Arnold Kling on the democrats’ “financial reform” bill. Let’s hope they can’t get any Republican votes.

My instinct is to call the proposed legislation a “blame deflection bill” rather than financial reform. But I admit that I have not read the whole bill. Has anyone?…

I have to rant about the notion of a consumer financial protection agency. I know that it’s axiomatic that poor people are helpless victims. But in the case of these mortgages, that is a really hard sell. The banks did not take from poor people. They gave to poor people. If you were lucky enough to get one of these exotic mortgages when house prices were still going up, then you got to reap a nice profit on your house. If you were not so lucky, you lost…close to nothing. I’m sorry, but if you borrowed up to 100 percent of the value of the house or more, then all you really lost were your moving expenses.

What about predatory lending? As I understand it, the idea of predatory lending is to saddle the borrower with an expensive mortgage so that you can foreclose on the property and sell it at a profit. How many times did that happen? Have you read of a single instance in the past three years where the bank made a profit on a foreclosure?

I am always ready to feel sorry for poor people because of their poverty. But I cannot feel sorry for somebody who was given a basically free option on a house and the option didn’t happen to come into the money.

The reason that those of us on the right are left somewhat speechless by the financial reform bill is that it seems to us to be based on premises that strike us as preposterous.

Hat tip to the News Junkie.

The rich are different from you and me”, says Nick Carraway in Scott Fitzgerald’s Great Gatsby, prompting Hemingway to retort: “Yes. They have more money.”

But even the rich are not immune from the impact of the current recession and the real estate market collapse.

The New York Times reports that the price of William F. Buckley, Jr.’s splendiferous Manhattan pied-a-terre has been slashed by slightly more than half.

THE worldly and the clever gathered at the dinner parties that William F. Buckley Jr. and his wife, Pat, gave in their Park Avenue maisonette. Yet even though the chairs in the formal dining room are still covered in chartreuse leopard print, it has been quite a while since anyone but a broker or a prospective buyer has spent much time there.

Mrs. Buckley, a socialite and mainstay of the charity circuit, died in 2007, and Mr. Buckley, the writer and godfather of modern conservatism, followed 10 months later in early 2008. Their 10-room duplex came on the market at $24.5 million in May 2008, but there were no takers; in early 2009, as the real estate market was choking, the estate decided to take down the for-sale sign.

Now, more than a year later, the apartment at 778 Park Avenue has been relisted at $12 million, less than half the original asking price. And it is not the only listing in the building to have had to, ahem, adjust its price. The late Brooke Astor’s 15th-floor duplex, with 14 rooms and 6 terraces, started at $46 million in May 2008 and is now being offered for $24.9 million.

Ms. Del Nunzio is quick to point out that the apartment has “the most extraordinary suite of entertaining rooms that you could find,” with a private entrance on East 73rd Street and an 18-foot-long marble entry hall that opens onto a 27-foot-long gallery, leading to a living room, a library and a dining room.

“This is the place,” Ms. Del Nunzio continued, “where all those conversations and dinners with statesmen and political figures, not to mention film and television stars, with a quiet family dinner thrown in here and there, happened. This is a rare opportunity to acquire a piece of New York’s intellectual history.”

The listing, with additional photos.

Looking at Drudge Report this morning, I read the following headlines:

9.7%… 36,000 JOBS LOST IN FEB…
Unemployment Rate Including Discouraged Workers Rose To 16.8%…
Federal pay ahead of private industry…

Those are ugly headlines testifying to hard times for Americans and sure evidence that come November there is bad news coming for democrats.

New Jersey Governor Chris Christie addressed the necessity of reining in spending in an address to his state’s mayors at the New Jersey League of Municipalities.

His “holding hands and jumping off a cliff” metaphor was a hit, but more important was his identification of the rigged arbitration system which awards government employee unions reliably the better part of everything they ask for, year in and year out, good times or bad.

The current economic crisis has established definitively that the current relationship between unions and government and current levels of expenditure are unsustainable in a number of states.

Mish Shedlock has excerpts:

In the time we got here, of the approximately $29 billion budget there was only $14 billion left. Of the $14 billion, $8 billion could not be touched because of contracts with public worker unions, because of bond covenants, because of commitments we made accepting stimulus money. So we had to find a way to save $2.3 billion in a $6 billion pool of money.

When I went into the treasurer’s off in the first two weeks of my term, there was no happy meetings. They presented me with 378 possible freezes and lapses to be able to balance the budget. I accepted 375 of them.

There is a great deal of discussion about me doing that by executive action. Every day that went by was a day where money was going out the door such that the $6 billion pool was getting less and less. So something needed to be done. …

Our citizens are already the most overtaxed in America. US mayors hear it all the time. You know that the public appetite for ever increasing taxes has reached an end.

So when we freeze $475 million in school aid, I am hearing the reverberations from school boards saying now you are just going to force us to raise taxes.

Well there is a 4% cap in place as you all know, yet school boards continue to give out raises which exceed that cap, just on salary. Not to mention the fact that most of them get no contribution towards the spiraling increase in health care benefits. …

Do we need to change some of the rules of arbitration to level the playing field to allow municipalities and school boards to have a more level sense of collective bargaining?

I think the evidence of ever increasing raises being given to public sector workers as a result of the arbitration system tells us that we do. …

I am tired of hearing school superintendents and school board members complain that there are no other options than raising property taxes. There are other options.

You know, Marlboro, after a two year negotiation, they give a five year contract giving 4.5% annual salary increases to the teachers, with no contribution, zero contribution to health care benefits.

But I am sure there are people in Marlboro who have lost their jobs, who have had their homes foreclosed on, and who cannot keep a roof over their family’s head there is something wrong.

You know, at some point there has to be parity. There has to be parity between what is happening in the real world, and what is happening in the public sector world. The money does not grow on trees outside this building or outside your municipal building. It comes from the hard working people of our communities who are suffering and are hurting right now.

I heard someone in the legislature say two days ago that they wanted no fare hike in New Jersey Transit, no cuts in service, and no cuts in subsidy. And I was thinking to myself, man I should have made this guy treasurer. [Laughter] Because if you can pull that one off, you’re obviously magic.

This is the type of awful political rhetoric that people sent me to this city to stop.

“Scariest thing you’ve ever seen.” says my wife who sent me the link to this map illustrating the impact of the recession county by county.

Vulnerable democrats seeking distance from Obama. Surprise, surprise.

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Leftwing commentariat still trying to pass defunct health care bill. Ezra Klein and Jonathan Chait provoke stinging rejoinder from Ann Althouse.

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Carly Fiorina has an amusing Monty Pythonesque attack ad directed at a Republican primary opponent, labeling him a FCINO (Fiscal Conservative in Name Only). Needs re-editing, but worth a look. 3:21 video

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Eric Holder waives the 5th and admits to Mirandizing Abdulmutullab. We’ll see how he feels about all this after the next attack.

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Poof: Another 800,000 jobs disappear.

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Don Surber:

Tom Jensen at the liberal Public Policy Polling: “If you want a prism into why Democrats are struggling so much right now, this may sum it up: only 11% of voters across the country say that their economic situation has improved over the last year compared to 42% who think it has become worse. 47% say it’s about the same as it was.”

Rajeev Syal, blogging as “The Observer” at the Guardian, quotes a senior UN official who reveals that illegal drug money provided the only liquid capital during the crisis in the Fall of 2008, and may possibly have played the decisive role in averting a complete financial meltdown.

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations’ drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

On the one hand, we libertarians can rejoice at the irony of the system being propped up by funds accumulated via victimless crime. On the other hand, of course, if drugs were legal, the massive profits that produced the vitally-needed needed liquid capital certainly could not have come from drugs.

Barack Obama and the democrats in Congress did not turn the economy around with their massive spending stimulus package. Unemployment rates are high. They have not fixed the credit markets with bailouts. A new wave of foreclosures is underway. Home real estate prices are still in decline, nearly a quarter of American home owners are underwater on their mortgages, and the commercial real estate market is headed for complete disaster. Small businesses are experiencing a credit squeeze, which some economic authorities argue is attributable to government soaking up available credit for federal deficits.

As the US economy sinks, the democrats controlling Washington are attempting to hand it an anvil in the form of a staggering new health care entitlement. If a deficit burden reaching to the sky is not enough, we know that Congress has every intention of allowing the Bush tax cuts to expire, and proposals for new forms of taxation, a V.A.T. and even a special wartime surtax, have been floated. Coming up as well are plans for even yet another massive federal tax scheme involving mandatory purchases of carbon credits (at least for business not favored by federal exemptions) and dollar transfers to international bodies and/or Third World countries.

Most of us assumed that leftwing democrats want to do all these economically unfortunate things because they are clueless, childish, and subscribe to a worldview whose economic theories have everything backward. They are reckless, irresponsible, and just plain dumb.

But, it turns out there is a more sinister theory out there.

According to James Simpson, writing at American Thinker, democrat bad economics is deliberate. There is a conspiracy, and they have a plan.

The methodology is known as the Cloward-Piven Strategy, and we can all be grateful to David Horowitz and his Discover the Networks for originally exposing and explaining it to us. He describes it as:

The strategy of forcing political change through orchestrated crisis. The “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

Richard Cloward and Frances Fox Piven were two lifelong members of Democratic Socialists of America who taught sociology at Columbia University (Piven later went on to City University of New York). In a May 1966 Nation magazine article titled “The Weight of the Poor,” they outlined their strategy, proposing to use grassroots radical organizations to push ever more strident demands for public services at all levels of government.

The result, they predicted, would be “a profound financial and political crisis” that would unleash “powerful forces … for major economic reform at the national level.” …

The real goal of “health care” legislation, the real goal of “cap-and-trade,” and the real goal of the “stimulus” is to rip the guts out of our private economy and transfer wide swaths of it over to the government to control. Do not be deluded by the propaganda. These initiatives are vehicles for change. They are not goals in and of themselves except in their ability to deliver power. They and will make matters much worse, for that is their design.

This time, in addition to overwhelming the government with demands for services, Obama and the Democrats are overwhelming political opposition to their plans with a flood of apocalyptic legislation. Their ultimate goal is to leave us so discouraged, demoralized, and exhausted that we throw our hands up in defeat. As Barney Frank said, “the middle class will be too distracted to fight.”

I was smiling ironically, as I began assembling what I thought would make an amusing posting identifying a colorful and extremist line of accusation. But, as I reflect on the peculiarly self-destructive aspects of recent democrat political behavior, their strange willingness to defy the polls and ram through controversial measures in defiance of public opinion, I wonder if looking upon what they are doing as a form of the Cloward-Piven Strategy does not make sense.

It was the stock market crash that doomed Republican chances to defeat a relatively unknown, radical democrat last year. Chaos, fear, and uncertainty were precisely the reason that independent voters were willing to vote for Change, any kind of change, and took a flyer on Barack Hussein Obama. Chaos and economic bad news have been Barack Obama’s friends so far. Rahm Emanuel is famous for observing that he saw an empowering opportunity for the left in a serious crisis and was resolved not to waste that opportunity.

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That Barney Frank “the middle class will be too distracted to fight” quotation may be a warning sign, though. I’ve been unable to verify it as a real statement made by the Congressman from Massachusetts. It turns up in large volume as a search result, but always from this same body of text.

THE ECONOMY IS SO BAD, that . . .

Congress says they are looking into this Bernard Madoff scandal. (Oh Great!! The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear.)

Hat tip to Bill Laffer.

David Brooks, too, observes that the willingness of democrats to try for radical change at the risk of the economy is costing them the support of the non-ideological center.

Independents turned on the Republican Party because the MSM persuaded them that it was George W. Bush’s intransigent extremism which had poisoned American political life and produced bitter factionalism, and that it was Bush’s war spending and Republican banking deregulation that produced the economic crisis. They put democrats in charge, and our politics has not become bipartisan, the Middle East is not at peace, and the economy has not recovered. On the other hand, the deficit has quadrupled, the government owns General Motors, and Congress is trying to nationalize another one sixth of the economy while adding another trillion dollar entitlement, just before it proceeds to start working on carbon taxes.

Right now, independent voters are astonishingly volatile. Democrats did poorly in elections on Tuesday partly because of disappointed liberals who think that President Obama is moving too slowly, but mostly because of anxious suburban independents who think he is moving too fast. In Pennsylvania, there was an eight-point swing away from the Democrats among independents from a year ago. In New Jersey, there was a 12-point swing. In Virginia, there was a 13-point swing.

The most telling races this year were the suburban rebellions across the country. For example, in Westchester and Nassau counties in New York, Republican candidates came from nowhere to defeat entrenched Democratic county officials. In blue Pennsylvania, the G.O.P. won six out of seven statewide offices.

Middle-class suburban voters who have been trending Democratic for a decade suddenly lurched out of the Democratic camp — and are now in play.

Why? What do these voters want?

The first thing to say is that this recession has hit the new suburbs hardest, exactly where independents are likely to live. According to a survey by the National Center for Suburban Studies at Hofstra University, 76 percent of suburbanites say they or someone they know have lost a job in the past year.

The second thing to say is that in this time of need, these voters are not turning to government for support. Trust in government is at its lowest level in recent memory. Over the past year, there has been a shift to the right on issue after issue. According to Gallup, the percentage of Americans who believe that there is too much government regulation rose from 38 percent in 2008 to 45 percent in 2009. The percentage of Americans who want unions to have less influence rose from 32 percent to a record 42 percent.

Americans have moved to the right on abortion, immigration and global warming. Over the past seven months, the number of people who say government is doing too many things better left to business has jumped from 40 percent to 48 percent, according to a Wall Street Journal/NBC News poll.

According to that same survey, only 31 percent of Americans believe that the president and Congress “should worry more about boosting the economy even though it may mean larger budget deficits.” Sixty-two percent, twice as many, believe the president and Congress “should worry more about keeping the deficit down, even though it may mean it will take longer for the economy to recover.”

These shifts have not occurred because conservatives and liberals have changed their minds. They haven’t. The shift is among independents.

According to Gallup, the share of independents who describe their views as conservative has moved from 29 percent last year to 35 percent today. The share of independents who believe there is too much government regulation of business has jumped from 38 percent to 50 percent. Independents are in the position of a person who is feeling gravely ill at the same time he has lost faith in his doctor. …

Independents support the party that seems most likely to establish a frame of stability and order, within which they can lead their lives. They can’t always articulate what they want, but they withdraw from any party that threatens turmoil and risk. As always, they’re looking for a safe pair of hands.

Daniel Henniger explains that economic fears drove independent voters to flee the Republican ticket and vote for Barack Obama, whose calm tones and competently-run campaign promised he could handle the crisis. The economic crisis was not resolved quickly. Democrats chose not to adopt the conventional policy of cutting taxes, preferring to regulate and spend. The public’s unease has been increased rather than assuaged by the Administration’s determination to advance an extreme partisan agenda, even in the face of declining public support.

Independent voters across the U.S. have become like the massive cattle herd John Wayne drove from Texas to Kansas in “Red River.” These voters are spooked and on the run, a political stampede that veered left in November 2008 and now right a mere year later. They will keep running–crushing incumbents, candidates and political models of the left and right–through November 2010 and onto 2012 until they find a person or party capable of leadership appropriate to our unsettled times. And yes, Virginia, the possibility of a man on a white horse in 2012 is not out of the question.

Exit polls in New Jersey and Virginia said the economy was on voters’ minds. Unemployment is near 10% and may stay there for a year. But it’s deeper than that.

This isn’t just another turn in the business cycle. On Sept. 15, 2008, the economic structure of the U.S. imploded. Lehman Brothers, a synonym for the American financial bedrock, filed for bankruptcy. On June 1, 2009, General Motors, once a synonym for American economic primacy, filed for bankruptcy and was effectively nationalized. In the nine months between these two iconic events, the American people were riveted to news of economic distress.

The signal event of the 2008 presidential election was the day in September when Sen. John McCain “suspended” his campaign to deal with the financial crisis. Within 48 hours, his candidacy stood naked. Mr. McCain’s instincts were right; The American people wanted leadership. But he didn’t have a clue how to provide it. The restless herd ran toward Barack Obama.

Now they’re ready to run toward someone else. They just did in New Jersey and Virginia.

This is not normal. A new American presidency, especially this one, should not be in this much trouble 10 months into a four-year term. Nor would it be if not for the economic events that fell out of September 2008.

Absent the immediate need to steady the credit markets and deal with a deepening recession, the Obama White House would have introduced–and passed–its restructuring of the U.S. health-care system in early spring. Instead, voters watched Congress create and pass a nearly trillion-dollar “stimulus” bill, and then erect the world’s tallest national budget–a towering $3.5 trillion. They watched the Obama Treasury, now hard-wired to the Federal Reserve, intervene massively in the structure of the private economy. There was an attempted federal climate-control bill, an attempted expansion of union organizing rights (card check) and second thoughts on free-trade agreements.

Only then, in June, was this hyperactive government able to introduce its health-care proposal–the public option, the remaking of the insurance industry, a 5.4% tax surcharge, the expansion of Medicaid.

After his election, Mr. Obama’s strongest attribute was limitless self-confidence. He was a man aglow with knowledge, control and . . . leadership. Now, with the scale and cost of Mr. Obama’s ambitions so clear, the question many voters are asking is whether the Obama government’s reach exceeds its grasp or abilities–or any government’s.

The most acute voters know these are not normal times. The Obama vision so far looks a lot like the social-market economic model of Europe, where leaders such as Nicolas Sarkozy and Angela Merkel give homilies about the “crisis” of capitalism. If American voters then look toward Asia, they see rising economies using capitalism to supplant Europe.

American voters know they’ve reached a long-term economic tipping point. Which way to go, old West or new East? They understand the challenges are growing while the politicians seem to be shrinking.

So the Republicans “won” Tuesday. Now what?

Just as the Democrats in 2008 ran mainly against “Bush,” the Republican political model seems to be to let Democratic failure dump states like New Jersey and Virginia into their control. But I think most voters, no matter their party registration, know that in the past 12 months the stakes for them have suddenly become larger than political “control.”

Unless leadership emerges equal to the new world voters see they have fallen into, volatility in America’s election returns is going to be the norm for a long time.

The moral is that personal charm and a reassuring manner are powerful tools in gaining middle-of-the-road support in American politics, but keeping the support of a coalition including the ideologically uncommitted requires a kind of leadership which Ronald Reagan had and which Barack Obama lacks.

Obama already seems already far more likely to go down in history as a surly extremist who achieved election by temporarily feigning a false bonhommie, à la Jimmy Carter, than a genuinely transformative president like Reagan.

Going for a New Deal-style massive entitlement program in the midst of recession, after quadrupling the deficit, will never persuade independents that this administration is responsible and pragmatic.

Holman W. Jenkins, Jr., in the Journal, notes just how well the Obama Administration has done in turning the economy around.

Banks continue to fail at an alarming rate, the dollar is under assault, and Washington is looking at a future of trillion-dollar deficits. One might have guessed it would take a decade of Obamanomics to produce European welfare state levels of youth unemployment, but at 18.5% we’re there.

About the only positive sign is the price surge in normally uncorrelated assets—stocks, bonds, commodities, gold—as fund managers use cheap credit to play the carry-trade opportunity.

All this might be defensible if time were being bought to clean up an accumulation of past excesses. Instead, the president is creating a new one. It’s no exaggeration to say the Senate health-care bill taking shape is the equivalent of climbing aboard a train about to plunge into a canyon and deciding what it really needs is a bomb on board.