Friday, October 03, 2008

Gambling Barney Frank Bankrupts Fannie Mae/Freddie Mac

"When the Democrats took over the House of Representatives and the Senate back in January of 2007, the Dow Jones Industrial Average was at an all-time high of 12,400 and gas prices hovered around $2.15 per gallon. The Republican-led Congress of the previous 4-years had left a strong-economy in the hands of Socialist Democrats."


  1. This is called the fallacy of “after therefore because of,” or “post hock ergo propter hoc” in Latin. You learn not to make such arguments in the first days of debate class, or classes in logic, or rhetoric, or philosophy.

    Why not? Because, if you make such an argument, and your audience realizes that that is what you are saying, then it thinks that you consider it to be stupid.

    “After therefore because of” arguments run along these lines: “Ever since we started taking dancing classes, the stock market has declined. Dancing caused it.” Or, “Ever since we moved to Boston, the Red Socks have had winning seasons. We caused it.” Or, the classic: “We carried an umbrella today, so naturally it didn’t rain.”

    Recognize the parallel to “These things have gone bad since the Democrats took office?”

    In fact, Henry Paulson took over as Secretary of the US Treasury in June 2006, so you could equally date all the declines in the US economy from then. He took over in June 2006, oil prices increased since then, unemployment increased since then—etc. Or, you could date all the economic woes from the surge in Iraq, which also happened about two years ago.

    The Republicans must be pretty desperate to resort to such “after therefore because of” arguments. Or perhaps they think we are stupid.

    Or, perhaps they think we forget that the economy was already on the decline in late 2006, before the Democrats took control.

    For example, by February 2007, less than one month after the new congress was sworn in, the rate of real income per family was calculated as having declined by $1,273 per family under Bush, meaning that each year an average family had $1,273 less to get along on after calculating rising inflation. Real per-family income had increased by $5,825 per family under Clinton.

  2. I agree, causality is very difficult to determine and more so as systems get more complex. that is why pinpointing a cause for global warming is so hard (I'd say closer to impossible).

    So I take it you would agree that the left, including Barney Frank are guilty of deception or are disrespectful of the electorate when they make references to "the last 8 years"? That is probably the most commonly used phase these days in the Democratic lexicon.

    While the media craves a formula for assessing blame, I think a good dose of common sense works better.

    I didn't need a calculator to figure out that the cost of housing in many parts of the country are hyper-inflated for the past few years. I also didn't need to do any deep analysis to figure out it would eventually end. I planned my life accordingly and tried to convince those around me to do the same. I'm sorry some decided to listen to the "It's going to be OK" message instead.

    I worked in government long enough to know that government involvement will almost always lead to a screw-up of monumental proportions eventually.

    Our enemy is "big". By allowing government or businesses to get too large and too powerful we risk sudden catastrophic failure that can't be easily remedied.

    Smaller government, and policies that favor small businesses and disfavor monopolistic practices would have kept us out of this. Too bad so many of our candidates for public office (but particularly the Democrats) don't see it this way.

  3. As you say, causality is hard to determine. Causality for two years particularly, but for eight years????

    Did anything like this happen when you were in government?

    Federal No-Bid Contracts On Rise
    Use of Favored Firms A Common Shortcut

    By Robert O'Harrow Jr.
    Washington Post Staff Writer
    Wednesday, August 22, 2007; Page A01

    Under pressure from the White House and Congress to deliver a long-delayed plan last year, officials at the Department of Homeland Security's counter-narcotics office took a shortcut that has become common at federal agencies: They hired help through a no-bid contract.

    And the firm they hired showed them how to do it.

    Scott Chronister, a senior official in the Office of Counternarcotics Enforcement, reached out to a former colleague at a private consulting firm for advice. The consultant suggested that Chronister's office could avoid competition and get the work done quickly under an arrangement in which the firm "approached the government with a 'unique and innovative concept,' " documents and interviews show.

    A contract worth up to $579,000 was awarded to the consultant's firm in September.

    Though small by government standards, the counter-narcotics contract illustrates the government's steady move away from relying on competition to secure the best deals for products and services.

    A recent congressional report estimated that federal spending on contracts awarded without "full and open" competition has tripled, to $207 billion, since 2000, with a $60 billion increase last year alone. The category includes deals in which officials take advantage of provisions allowing them to sidestep competition for speed and convenience and cases in which the government sharply limits the number of bidders or expands work under open-ended contracts.

    Government auditors say the result is often higher prices for taxpayers and an undue reliance on a limited number of contractors.

    End quote:

    Let me repeat: $207 billion total, $60 billion last year alone.

    Or did anything like this happen when you were in government?

    Sex, Drug Use and Graft Cited in Interior Department
    Published: September 10, 2008

    WASHINGTON — As Congress prepares to debate expansion of drilling in taxpayer-owned coastal waters, the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.

    In three reports delivered to Congress on Wednesday, the department’s inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes.

    “A culture of ethical failure” pervades the agency, Mr. Devaney wrote in a cover memo.

    The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch.

    The highest-ranking official criticized in the reports is Lucy Q. Denett, the former associate director of minerals revenue management, who retired earlier this year as the inquiry was progressing.

    The investigations are the latest installment in a series of scathing inquiries into the program’s management and competence in recent years. While previous reports have focused on problems the agency had in collecting millions of dollars owed to the Treasury, and hinted at personal misconduct, the new reports go far beyond any previous study in revealing serious concerns with the integrity and behavior of the agency’s officials.

    In one of the new reports, investigators concluded that Ms. Denett worked with two aides to steer a lucrative consulting contract to one of the aides after he retired, violating competitive procurement rules.

    Two other reports focus on “a culture of substance abuse and promiscuity” in the service’s royalty-in-kind program. That part of the agency collects about $4 billion a year in oil and gas rather than cash royalties.

    Based in suburban Denver and modeled to operate like a private sector energy company, the decade-old royalty-in-kind program sells oil and gas on the open market. Its employees are subject to government ethics rules, such as restrictions on taking gifts from people and companies with whom they conduct official business.

    One of the reports says that the officials viewed themselves as exempt from those limits, indulging themselves in the expense-account-fueled world of oil and gas executives.


    Big government is certainly involved in such doings, but not just bigness alone.

  4. Let me guess... your position is that if we just had the right man in the White House such abuse would stop?

    Again raw statistics can be misleading.

    I was in government (as a contractor) mostly during the CLINTON years and there was plenty of abuse of this nature. I witnessed Gore going around and making mandatory-attendance speeches at various government agencies regarding their "Reinvention Express", a rather nebulous concept that was to streamline government. One of the "streamlining" moves they made was to issue credit cards to low level managers and no longer require them to seek authorization to buy items below a certain cost.

    While me and my colleagues waited months for equipment needed to fulfill our contractual obligations, government employees were "testing" digital cameras, small PCs and new monitors (all of which we could have used too) in their homes. Most of this equipment never came back.

    The process by which vendors are selected for government contracts is not an open process, nor is low bid the only factor. Other "intangible" things factor in, such as how helpful contractors have been in setting up government employees home PCs.

    In what percentage of cases does sex and cocaine use play into these corrupt practices? I'd guess very few, but the practice is corrupt no matter what the motivation, nepotism, kickback, "personal services" (this has a technical meaning that shouldn't be confused with my use here), or just sticking with a vendor you know when there is ample evidence that they are not the best. While we are at it, add to that the "make work" contracts set aside for minorities, women, disabled which not only "makes work" for those people but also makes work for those of us who had to clean up the mess afterward.

    Finally, I can't say for sure if, strictly in terms of dollar amounts there is more corruption now than then. If you set a figure on government corruption, lets say, 80 percent of every dollar spent on government is wasted, then certainly as government spending grows, so will the amount of money wasted (in absolute terms). One thing you might look into is the effect of the war (military spending) on the total. For many military items (big-ticket ships and airplanes) there is effectively only one vendor in many cases. When the government suspended Boeing from bidding on certain military aircraft a number of years ago the suspension only lasted 6 months. Why? Because there was no other US company capable of doing parts of the work. When Boeing, Lockheed Martin, McDonald Douglas and other companies were all alive and well they frequently shared this work, no matter which company won a contract they relied on the others for major sub components.

    Of course this doesn't play into the Department of Interior scandal. Have you never heard what a disaster that department has been before this? There is nothing about this that is recent. Sexual harassment, nepotism and worse run rampant in the "do-good" programs and this departments problems probably go back as far as its large budgets. Nobody in politics dares question these programs because their opponents would say "oh you are trying to hurt Native Americans!". Lefties are incredibly naive about these things in my opinion, which saddens me because the mess won't get cleaned up until voters WAKE UP and realize that people going into these things with apparently good intentions is no guarantee the results won't do more harm than good.

    Both McCain and Obama claim to be reformers by the way. McCain actually has a track record that is fairly respectable (even though I don't agree with some of his election reforms for example). But more is going to have to happen to reform our entrenched bureaucracy than just a motivated president. Department heads and several levels of management down from that can do much to sabotage any reform that they don't like and while these permanent government people are supposed to be above politics (they can't openly campaign for national candidates, but neither can they be easily fired for mere incompetence) I often witnessed congressional mandates being intentionally ignored and on those occasions when the ignored mandate was later enforced, rushed efforts to put them into production led to horrible products which continue to be "patched" years later because they weren't designed properly in the first place.

    I could go on and on...