Entries from September 2008 ↓

House nixes $700B bailout bill in stunning defeat. The vote was 228-205. (Voting no: 133 Republicans and 95 Democrats.) The stockmarket dropped 777 points. I’m impressed that Congress refused to be steamrolled.

(Here are the options the congressional leadership is considering.)

What would it look like if the free market just does its work?

Here is one proposed alternative to the government buying up nation’s bad mortgage investments. From James Pinkerton, Let’s Bail Out Main Street NOT Wall Street. Here’s How:

Mallory Factor, a South Carolina businessman, has a better idea: “Bail out homeowners, not lenders,” he says. “Any qualified buyer who wants to buy a house,” he says, “could buy one at a guaranteed low interest rate, of, say, 3.5 percent. And any qualified homeowner who wants to refinance could get the same rate.” If that happens, Factor predicts, “There would be a flood of liquidity into the system, as people bought houses again, which would also help reduce the housing-stock overhang. In addition, as people refinanced, all these instruments, such as collateralized mortgage obligations, which Fannie Mae and Freddie Mac have choked on, would once again start performing. And that would save the banks and many investors. It would save the banks and investors by saving homeowners and homeownership.” In other words, trickle up, not trickle down.

The current interest rate for a standard 30-year mortgage is around 6 percent. At that rate, the payments on a $300,000 mortgage work out to $1,799.65 a month. By contrast, at Factor’s proposed rate 3.5 percent, the payment would be just $1,347.13 a month. That’s a whopping difference, especially for homeowners who might have paid more for a house than it is currently worth. And at 8 percent, which many adjustable rate mortgages (ARMs) have shot up to, the monthly bill is a prohibitive $2,201.29 a month.

This interest-rate buy-down is the elegant heart of Factor’s plan. And who would do the buying down? “The federal government,” Factor answers bluntly. “This is a government buy-down of interest rates, but it would benefit homeowners first, and only then, second, the banks.” But, he notes, the buy-down is only for qualified borrowers. So the banks would still lose a lot of money. Which is good, since they need to be reminded not to make this mistake again. And since there’s no Fannie or Freddie any more to buy these dubious loans in the future, the banks will have to be careful, once again, about who is a qualified borrower, and who is not. The government, Factor reminds us, would only be on the hook for the costs above 3.5 percent—the banks would be responsible for the first 3.5 percent, and for the principal.

That’s bad news for bankers, Factor adds, but good news for taxpayers: He estimates that his interest-rate buy-down plan would cost Uncle Sam perhaps $200 billion (more if interest rates rose, less if interest rates fell). But it would surely be cheaper, he suggests than the trillion or more that the Washington plan seems destined to cost. And once again, Factor’s plan would focus on Main Street, not Wall Street—surely a substantial virtue in and of itself.

What might be some other alternatives?

The science journal NATURE sent both candidates a series of questions about their position on various scientific issues. Only Barack Obama replied, but the journal cobbled together statements that McCain has made on the subjects. Sample:

Do you believe that evolution by means of natural selection is a sufficient explanation for the variety and complexity of life on Earth? Should intelligent design, or some derivative thereof, be taught in science class in public schools?

Obama: I believe in evolution, and I support the strong consensus of the scientific community that evolution is scientifically validated. I do not believe it is helpful to our students to cloud discussions of science with non-scientific theories like intelligent design that are not subject to experimental scrutiny.

McCain said last year, in a Republican primary debate: “I believe in evolution. But I also believe, when I hike the Grand Canyon and see it at sunset, that the hand of God is there also.” In 2005, he told the Arizona Daily Star that he thought “all points of view” should be available to students studying the origins of humanity. But the next year a Colorado paper reported him saying that such viewpoints should not be taught in science class.

Politicos worked out a financial bailout to be voted upon by Congress today. With a lot of details added, it is essentially the same one proposed last week, to spend $700 billion to buy up devalued mortgage securities. Bottom line: Should the Congress pass it or not?

Yesterday was the day when various pastors resolved to challenge I.R.S. restrictions by endorsing candidates from the pulpit. Did your preacher do that? Thirty-three did, organized by a conservative legal foundation, and the IRS has promised to “take action as appropriate.”

These preachers seem to all be conservatives and preached against voting for Barack Obama. But mainstream denominations, as I recall from experience, preach politics all the time, condemning conservative candidates in much the same terms. And African-American churches seem to turn their services into campaign rallies, with Democratic candidates doing the preaching! Let the IRS crack down on everyone or no one.

There are times when God uses the state to reform the church. The Reformation being the major example, when Luther called on the aid of the princes to curb ecclesiastical abuses,. But I think too of the priest pedophile scandal and the financial scams run by various TV preachers. Might IRS regulations be a legitimate Romans 13 means by which God ensures that churches focus on the Kingdom of Heaven rather than the kingdoms of this world?

Can you think of other cases when state power needs to come down upon the church? Or do you think, despite the example of the Reformation, that churches should be completely unconstrained by the state?

I hope you had a happy St. Michael and All Angels day yesterday, a day to reflect on angels, including the fallen angels whom Michael battles. On this topic, our pastor preached an illuminating sermon. As he said, ” the war in heaven has now come down to earth.”

We also had a baptism. In the bulletin was printed Luther’s admonition to the baptismal party, which included this startling sentence: “Remember, therefore, that it is no joke to take sides against the devil and not only to drive him away from the little child, but to burden the child with such a mighty and lifelong enemy.”

Think of that. The Baptized have been delivered from the devil, but that makes them the devil’s special enemy, with Satan always trying to thwart God’s grace and win them back.

You have got to read the sermon linked above, which dives deeply into this. A sample (Logan is the name of the baby we baptized):

So given the danger that surrounds us everyday, how could we put little Logan into such a difficult and precarious situation? How could we give him such a mighty and lifelong enemy, and rejoice in doing so? Well, we do, and we can, because although the battle rages on, the war has been won. Because the gifts of God are greater than the schemes of the enemy. Because the great dragon that was thrown down to the earth, was defeated by a baby boy who at one time was the same age as Logan and nursed at His mother’s breast. A baby boy wrapped in swaddling clothes and laid in a manger. A baby boy the news of whose birth the angels announced and celebrated. A baby boy who was not only a baby boy, like Logan, born in the natural way, but the Son of God, conceived by the Holy Spirit, and born without sin. A baby boy who is the King of angels, come to do what no angel could do. For while Michael and his angels tossed the old, evil foe down from heaven, it was a baby boy named Jesus who defeated him once and for all.

After the dust settled, after three out of the top five college football teams were upset, my (class of ‘73) Oklahoma Sooners are ranked number one! And the Milwaukee Brewers, after a nail-biting victory over the Cubs and a nail-biting Mets defeat from the Marlins, are in the playoffs as the NL wildcard team! (We will set aside how the Packers did.)

Thanks for the suggestions for books of light reading. Quite a few of them I have already read, but more of them were new. I will now go into Barnes & Noble with a shopping list!

So who do you think won the debate? I think the Kennedy/Nixon syndrome has kicked in. Obama just comes across better, setting aside content, as the American public does.

I went into a Barnes & Nobles recently and found no book that I wanted to read! Maybe you could help me. I’m not looking for serious, interesting, or edifying books. I have plenty of those. What I need is something light, something suited for reading on airplanes. It needs to be a novel. Not fantasy or science fiction. I like well-researched, immersive historical fiction. Contemporary settings are fine, but no depressing family sagas. Mysteries are OK, preferably mixed with the above. Due to my literary studies, I have trouble putting up with a poor prose style, so the book has to be well-written. I like to feel like I’m learning something. I like complicated plots.

The gold standard of what I’m looking for would be Patrick O’Brian’s sea-faring novels, a genre I have drunk to the lees and so am rather tired of.

So do you know of anything that meets these criteria? I’d be much obliged for your suggestions.

Frank J. Fleming offers A Modest Proposal for Training Future Presidents:

If God got fed up with us — and who would blame Him — and stepped down, would we want an extensive, well-thought-out process for picking a successor? Would we want to make sure whomever we elected to rule the universe was someone we know to be responsible with the power over life and death and who wouldn’t just smite people because he’s bored?

And would we want to make sure he has a good understanding of physics so we know he won’t mess with Planck’s constant and destroy all matter? Or would we just pick someone off the street and say, “Hey. He seems nice. Let’s give him ultimate power over us all”?

Well, the American presidency is the next most powerful job after God, what with running the world’s most powerful nation and the ability to kill billions. You’d think we’d have a very solid process for figuring out the best person to fill the position, but we have been completely clueless on this for more than two hundred and thirty years. And the Founding Fathers weren’t much help on the task of picking a president, only listing two qualifications: he or she has to be thirty-five years old and has to have been born in this country. Nowadays, that limits the pool of potential applicants to about two hundred million people. Luckily we have a two-party system which somehow uses New Hampshire and Iowa to whittle down all the choices to two. . . .

In the current election, for example, people say they think Barack Obama would be a good president because he’s inspirational, but if you want inspiration, can’t you buy books or tape sets for that? Others say John McCain has the experience to be president, but experience at what? He’s been in the Senate a long time, but what do they do there? Vote on stuff? You could get the same experience just clicking on a lot of internet polls.

We even debate over which candidate will better improve the economy, which is kind of like trying to choose from a litter of kittens based on which one is best at controlling the weather (hint: it’s usually the calico). It’s like we don’t even know what a president does. No huge corporation is going to hire a CEO just because they just like the cut of his jib; they’re going to want a solid resume showing that the applicant is already experienced doing similar work.

Fleming, tongue firmly in cheek, offers one idea for doing it better. But might there be better ways to get better candidates? For example, how about choosing our president by taking the constitution literally? Just elect members to the Electoral College, none of whom are publicly committed to a candidate. We would be electing individuals known in each particular state whose judgment we trust. They would then select the president, arriving at a consensus by give-and-take and negotiation, possibly selecting someone most of us have never heard of.

Do you have any better ideas?

The summit presided over by President Bush–attended by congressional leaders, John McCain, and Barack Obama–degenerated into a shouting match, according to reporters. The plan to spend $700 billion to purchase bad securities is losing support, but House conservatives have put forward a plan for the federal government to insure the bad debts, not take them over. From what I can tell from the overheated article linked above, McCain seems to be going in that direction. That sounds far less socialist and expensive to me. It looks like it was McCain vs. Bush and Obama, who with the Democrats supports the president’s plan.