April 19, 2011

RIP …

Filed under: General — Tom @ 6:31 pm

Grete Waitz.

Readers who don’t know who she was owe it to themselves to learn. The NYT obit is exceptionally well written.

Ohio’s Employment Situation is Improving; Kasich Gets the Presumptive Credit

Filed under: Economy,Taxes & Government — Tom @ 3:28 pm

Today’s Regional and State Employment and Unemployment release by Uncle Sam’s Bureau of Labor Statistics shows that conditions for Buckeye State workers are improving. Of course, there’s going to be a tug of war between ex-Governor Strickland and current Governor John Kasich for credit. In a sense I don’t care, because I just want to see things get better, but if were going to pin the credit on someone, it would not be Donkey Ted.

Some of the numbers:

  • (Table 3) Ohio’s seasonally adjusted unemployment rate was 8.9% in March, just barely above the nation’s overall rate of 8.8%. February’s rate was 9.2%. I don’t have time to fully check this, but I’m pretty sure it has been a very long time since the state and national rates have been so close (Note: I stand corrected on this point, as November’s 9.8% Ohio rate was the same as the national rate; however, the next sentence remains true, and has been generally so for at least several years, as seen in Comment 2 at below.) More typically, Ohio’s rate has been a half-point to a full point higher.
  • (Table 4) The raw unemployment rate (i.e., not seasonally adjusted) is 9%, down from 9.8% in February. That 0.8% one-month drop compares with last year’s February-March drop of 0.5%, from 11.5% to 11.0%. Only Kentucky (from 11.2% to 10.2%), New Mexico (8.8% to 7.4%), and Oklahoma (7.4% to 5.7%) had larger raw one-month drops.
  • (Tables 3 and 4) The out-of-state exodus and workforce dropout phenomena seen during the Taft and Strickland eras may be coming to a halt. The seasonally adjusted workforce was essentially the same in January, February and March, while the number of unemployed dropped by about 25,000. That means that the unemployed were finding work in Ohio, not leaving the state in hopes of finding it elsewhere or dropping out and giving up. Not seasonally adjusted, the workforce grew by 2,800 in March, while the number of unemployed dropped by a very impressive 47,700.
  • (Tables 5 and 6) More Ohioans are working. The seasonally adjusted Establishment Survey of businesses shows a 2,200-job pickup in March. The month’s not seasonally adjusted increase (i.e., the actual increase in the number of people found working) was 20,200.

Strickland defenders who want to claim hangover credit for the improvements described are going to have to point to some kind of policy specifics driving this improvement. Good luck with that.

The more likely answer is that after seeing November’s election results, Ohio’s businesses and out-of-state businesses looking to locate or expand in Ohio realized that Buckeye State would finally be open for business again, and that taxes will probably not go up, even as Governor Kasich and the General Assembly wrestle with the $8 billion millstone Ted Strickland hung around their necks as he left the Governor’s mansion. Expectations matter; expectations have improved, and it appears that opportunistic businesses are acting on those expectations.

But, as is said frequently elsewhere: Faster, please.

Today at the Cleveland Plain Dealer, Reginald Fields has a lengthy write-up on Kasich’s first 100 days. Bottom line, to me: Kasich on substance is on track to accomplish a lot, though his style is sometimes lacking (as I noted here back in February). I’ll take the latter if it gets me lots of the former; I’ll bet that most beleaguered Buckeye Staters who have endured 12 years of Taft-Strickland drift would agree.

IBD on Sarah Poise’s Wisconsin Speech

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 7:48 am

WelcomeSisterFreedomPalin041611In an editorial last night (bolds are mine), IBD offers a contrast between how Palin and the President have treated their opponents:

Sarah Palin hit it out of the park in a speech this past weekend in Wisconsin. She dazzled because, of all things, she reached out to her opponents. When was the last time we saw that coming out of the White House?

Amazingly, Palin’s words offered common ground between Tea Party taxpayers and public employee union members, who’ve until now been at odds with Wisconsin Gov. Scott Walker’s attempt to balance the state budget.

“What I have to say today I say it to our good patriotic brothers and sisters who are in unions … a pension is a promise that must be kept. Now, your Governor Scott Walker understands this. He understands that states must be solvent in order to keep their promise. And that’s what he’s trying to do. He’s not trying to hurt union members. Hey, folks, he’s trying to save your jobs and your pensions!”

In short, she came to save, not to cut, and in the finest example of bipartisan bridge-building since President Reagan made allies of blue-collar workers, she reached out to the very people whose hirelings tried to drown her speech out with obscenities.

Palin paid no attention to the thugs and kept her eye on the common ground. She put her finger on the two things that matter most to workers across the country — saving their jobs and their pensions — and decisively linked it with the reduction in the size of government sought by the Tea Party taxpayers.

As philosopher Eric Hoffer once noted: The elegant way to solve a problem is to take one and use it to solve the other.

Palin didn’t rest there, though. She put her finger on the real problem: union bosses, who, like AFL-CIO President Richard Trumka, brag about their daily contact with the White House as if to say they have President Obama in their back pocket.

Meanwhile, the editorial notes, President Obama invited Paul Ryan to sit in the front row at his most recent budget speech, and then proceeded to lie about Ryan’s plan:

“Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” Obama said. And, in a stunning bit of mendacity, he warned that “children with autism or Down’s syndrome” would suffer against “every millionaire and billionaire in our society.”

These are divisive words, favorites of Marxist-Leninist class warfare — the kind that drove nations like the Soviet Union to the verge of bankruptcy.

The Down’s syndrome reference was also a direct shot at Palin herself, giving away just how scared the left is of Sarah Poise. They should be.

A video of Palin’s speech is here at Breitbart.

Positivity: Architect of Steubenville’s Catholic revival to retire after 37 years

Filed under: Positivity — Tom @ 5:57 am

From Steubenville, Ohio:

Apr 17, 2011 / 06:07 pm (CNA).- The Franciscan University of Steubenville has announced that its chancellor and past president Father Michael Scanlan will retiring on June 30, 3011. Dr. Alan Schreck, a professor of theology at the school described how the 79-year-old priest took a leap of faith to renew the school’s Catholic identity.

“He saw his appointment as an opportunity to step out in faith, and do something radical – because a radical solution was needed,” Schreck told CNA. In 1974, the school was a “typical Catholic college,” suffering from cultural and financial upheavals. But the Franciscan priest set out to “make Jesus Christ the Lord of the campus in every aspect.”

“Fr. Michael said we had to establish a clearer Catholic identity, both in the campus life and in our academic offerings,” explained Schreck, who has taught at the school since 1978. In this way, the school took a different path from many other Catholic institutions of its day. “They began hiring people who were solidly Catholic and believed in faithfulness to the magisterium.”

“The rest is history,” said Schreck. Fr. Scanlan was president for 26 years, and has now been chancellor for 11 years.
(more…)

AP’s Condon Rips S&P’s Record, Ignores Fannie Mae’s, Freddie Mac’s Systematic Mortgage Securities Deceptions

As night follows day, the press is beginning to go after a business entity which had the nerve to do its job and call attention to Uncle Sam’s dire fiscal situation.

Standard and Poor’s is presumably not 100% populated with angels, but it didn’t deserve the gratuitous and ignorant shots fired at it this evening by the Associated Press’s Bernard Condon and an “expert” he quoted. In attempting to tar the firm, Condon acted as if the mortgage-lending mess was the creation of “banks” which marketed mortgage-backed securities and asleep at the switch ratings agencies. He didn’t once mention Fannie Mae or Freddie Mac, the fiasco’s Democratic crony-run uber-culprits, which for 15 years consistently deceived the markets about the quality of the already marginal loans underlying the securities they issued .

Here are selected paragraphs from Condon’s cracked creation, including a headline which gives away a resentment that the ratings agencies are still actually able to do what they were designed to do (bold is mine):

Even after missteps credit raters wield much power

News that Standard & Poor’s was cutting its outlook on U.S. debt rattled financial markets Monday.

Cooler heads might recall that this is the same agency, along with Moody’s Investors Service, that told investors that billions of dollars of securities tied to iffy home mortgages were safe bets – right before they collapsed and helped set off the biggest financial crisis since the 1930s.

“It’s a sad state of affairs when one of the agencies that blew up housing is telling the U.S. to get its fiscal (affairs) in order,” said money manager Michael Lewitt, who lashed out at high U.S. debt in his book “The Death of Capital.”

“They’re not wrong here, they’re late,” he said.

S&P spokesman Catherine Mathis said the agencies were “very good” at rating government debt, citing a recent International Monetary Fund report. It found that all the government debt that defaulted since 1975 had received a rating of “non-investment grade,” or what’s called “junk,” at least a year earlier.

The upshot: In deciding who gets to borrow, how much and how cheaply, S&P, Moody’s and Fitch Ratings, another big rater, wield enormous power.

After the housing crash, some critics dismissed ratings agencies as useless. But they still move markets. S&P’s opinion on Monday helped push down the Standard & Poor’s 500 index 1.1 percent. Treasury prices initially fell on the news, but later recovered. The yield on the 10-year note fell to 3.38 percent from 3.41 percent late Friday.

… Critics say raters are likely to err on the side of optimism when reviewing bonds because they are paid by companies selling bonds, not by those who buy them as was the case in the 1970s. According to a report published last week by the Senate Permanent Subcommittee on Investigations, raters delayed slashing their ratings on disastrous mortgage securities for fear of angering the banks that were marketing them. One of the authors, Sen. Carl Levin, D-Mich., has said that this model is akin to allowing one of the parties in a court case to pay the salary of the judge.

S&P’s Mathis said getting issuers to pay, not customers, is best because it allows ratings to then be distributed to all investors for free, resulting in more “transparent” markets.

The failure to mention Fan and Fred in discussing the mortgage-lending mess is like covering the state of the personal computer industry without bringing up HP or Dell.

Fan and Fred caused the financial crisis in two key ways. The first is fairly well understood by many; the second has, in my opinion, been deliberately ignored by the establishment business press because it clearly identifies the two government-sponsored enterprises and the Democratic Party apparatchiks who ran them as creators of the crisis they insist on laying at the feet of “Wall Street.”

First, Fan and Fred deliberately lowered the credit-score approval thresholds for conventional and subprime loans it would agree to purchase from originating lenders, thereby taking on a gravely dangerous level of risk. The follow graphic overlays the two entities’ key decisions — to move the conventional loan threshold from about 670 to 630 and the subprime threshold from about 630 to 590 — on a contemporaneous chart showing the likelihood of consumers going 90 days delinquent on debt for various score ranges (Fair Isaac, or FICO, is the largest provider of credit-scoring software):

FICOdelinquencyChances2008

Once Fan and Fred took these actions, banks had to follow suit or get marginalized out of the mortgage-lending business.

Second,  the two government-sponsored enterprises routinely deceived the ratings agencies and thus the securities markets about the underlying quality of the mortgages backing their securities. Specifically, a December 2009 Wall Street Journal article by Peter J. Wallison relayed the following shocking finding:

“… Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.”

As I wrote in January 2010 (bolds are mine):

It’s bad enough that Fan and Fred lowered the loan approval thresholds. Pinto’s point is that for 15 years, they doubled down by “routinely” misclassifying approved loans, effectively telling the capital markets and the public that these loans weren’t as risky as they really were. Because of this, securities backed by these mortgages carried lower interest rates than they would have if the risks had been properly disclosed. Some of the offerings should probably never have been issued, or should have been given junk-bond pricing. Further, misrepresented loans Fan and Fred kept on their books enabled the two entities to continually make false claims of financial health.

Memo to Bernard Condon: The blame for this far more important second factor cannot possibly be laid at the feet of Standard and Poor’s, Moody’s, or the other ratings agencies.

PS to Mr. Condon: It’s also not S&P’s fault that the current administration, with the help of the Democrat-controlled Congress in 2009 and 2010, ran up the national debt to its current level of over $14 trillion. If you’re looking for “missteps,” please start there.

Cross-posted at NewsBusters.org.