Randall Hoven has compiled a long list of cases of liberal doublethink.
George Orwell said, “There are some ideas so wrong that only a very intelligent person could believe in them.” What follows is my beginning of a list of ideas that some very intelligent people seem to believe.
The air should be taxed. More precisely, what every animal on earth exhales and what every plant on earth inhales can and should be taxed.
President Bush was bad for the economy because he spent too much. President Obama is helping the economy by spending a lot. ...
The Boy Scouts are wrong for having policies that inhibit pedophilia. The Catholic Church was wrong for not having policies that inhibit pedophilia.
An economy in which government accounts for about 40% of economic activity, which owns a similar percentage of all land, and which enforces a stack of regulations the size of 64 Bibles (or 30 New Deals) is considered a radical laissez-faire free market.
UPI reports that another great European nanny state measure is on the way.
[S]tart-stop systems that turn off a car when it is idling and reignite the engine when the driver releases the brake will be coming to the United States and Canada in the next five years, The Detroit News reported.
The technology is widespread in Europe and will be embraced in North America as a tool to meet increasingly stringent fuel-economy and emissions requirements, auto experts say.
“Engineers kill for one-tenth of a mile per gallon,” Joe Phillippi of AutoTrends Consulting Inc. said. “In city driving, it would make a huge impact.”
Estimates vary, but the consensus is shutting off the engine at a stop can improve fuel economy as much as 15 percent.
Consumer acceptance could be a challenge.
“It is a strange sensation because the engine suddenly turns off,” said analyst Stephanie Brinley of EMC Strategic Communications in Troy, Mich. “It is quick and seamless, but you can tell it happens.”
Half of the new cars in Europe will have start-stop technology in 2012, and North America will reach that figure in 2016, said Frank Frister, product manager with Bosch North America, one of the companies developing stop-start systems.
There you’ll be stopped at the light, and in front of you will be one of those holier-than-thous who has taken care to equip himself with the latest earth-saving technology.
The light changes, the complex electronic system stutters, and the democrat in the Prius fiddles with his ignition trying to get his engine restarted as seconds tick by and your blood pressure rises.
Jonah Goldberg examines the liberal notion that you are to blame for people’s deaths if you do something Muslims do not like, like burn a Koran or draw a cartoon image of Mohammed, and Muslims riot and kill someone or get killed.
When Pope Benedict delivered his Regensburg address in 2006, he suggested that Islam had a link to violence. In response, many Muslims rioted. It’d be funny if it weren’t so sad.
When Supreme Court Justice Stephen Breyer was asked in an interview about Koran-burning, he brought up former Supreme Court Justice Oliver Wendell Holmes’ famous comment that the First Amendment “doesn’t mean you can shout ‘fire’ in a crowded theater . . . Why? Because people will be trampled to death. And what is the crowded theater today? What is the being trampled to death?”
There are a number of grave problems with the crowded-theater cliche. First, you can—even must—yell “fire” in a crowded theater: It just has to be the truth.
But more to the point, fires are not human beings. Fire has no choice but to burn because that is what fire does. Humans have choices. Yet in this formulation (from which Breyer has somewhat retreated), Muslims are akin to soulless, unthinking flames. Taken seriously, this comparison suggests rational people have every reason to fear Muslims in much the same way they fear fire.
There are complex issues here. But the simple truth is the Islamist extremists who behead and riot do have a choice. They want to murder. What they want is an excuse, and they’ll find one no matter what.
The Center for Security Policy on Wednesday released its Team B competitive analysis the Islamic Sharia ideology and its adherents which “challenges the assumptions underpinning the official line in the conflict with today’s totalitarian threat, which is currently euphemistically described as ‘violent extremism,’ and the policies of co-existence, accommodation and submission that are rooted in those assumptions” and makes a number of recommendations.
U.S. policy-makers, financiers, businessmen, judges, journalists, community leaders and the public at large must be equipped with an accurate understanding of the nature of shariah and the necessity of keeping America shariah-free. At a minimum, this will entail resisting – rather than acquiescing to – the concerted efforts now being made to allow that alien legal code to become established in this country as an alternate, parallel system to the Constitution and the laws enacted pursuant to it. Arguably, this is already in effect for those who have taken an oath to “support and defend” the Constitution, because the requirement is subsumed in that oath.
U.S. government agencies and organizations should cease their outreach to Muslim communities through Muslim Brotherhood fronts whose mission is to destroy our country from within, as such practices are both reckless and counterproductive. Indeed, these activities serve to legitimate, protect and expand the influence of our enemies. They conduce to no successful legal outcome that cannot be better advanced via aggressive prosecution of terrorists, terrorfunders and other lawbreakers. It also discourages patriotic Muslims from providing actual assistance to the U.S. government lest they be marked for ostracism or worse by the Brothers and other shariah-adherent members of their communities.
In keeping with Article VI of the Constitution, extend bans currently in effect that bar members of hate groups such as the Ku Klux Klan from holding positions of trust in federal, state, or local governments or the armed forces of the United States to those who espouse or support shariah. Instead, every effort should be made to identify and empower Muslims who are willing publicly to denounce shariah.
Practices that promote shariah – notably, shariah-compliant finance and the establishment or promotion in public spaces or with public funds of facilities and activities that give preferential treatment to shariah’s adherents – are incompatible with the Constitution and the freedoms it enshrines and must be proscribed.
Sedition is prohibited by law in the United States. To the extent that imams and mosques are being used to advocate shariah in America, they are promoting seditious activity and should be warned that they will be subject to investigation and prosecution.
Textbooks used in both secular educational systems and Islamic schools must not promote shariah, its tenets, or the notion that America must submit to its dictates. Schools that promote anti-constitutional teaching should be denied taxpayer funding and lose charitable tax status.
Compounds and communities that seek to segregate themselves on the basis of shariah law, apply it alongside or in lieu of the law of the land or otherwise establish themselves as “no-go” zones for law enforcement and other authorities must be thwarted in such efforts. In this connection, assertion of claims to territory around mosques should be proscribed.
Immigration of those who adhere to shariah must be precluded, as was previously done with adherents to the seditious ideology of communism.
Gene Taylor (4-MS) this week became the first House democrat to sign the Repeal Obamacare petition.
Democrats in larger numbers are deserting Obama and calling for tax cuts for all Americans.
A.B. Stoddart, at the Hill, observes that you don’t have to wait for November to tell that the tide has turned, the Tea Party has already stopped Barack Obama, Nancy Pelosi, and Harry Reid’s leftist offensive. The war will continue, but the initiative has changed sides.
Even before Christine O’Donnell handily defeated Rep. Mike Castle (R-Del.) in an epic upset Tuesday night, the Tea Parties, all of them, had already won. No matter what happens in the midterm elections on Nov. 2, the Tea Party has moved the Democrats to the right and the Republicans even more so, and President Obama’s agenda is dead. ...
As of last week, before the House and Senate even reconvened, it was clear there were enough Senate Democrats joining Republicans seeking an extension of the Bush tax cuts for the wealthiest earners that the Democrats don’t have the votes to pass President Obama’s permanent extension of the middle-class tax cuts without passing cuts for the top two tax brackets as well.
When Obama introduced his latest economic proposals earlier this month, Sen. Michael Bennet (D-Colo.), an ally of the Obama White House, immediately put out a statement not only criticizing Obama’s newest infrastructure plan but knocking the original stimulus as well. “I will not support additional spending in a second stimulus package. Any new transportation initiatives can be funded through the Recovery Act, which still contains unused funds,” Bennet said.
Obama won’t get his infrastructure plan through the Congress, and he knows it. Next year, when he is running for reelection, tax and budget reform will be the only issues he could realistically work on with a GOP majority or a razor-thin Democratic majority. In other words, the Tea Party agenda.
The Tea Party candidates themselves — like O’Donnell, whom Karl Rove called “nutty,” — matter little. Only a few will actually get elected this fall. Yet the Tea Party has won without them. There are no tea leaves left to read. Democrats have been spooked and Republicans threatened, cajoled or cleansed. The results are already in.
“Obama has underestimated the frustration in the country and the power of the Tea Party movement, which gives the prevailing disillusionment a platform and a voice. It is by far the most vibrant political force in America. Obama’s left-of-center coalition, which got young people and intellectuals involved and which appealed to a majority of women, blacks and Latinos, has evaporated into nothing. ...
The new right, though, is on the rise. It sets the agenda. America is facing a shift to the right. The Republicans have already marched in this direction of their own accord, regardless how many Tea Party reactionaries get a seat and a voice in Congress in November. The Democrats and the president have been put totally on the defensive. From now on they will only be able to react, rather than act.
Norris’s comment struck a chord with bloggers and was widely reported, but all the attention she attracted made the cartoonist uneasy. Only a few days later, April 26, Norris was backing off and trying to distance herself from the whole affair.
Crawfishing, of course, did her no good at all, and in June,
Anwar al-Awlaki, our own home-grown jihadi cleric, now broadcasting agitprop and threats on the Internet out of Yemen, placed Molly Norris on a hit list including 8 others guilty of blasphemous caricatures of the prophet as a “prime target” whose “proper abode is hellfire.”
Now Seattle Weekly reports that Norris has gone into hiding.
[Molly Norris], on the insistence of top security specialists at the FBI,.. is, as they put it, “going ghost”: moving, changing her name, and essentially wiping away her identity. She will no longer be publishing cartoons in our paper or in City Arts magazine, where she has been a regular contributor. She is, in effect, being put into a witness-protection program—except, as she notes, without the government picking up the tab. It’s all because of the appalling fatwa issued against her this summer, following her infamous “Everybody Draw Mohammed Day” cartoon.
Personally, I think she should just move to red state America where everybody has guns.
Conservative author and commentator William F. Buckley (1925-2008) was asked, in 1967, whom he would support in 1968 for U.S. president. Buckley responded with what would late be called the ‘Buckley Rule” for primary voting: “The wisest choice would be the one who would win. No sense running Mona Lisa in a beauty contest. I’d be for the most right, viable candidate who could win. If you could convince me that Barry Goldwater could win, I’d vote for him.”
Yesterday, in reference to the Delaware GOP Senate primary in which Tea Party candidate Christine O’Donnell supported by Sarah Palin defeated moderate Republican Mike Castle supported by Karl Rove, Rush Limbaugh proposed replacing the Buckley Rule with a new rule of his own.
So we have professional Washingtonians now telling us that Mike Castle’s the only option we’ve got. Well, it’s time, ladies and gentlemen, for the Limbaugh Rule to supplant and replace the Buckley Rule, because the Buckley Rule requires clairvoyance. The Buckley Rule requires people who can’t possibly know the outcome of anything in the middle of September to support or not support somebody based on what they think’s going to happen in early November. Christine O’Donnell can’t win, she’s 25 points down. Can’t win? If a constitutional conservative can’t win in this climate coming down from 25 points, we need to find that out, find out where we are. Why not go for it? The stakes dictate it, do they not? Here’s the Limbaugh Rule: In an election year when voters are fed up with liberalism and socialism, when voters are clearly frightened of where the hell the country is headed, vote for the most conservative Republican in the primary, period.
Rush was perfectly right.
In general, it is better to back the conservative candidate and go down to defeat in the general election in an unfavorable year than to try calculation and support a RINO Republican, like John McCain, Arlen Specter, Lincoln Chaffee, Olympia Snowe, Susan Collins, and the like, in hope of support on the organization of the Senate and the occasional vote.
In every serious contest during the Bush Administration, confirmation of judges, making tax cuts permanent, Social Security reform, reforming Fannie Mae, RINO Republicans sided with the democrats and foiled GOP policy. If we had not had so many RINOs, George W. Bush might have successfully privatized Social Security and prevented the Housing Bubble from collapsing. There might have been no Panic of 2008 and no democrat control of Congress, no Barack Obama.
We have to win the battle of idea and achieve victory in the national debate. There is no shortcut to conservative success achievable by compromising and taking a certain number of liberal RINO Republicans along for the ride. They will always undermine and betray any possibility of actually accomplishing something with a Republican majority. We need to elect a majority of real Republicans, and if we can’t put a principled and conservative Republican into a legislative seat, we should just need to go back and try again, and do a better job of opposing the incumbent democrat in the next election.
In its 1989 Texas v. Johnson decision, The US Supreme Court ruled that burning the American flag constituted “expressive conduct” protected by the First Amendment’s free speech guarantee.
Burning the Koran, on the other hand, gets you detained and questioned by New York City police, and fired by your employer, if you work for NJTransit.
The protester who burned pages from the Koran outside a planned mosque near Ground Zero has been fired from NJTransit, sources and authorities said Tuesday. ...
“Mr. Fenton’s public actions violated New Jersey Transit’s code of ethics,” an agency statement said.
“NJ Transit concluded that Mr. Fenton violated his trust as a state employee and therefore [he] was dismissed.”
Fenton was ushered from the protests by police on Saturday and questioned, but he was released without charges.
Mr. Fenton has the grounds for a successful law suit against NJTransit.
“Qur’an… an accursed book… So long as there is this book there will be no peace in the world.”
—William Gladstone (1809-1898) British Prime Minister
“Ever since the religion of Islam appeared in the world, the espousers of it…have been as wolves and tigers to all other nations, rending and tearing all that fell into their merciless paws, and grinding them with their iron teeth; that numberless cities are raised from the foundation, and only their name remaining; that many countries, which were once as the garden of God, are now a desolate wilderness; and that so many once numerous and powerful nations are vanished from the earth! Such was, and is at this day, the rage, the fury, the revenge, of these destroyers of human kind.”
—John Wesley (1703-1791) Methodist leader
“Adopting from the new Revelation of Jesus, the faith and hope of immortal life, and of future retribution, he [Mohammed] humbled it to the dust by adapting all the rewards and sanctions of his religion to the gratification of the sexual passion. He poisoned the sources of human felicity at the fountain, by degrading the condition of the female sex, and the allowance of polygamy; and he declared undistinguishing and exterminating war, as a part of his religion, against all the rest of mankind. THE ESSENCE OF HIS DOCTRINE WAS VIOLENCE AND LUST. TO EXALT THE BRUTAL OVER THE SPIRITUAL PART OF HUMAN NATURE. Between these two religions, thus contrasted in their characters, a war of twelve hundred years has already raged. The war is yet flagrant … While the merciless and dissolute dogmas of the false prophet shall furnish motives to human action, there can never be peace upon earth, and good will towards men.” [The words in caps are as originally printed].
[On the Koran:] The precept of the koran is, perpetual war against all who deny, that Mahomet is the prophet of God. The vanquished may purchase their lives, by the payment of tribute; the victorious may be appeased by a false and delusive promise of peace; and the faithful follower of the prophet, may submit to the imperious necessities of defeat: but the command to propagate the Moslem creed by the sword is always obligatory, when it can be made effective. The commands of the prophet may be performed alike, by fraud, or by force.
— John Quincy Adams (1767-1848) Sixth President of the United States
“[Islam] is essentially an obstructive, intolerant system… It has consecrated despotism; it has consecrated polygamy; it has consecrated slavery. It has declared war against every other creed; it has claimed to be at least dominant in every land… When it ceases to have an enemy to contend against, it sinks into sluggish stupidity and into a barbarism far viler… It must have an enemy; if cut off…from conflict with the infidel, it finds its substitute in sectarian hatred of brother Moslems…”
—Edward Augustus Freeman (1823-1892) British historian
“Christianity was saved in Europe solely because the peoples of Europe fought. If the peoples of Europe in the seventh and eighth centuries, and on up to, and including, the seventeenth century, had not possessed a military equality with, and gradually a growing superiority over, the Mohammedans who invaded Europe, Europe would at this moment be Mohammedan and the Christian religion would be exterminated.
Wherever the Mohammedans have had complete sway, wherever the Christians have been unable to resist them by the sword, Christianity has ultimately disappeared. From the hammer of Charles Martel to the sword of Sobieski, Christianity owed its safety in Europe to the fact that it was able to show that it could, and would, fight as well as the Mohammedan aggressor.”
The civilization of Europe, America, and Australia, exists today at all, only because of the victories of civilized man over the enemies of civilization—because of victories through the centuries from Charles Martel, in the eighth century, and those of John Sobieski, in the seventeenth century. …There are such “social values” today in Europe, America and Australia only because during those thousand years, the Christians of Europe possessed the warlike power to do what the Christians of Asia and Africa had failed to do—that is, to beat back the Moslem invader.”
—Teddy Roosevelt (1858 – 1919) Twenty-sixth President of the United States
“Will not perhaps the temporal power of Islam return and with it the menace of an armed Mohammedan world, which will shake off the domination of Europeans — still nominally Christian — and reappear as the prime enemy of our civilization? The future always comes as a surprise, but political wisdom consists in attempting at least some partial judgment of what that surprise may be. And for my part I cannot but believe that a main unexpected thing of the future is the return of Islam.”
—Hilaire Belloc (1870-1953) Author/Historian
“How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia [rabies] in a dog, there is this fearful fatalistic apathy. …The fact that in Mohammedan law [sharia] every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men. Individual Moslems may show splendid qualities—but the influence of the religion paralyses the social development of those who follow it. No stronger retrograde force exists in the world.”
—Winston Churchill (1874-1965) British Prime Minister
——————————————————————-
Muslim voices:
“Islam makes it incumbent on all adult males, provided they are not disabled and incapacitated, to prepare themselves for the conquest of [other] countries so that the writ of Islam is obeyed in every country in the world. But those who study Islamic Holy War will understand why Islam wants to conquer the whole world…. Those who know nothing of Islam pretend that Islam counsels against war. Those [who say this] are witless. Islam says, kill all the unbelievers just as they would kill you all! …Whatever good there is, exists thanks to the sword, and in the shadow of the sword! People cannot be made obedient, except with the sword! The sword is the key to Paradise, which can be opened only for Holy Warriors! …Does all that mean that Islam is a religion that prevents men from waging war? I spit upon those foolish souls who make such a claim.”
—Ayatollah Khomeini (1902-1989) Iran’s Supreme Leader from 1979 to 1989—the highest ranking political and religious authority of the nation.
“Arise. O sons of Arabia, fight for your sacred rights. Kill the Jews wherever you find them. Their spilled blood pleases Allah, our history, and religion.”
—From a radio broadcast by Amin el-husseini, the Grand Mufti of Jerusalem. After instigating a pro-nazi putsch in Baghdad in 1941, he left for Germany, where he spent the remainder of WWII broadcasting propaganda to the Middle East.
“We should fully understand our religion. Fighting is a part of our religion and our Sharia [Islamic legal code]. Those who love God and his Prophet and this religion cannot deny that. Whoever denies even a minor tenet of our religion commits the gravest sin in Islam.”
—Osama bin Laden
“Islam isn’t in America to be equal to any other faith, but to become dominant. The Qu’ran should be the highest authority in America, and Islam the only accepted religion on earth.”
—Omar Ahmed CAIR (Council for American Islamic Relations) Founding Chairman
Louis Case, at American Thinker, points out that the complicated Machiavellian shenanigans needed to get Obamacare through Congress inevitably include the potential legal seed of the destruction of the entire bill.
Virginia’s lawsuit argues that the federal government has no constitutional authority to require individuals to purchase health insurance policies.
Virginia is asserting that certain portions (that is, the personal mandate) of ObamaCare are unconstitutional. If Virginia prevails, it leaves the question of what happens to the rest of the ObamaCare statute. This is where the concept of severance comes in. Normally, all comprehensive laws contain a boilerplate severance clause: it says that if any portion of the law is found to be unconstitutional, that portion is severed from the rest of the law—that is, the rest of the law stands.
But ObamaCare contains no severance clause. Virginia is asserting that if it prevails on its substantive claims, the whole law is unconstitutional. (If Virginia does not prevail, any one of the twenty-plus legal challenges have the same severance argument available.)
If a severance clause is normal boilerplate, why does not ObamaCare contain one? This is where Scott Brown’s election enters. Recall that the House passed its version of ObamaCare. On Christmas Eve, after much horsetrading and bribing, the Senate passed its version. The Senate version was not drafted to be in its final form; it was drafted to get 60 votes. Normally, these bills would be reconciled in a conference committee, and the final version would have to be voted on again with 60 votes in the Senate. However, before it could be sent to conference and reconciled, Scott Brown won in Massachusetts—a reconciled bill could no longer get 60 votes! That is why the House had to vote up or down on the Senate bill, which was basically a draft without the normal boilerplate inserted.
As Virginia argued in its Memorandum (Pages 24 to 28), the presence of a severance clause raises a presumption that Congress did not intend the whole statute to depend on the constitutionality of any particular clause. But with no severance clause, they are not entitled to that presumption. A court cannot sever the offending clause on its own if the statute would not function as Congress intended.
Most living Americans, including now approaching geezerhood Baby Boomers, have never seen anything like the current economic hard times. When I go out out of doors, I sometimes feel a bit surprised that the world is actually in color, not in black and white, and no one is dressed in 1930s styles.
But, on the whole, most of us have been facing current adversities with grim good humor. It’s our turn, we tend to reflect. We’ve had it good for so long. Sooner or later, government was bound to screw things up seriously.
But, we shrugged, we can survive. Our parents did. And the world has changed. We have vastly more education, more skepticism and sophistication. The peasant mentality that permitted the Great Depression to drag on for over a decade as the result of one socialist monkey wrench after another thrown into the engine of the economy and the Smoot Hawley Tariff just can’t happen today.
We’ve learned a lot. The policy errors of the New Deal have been exposed and its economics debunked. Today’s American population will not sit passively by and let Washington drive the economy into the ground year after year after year. The democrats will get slaughtered in 2010 and our Kenyan Caliban will be sent packing in 2012. A conservative Republican will take office in 2013 and the land will heal.
But, I have just read two news items in the Wall Street Journal which give me pause.
1) Despite the fact that the newspapers are full of foreclosure auction notices, and we all know people moving and abandoning homes to the banks, we tend inevitably to think that real estate disaster is well along and that we can look forward to the end of all that within an endurable interval.
We may be wrong.
This WSJ article from yesterday ends, I think, with whistling in the dark.
Housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.
The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.
The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a “closet moratorium” on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.
The result: The share of distressed sales fell by November to 25% of home sales, and prices stabilized. After rising in the winter, the distressed share fell to 22% in June, before bouncing to 30% in July.
The problem is that these measures are wearing off. Demand plunged this summer after tax credits expired, and unsold homes are piling up. More foreclosures could move onto the market as borrowers fall out of the loan-modification program.
“We see the perfect storm brewing with rising supply and falling demand,” said Ivy Zelman, chief executive of research firm Zelman & Associates and one of the first to warn of trouble five years ago. She estimated that distressed sales could account for half of the market by year-end if traditional sales didn’t rebound.
The market does have some tailwinds: Housing starts are at all-time lows. Banks have hired more staff to manage problem loans and government entities such as Fannie Mae and Freddie Mac that own a growing share of foreclosures are less likely to deluge the market.
The next leg down in prices “isn’t going to be the foreclosure-induced freefall where you just had inventory coming out the wazoo, and it was going to be sold one way or the other,” said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage.
Prices also have come down so much already they have less distance to fall. During the housing boom, prices inflated much faster than incomes rose, thanks to speculation and lax lending. The ratio of home prices to annual incomes reached 1.6 at the end of June, which is below the ratio of 1.88 from 1989 to 2003, according to Moody’s Analytics.
By those metrics, prices are actually undervalued in markets that have already seen huge declines, such as Las Vegas, Phoenix and Los Angeles. But Moody’s data show that prices remain “significantly overvalued” elsewhere, including Boston; New York; Seattle; Orange County, Calif., and Charlotte, N.C. Markets in both camps face supply imbalances that will pressure prices for years.
What I see is houses being offered for sale at significantly lower prices which are not selling, and a huge, absolutely enormous backlog of not-yet-foreclosed, not yet fallen out of the Home Affordable Mortgage Program houses yet to hit the market.
Who would be crazy enough to buy at any price in the current, totally unpredictable circumstances?
It is easy to find experts venturing predictions that home prices may fall another 10%. Why not another 30%, another 50%, or even 90%?
The market is flooded with homes. An enormous number more are somewhere in the pipeline headed for distress sale. Money is tight. People are still out of work, still losing jobs. Mortgage rates are low, but it is very difficult to get a mortgage. And, in the final analysis, who is going to buy now? Who will not believe that the market is still going down?
How low can we go? No one knows. People my age have lived through a period in which government policies lifted home prices into the stratosphere by arranging for 30 year financing for everyone. When I was a boy, working class families bought $5000-$12,000 houses, paying cash or arranging for two or three years of seller financing. The same kind of homes were selling for as much as $500,000 near Eastern cities a few years ago, and for $1,000,000 or $1,200,000 near San Francisco.
There is a very long way down between the prices of homes decades ago and recent prices. And deleveraging is just not happening. That backlog of unliquidated defaulted properties is sitting there, still unprocessed, like a ticking bomb.
2) Then, I read in the same WSJ of internationally-designed new banking rules intended to reduce risk by reducing liquidity and dramatically raising banks’ capitalization requirements.
The focus of the agreement is on the amount of “capital” banks are forced to hold. Capital is what banks use to absorb losses. Regulators and analysts typically believe that banks with more capital have a lower risk of failure or insolvency.
Regulators agreed to require banks to hold a specific level of a basic type of capital known as “common equity.” Common equity is considered the most effective type of capital because it is used to directly absorb losses. Officials agreed large, internationally active banks will have to hold levels of common equity equal to at least 7% of their assets, much higher than the roughly 2% international standard or 4% standard for large U.S. banks.
Who said governments in our time would not undertake “reforms” that reduce credit, constrict economic growth, and preclude recovery?
Remember Japan? Back in the late 1980s, everyone was afraid that Japan was going to replace the United States as the world’s leading economic power. Then along came recession, and Japan responded with the same kind of policies we see being applied right here today. Japan is still in recession, and nobody has been afraid of Japanese economic performance in years and years.
We have been saying to ourselves that housing prices may drop another 10% and that the real beginnings of the recovery may take another year, or maybe two, to arrive. We could be wrong.
