November 17, 2005

Congress Just Can’t Handle Success

Filed under: Economy,Taxes & Government — Tom @ 7:05 pm

The Tax Cuts Have Worked, so of course a lot of the ding-a-lings in Congress, even the ones that voted for the cuts in the first place may not extend them (WSJ link requires subscription):

Of course, the GOP already has plenty of economic artillery to make the case. GDP growth has averaged close to 4% since those tax cuts were passed in 2003; the jobless rate is a mere 5%; the deficit has fallen; and federal tax receipts are up by nearly 14% over last year’s level, a pace not seen since 1982. This is an economic success story by any measure, yet Republicans are dithering over whether to reverse the policies that helped make it happen.

This can’t be emphasized enough: In the real world, not “extending the tax cuts” will have the economic holdback effect of a tax increase. Additionally, whatever revenues these doofuses think the tax increase will raise will not happen because of the reduction in the rate of economic growth that will inevitably result.

The French Accumulation: Some Riot Totals, and What “Normalcy” Is

Filed under: Economy,Immigration,Taxes & Government — Tom @ 4:02 pm

Now we learn what “calmed down” means in France (bolds are mine):

126 police injured since beginning of riots

PARIS, Nov 16 (AFP) – France’s national police service said Wednesday that 126 officers have been injured since urban unrest first flared nearly three weeks ago.

A total of 2,888 people have been arrested since the violence started October 27, and 8,973 vehicles have been destroyed by arson, it said.

Tuesday night showed another decline in the level of the violence, with 163 vehicles being torched and 50 people arrested across the country — effectively down to pre-riot levels.

The police service said 27 vehicles were destroyed in the Paris area (compared to 60 overnight Monday) and 136 elsewhere in France.

….. In all, 11,200 police have been deployed to rein in the unrest, backed up, in a few cases, by curfews on minors. Overnight Tuesday saw just one officer injured, during the arrest of a group of people throwing bottles of acid.

163 vehicles torched and acid bottles thrown at police–all in a night’s work in France.

Don’t forget these things down the road when, as I expect, the lectures from overseas about America’s “runaway crime” resume.

Willisms has plenty of solid data on how school violence in the US, and violent crime in general, especially crimes against African-Americans, have fallen.
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Nov. 18 Update: “Only” 98 vehicles were torched nationwide on Wednesday night. Police say they are “back to normal.”

Media Exec: (Another) Liberal Net Would be a Non-Starter

Filed under: MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 2:02 pm

I’ll say (HT Drudge), though not for the reason this network exec stated:

Going after a lefty audience would be futile, Wright said. “For some strange, probably genetic, reasons”—we’re pretty sure that was a joke—”they don’t listen to a lot of radio and they don’t watch a lot of television.”

Oh, puh-leeze–what elitist nonsense. The problem with putting together a “new” liberal network is that there are already four established liberal networks. Like we need a fifth?

Column of the Day: Fan and Fred Are “Scandals Waiting to Happen”

From an op-ed column in The Wall Street Journal (requires subscription; bolds are mine) by Congressman Scott Garrett (R-NJ), on recent legislation passed related to Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac (Fan and Fred):

Two weeks ago the House finally passed GSE legislation. But while I applaud the efforts of its crafters, the bill fails to protect the interests of taxpayers. Instead, it runs the very real risk of enriching private shareholders and CEOs at public expense.

…. Fannie and Freddie held a combined $132 billion, or 5.6%, of the single-family home-mortgage market in their own portfolios in the early 1990s. Over the last 15 years, this number has grown to roughly $1.5 trillion — almost 25% of the market. However, no one knows precisely what the GSE portfolios contain.

Among its many flaws, the House bill imposes a 5% tax on GSE annual profits to create a new “Affordable Housing Fund.” Inevitably, the GSEs will compensate for this lost income by holding an even larger percentage of mortgages and mortgage-backed securities in their own portfolios, further increasing the interest-rate risk associated with a volatile market. Unfortunately, many House Republicans abandoned their typical aversion to tax increases and supported this proposal. More surprisingly, House Democrats overwhelmingly supported the bill. Ever attacking the administration’s alleged “corporate coziness,” their votes represent an exercise in political hypocrisy. No private company could maintain such low standards of accountability as do these GSEs. Freddie and Fannie are scandals waiting to happen — on a scale that would make the Savings and Loan bailout seem trivial.

Questions:

  • Note the Democrats’ chutzpah-laden “corporate coziness” charge. Despite the fact that the large majority of the portfolio buildup occurred in the 1990s while Democrats were in charge (including Democrat cronies in the executive suites), who do you think will get the Mainstream Media’s blame (partially but not fully deserved) if these GSEs blow up?
  • Though they are GSEs, Fan and Fred (symbols FNM and FRE, respectively *) are also publicly held companies listed on the New York Stock Exchange. How can they be in compliance with Sarbanes Oxley if “no one know precisely what the GSE portfolios contain”? (E-mail me or do a comment if you have an explanation.)

* – The respective legal names of the entities are Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.
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UPDATE: As noted in the comments below, Fan and Fred are already accounting and reporting scandals with late reports and statements not in accordance with generally accepted accounting principles. The only question is whether they are also financial disasters waiting to happen. Who knows?

UN-Tunisia Internet Governance Result Must Be Fine (Because the AP and Mugabe Are Whining)

Filed under: Economy,Taxes & Government — Tom @ 10:01 am

Matt Moore of the AP tries to spin it:

Despite a late-night agreement averting a global showdown over continued U.S. control of the Internet’s addressing system, many delegates to a U.N. technology summit did not think the Americans emerged victorious.

Representatives of a number of countries remained adamant that U.S. control must be tempered if the Internet is to fully reach its potential. And even traditional allies of Washington considered it to have opened the door to the possibility of more shared governance.

Yeah, but Matt, nothing changed (even this link says “for now”–Zheesh).

Also in a very good sign, Zimbabwean butcher Robert Mugabe isn’t happy either (at same link):

President Robert Mugabe of Zimbabwe spoke for the more radical opposition to U.S. control.

“Why should our diverse world be beholden to an American company?” he told government, business and other delegates as the three-day U.N. World Summit on the Information Society opened Wednesday.

Since AP and Robert Mugabe are whining in unison, I have to conclude it went well for us. Whew.

Another confirmation that things turned out well from The Wall Street Journal (requires subscription): “The upshot of the so-called ‘Tunis Agenda’ is that the everyday Internet user will see almost no change in how cyberspace works. That’s quite an accomplishment on the part of American negotiators and allies such as Canada and Australia. Many observers had feared that this meeting would end up giving birth to an intergovernmental body that would clog the ‘Net with regulation and bureaucracy.”
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Previous Post: About That Nov. 16-18 UN Internet Conference in Tunisia (UN-EU takeover attempt)

Money Tip of the Day: Cards That Claim to Help You Build Savings Most Likely Won’t

Filed under: Business Moves,Money Tip of the Day — Tom @ 8:02 am

From Leigh Gallagher of FOX Fan Central:

You have to hand it to the credit card companies when it comes to creative loyalty marketing. First there were free miles. Then there was free stuff, everything from coffeemakers to Bose Wave radios. Then there was cash — cold, hard cash! Now comes the latest plan designed to entice consumers to charge more: free savings accounts.

Two new cards, American Express’ One and Bank of America’s Keep the Change card, promise to stash away a little something in a savings account for every purchase made. It’s a simple concept: spend more, save more.

With the One card (in case you’ve somehow missed the Ellen Degeneres television campaign), American Express will put one percent of every purchase into a savings account that accrues interest at the rate of 3.15 percent. Bank of America’s card works slightly differently, rounding every debit card purchase to the next dollar and depositing the change into a savings account, almost like an electronic piggy bank. Both companies offer a little something extra to sweeten the deal: American Express waives the $35 annual fee the first year and awards new cardholders a $25 bonus deposit; Bank of America will match 100 percent of the amount saved for the first three months, then five percent annually, up to $250 a year.

…. like most reward cards, the actual freebie value is pretty paltry compared to what consumers have to spend: Factoring in the card’s annual fee after the first year, One cardholders have to spend $3,500 before anything gets deposited into the savings account.

Also, as the author notes, the issuers have the money in the bank accounts of their own affiliates, and the 60% or so of cardholders who carry a balance will pay much, more in interest than the savings accounts will ever pay.

Stay, away.

Positivity: Outraged Young People Honor Vets (UK)

Filed under: Positivity — Tom @ 6:11 am

A heartening reaction to a sickening event (HT Good News Blog; a “yob” is “A rowdy, aggressive, or violent young man”):

(more…)

Our Leaders Look Like They’re Giving Up on This War

Filed under: Business Moves,Consumer Outrage,Corporate Outrage,Economy — Tom @ 12:01 am

They’re saying the war can’t be won.

They say that we can’t stop the enemy’s new weapons, that we’ll always be playing catch-up with the bad guys, and that we’re only in the early stages of solving the problem.

They say that we’re in an ever-escalating and perpetual arms race.

No, it’s not THAT war–it’s the war against online fraud and identity theft (CardForum.com link requires subscription):

Fight vs. Online Fraud Seen Reaching ‘Stalemate’

The war against online fraud may not be winnable, according to several bankers and security technology vendors.

Speakers at two New York security conferences last week agreed that the protection measures banks have in place now probably will not be effective against new types of scams that are being developed, and that even though new anti-fraud techniques are being developed, criminals will find ways to defeat them.

“This is an arms race, and it’s never going to stop,” Justin Bonar, who manages sales and business development for the Redwood City, Calif., security software vendor PassMark Security Inc., said at a panel discussion at a conference hosted by the trade magazine publisher Digital ID World LLC.

Other members of the panel agreed with his assessment.

Michael Aisenberg, the director of policy for the Mountain View authentication technology vendor VeriSign Inc., said the financial services industry is “in an early stage of solving the problem, and I don’t think we’re doing a very good job yet.”

….. Susanna Montezemolo, a policy analyst with Consumers Union, said during Mr. Penn’s panel, “There is no 100% foolproof way to stop identity theft and the harms that come from it.”

I get the sense that the industry, and even the watchdogs, are almost OK with this, or resigned to the reality. I have bad news for them: Most consumers aren’t, and will stop (or not start) using online services if these issues aren’t effectively addressed–and soon.

Is it going to take a cutback in online usage of financial services, and the economic slowdown that will likely accompany it, to make these people wake up? Or would they prefer that the government, acting on demands from outraged consumers/voters, come up with the control standards?