Down And Out on Paradise

Sticklers for detail will notice this is the Strip and not actually Paradise, a few blocks East.

Things are tough all over.

I do hope nobody is surprised to learn that poverty in the United States is even higher than expected. After all, some 15% of our population is on food stamps — and that’s according to the freaking Wall Street Journal! And it is worse than average here in Vegas, where the “recovery” you lucky souls in other parts of the nation have been experiencing the last 2 years has passed us by like some angry Santa:

There’s a newer version of this chart right here. Add to that the fact that Vegas is still the reigning foreclosure capital of the nation, and it shouldn’t be any shock that we have a problem with homelessness and “food security” — a fancy term for “no food and/or no money for food.” Please remember that no matter what you may think of the work ethic of people in these situations, some of the people effected are children. There are mighty few jobs available to children that will pay the family’s bills, and most of them are worse than mere hunger.

Maybe if Wall Street didn’t sell us a pack of lies about how we can run our economy on lattes and cheap imports, we could change things. Even Starbucks is trying to create jobs outside the Latte Economy.

In Closing: is police use of a GPS really different from tailing them (uh, yeah); whites use more drugs, but blacks get sent to prison more (huh, could the War on Drugs possibly be racist??); even a broken clock is right twice a day; Americans would rather have government bureaucrats than insurance company bureaucrats (who could know these things?); amen; and right on, Rick.

Follow-Up Thursday

HR3: “Ok ok, we’ll take that word out if you’re going to get pissy about it. Damn feminists and liberals! We’d better get some concessions in return!” It’s still a bad bill that should not become law.

Banking Corruption: Oh yeah, JP Morgan knew Madoff wasn’t quite legit, problem? Elizabeth Warren still needs to head the CFFB, and to hell with Timmy Geithner. Did you know that the highest paid guy at Bank of America is still Angel Mozilo? The same guy whose business practices cost B of A billions of dollars last quarter alone?? It sure would be nice if someone would enforce the law regarding foreclosure fraud.

I felt a disturbance in the Force, as if a million wingnuts’ heads exploded and were suddenly silenced: The Obama administration is investigating whether the Health Insurance Reform bill can be used to require insurers to provide — not just cover, but provide freecontraceptives and family planning services!

On the Tea Party: Excuse me, I seem to have fallen into some alternate universe where George W. Bush is talking sense, and more or less agreeing with Howard Dean. Does the letter J exist in this universe?

On the Economy: Google got 75,000 job applications in one week because the economy is soooo good, right? At least demand for temps is up (pro tip: I’ve gotten job offers working at temp agencies; they’re a good way to earn a little money, get your feet wet, and maybe end up in a working interview!). On the whole, the employment situation is still “a lighter shade of gray.” The number of people using food stamps is up 14% from last year. So yeah, there’s a teensy disconnect between Wall Street and Your Street.

Will of the People: We want alternative energy, and the jobs we hope will be created by it, and the lower power/fuel bills, and just maybe the cleaner world. This is one of those “excuse me, the center is way off there to the left” moments.

On Education: You know, maybe teachers would do a better job if they had a decent curriculum to work from! Oh, now that’s crazy talk; everybody knows a really good teacher re-invents the wheel every semester…..

In Closing: Republicans hate puppies; they hate the environment too (Nixon was a dirty hippie!!) homeless shelters sometimes break up families; anchor babies; Weird Al; China; and VW is trying to win me back after making the Jetta look like ass:

Shorties Horizon

Dead Zombie Horse: a few thoughts on health insurance reform. And Immaculate Infection.

Oh Christmas Tree, Oh Christmas Tree: you make a fine fish habitat.

Laughing all the way to the bank: Only $3 billion? Pshaw! Let me get my checkbook.

Speaking of Banks: FDIC may sue executives of failed banks to try and get some of their money back. Oh and if we won’t do anything about too big to fail, Europe will.

Just Call Him Phoenix: a real life superhero in Seattle.

Nice: The Westin St. Francis washes every coin it receives.

Nuts: the rift between environmentally conscious Christians and nutjobs who think Jesus will just fix the environment.

The Dude Abides: Well no, it’s really just Jeff Bridges.

Obligatory January Weight Items: most Americans think their weight and dietary habits are just fine, thank you. Here’s the 8 worst diet and fitness fads of 2010. And for the motivated, a kick-start workout guide (don’t forget to eat healthy foods in moderate quantities!)

On Poverty: officially and in reality. At least it’s creating jobs at Dollar General, for what it’s worth.

Nevertheless: I hope you never need to know this information.

On Republicans: Go ahead and read the Constitution. How do they get away with telling the same lies so much we start to believe it’s true? Three Cups of Tea (tell ’em, Howard!). Hey big businesses, what laws do you want to not follow anymore? Guide to Governance. The sane people are concerned. And an open letter.

On all the other parties: Ha! Seriously though, I’d like to see a big, televised debate between party leaders of all these “third parties,” live during prime time. It would be a great laugh (have you ever read some of the published party platforms??), and the few good ideas will get picked up by someone who can run with it.

Delicious: Bison.

Oops: I mean oats.

Immigration Reform: it’s more complicated than putting up a fence.

Images: ranging from merely amusing to mind-blowing.

Welcome to 2011.


Before we get to today’s news, let’s start with a bit of history and background on how banking and lending works. Long ago, the first bankers realized that the odds of everybody wanting their money at the same time were just astronomical. So if they were to lend some of that money out at interest, not only would they profit, but they could pass on a little bit of that interest to depositors, making people want to deposit money with them. Charging of interest is even discussed in the Bible, so we know it happened in Biblical times. This process in fact creates money, so it’s very important to the economy.

But let’s fast-forward to a mythical and highly simplified bank somewhere in America. We’ll call it Bailey Bank. Bailey’s got ten thousand depositors with an average daily balance of $1,000. Simple math says they have roughly $10,000,000 in deposits — small by modern standards but still nothing to sneeze at. The Federal Reserve Bank regulates how much money they need to have on hand, and also says how much needs to be deposited with them for emergency purposes. They still have plenty of money to lend out.

So Bailey makes a few dozen mortgage loans, and lends for a few farms and small businesses too. If they are short on cash, they can borrow money from nearby Potter Bank or from the Federal Reserve, at interest rates set by the Fed. These are the rates that Greenspan used to mess with, and the ones Bernanke can change today, not the rates that banks charge us but the rates they charge one another and the rate that the Fed charges them.

When they came to the point where they didn’t really have more money to lend, they sold a bunch of mortgages to Fannie Mae and Freddie Mac. Fannie and Freddie paid them to be the servicers — sending the bills and collecting the money — and paid Bailey most of the money they would have earned by keeping the mortgage until it was completely paid off. This left Bailey with more money to write more mortgages. But Fannie and Freddie have rules about what they will and won’t buy. So Bailey changed some lending policies to make sure that Fannie and Freddie would buy their loans. There are properties that you almost can’t get a mortgage on because other banks did the same thing.

You already know the sad story of banks being left holding the bag in the foreclosure crisis they created. And maybe you even have seen how banks are driving down property values in your neighborhood by dumping properties at ludicrously low asking prices.

This also left Fannie and Freddie behind the 8-ball, and it may yet cost American taxpayers $1,000,000,000,000 to fix it. Why bother? Because banks have stopped counting on holding mortgages until they mature and count on selling the paper to investors like Fannie and Freddie. Without someone to buy the paper and give banks more money to lend, lending will dry up even more than it already has. And that means almost nobody buys property without cash. It may already be too late to save Fannie and Freddie; they are being delisted from the New York Stock Exchange. It would be polite to say that’s a negative for the stocks.

But there is one ray of sunshine in the mortgage mess: the arrest of Lee Bentley Farkas of mortgage company Taylor, Bean & Whitaker. He and unnamed conspirators are accused of fraud in the TARP program, “misappropriating” $400,000,000, and causing the collapse of Colonial Bank by selling them $1,500,000,000 in bad mortgages. I agree that this prosecution is a good start.

In closing: Arizona still keen to repeal the 14th Amendment even as its schools wonder how to comply with state law; homelessness in America; China owns 13% of the publicly held national debt; some people said I was nuts when I suggested that some religious nuts favored the life of an embryo that couldn’t even become a baby over that of a fully grown woman; terrorist nitwits; and sometimes buttons are better than velcro.