept it is to either focus the attention of the reader on the emotion evoked by the idea or calculated to knock the reader off balance in order to shock you the reader out of comfortable ways of thinking, or the word may be chosen simply to properly express our own emotional response to a situation in the news. But vulgar outbursts by anonymous posters have no potential of adding value to what we are trying to do here. Though it pains me to say even that much. If this post was a purely vulgar attack from a person that identified themselves it might have value as an expression of that person's emotional reaction to our content, but as an anonymous outburst from the tubes its just the kind of behavior that would embarrass the poster's mother. Really, you should think of what your mom would say if she saw you filling the wholesomeness of the intertubes with your potty mouth.

Anonymous posts have been a source of much enjoyment for me personally. Contributing to a blog has given me the opportunity to be exposed to the kind of virulent criticism, madness, and ad homenim attacks that can only be generated by painfully sane and mundane minds. I am glad that the intellectual hurdles involved in operating a computer, gaining access to the Internet, surfing the Internet, literacy, and posting a comment don't include the ability to think clearly and express oneself. If they did, the log cabin would be a much less entertaining place.

So we have decided to continue rejecting anonymous profane comments without context as a matter of policy. This is because, without posting your name to such a comment, we are unable to verify whether or not it is an actual person making said comment, thus we do not have to worry about violating an individual's freedom of speech. So if you feel the need to simply leave a profane remark, have the character and gumption to put your name to it. Also, this type of comment doesn't benefit anyone, even the individual responsible for it. It doesn't serve to elevate the discourse, provide any more information that might be lacking from the original posting, or doesn't meet the aforementioned 'mother' criteria, it only makes the commenter vent some emotion and lowers others' opinions of him or her. If on the other hand, you feel passionate about a particular subject and are offended by our thoughts, conceptualizations, ideas, or writings, and comment in a form such as 'fuck you, X is (positive adjective) because Y', this type of comment would be acceptable. So, in summary, please try to keep your comments above the level of an elementary school ad hominem. Thank you for reading, and we hope that you continue to enjoy our content here at the Fringe Element.

"A Papercut"

Consider this as indicative of the overall situation of the military, the war in Iraq, and the unfortunate enlisted volunteers.

Clearly, the military is almost desperate for people if they are speaking of individual soldiers and their skill sets as "investments." Not to say that every single soldier isn't expensive, but they are having problems recruiting and retaining people and those who have already suffered are suffering more "papercuts."

Around 700 people have gone through just Walter Reed to be treated for serious injuries involving the loss of a limb, not to mention thousands of others who have suffered severe burns and traumatic head injuries. The War in Iraq, due to the nature of the weapons involved has become one of the most brutal bloodbaths in history, and with each side continuously re-inventing the bomb, the death toll stands to climb higher. But, as some may say, the insurgents are fighting a guerrilla war, trying to best us through ten thousand papercuts.

Despite the fact that many of these injuries have cost these men and women their lives livelihoods, they are not especially cared for in the manner that most Americans would expect. The individual Army of One is not particularly significant in and of him or herself, indeed to the impersonal military bureaucracy that is the Department of Defense, their losses are only so many papercuts.