March 18, 2007

WSJ Op-Ed on Mortgage Market Misses One Important Point

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 3:04 pm

In Monday’s WSJ, Alex J. Pollock of the American Enterprise Institute wisely counseled (requires subscription) against a government overreaction to the mortgage-industry muddle, but missed one striking difference between this mess and previous ones:

The great British financial journalist Walter Bagehot observed back in 1873: “The mercantile community will have been unusually fortunate if during the period of rising prices it has not made great mistakes. Such a period naturally excites the sanguine and the ardent; they fancy the prosperity they see will last always.”

Nothing fundamental has changed about this in 134 years: the huge amount of financial legislation in the meantime notwithstanding. In the recent period of rapidly rising house prices, which seemed like it would continue indefinitely, the sub-prime mortgage community, sanguine, ardent, and enjoying success, made some significant mistakes, and further excessive speculations will doubtless come to light. The current bust will also reveal its own swindles and scandals, as have its many predecessors.

Wall Street analysts and traders are now scrambling to figure out who holds these risky assets. At the same time, as in the past, the specter of political overreaction looms large. Will Congress address this problem with a “Sarbanes-Oxley Act of Mortgage Finance” or some similar punishing of the innocent along with the guilty? That is one road better not taken.

Pollock is of course correct that over-regulation won’t work, but what he misses is how distorted the markets of the past few years became because of the deliberately lax credit standards of Government Sponsored Enterprises (GSEs) Fannie and Freddie Mac (which many others in the private sector felt they had to imitate if they were to compete).

I don’t think anyone knows how much gunk and junk are on the books of either of these GSEs, both of which are described here as “recovering from accounting scandals” (note: not “recovered” in the past tense). I’m afraid that when we find out, the idea that Uncle Sam will just blithely (and, in my opinion, incorrectly) step in and make up the difference will be put to a severe test. If it gets that far, there will be tremendous lobbying and hysteria by the holders of mortgage-backed securities to claim that this is what the government “promised.” Governments don’t have a good track record of standing up to such pressure.


UPDATE, March 19: Liz Moyer at Forbes says not to worry:

But from a bond market analyst’s perspective, fears of a broader contagion are overblown. Just 1% of the mortgage bonds securitized so far this year and rated by Moody’s Investor Service have been downgraded or put on watch, for example. That’s out of $149 billion securitized since January.

Gathering of Eagles (GoE) as an Indicator of Old Media Decline

How many GoE participants were there?

The New York Times (may require registration) reported “several hundred counterdemonstrators” (HT Michelle Malkin, who has the priceless quote of the day — “…. the NYTimes relied on ‘several veterans of the antiwar movement’ to give them crowd estimates of the Gathering of Eagles. It’s the domestic equivalent of MSMers relying on dubious Iraqi stringers to provide them with war coverage….” — THWAP!)

The Washington Post, in its article about the protest, wrote of “thousands of counter-demonstrators.”

Gathering of Eagles’ web site reports that they were told by the National Park Service that their GoE estimate is ….. is …..


GoE’s site is also saying that the protester counts being reported elsewhere were 5,000 to 10,000 (the Times reported “thousands” and WaPo said “several thousand,” but both papers acknowledged that the protester turnout was much lower than at a similar event in January).

Bottom line: GoErs outnumbered protesters at least three to one. Remember what you just read here and will read at the center-right blogs, because you probably won’t see this “turnout rout,” which as far as I can tell is unprecedented, reported in the Formerly Mainstream Media.

“Cherry-picking pictures”

Absolutely. Here’s the one and only one WaPo used to represent GoE to the nation in its separate article about GoE (where it waited about 10 paragraphs to name the group):

Meanwhile, here’s the WaPo’s protester pic (the caption indicates it wasn’t even taken during Saturday’s protest — that tells me they weren’t able to find a warm, cuddly protester yesterday):

At the protest itself, the Times reports that the reality was anything but somber:

Judging by the speeches and placards, the marchers on Saturday set their sights on sweeping goals, including not only ending the war but also impeaching President Bush and ending the Israeli occupation of Palestine. Many carried Answer Coalition signs bearing the image of the Latin American revolutionary Che Guevara.

Brian Becker, the national coordinator of the Answer Coalition and a member of the Party of Socialism and Liberation, said the group held out little hope of influencing either the president or Congress. “It is about radicalizing people,” Mr. Becker said in an interview.

For those who don’t know, the Answer Coalition is a revolutionary group that has no problems with violence, and Che Guevara was a Fidel Castro lieutenant who had no qualms about abusive violence.

Our good buds Jerry Lembcke and Dean should appreciate the justifiable precautionary measures taken by some GoErs:

The New York Times had no GoE pics; its only pic from the event was of a burly member of law enforcement appearing to drag away a protester, possibly cuffed.

For a better (and more accurate) representation of the GoErs, go here to Hot Air’s Flickr collection.


WaPo pulled a major mislead in its article covering the protest:

Some counter-protesters yelled obscenities and mocked the marchers as traitors. War protesters responded with angry words of their own, and police intervened at times to prevent shouting matches from escalating.

WaPo made no mention of the protesters’ obscenities, even though, as you can see in the Cindy Sheehan excerpt at Hot Air, the obscenities came from the stage.

* * * * *

So …. who got closer to the reality of what happened yesterday? And why should anyone be surprised at the continued decline of both “newspapers of record”?

Cross-posted at


UPDATE: Mega-props to Justin at Right on the Right for being there (his posts, as of shortly after noon, are here, here, here, here, and here). 1:15 PMAnd here.

UPDATE 2: Lifelike Pundits has extensive and very well-done coverage.

UPDATE 3: Hot Air’s report is, as would be expected first-rate, and is now an inescapable part of the historical record.

UPDATE 4, March 20: Rightwing Nuthouse on Monday –

History ended yesterday. Or at least one version of it. Or perhaps it didn’t end as much as it was overthrown, trampled by the feet of 30,000 ordinary Americans who gathered on the mall and along the broad avenues in Washington to confront those who have, either wittingly or witlessly, given aid and comfort to the enemies of the United States for more than 40 years.

The rancid ideology that has swaggered across the American landscape since Viet Nam (posturing a moral superiority they never proved nor deserved) as ordinary Americans looked on with a growing sense of outrage was quite simply, shown up – bested by an amalgam of military veterans, conservative activists, and just plain folks whose numbers shocked the media, not to mention the anti-everything protestors from the other side.

I can’t come up with anything similar that has occurred in recent American history.

Same here.

UPDATE 5, March 22: Cinnamon Stillwell

Never again will America’s brave warriors and their cause be abandoned and the people our country has pledged to liberate be left to perish at the hands of tyrants. Those days are most definitely over.

Positivity: William Wilberforce

Filed under: Positivity — Tom @ 6:58 am

Note: I’ve decided to turn off comments at Positivity posts for the foreseeable future to reduce the possibilities for comment spam. Please e-mail any comments you have concerning them.


Chuck Colson writes of the man who, more than any other, was responsible for the end of the slave trade in Britain (link to movie added by me):

Few men have changed history as profoundly as the English parliamentarian William Wilberforce. Beginning in 1791, and moved by his conversion to Christ, he began the crusade to abolish the slave trade in Great Britain. It was a crusade that would try his soul and cost him his health for the next twenty years.

Though his name was on the lips of America’s founding fathers, and his actions inspired abolitionists in this country, Wilberforce has been all but lost to history on this side of the Atlantic. Thankfully, that is about to change. This Friday (the column was written on Feb. 19 — Ed.), America will rediscover this great hero with the release of the wonderful new film, Amazing Grace.

I want to encourage you and your friends to go and see this outstanding film made by Bristol Bay Productions, which also produced the much-acclaimed movie Ray. I hope the film will spark a passion in you to rekindle the spirit of Wilberforce in our day. To that end, we will be focusing each day this week on the life and work of this amazing man for whom our Wilberforce Forum is named.

At the most basic level, to speak of Wilberforce is to speak of biblical worldview in action. When Wilberforce came to Christ early in his political career, he thought about leaving Parliament and public life altogether. Thankfully, William Pitt—who went on to become Great Britain’s youngest prime minister—convinced him otherwise. Pitt wrote to Wilberforce: “Surely the principles as well as the practice of Christianity are simple and lead not to meditation only, but to action.”

And for the rest of his life, Wilberforce’s Christianity meant action. His fiercely unpopular crusade against the slave trade consumed his health and cost him politically—but he could not stand idly by and see the imago Dei, the image of God, enslaved and abused in the holds of ships. He endured verbal assaults and was even challenged to a duel by an angry slave-ship captain.

When the French Revolution began, what had been merely an unpopular position became a dangerous one in Britain. Wilberforce’s detractors charged that the humanist revolution would sweep England, and Wilberforce, with his passion for the slaves, was made suspect.

Nonetheless, Wilberforce persevered. Writing about political expediency and whether to give up the fight, Wilberforce notes, “a man who fears God is not at liberty” to give up.

But Wilberforce’s worldview led him to engage in more than just the issue of slavery. He sold his home and dismissed servants to have more money to give to the needy. He fought for prison reform. He founded or participated in sixty charities. He convinced King George III to reissue a proclamation encouraging virtue and reinstated the Proclamation Society to help see such virtue encouraged. He cared for God’s creation, founding the Society for the Prevention of Cruelty to Animals; and he championed missionary efforts, like the founding of the British and Foreign Bible Society.


UPDATE: Mark Steyn has one of his best columns ever (and that’s really saying something) about Wilberforce today.