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Chicago Tribune editors introduce us to Tzipi Livni. She’s about to become a prime minister. No, not Finland. Israel.
Iran is rushing ahead with its nuclear program, overcoming technical challenges and daring the world to stop it. The terrorists of Hamas are tightening their grip on Gaza and eyeing the West Bank. Hezbollah radicals are ascendant in Lebanon. And peace talks with the Palestinians are lurching along, yet to yield any major results.
Enter Tzipi Livni, the woman who likely will be Israel’s next prime minster.
If that name’s not familiar to you, it will be. Livni won election Wednesday as the new leader of the Kadima party, which was founded by her political mentor, the former Prime Minister Ariel Sharon. She now will try to form a coalition government that would replace disgraced Prime Minister Ehud Olmert. He is stepping down after a series of damaging corruption investigations. …
Jim Kramer provides concise cogent background for Wall Street’s troubles.
Frank Capra would have loved the ongoing demise of Wall Street as we know it. How could he not? He correctly presaged it 62 years ago in It’s a Wonderful Life. Except in the 2008 sequel, not only does the Bailey Bros. Building & Loan survive, but it vanquishes Potter’s sorry, bloated operation, and the evil banker’s empire gets dismantled and sent to the eponymous field! This time around, George Bailey gets played not by Jimmy Stewart but by another quiet, unassuming individual, Ron Hermance. He’s the CEO of the homegrown Hudson City Bancorp, a modern-day replica of the Bailey Bros. Building & Loan. Never heard of Hermance or Hudson City? Under the avuncular and down-to-earth Hermance, this once-tiny Paramus, New Jersey, savings bank is now the largest savings and loan in the country. Who gets cast as the vicious, scheming Mr. Potter? We’ve got tons of candidates vying for that role these days, but only Richard Fuld, of the bankrupt Lehman Brothers, can truly fill Lionel Barrymore’s wingtips, given his arrogance and greed. How fitting is it that the day Lehman Brothers ceased to trade, because of Fuld’s inability to grasp how truly rotten Lehman had become, Hudson City hit its 52-week high? The cause of Lehman’s death? A mortgage portfolio of deadbeat loans that may prove to be worth even less than Fuld and his minions eventually acknowledged.
Hudson City’s secret is that, just like good old George Bailey in the movie, Hermance never saw the world outside his hometown, never went to exotic places like Santa Barbara, South Beach, or Europe. So unlike Fuld, or the executives at the defunct Bear Stearns, the merged Merrill Lynch, and even the now-seized American International Group, Hermance never lent money, gave mortgages, or promised to pay off on guarantees to anyone outside of his bailiwick. In other words, unlike those other guys, Hermance actually knew his borrowers and has been paid back on virtually every loan he has ever made. Hudson City’s default rate is virtually nonexistent compared with that of every one of these fallen behemoths. That’s how good the firm’s lending standards are. His model couldn’t have been more the opposite of the Potter-like plan, which, at its core, meant crafting mortgage-backed securities together from billions of dollars in residential loans of dubious quality that vastly overstated the value of the property underneath them and had no hope of ever being repaid unless housing continued to appreciate. No wonder Hudson City’s thriving while Potter’s field is filled with the graves of those who worked at Bear, Lehman, and Merrill.
The ascendancy of Hudson City, and the destruction or succumbing of so many of the once seemingly invincible investment banks or insurers, is no coincidence. There’s a fundamental change going on, and Hudson City’s riding it while almost everyone on Wall Street is being swamped by it. The change involves risk and the need to avoid taking it; it involves funding and the need to have a steady source, through sticky deposits, not hot slimy hedge funds; and it involves simplicity, not complexity. A mortal can actually understand how Hudson City makes its money; nobody can possibly even fathom all of the ways that Lehman or Bear or Merrill or AIG found to lose money. …
Spengler’s cynicism may not be the tonic for now, but he has a point.
Why should American taxpayers give US Treasury Secretary “Hank” Paulson a blank check to bail out the shareholders of busted banks? Why should the Treasury turn itself into a toxic waste dump for their bad loans? Why not let other banks join the unlamented Brothers Lehman in bankruptcy court, and start a new bank with taxpayers’ money? Or have the Treasury pay interest on delinquent mortgages, and make them whole? Even better, why not let the Chinese, or the Saudis or other foreign investors take control of failed American banks? They’ve got the money, and they gladly would pay a premium for an inside seat at the American table.
None of the above will occur. America will give between US$700-$800 billion to the Treasury to buy any bank assets it wants, on any terms, with no possible legal recourse. It is an invitation to abuse of power unparalleled in American history, in which ill-paid civil servants will set prices on the portfolios of the banking system with no oversight and no threat of legal penalty.
Why are the voices raised in protest so shrill and few? Why will Americans fall on their fountain-pens for their bankers? If America is to adopt socialism, why not have socialism for the poor, rather than for the rich? Why should American households that earn $50,000 a year subsidize Goldman Sachs partners who earn $5 million a year?
Believe it or not, there is a rational explanation, and quite in keeping with America’s national motto, E pluribus hokum. Part of the problem is that Wall Street, like the ethnic godfather in the old joke, has made America an offer it can’t understand. The collapsing the mortgage-backed securities market embodies a degree of complexity that mystifies the average policy wonk. But that is a lesser, superficial side of the story. …
WaPo story on Hillary fan who now supports McCain because of the Palin pick.
Lynette Long’s friends can barely sputter their objections. “How could you?” they say. “What about the environment? What about gay rights? What about Roe v. Wade?”
Long’s son calls, flabbergasted. And her patients in affluent, liberal Bethesda? They can hardly fathom it.
Lynette Long — psychologist, feminist, Democrat, Dupont Circle dweller, Whole Foods shopper, George Bush hater, Hillary Clinton supporter (to the max) — is not just voting for John McCain and Sarah Palin, she even took the stage at their rally in Fairfax to trumpet her decision to the world.
Long got the call from the McCain campaign at 10 the night before the rally this month. With a twinkle in her eye, the struggle for women in her heart and a bit of mischief in her mind, she agreed to be a warm-up speaker for the Republican ticket.
She had never been to a candidate’s rally before. She had voted for the Democrat for president in every election except for the elder George Bush’s first time, against Michael Dukakis in 1988. Sure, she had demonstrated against the Vietnam War, but she basically wasn’t the political type. That is, until Hillary Clinton came along.
All of a sudden, Long saw hope. As she told her son: “How would you feel if every day all the people you saw in authority were men, all the statues in Washington are all men, the money in your pocket, all pictures of men — and then finally, a woman comes along and she could be president? How would you feel? I would vote for her.” …
Ralph Peters on the charms of Sarah Palin.
… Speaking of Reagan (Eureka College, Illinois), every chief executive we’ve had since the Gipper snapped his final salute as president has had the imprimatur of an Ivy League university. And we’ve gone from bad to worse:
* George Herbert Walker Bush: Yale.
* William Jefferson Clinton: Georgetown, Oxford, Yale Law.
* George W. Bush: Yale and Harvard Business School.
The first lacked the sense to finish the job in Desert Storm; the second lacked the guts to go after al Qaeda when it was just a startup – and the third, well, let’s just say he disappointed our low expectations.
Now we have the Ivy League elite’s “he’s not only like us but he’s a minority and we’re so wonderful to support him” candidate, Sen. Barack Obama (Columbia and Harvard Law).
Our country can’t afford another one of these clowns. Harvard isn’t the answer – Harvard’s the problem.
So here’s the message Palin is sending on behalf of the rest of us (the down-market masses Dems love at election time and ignore once the voting’s done): The rule of the snobs is over. It’s time to give one of us a chance to lead.
Sen. John McCain‘s one of us, too. He raised hell at Annapolis (quadruple ugh: military!), and he’ll raise the right kind of hell in Washington.
McCain’s so dumb he really loves his country.
Jeff Jacoby on the drilling bill that’s against drilling.
Q: Says here the House of Representatives approved a bill to allow offshore oil drilling, but nearly all the Republicans voted against it. Weren’t Republicans the ones chanting “Drill, baby, drill!” at their convention last month?
A: Yep. That’s why they voted against this bill. It isn’t a drilling bill, it’s an anti-drilling bill. If it becomes law, nearly all the oil and gas in the Outer Continental Shelf would be off-limits forever.
Q: Huh? This story says the bill “would allow offshore drilling as close as 50 miles from the Atlantic and Pacific coasts.” It quotes House Speaker Nancy Pelosi: “It’s time for an oil change in America, and this bill represents that.” That’s anti-drilling?
A: C’mon: A few weeks ago, Pelosi was implacably opposed to letting the House vote on lifting the offshore drilling moratorium. “I’m trying to save the planet!” she told Politico. “I’m trying to save the planet!” You really think someone so sanctimoniously hostile to drilling just six weeks ago is all for it now?
Q: But this bill -
A: This bill permanently bans all drilling within 50 miles of the US coast, which just happens to be where most of the recoverable oil and gas reserves are. …