Wednesday, January 25, 2012

How candidates' first impressions count and how policy positions fortify them

My column in the Sky Hi News today..
The cost of modern presidential campaigns is staggering, and the money flowing into the process is corrupting.

The length of it is brain-numbing, but there is an offsetting value. This long trial by fire gives us greater insight into the candidates' character, perspectives, priorities, and background that soars beyond the issue of the moment.  We get a better initial impression of which direction his/her knee will jerk, and how that translates into policies that affect us.

Publicly stated Issue positions and platforms are still important because they support or contradict first impressions . A wealthy candidate may be “of and by” a certain background, but what that candidate is “for” could either contradict or validate first impressions. We have had many wealthy presidents who still advocated policies benefiting the less fortunate. Mitt Romney does not fit that mold.

Barack Obama in 2008 made some good initial impressions: In ringing rhetoric and quiet interviews he convinced Americans he understood them because his life story of coming from a white, struggling middle class family of loyal American grandparents. He was of, by and for policies that recognized the declining income of the middle class relative to the upper 20 percent that began years before the Bush crash of 2008.

That impression, fortified by supporting policies, trumped the attempt by the Republicans to paint him as an angry black, or a secret Muslim who would sell out America to the  jihadists.

Familiarity can also bring contempt. Documented character flaws could be Newt Gingrich's Achilles heel, but so far it has not stopped him. It is yet unknown how that would translate on the national stage when contrasted with Romney's or Obama's living the ethic of family values.

Romney is coming across as not being comfortable in his own skin. He seems to be a person who fears that if voters realize what a cold-hearted, privileged businessman he is, they would not believe he has their good interest at heart. His caginess about releasing his tax returns and discomfort with his 15 percent personal income tax indeed plays right into the hands of the Occupy Wall Street movement that  raised the awareness of the unfairness of income disparity.

An initial impression of Romney as a rich guy disconnected from the middle class is backed up by what policies he supports. They are not for the middle class. On public record is his throwing Romneycare under the bus, dumping it on the states with no requirement to make heath care affordable to many more than can pay for it now. On his website he promotes a tax structure that decreases taxes on the rich and increases taxes on some poor. Missing is how he will pay for increasing spending on the Pentagon, a more interventionist foreign policy, and reduction of the wealthy's income tax contributions to the Treasury. His priorities would leave little money for investment in education to enable the middle class to achieve their American dreams or to provide infrastructure job creation or to fund block grants to states to provide services, in spite of his lip service to those goals.

Romney has been a flip-flopping pig in a poke when it comes to Social Security and Medicare. He has changed views and now differs from the remaining GOP field by not yet subscribing to their “privatization” or “replacing it with savings accounts invested in Wall Street.” His disquieting solution: Let's sit down and talk.

However, for sure he wants to make employees pay entirely for their own unemployment insurance by investing it in a savings account. He proposes no safety net if those unemployment savings accounts run dry . He rests most solutions on his brand of job creation proposals, lax regulation of business and lower taxes for the well off, the very same policies that led to the middle class's income disparity and the economic disaster Obama inherited.

Wednesday, January 18, 2012

Romney and the real pious baloney

Column in the Sky Hi News Jan. 18 2012
The world of politics should be forever grateful to Newt Gingrich for introducing to the English language “pious baloney,” or how to call an opponent a hypocrite without using words not suitable for primetime.  

I recall another primary that gave birth to an icon of political speech, “Where's the Beef.” Walter Mondale in 1984 fired away at Presidential nomination contender, Gary Hart, for sloganeering his “New Ideas” without explaining its substance. The phrase was a play on a hamburger business' ad that was dramatized by a feisty senior complaining about a competitor's miniscule patty in a big bun.

This year's icon is the 1 percent (or the 99 percent, depending how it is used in context). Thanks to Occupy Wall Street, it is shorthand for either class warfare or “fairness.” 

Most politicians are guilty of pious baloney, some to a greater degree, some to a lesser degree, shorting the beef, and appealing to a class or special interest. To paraphrase George Orwell's “Animal Farm,” “all politicians are equal; some are more equal than others,” and this year Mitt Romney qualifies for the “more equal” category.

Gingrich attacked Romney for trying to appear as something that he was not. Such posturing happens when a campaign consultant looks at the polls to see how best their candidate could position him/herself, and then attempts to cram the client into a costume that does not cover the body. In the game planning for 2012, a poll must have shown voters wanted a non-DC insider, probably because they were disgusted with the gridlock antics of politicians within the Beltway.

To use Bill Clinton's 1992 iconic phrase, the top concern of voters this year? “It's the economy, stupid,” so drawing on Romney's business background, his advisors saw a good match. A successful businessman, even a cold-hearted “vulture capitalist,” was a person who knew how to cure the slow recovery. Exclusively accenting his business background served more purposes, too, helping the GOP overlook some of his less than conservative record as a governor and his fatherhood of Obamacare. As Gingrich pointed out, Romney had been an aspiring candidate for office throughout much of his life, anyway, and was hardly the non-politician he portrayed himself.

Others in the Republican field are or were not as vulnerable. Rick Santorum is mostly “pious.” Ron Paul is true to an ideology of every person on his/her own and for his/her self regardless of wordly realities, fair or not. Rick Perry's less than intellectual astuteness could not have been invented by any campaign consultant.   Less said about Herman Cain the better, but his 999 flat tax proved to be unfair to the 99 percent. Former candidate Michele Bachmann's frequent gaffes that did not pass the fact checkers substituted some baloney for the beef. Ron Huntsman failed to qualify as a politician since his support was nearly none. 

Romney is not out of the woods, yet. In an era of populist anger at whatever is big (government, corporations) and with 50 percent of America poor or nearly poor,  he is an icon of the 1 percent, of, by and for Wall Street, while Obama is from a struggling middle-income family and genuinely gets the fairness factor. 

Last week Romney tried to convince us that “he is concerned about the middle class,” while at the same time condemning “class warfare” and defending his questionable job-creation record. More pious baloney. Romney's balm to middle class pain is to kill Obamacare that would make health insurance affordable in all 50 states for even those without employer insurance. He promises to kill Wall Street reform with its protection bureau empowered to save consumers from predatory credit practices. His tax proposal would increase average taxes on many poor and would decrease taxes on the rich, per an analysis in the current “Atlantic Monthly.” With friends like him, the middle class does not need enemies. 

Wednesday, January 11, 2012

GOP's Newspeak translated to Oldspeak is Alice In Wonderland Orwell style

Today's column appearing in the Sky Hi News  Jan. 11 2012

George Orwell's foreboding novel “1984” introduced a new language, Newspeak, and he predicted that by 2050 it would replace Oldspeak, the English we have known.

2050 has arrived.

The purpose of Newspeak, according to Orwell, was for totalitarian leaders to make subversive thought and speech impossible by reducing and simplifying grammar and vocabulary and removing all shades of meaning. The difference is today's Newspeak is a creature of modern communication.

A debate with many candidates requires each to condense explanations into 30-second sound bites. Thirty-second TV commercials depend upon catchy, simplistic phrases. However, these sound bites could generate some interesting shades of meaning if we add in a tad more Oldspeak. Fat chance. Newspeak's advantage to politicians: It is a mask for reality challenges and Alice in Wonderland style illogic.

What if the GOP's Newspeak were translated into Oldspeak? We hear the GOP claiming that President Obama is a” failed leader.” What the GOP could be saying in Oldspeak: “Obama got much of his agenda passed in spite of our efforts to stop him, but he failed to cave in to his supporters. That Obama passed through Congress a stimulus bill, Obamacare, auto industry bailout, increase of the debt ceiling, temporary passage of the payroll tax cut extension, and Wall Street Reform does not count; it wasn't our agenda.”

“Any one could have gotten Bin Laden by approving a risky operation. George W Bush assured us that getting him was not a big deal. Any action short of boots on the ground, bombing, and occupation is leading from behind or appeasement. Hang the cost; we can cut everyone else's budget and benefits.”

GOP Newspeak: “While the Great Recession was not caused by Obama,  he failed to turn around the economy.” Oldspeak translation: Anything short of a return to the pre-2008 economic bubble is not recovery. That GDP and employment have shown steady growth beginning in 2010 is not because of Obama's policies.

GOP Newspeak: “Obama wants to kill job creators. We know how to create jobs and only we understand how business and the economy works.” Oldspeak translation: We know how to kill jobs by opposing auto bailouts and infrastructure funding, and closing plants. Bush economic policies lost us over 8 million jobs, but let's not Bush bash. We have had low taxes for the rich, our job creators, for a decade. More of the same should work just as well in the future, too. Lowering taxes further for the 1 percent is fair enough. The Obama stimulus we opposed created nearly 3 million jobs, as promised. It failed because it did not create more than that. Shrinking government, stopping Obama, and protecting high end tax breaks are more important.

GOP Newspeak: “Uncertainty is killing business.” Oldspeak translation: Take back the White House and Congress. That will certainly make it possible to reinstate economic policies of the past. We certainly know where that got us. So let us restore past policies, stop reform, and take our country backward. Blame Obamacare. While not fully operational until 2014, it is OK to keep business uncertain if the GOP can kill it.

GOP Newspeak: “Government cannot create jobs.” Oldspeak: Only the private sector creates jobs. Teachers, firefighters, and police are public employees so they cannot count as jobs created by Government. Government cannot create road and bridge infrastructure jobs because our budget priorities are more important .

GOP Newspeak: “We have plans to save Social Security, Medicare, health care.” Oldspeak: Government guarantees that your pension will still be available when you retire are unnecessary. Wall Street investments always beat Social Security, recent experience with IRAs notwithstanding. If future seniors pay $6,000 more per year, we can save Medicare. Our health insurance cure-all: Cross state insurance purchase and restricting malpractice suits so we can make insurance affordable for 3 million of the uninsured 30 million.

Thursday, January 5, 2012

Bonfires of the mortgage industry; first hand observations of two; save Wall Street reform

My column in the Sky Hi News January 4, 2012

In the mid-1990s I had just finished nearly 12 years of immersion in housing finance issues, including eight as Denver's public trustee administering foreclosures, several as an executive with the nonprofit Consumer Credit Counseling Service (CCCS), simultaneously serving as chair of the Colorado Housing Coalition assisting qualified low-income homebuyers fighting banks' refusing to approve mortgages in minority neighborhoods. I polished it off as a part time loan originator for a mortgage company.

All of this took place before the late '90s, the time when the housing market went haywire.

The 1980s were rocky for housing, too. I had watched a bubble burst long before the recent 2008 crash. Causes of the '80s debacle were short-term mortgages ending in unaffordable and unrefinanceable balloon payments, overbuilding of new homes, high interest rates, fraud in savings and loan institutions, and a local economy that was hit by a crashed energy boom.

Like the current mess, owners unable to meet their payment schedules, with houses worth less than the loan amount, walked away, leaving banks holding the bag. Even large financial institutions were devastated. Foreclosures and bankruptcies were commonplace. For years thereafter, many consumers sought refuge in credit counseling.

My boss at the mortgage company called me in to his office in the mid-1990s to tell me that the company would now offer mortgages to those who had a bad credit history (called sub-prime lending) and asked if I would make the sales connection with CCCS clients. I refused. The purpose of CCCS was to keep those who could not afford debt from digging themselves into more bad debt. I had been Ms. Conservative, requiring 20 percent down, documentation of income, correct ratios of debt to assets and I had faith those loans I originated were going to be paid. While the lenders had their “favorite” appraisers to make sure the property being financed had an evaluation to justify lending 80 percent of value, the appraisals were within reason.

That was soon to change as hyper-inflated appraisals cited hyper-inflated comparisons to justify value . No down, no documentation of ability to repay the loan, became the standard. Predatory lenders reaped origination fees based on loan size and convinced wannabe homeowners they could afford to pay back these impossible loans. Some steered them to the most expensive terms when better ones were available. Buyers wrongly assumed if the bank thought they qualified, they could afford the big house.

In the late '90s, Freddie Mac and Fannie Mae, quasi-governmental FHA lender/underwriters, lowered loan qualification standards to get minorities into homeownership. Other mortgage bankers followed suit in lending to others and fueled the bonfire of the mortgage industry. To stimulate the immediate post-Sept. 11 economy, the Federal Reserve greased the skids with low interest rates.

However, blame does not rest alone on Fannie, Freddie and the Fed. Shame on all of those who took those shaky loans, mixed them with the solid loans, and passed them off as good risks to investors. Whether those investors who then resold them winked and knew the game or were fooled themselves is a good question. These toxic bank assets (loans that could not be repaid) poisoned our economy.

Others also share blame for the worst financial crash since the Great Depression. Holmann Jenkins writing in the Wall Street Journal Dec. 28, 2011, believes Wall Street could have absorbed these lemons, but giant financial institutions in the U.S. and Europe were weakened by excessive overnight and short-term borrowing to hold onto suddenly unsellable mortgage derivatives and unregulated bets on other mortgage investment instruments.

Less regulation would do nothing to prevent such bad practices in the future. Been there; done that. While we now have higher lending standards, requiring more capital to cover loans, controlling of derivatives, and anti-predatory lending measures would help. Wall Street Reform addresses some of problems and deserves protection from those who would roll it back.