In a market economy, it is not the responsibility of the government to provide jobs (a statement with which nearly everyone agrees, freaks from places like moveon.org notwithstanding). It is the responsibility of the government to provide an environment in which the people of the country can go about their business, which will collaterally result in creating jobs. So the government takes care of the national defense and provides an impartial system for the adjudication of disputes, which in our country is predicated on applying the same set of rules to similarly situated people similarly (unless you are a demunist, in which case the rules get applied depending on whether you are in one of their identified support groups or not, the nub of identity politics). This is something that statists, redistributionists and collectivists like Barack Obama and his Demunistic brethren fail to understand. The more they do to create jobs, the less likely it is that we will have sustainable job growth. They are destroyers. They destroy. If they really wanted to see jobs created, the best thing they can do is get the government the hell out of the way.

This of course brings to mind Obama during the campaign.  I know I am not the only one to have noticed that Obama affected the speech mannerisms of Martin Luther King.  A stylized form of speech combining aspects of southern drawl with staged preachiness.  Notice also that now that The Annointed One has actually ascended to the throne (while fighting tooth and nail not to produce a birth certificate proving that he was actually born in the United States – why not just produce it?), his speech has more or less returned to normal.  Obama is very clever.  He has mastered the Clintonian tactic of stealing an issue from your adversary and making it yours while acting the part like Reagan did.  Just as Clinton stole welfare reform and the balanced budget issue and pretended that they were his issues, when history shows he had them forced upon him, so Obama stole the religious issue stating over and over again that he is a man of faith, a religious person.  Very smart, since a real or affected religiosity is unfortunately and absurdly an absolute prerequisite to political success in America.  And a real bummer since absence of religious fanaticism is one of the only good things that can usually be said when a Democrat takes office.

Since my childhood, I have spent most of my time in cities, New York, Minneapolis and Chicago. I had settled on Chicago because it represented a happy medium between Minneapolis and New York in terms of liveability and opportunity. Liveability means it was easier to get around and generally safer in the areas where I went than New York. It also means it was generally more affordable.

There are two reasons it may be time to leave Chicago. First, I have children and I would like them to experience some of the carefree joy of living outdoors. This is not really a possibility anywhere near Chicago. The second reason is that it is becoming less liveable in many ways.

First it has become really difficult to get around in a reasonable amount of time.  But more importantly, it has become much less affordable.  Housing costs, while they did not climb as much as they did in the “hot” areas on the coasts, still rose to an outrageous extreme.

Second, the governance is dismal.  Sales taxes are now more than 10% for everything.  That is approaching VAT levels in Europe.  Now the replacement governor is talking about raising the income tax.  The very low rate of income tax was one of the main reasons for living in Illinois.  Last week, the parking system became untenable.  Whereas I was paying 25 cents to park for an hour in Bucktown, the rate just went up to a dollar for an hour.  That is a 400% increase.  On Wells street the rate went to 2 dollars an hours.  That is 8 quarters.  I am not in the habit of carrying around sacks of quarters.

Finally there is the privacy issue.  Daley has said that there will be cameras everywhere in the city.  That will keep people safer but it will also be more intrusive.  More perniciously they are using the traffic cameras at many intersections to give out automated tickets.  And I have read talk about using some kind of automated system on the freeways to issue speeding tickets.  With all this it really is becoming time to go somewhere else.

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While people like Paul Krugman will say that the causes of the credit crisis involve many actors, and liberals point the finger at Wall Street and greedy bankers, it is instructive to remember exactly what the problem is.

The genesis of the problem is simply that millions of really LARGE loans were made to people who cannot or will not repay them.  This is not like people not paying their unsecured credit cards.   The dollar amounts involved there are small.  This is about default rates on mortgage loans going from the 1-3% range to the 15-30% range on loans whose average size is in the hundreds of thousands of dollars each.  Because the dollar amounts are so absolutely huge, they represent multiples of the capital reserves of the banking system, hence posing systemic risk.

This problem has been and will continue to be used as justification by those with other regulatory agendas to impose all kinds of burdensome and unnecessary regulations on activities from banking to trading.  Note however that the entire mess could have been avoided with but 2 simple rules relating to mortgage underwriting.

First, the lender should be reasonably sure that the normal anticipated monthly mortgage payment represents some reasonable fraction of income.  This is the Debt Service Ratio test.   Second, the amount loaned must represent no more than some maximum percentage of the appraised value of the property.  This could be as high as 90%, but probably not much higher.

Had these two simple rules been required by regulators of mortgage originators, we would not have the credit crisis we have today, even with securitisation and all the rest of it.  So be wary when you hear government say we need to regulate this, that and the other thing.  We only need 2 simple rules.

The tired policies of the past are precisely the kind of ideas with which Obama is going to try to saddle us;  statist ideas whose implementation will still be impeding the growth of our economy when my children’s children’s children start to vote or the great American experiment has finally come to an end, crushed by the burden’s of promises blithely made and obligations flippantly incurred in the distant past, our near future.

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By now many people are familiar with the minor uproar caused when Rick Santelli of CNBC directed a bit of criticism (click for the video) directly at President Obama over his Homeowner Affordability and Stability Plan.   I have seen three members of the Administration come out to address this.  First was Jared Bernstein, who basically just said it would not help house speculators or flippers, but failed to address the nub of the issue.  Second was Robert Gibbs, the White House Press Secretary.  He used the imprimatur of the bully pulpit to imply that Mr. Santelli was uninformed about the plan.  Third I saw some pimply faced kid claiming to be the HUD Secretary who got even more snippy, saying things like “perhaps Mr. Santelli is not aware there is a crisis going on” and such.

What is the nub of the problem with the Presidents plan?  The real problem is that the government seems to be proferring, through the Homeowner Stability Initiative, help to people who used the most outrageous kinds of mortgages to reach for homes they could not really afford and thus helped drive prices out of reach for those who saw the wisdom in not signing up for things like negative amortization because they had some inkling that might not be a good idea.

Mr. Gibbs seems to say in his response (click here for video) (or click here) that the plan “won’t help somebody who has long ago known they are in a house they cannot afford”.  He also derisively chides Mr. Santelli for not reading the presidents plan, and suggests he “download it, hit print and begin to read it”.

Well I have read what the White house has made available.  In Section 2 of the Executive Summary (Section 2A of the Fact Sheet)

… millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly if they received subprime and exotic loans with exploding terms and hidden fees. The Homeowner Stability Initiative operates through a shared partnership to temporarily help those who commit to make reasonable monthly mortgage payments to stay in their homes …

The plan will do this by either having the lender reduce the interest rate or the principal (for 5 years) until the monthly mortgage payment reaches 31% of the borrowers monthly income.  In addition, the homeowner can get $1,000 per year for 5 years as incentive to stay current.  There are also some cash incentives for lenders.

So let me add a couple of examples that did not appear in the Housing Example Sheet provided by the White House.  I bought a house in Chicago in 2004 that WAS within my means.  It has a nice southern view, but to the north my neighbor is a chicken plant that makes a lousy neighbor.  But my payment is comfortably below 31% so presumably I do not qualify for assistance under the President’s plan.

I COULD have bought a place down by Lake Michigan if I had taken full advantage of something like a negative amortization mortgage where I only had to make partial interest payments (or if I had a “friend” like Tony Rezko to help me “find” a great property at a reasonable price as President Obama did, but alas I did not).  If I had done that, I would now be in a really beautiful home, but I would be staring down the barrel of the foreclosure gun…or would I?  Hey I would qualify for the President’s Plan!!!

So what happens to someone else just like me who bought their family the big house down by the lake?  Well hey, their monthly payment is probably 45% of their monthly income now that that low interest only payment has started to include all of the interest and some principal!  But here comes President Obama’s Homeowner Stability Initiative to help them stay in their home and reduce their payment back to 31% of their income!!!    Yeah!!!  They get to keep their awesome house near the lake while I as a result of my “prudence (stupidity?)” have to live 5 miles away from the lake near a chicken plant!  Bwah-ha-ha-ha-ha, what a chump.

Perhaps Mr. Gibbs and his master have forgotten the principal that underlies the American system of justice.  That principal is a principal of fairness; it is that similarly situated people be treated similarly under the law.  What the President is proposing is to treat similarly situated people differently under the law.  Not only that, but he proposes to treat the irresponsible people more generously than the responsible people.

Robert Gibbs is thus just lying when he says that the President’s plan will not help people who long ago realized they were in a house they could not afford.  He is at best misleading when he says that the Homeowner’s Stability Initiative will only help people who played by the rules.   The plan will use my tax dollars to help people who, while they technically might be said to have played by the rules, should have known better.   It is right there in the documents he chided the (sneer) derivatives trader to read.  Rick Santelli (who is a reporter on derivatives traders, not a derivatives trader – actually he reports on the bond market, something with which el Presidente will become familiar as rates explode due to the idiotic American Recovery and Reinvestment Act or stimulus plan but thats another story) is right to be outraged.  The Homeowners Stability Initiative will be outrageously unfair.  President Obama, are you listening ?

Microsoft is a hard-nosed, money-grubbing company that had the good sense to create a structural monopoly and the audacity to keep it.  They are not an inside part of the internet community.  And they do not give anything away for free.

Yahoo! is very much West Coast, the promise of America’s frontier.  Microsoft and Mr. Icahn are very much East Coast, America’s past.  I hope Mr.  Icahn fails in his proxy fight to unseat Yahoo!’s board of directors.  I do not want to change my home page from My Yahoo! in the event Microsoft causes Yahoo! to cease to exist.  But if they do, I will change my home page address the next day.

Pack a lunch and walk or bike over to the nearest park with the kids.  Clean the house.  Just do not do anything that requires the use of fuel.  Do not drive anywhere.  Do not drive to work or use public transportation.  Stay home and enjoy the day.

This is the only way to really say “Hey W, STOP buying oil on the open market to fill up the SPR, which is already 97% full.”  Or, “Hey W, ethanol madates!?  Hmm. Looks like that is a bad idea.”  Or, “Hey Saudi Arabian mysoginists, you will have to wait another day to sell us those 8 million barrels of oil.”  Or, “Hey idiots in Congress, maybe we ought to start looking to see what energy resources we have off the coasts or in Alaska.”

So make the decision to stay home, and pass the idea along to your friends.  People CAN make a difference.

It really makes me very angry to see those who promote this kind of statist and oppressive government accumulating ever more wealth at our expense and recycling that wealth into ownership of key assets in our economy (i know I should be happy that they do because it keeps our current account deficit from creating problems and keeps our capital markets healthy, but that doesn’t mean I have to like it). The Middle East is a major locus of dollar reserves abroad because we and others keep sending them so much money for oil purchases. How much? This page at the US Government agency that tracks such things, the Energy Information Association or EIA (oil traders are of course familiar with the EIA, which releases the much watched inventory information on Wednesdays), lists how much we import from various countries. We import roughly 2/3 of the oil we use every day. Note that as I am writing, for the first 9 months of 2007, Saudi Arabia ranks third on this list of oil exporters to the US with around 1.4 Million barrels of oil a day.

So at $90 per barrel that means we alone send the Saudi royal family about $130 Million per day, $50 Billion per year, roughly $5 Million per hour, every hour, 24/7, 365 days a year. Now you can look here, to see that Saudi exports to the US are only about 16% of their exports. Their total exports are about 8.651 Million barrels per day. So the Saudi royal family, at $90 per barrel, rakes in $800 Million per day, nearly $300 Billion per year, or roughly $30 Million per hour, every hour, 24/7, 365 days a year. And that is just the Saudis. That doesn’t include the rest of the despicable people who are raking in this money, and there are plenty of them. So because we depend so heavily on oil to power our economy, a single family is able to run a country of 27 million people as their own private little cult, which happens to be called Wahhabism (Whabbism), and which implements Sharia law, which calls, among other things, for women to be treated as chattel, or is so interpreted by their culture today.

Oil is a fungible commodity, but because we use so much from whatever the source, it supports the market, which supports regimes such as the one in Saudi Arabia, which supports – indeed mandates by law – a fanatical religious cult, which ultimately threatens our way of life, and with whom we do not share similar values. It is a direct link.

If we really want to promote freedom and squelch statists, misogynists and fanatics worldwide, then rather than spending trillions of dollars fighting wars abroad against non-state foes, we could probably put a fraction of these massive public resources into relegating oil to as small a portion of our energy needs as possible. This approach runs counter to deeply ingrained beliefs in our domestic culture. The market has heretofore appropriately dictated how our energy needs are met. Petroleum has been cheap and so has been the most efficient way to power our economy. And this is a good thing.

But I believe we are at a critical point in history that suggests strongly that we need a program similar to putting a man on the moon; that would use public resources to hasten the technological advances that will allow the world to stop sending so much money to people with whom we do not share values and who directly sponsor those who wish to actually kill us. Make no mistake, our dependence on petroleum is itself the biggest threat to our national security. Even if 99% of the money were wasted, if it results in technology allowing us to reduce our reliance on these people, it would be money well spent.

This program should have elements of the X-Prize or the Methuselah Prize. It does not have to be exclusively direct payments to corporations or universities, though we will need plenty of that as well. We can spend $200 Billion a year on this and still have it be money better spent than liberating Afghanistan or Iraq. Better yet, the money will spread to better uses than pure military spending is spread and can kick-start many small companies that will be tomorrow’s giants.

In the meantime, maybe we should pass a law that prohibits male visitors from ridiculous statist Arab theocracies, including Saudi princes, from stepping out in public in the United States unless they are covered from head to toe in a burqa, and accompanied by a female escort, which could be their wife or sister. Make it a condition of their entrance visa. Sounds good to me.