SunTrust Bank and Guns

It is with great amazement that I share this story. A good friend who had a great relationship with this bank had his 7 Figure account frozen because he did the crazy thing of exercising his 2nd amendment rights in the purchase of a gun. The bank actually told him he would receive his funds within 30 days. After hearing such news he contacted the General Counsel of the bank who promised he would get back with him by day's end. A lie!! For any of you lovers of the constitution (which we all should be) this should greatly alarm you. This bank is definitely off of my choice of financial institutions.

FOMC Statement

Release Date: March 15, 2011

For immediate release
Information received since the Federal Open Market Committee met in January suggests that the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks. Nonetheless, longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

2011 Monetary Policy Releases

Funny

What is the public hearing and seeing regarding the April Fool's Day changes? "Starting April 1, under a new compensation rule from the Federal Reserve, borrowers who get their mortgages through brokers will most likely pay less for their services and must be offered the lowest possible interest rate and fees for which they qualify. The new rule also affects those dealing with small banks and credit unions, which typically do not fund loans from their own resources. But most banks and other direct lenders, including the few mortgage companies that function like banks, are exempt." SOUNDS MISLEADING!

Details of the latest Redwood Trust March 1st deal are emerging. The $290 million residential MBS are backed by 303 loans, roughly 2/3 from First Republic Bank and the rest by PHH Mortgage. The average loan size is $977,000, according to the filing, with over 50% being from California. The deal holds an aggregate principal balance of $296.3 million with the underlying loans a mix of 30-year fixed-rate mortgages and 10-year hybrid loans. The master servicer will be Wells Fargo with Citigroup acting as the trustee.

What investor is going to buy any of the deal without a rating? Apparently Redwood began working with more than one rating agency. Fitch gave the deal its highest grade, but the other two rating agencies (Moody's and Standard & Poors) offered unsolicited opinions that raised doubts about Fitch's assessment including questions about the risks attributable to the geographic concentration of the mortgage loans.

Last week we learned that in the Great State of Texas, Vista Bank will be purchasing Founders Bank. At the other end of the deal spectrum, however, the FDIC announced that in Georgia (unofficial slogan: "Without Atlanta, We're Alabama")  Habersham Bank was closed and its depositors moved to SCBT National Association (SC), and Citizens Bank of Effingham was absorbed by HeritageBank of the South. Out in California (unofficial slogan: ""By 30, Our Women Have More Plastic Than Your Honda") Bank of Marin assumed all the deposits of Charter Oak Bank, and First California Bank assumed all the deposits of San Luis Trust Bank.

Provident Funding released details of its compensation plan. "Provident Funding will require a Broker Fee Agreement (between the broker and the borrower) to be uploaded for each transaction at Initial Registration beginning on March 1, 2011. You may use your own Broker Fee Agreement forms, provided all of the following requirements have been met: Must be signed and dated by the interviewer and all borrowers, must specify all broker fees to be charged in the transaction, regardless of who will be paying them, and the total for all broker fees reflected on the Broker Fee Agreement must match the GFE (i.e. Block 1 minus Lender Fees). When the GFE fees are input into the system: the Broker Origination Fee can be either a flat fee or percentage of the loan amount, and a Broker Processing Fee and up to 3 additional miscellaneous broker fees can be input. These must always be flat fees and cannot be based on a percentage of the loan amount; otherwise the GFE will be rejected."

Provident's bulletin goes on to note, "Where state law permits the broker origination fee to be based on a percentage of the loan amount, but the Broker Fee Agreement does not have a designated space for broker compensation to be specified as such (i.e. only as a dollar amount), one of the following is required: The agreed upon percentage of loan amount for broker compensation can be handwritten or typed in, as long as it is initialed by the borrowers, or an addendum signed by the borrowers and specifying that the broker compensation is based on a percentage of the loan amount can be provided. If neither of the above is provided, all broker compensation is presumed to be a flat fee."

Recently at Bank of America, its correspondents learned that it is now adding "loan-level suspensions to loans where state licensing requirements appear not to be met." Correspondent clients, by now, should have sent BofA copies of all current state licenses. Bank of America, by the way, has discontinued its Conforming Home Possible program line.

Other "discontinuations" include M&T cutting its FHA 30-yr fixed buydown, 203k rehabilitation buydown and VA 30-yr fixed buydown products, MSI discontinuing its USDA Rural Housing 2/1 Buydown program, and Affiliated Mortgage cutting its FHA and VA 30 Year Buydown products. 

Conversely, Flagstar Bank announced that the temporary suspension of "to be determined" (TBD) properties has been lifted. But like practically every other investor, Flagstar Bank is suspending all products that include a temporary interest rate buydown. Starting yesterday Flagstar is allowing "all approved FHA Sponsored Originators (formerly known as FHA TPO and FHA Sponsored Loan Correspondents) to order their FHA Case Number Assignments via Loantrac," and also told clients that "new construction attached PUDs located in Florida are eligible properties, provided the project or subdivision has a 50% pre-sale ratio. Flagstar continues to prohibit FHA and VA financing of new construction attached PUDs located in Arizona."

Fifth Third correspondent clients learned that next Tuesday, since Freddie Mac is revising their policy to require funds to close to be verified on refinance transactions (LP will not reflect the amount of funds required to be verified to close), neither will it.

CitiMortgage Correspondent's channel announced a re-org. Starting March 1st CitiMortgage will support your Correspondent relationship with a newly assigned Correspondent Account Executive.  Our sales coverage model offers multiple benefits, including: a seasoned, consultative Sales Account Executive that has the experience and knowledge to deliver on our commitment to you, a dedicated Client Services Consultant who will provide proactive communication and tailored support, etc. The reorganization resulted in lay-offs, as one would expect.

Mortgage Services III (MSI) posted several changes that are now on its website. Changes include revisions to refinance guidelines & verification of funds, and a revised MSI Document Preparation Form & updated procedures.

PHH told its clients that starting next Tuesday, users of its "Fastrieve" system will notice that the "PreSubmission" option will no longer be available In order to simplify the document submission process. (Users will now choose between the two remaining Package Status options, "Final" or "Conditions" and plan accordingly for existing documents.) Late last week PHH followed changes in agency guidelines, specifically with LP scored and manually underwritten loans for refinancing purchase money transactions. ("for no cash out loans scored through LP or Manually Underwritten, the mortgage being refinanced must have a Note Date of at least 120 days prior to the Note Date of the No Cash Out refinance transaction") and the verification of all assets stated on the loan app. PHH also reminded clients that "the borrower must explain in writing all inquiries shown on the credit report within 120 days prior to the date of the credit report for all LP and manually underwritten loans. Loans scored through DU are required to provide explanations for credit inquiries within the previous 90 days prior to the date of the credit report. Previously it was 90 days for all loans." Check the bulletin for exact details.

At least pricing in some areas is improving. For example, late last month Wells Fargo Funding rate sheet (for correspondent clients) pricing began reflecting an uncapped base rate sheet price (although its maximum "all-in" base price cap of 102.75 on all Best Effort Correspondent Loans remained unchanged). "For Conventional and Government Best Effort Loans, the final price, excluding SRP, may not exceed 102.750, the final base price paid to the Seller will be capped at 102.75 after adjusters have been applied, even if the "pre-adjuster" price exceeds the cap, and Servicing Released Premiums, including the non-escrow waiver, are not included in this calculation, and are applied after the all-in base price is calculated."

Remember, it's already Tuesday! I lose track of all the housing indices that come out, but today we have the Case-Shiller 20-city Index, along with Consumer Confidence. Tomorrow is not much aside from Existing Home Sales and weekly mortgage app numbers from the MBA, which, as expected for 2011, have not been setting the world a 'fire lately. Thursday we can look forward to Jobless Claims, Durable Goods, another housing price index, and New Home Sales. On Friday we'll have our second look at the GDP from the 4th quarter (old news?) and a Michigan Sentiment number. In addition to the average news week, there will be Treasury auctions today, tomorrow, and Thursday, and which always have the potential of moving Treasury and mortgage rates one way or another.

Fill up those gas tanks! For news, the focus is on continued geopolitical unrest in the Middle East and Libya, the earthquake in New Zealand, and a possible downgrade for Japan by Moody's. Oil and gold are on the rise, early indications point to a "down stock market" but the 10-yr Treasury is better by about .5 in price (and down in yield to 3.52%) and MBS prices are better by roughly .250.

Marriage is sharing.

The old man placed an order for one hamburger, French fries and a drink.

He unwrapped the plain hamburger and carefully cut it in half, placing one half in front of his wife.

He then carefully counted out the French fries, dividing them into two piles and neatly placed one pile in front of his wife.

He took a sip of the drink, his wife took a sip and then set the cup down between them. As he began to eat his few bites of hamburger, the people around them were looking over and whispering.

Obviously they were thinking, "That poor old couple - all they can afford is one meal for the two of them."

As the man began to eat his fries a young man came to the table and politely offered to buy another meal for the old couple. The old man said, they were just fine - they were used to sharing everything.

People closer to the table noticed the little old lady hadn't eaten a bite. She sat there watching her husband eat and occasionally taking turns sipping the drink.

Again, the young man came over and begged them to let him buy another meal for them. This time the old woman said "No, thank you, we are used to sharing everything."

Finally, as the old man finished and was wiping his face neatly with the napkin, the young man again came over to the little old lady who had yet to eat a single bite of food and asked "What is it you are waiting for?"
She answered:

'THE TEETH'

Missle Defense Statement from the State Dept

We shall hold them accountable if this is not true:

BUREAU OF ARMS CONTROL, VERIFICATION AND COMPLIANCE
Fact Sheet
December 1, 2010
There are no “secret deals” with Russia on missile defense.
The Administration has repeatedly communicated to the Russian Government at the highest levels that the United States will not agree to any limitations or constraints on U.S. ballistic missile defenses, and that the United States intends to continue improving and deploying BMD systems to defend the U.S. against limited missile launches, and to defend our deployed forces, allies, and partners against regional threats.
The Administration has repeatedly made clear that it is pursuing missile defense cooperation with Russia. As one example, at a June 17 hearing of the Senate Armed Services Committee, Secretary Gates stated: “Separately from the treaty, we are discussing missile defense cooperation with Russia, which we believe is in the interests of both nations. But such talks have nothing to do with imposing any limitations on our programs or deployment plans.”
The Obama Administration believes that missile defense cooperation with the Russian Federation is in the national security interests of the United States, as did the Bush Administration. Restrictions or limitations on U.S. missile defense capabilities are not under discussion in any forum.
At Lisbon, NATO and Russia agreed to resume theater missile defense exercises and discuss ways where they could potentially cooperate on territorial missile defense in the future.
U.S.-Russia and NATO-Russia cooperation on missile defense is intended to help improve our defensive capabilities, strengthen transparency, and reduce Russia’s concerns about the United States’ missile defense efforts by providing it with further insight into the nature of and motivations for U.S. and NATO ballistic missile defense plans and programs.
In 2004, under the Bush Administration, the United States began seeking a Defense Technical Cooperation Agreement (DTCA) with Russia. The DTCA is a broad agreement that, once concluded, would address the Parties’ responsibilities and rights with respect to a broad range of defense-related cooperative research and development activities, including missile defense. The last DTCA discussions with Russia were held in 2008.
The Administration decided to propose a more limited form of the DTCA that would only address missile defense cooperation issues - a Ballistic Missile Defense Cooperation Agreement (BMDCA). The proposed BMDCA would establish a framework to allow for bilateral BMD cooperation, including: transparency and confidence building measures; BMD exercises; data sharing; research and development; and technology sharing. Details about how to cooperate would need to be negotiated subsequent to the BMDCA.
As with the DTCA, the proposed BMDCA does not specify any missile defense cooperation measure in particular; instead, it would serve as an umbrella agreement under which future individual technology agreements could be considered.
The U.S.-proposed BMDCA specifically stated, “This agreement shall not constrain or limit the Parties’ respective BMD plans and capabilities numerically, qualitatively, operationally, geographically, or in any other way.”
Last spring, the Russian Government indicated that it did not wish to negotiate a BMDCA at that time.
The United States intends to resume discussions with Russia on a possible DTCA in the near future.
The United States will continue to discuss possible missile defense cooperation with Russia and will not accept any limits or constraints on our ability to effectively defend the United States, our deployed forces, and our allies and friends from the ballistic missile threat.

Fed Policy

Federal Reserve policies focused
Posted: 23 Nov 2010 01:59 PM PST
This blog posting was originally an article in the Sunday, November 21, edition of the Atlanta Journal-Constitution. The article was written by Atlanta Fed Senior Vice President and Research Director David Altig.

On Nov. 3, the Federal Open Market Committee (FOMC)—the group within the Federal Reserve charged with formulating monetary policy for the United States—announced its plans to purchase, over the course of the next eight months, up to $600 billion worth of longer-term Treasury securities.

In many circles (maybe including yours), this decision has generated some controversy. A good deal of the controversy revolves around the view that this monetary policy decision is aimed at buying up government debt for the purpose of making it easier for the country to continue on the path of deficit spending. This view is inaccurate.

I understand the concerns that are triggered when the Fed announces a significant Treasury purchase program at a time when the fiscal situation is so challenging and unsettled. Be it the hyperinflations of Germany's Weimar Republic in the period between the two world wars; Hungary after World War II; or the more recent case of Zimbabwe, most of us have heard or read of extreme examples of countries that ended up creating big problems trying to finance government by printing money.

Generating government revenues via the printing press is a policy that is often referred to as "monetizing the debt." I think the emphasis in that sentence should be on the word policy. A policy is really a sort of rule—sometimes explicit, sometimes only implicit—that lays out a decision maker's objectives and how they are going to be attained. The objective of a policy of monetizing the debt is to create inflation as a means of lowering the burden of government debt by lowering the value of the debt and interest the government must repay in inflation-adjusted terms.

Monetizing debt is decidedly not the current policy of the Federal Reserve, at least not according to Federal Reserve Chairman Ben Bernanke. Speaking at a recent conference hosted by the Federal Reserve Bank of Atlanta, Chairman Bernanke was unequivocal: "We are not in the business of trying to create inflation."

So what business is the Fed in?

In short, the Fed's so-called dual mandate charges the FOMC with promoting sustainable growth and low and stable inflation. Though the economy is moving forward, it is doing so at a pace that is only slowly yielding job growth. This forward momentum has not yet proved robust or sustained enough to dent the unemployment rate.

More important, the economic landscape at the end of the summer was colored by the continuation of a declining inflation trend that was bleeding into expectations about the probability of deflation. In a still-recovering economy with very low interest rates, the emergence of deflation expectations would be a most unwelcome development that could seriously impede the prospect for continued recovery.

As Atlanta Fed President Dennis Lockhart has said, stabilizing inflation expectations is a key to policy success, and "managing inflation expectations requires following through with policy actions consistent with stated objectives—in this case ensuring that inflation trends remain in a desired zone. The FOMC's November decision should be seen in that light."

The policy represented by the November decision appears to be working. As markets came to expect the November announcement, price expectations that had been declining all summer began to stabilize and have now returned to pre-summer levels.

Could the policy be too successful? That is, there a risk that the policy will overshoot and replace declining inflation rates with too-high inflation rates?

There are, of course, always risks to action and inaction. Now that the FOMC's action has apparently mitigated the risk of a recovery-threatening disinflationary spiral, at some point it will be appropriate to turn attention to inflation risks. As President Lockhart recently commented, we at the Atlanta Fed are confident these decisions will be made independent of fiscal considerations.

The current focus is on rising commodity prices, and the Federal Reserve, including the Atlanta Fed, is watching those developments too.

As one of the 12 Federal Reserve Banks charged with bringing a real-time sense of the economy to the monetary policy process, the Atlanta Fed queries hundreds of contacts every month. In general, our contacts, while acknowledging some rising cost pressures, do not indicate they are likely to respond with price hikes of their own.

But we will keep asking, watching for signs that things are changing, and preparing in the event that a change in course is warranted.

And this vigilance is precisely the point. Intentions do matter, and President Lockhart has made his very clear: "Rest assured, should inflation begin to move above desired levels, I am confident the FOMC will work hard to keep it from getting away from us."

By Dave Altig, senior vice president and research director at the Atlanta Fed

 

Funny

A gas station owner in Mississippi was trying to increase his sales. So he put up a sign that read, "Free Sex with Fill-Up."

Soon a local citizen pulled in, filled his tank and asked for his free sex.

The owner told him to pick a number from 1 to 10. If he guessed correctly he would get his free sex.

The citizen, some would say redneck, guessed 8, and the proprietor said, "You were close.  The number was 7. Sorry.  No sex this time."

A week later, the same redneck, along with his brother, Bubba, pulled in for another fill-up.

Again he asked for his free sex.

The proprietor again gave him the same story, and asked him to guess the correct number.

The redneck guessed 2 this time.

The proprietor said, "Sorry, it was 3. You were close, but no free sex this time."

As they were driving away, the redneck said to his brother, "I think that game is rigged, and he doesn't really give away free sex."

Bubba replied, "No it ain't, Billy Ray. It ain't rigged. My wife won twice last week."

Funny

A man goes to see the Rabbi.  "Rabbi, something terrible is happening and I have to talk to you about it."

The Rabbi asked, "What's wrong?"

The man replied, "My wife is poisoning me."

The Rabbi, very surprised by this, asks, "How can that be?"

The man pleads, "I'm telling you, I'm certain she's poisoning me - what should I do?"

The Rabbi then offers, "Tell you what.  Let me talk to her, I'll see what I can find out and I'll let you know."

A week later the Rabbi calls the man and says, "I spoke to her on the phone for three hours. You want my advice?"

The man said yes and the Rabbi replied, "Take the poison."

Facebook

SAN FRANCISCO (Reuters) - Facebook trotted out an all-in-one messaging tool on Monday that pools users' email, instant and text messages, taking on Google Inc's and Yahoo Inc's popular email platforms.

Addressing speculation the world's largest social networking site was planning a "Gmail-killer," Facebook Chief Executive Officer Mark Zuckerberg said the new system will let users own "facebook.com" addresses, but stressed it did not stop at email.

It also lets users send instant and text messages in addition to standard email and Facebook notes, he said.

"This is not an email killer. This is a messaging system that includes email as one part of it," Zuckerberg told reporters at the swanky St. Regis hotel.

Zuckerberg, who said more than 350 million of Facebook's half-billion users now actively send and receive messages on his website, did not see communications being email-based in future.

While people will not stop using email immediately, more and more will shift to an integrated, cross-platform mode of communications such as Facebook, Zuckerberg argued.

More than 4 billion messages get sent everyday through Facebook. Its new messaging platform will incorporate a number of features, including an inbox devoted to a user's friends and contacts on Facebook, and another for other mail and messages.

Facebook and Google's intensifying rivalry is expected to play a crucial role in shaping the future of the Internet. The industry is closely watching their pitched struggle for Web surfers' time online, advertising dollars, and increasingly costly Silicon Valley talent.

(Reporting by Alexei Oreskovic and Edwin Chan; Editing by Gerald E. McCormick and Richard Chang)

2012

Democrats' Losses Could Grow in 2012
By Josh Kraushaar | Wednesday, November 10, 2010 | 06:00:13 AM

Photo: Alex Wong/Getty Images
Updated at 8:30 a.m. on November 10.
It’s something of a professional hazard to make predictions this far out before the next election. Witness Karl Rove’s anticipation early in the Bush years of a permanent Republican majority, or James Carville’s boast in early 2009 that Democrats would dominate the political landscape for the next 40 years – a prediction off by 38 years.
But there are some telltale signs of what 2012 is going to look like, and it doesn’t take a crystal ball to understand that the short-term trends look dismal for congressional Democrats. Even if Democrats turn their political fortunes around, they’re still likely to lose seats in the Senate and will be hard-pressed to make inroads in the House, thanks to factors entirely out of their control.
The numbers tell the story in the Senate: The president’s party will be playing defense, with 23 Democratic-held seats up for grabs. By comparison, only 10 Republican Senate seats will be in play, most in solidly Republican states. It’s the most lopsided disparity for any party since 1980, when Democrats lost 12 Senate seats.
And the map where all the top races are being contested is awfully daunting for Democrats. Of the 23 seats Democrats will be defending, eight are in Republican-friendly or battleground states: Nebraska, Virginia, Missouri, Montana, West Virginia, North Dakota, Ohio, and Florida.
Other Democratic senators, like Bob Casey (Pa.), Debbie Stabenow (Mich.), and Amy Klobuchar (Minn.) also could face competitive races if the environment doesn’t improve significantly for their party.
The only two states where Democrats look to have a fighting chance of picking up Republican Senate seats are Massachusetts (Scott Brown) and Nevada (scandal-plagued John Ensign). Even a Democratic landslide in 2012 would be unlikely to yield gains, given that most GOP senators up for reelection represent safely Republican states like Utah, Mississippi, and Texas.
There are already signs of strain among Democrats up for reelection in 2012. Sen.-elect Joe Manchin, D-W.Va., won his seat by trumpeting his differences with President Obama on such key issues as health care and cap-and-trade, and with a race for a full term just two years away, there’s no reason to believe Manchin is going to change his maverick tune any time soon. Sen. Jim Webb (D-Va.) hasn’t committed to running for a second term; if he retires, there isn’t much of a Democratic bench left in the Old Dominion, while former Sen. George Allen looks poised to run again for his old seat. (Paging Tim Kaine!)
Put simply, holding a Democratic majority at 53 seats would take a herculean effort, and even holding a bare majority would be an accomplishment. There’s a good reason why Majority Leader Harry Reid has been hard-pressed to find any one of his colleagues willing to chair the Democratic Senatorial Campaign Committee in 2012.
In the House, the Republican wave couldn’t have come at a better time for the ascendant party. The GOP now has unilateral control of redistricting in key battleground states for the upcoming election cycle. That will allow the GOP to protect many of their newfound majority-makers and redistrict other Democrats out of existence. And that’s on top of reapportionment. The states slated to gain House seats – Arizona, Florida, Georgia, Nevada, South Carolina, Texas, Utah, and Washington -- as a whole tilt in favor of Republicans. The ones projected to lose representation are predominantly Democratic: Illinois, Iowa, Louisiana, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, and Ohio.
The GOP’s massive gains in state legislatures mean they enter 2012 with as big an advantage in drawing districts as they’ve ever had. Many vulnerable Republicans will find themselves running in more favorable districts, while the party can expect to benefit from newly-created districts designed to their advantage.
Republicans fully control redistricting in 15 states, including the battlegrounds of Florida, Michigan, North Carolina, Ohio, Pennsylvania, Minnesota, and Wisconsin. They control the mapmaking for 193 House districts, compared to 44 for the Democrats.
The implications are significant for 2012. Take North Carolina, for example. It was a rare bright spot for House Democrats, who hung on to three of four contested seats despite the wipeout against the party in the South. Democrats still hold a 7-6 majority in the congressional delegation, thanks to a gerrymandered map drawn by state Democrats for generations.
That’s likely to change with Republicans winning control of the legislature for the first time in history. Reps. Mike McIntyre and Larry Kissell could easily find their careers in peril, if the new lines exclude African-American constituencies from their districts that have been crucial to their political successes.
Republicans have the ability to expand their congressional majorities in other battleground states. In Pennsylvania, unfettered control of redistricting will allow the GOP to draw a Democrat out of office. In Ohio, which will likely lose two House seats, Republicans will be able to better protect its five incoming freshmen, and probably will be able to force two Democrats (from the Cleveland area) to square off against each other.
Republican State Legislative Committee Executive Director Chris Jankowski estimated the GOP will gain between 25 and 30 additional House seats from the reapportionment and redistricting process alone, a number that makes it all the more difficult for Democrats to win back the seats necessary to retake the majority. Republicans already are slated to hold between 241 and 244 seats in the new Congress, their largest majority since 1946.
Adding insult to injury, Republicans effectively picked off nearly two dozen Blue Dog Democrats, many of whom had been entrenched in their seats. Of the 48 Democratic-held districts won by John McCain in the 2008 election, Republicans picked off 36 of them. In the past, Democrats' ability to consistently hold deeply conservative districts provided a crucial bulwark for the party's majorities.
Democrats aren’t likely to contest many of those seats again. Good luck electing a Democrat in the seats that Reps. Gene Taylor (D-Miss.), Ike Skelton (D-Mo.), or John Spratt (D-S.C.) currently hold, to name a few, especially if Nancy Pelosi remains the face of the House Democrats.
Pelosi’s decision to stick around as minority leader is another factor that bodes well for House Republicans protecting their majorities in 2012. Moderate Democrats, the kind necessary to take back a majority, are already fretting that her continued presence for the next two years will depress Democratic recruiting in swing districts, prevent Democrats from turning the page on a disastrous year, and fuel Republican fundraising (even as she’s a very effective fundraiser herself).
The Democrats empowering her return to leadership are the ones who hail from safe districts and don’t have to worry about getting reelected. Many defeated Democrats would like to make a comeback, but their paths will be tougher with Pelosi in charge. One Democratic campaign manager whose boss lost in a northeastern swing district says her disapproval rating was near 60 percent in the district, with her approval rating in the teens.
“Obama wasn’t the reason we lost. It was because of Pelosi,” the strategist said. “She was a turnout machine – for the other side.”
Two years is an eternity in politics. President Obama’s popularity is poised to rebound, and Republicans could certainly overreach now that they’re in charge of the House. But fundamentals also matter. And the structural changes to the House race map and the defensive posture of Senate Democrats portend a very difficult cycle for Democrats.

Afghan Update

Coalition, Afghan Forces Detain Numerous Insurgent Leaders

Compiled from International Security Assistance Force Joint Command News Releases

WASHINGTON, Nov. 9, 2010 - Coalition and Afghan forces have captured multiple Taliban leaders involved in enemy operations in Afghanistan in recent days, military officials reported.

Afghan and International Security Assistance Force security forces captured a Taliban leader who is believed to be responsible for supplying weapons and coordinating insurgent attacks, along with three of his associates, during an intelligence-driven overnight operation in Zabul province's Shah Joy district.

As the partnered force approached the targeted compound, they saw a bag thrown from a window and found it contained bomb-making materials.

Meanwhile, ISAF officials confirmed the capture during a Nov. 7 overnight operation of a senior Taliban leader who led attacks in Kandahar province's Dand and Panjwai districts. An associate also was detained.

In other operations:

-- In an intelligence-driven operation in Kandahar province last night, a combined force captured a key Taliban leader believed to responsible for insurgent networks in Kandahar City and the province's Panjwai district. He is the 15th senior Taliban leader captured in the province in the last month and is linked to multiple bombings in Kandahar City, officials said.

-- A combined force in Farah province detained several suspected insurgents yesterday while targeting the Taliban leader for the Bala Boluk district, who reportedly has claimed responsibility for numerous attacks against civilians and against Afghan and coalition forces. Intelligence reports led the partnered force to a compound in the Bakwah district, where the force detained the suspects and found an automatic weapon.

-- In Paktika province's Orgun district last night, a partnered force acting on intelligence information detained a suspected insurgent last night while searching for a Haqqani terrorist network leader who has coordinated attacks against the Salerno and Chapman forward operating bases in Khost province.

-- Also last night, a combined force in Khost province found machine-gun ammunition and detained several people for questioning while looking for a Haqqani leader known for coordinating suicide-vest and vehicle-borne bomb attacks in the Sabari district.

-- In Logar province last night, a partnered force detained a suspected insurgent while looking for a senior Taliban leader operating in the Baraki Barak and Charkh districts.

-- Acting on intelligence information and tips from local residents, a combined force in Helmand province arrested a wanted senior Taliban leader yesterday. The suspect reportedly led about 300 fighters in the area and was appointed as leader of all Taliban forces in and around Marja. The force entered the targeted compound and detained at least 10 suspected insurgents without incident, but then became aware of four armed insurgents setting up an ambush to attack them as they departed. The force called in an airstrike that killed all four.

-- In Logar province's Pul-e Alam district yesterday, a partnered force acting on intelligence reports and local residents' tips found 220 pounds of homemade explosives, seven 82 mm mortar rounds electrically primed to explode, five Claymore mines wired to explode, a 60 mm mortar round and an anti-tank mine.

-- A Nov. 7 truck search by a coalition patrol in Helmand's Reg-e Khan Neshin district yielded more than 4,000 pounds of ammonium nitrate. The banned fertilizer is used in making roadside bombs. The three Afghan civilians in the truck were detained.

-- Multiple intelligence sources led to the arrest yesterday of a suspected weapons trafficker at Kabul International Airport. Afghan forces discovered the suspect had boarded an airplane which had taken off and was destined for Saudi Arabia. Authorities ordered it back to the airport, and upon its arrival, Afghan security forces boarded the plane. The suspect identified himself and was arrested without incident. As part of the Haqqani network, he was wanted for supplying weapons and ammunition used in attacks against Afghan and coalition forces. He also was known to have participated in numerous bombing attacks. Three other suspects traveling with the wanted man were detained, one of whom was wanted on an Afghan government warrant.

In other news from Afghanistan, ISAF officials said that despite senior Taliban leadership claims of protecting civilians, insurgent fighters were responsible for more than 100 Afghan civilian deaths and more than 200 civilian injuries last month.

"The insurgency continues to exhibit striking hypocrisy between their stated objective to protect civilian lives and their actions throughout Afghanistan," said Navy Rear Adm. Vic Beck, an ISAF spokesman. "Their message simply does not match the reality that every day, insurgents are deliberately killing, injuring and intimidating Afghan civilians."

Recent incidents of insurgent violence against Afghan civilians include:

-- Insurgents executed a truck driver Oct. 1 after he left an ISAF combat outpost in Kunar province's Darah-ye Pech district.

-- A series of explosions near an Afghan police checkpoint resulted in eight Afghan children killed and 23 Afghan civilians injured Oct. 5 in Kandahar province's Kandahar district. Ten of the injured civilians were children.

-- Two religious leaders in Kandar province were assassinated in mosques. A member of the Ulema religious council was killed Oct. 4, and a member of the Kandahar religious council was killed Oct. 10.

-- Ten civilians were killed and 10 others were injured Oct. 19 in Nimruz province's Khash Rod district when they inadvertently detonated an insurgent-planted roadside bomb.
 

Lending Practices

The National Association of Realtors® (NAR) used the forum of its 2010 Conference in New Orleans to urge the lending industry to make things easier to qualified buyers to become homeowners. NAR appealed primarily to the public sector, i.e. FHA, Fannie Mae, and Freddie Mac, which it said account for more than 90 percent of the mortgage market, saying that lenders refuse to make loans without assurance that FHA will insure them or the GSEs will buy them.

Vicki Cox Golder, NAR President, said that the government agencies are impairing their own mission to provide mortgage liquidity to home buyers with unnecessarily restrictive limits on the availability of credit. "These policies are delaying recovery both of the housing market and the larger economy."

"Under current practices, many would-be home buyers who could responsibly, affordably become home owners are unable to do so," said Golder. "NAR wants to ensure that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream."

NAR also called on FICO Corp. and private lenders to amend certain rules on the utilization of credit, how negative credit scores will affect future home purchases, and to change how they report and treat loan modification and payment plans. The Association also expressed its intentions to work with all public and private parties to encourage them to assess their credit policies on an ongoing basis.

Funny

An Arizona couple, David and Samantha Ribbon, had 9 children.

They went to the doctor to see about getting David "fixed". The doctor gladly started the required procedure, and then suddenly asked them what finally made them make that decision. "Why, after 9 children, would you decide to do this?"
David replied that they had read a recent article about 1 out of 10 children being born in the United States probably ending up working in the mortgage services sector, and they just couldn't afford to take that chance.

Beige Book

October 20, 2010

Summary

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Summary
Districts
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Full report

Prepared at the Federal Reserve Bank of Dallas based on information collected on or before October 8, 2010. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.
Reports from the twelve Federal Reserve Districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October.

Manufacturing activity continued to expand, with production and new orders rising across most Districts. Demand for nonfinancial services was reported to be stable to modestly increasing overall. Consumer spending was steady to up slightly, but consumers remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items. New vehicle sales held steady or rose during the reporting period; sales of used automobiles were strong as well. Activity in the travel and tourism sector picked up.

Housing markets remained weak with most Districts reporting sales below year-ago levels. Reports on prices suggested stability, however. Conditions in the commercial real estate sector were subdued, and construction was expected to remain weak. Lending activity was stable in most Districts. Agricultural conditions were generally favorable, and above-average yields were expected in most reporting Districts. Activity in the energy sector continued to expand.

Input costs, most notably for agricultural commodities and industrial metals, rose further. Shipping rates increased, and retailers in some Districts noted rising wholesale prices. However, prices of final goods and services were mostly stable as higher input costs were not passed on to consumers. Wage pressures were minimal.

Manufacturing
Manufacturing activity continued to expand, and several Districts reported gains in production or new orders across a wide range of industries. The only exceptions were the Philadelphia and Richmond Districts, where activity softened compared with the previous reporting period. Exports boosted manufacturing activity according to contacts in the Cleveland, Chicago, and Kansas City Districts. Producers of semiconductors and other high-tech equipment saw continued growth in sales in the Boston, Dallas, and San Francisco Districts. Auto production rose strongly in the Cleveland and Chicago Districts. Metals producers in the Chicago District reported that September sales were the strongest year-to-date, while contacts in the Minneapolis, Dallas, and San Francisco Districts saw only modest gains. Shipments of steel in the Cleveland District continued to be buoyed by demand from energy-related, automotive, and heavy equipment industries. Food processors in the Philadelphia and Dallas Districts noted solid demand for their products, while a few contacts in the St. Louis and Minneapolis Districts reported plans to expand existing operations.

Refiners in the Dallas and San Francisco Districts noted a slowdown in activity and rising inventories. Demand for construction-related products remained weak, and reports on activity in the wood products and furniture manufacturing industries were mixed.

Hiring at manufacturing firms remained sluggish. Inventories were generally light or in line with orders. Future capital spending plans appeared to be limited, except for in the St. Louis District where several manufacturers reported plans to build new plants or expand operations. Manufacturers' assessments of future factory activity were optimistic in the New York, Philadelphia, Chicago, and Kansas City Districts, where contacts expect business conditions to remain positive or to improve in coming months.

Nonfinancial Services
Activity was stable to modestly increasing for most professional and nonfinancial services. Demand for information technology (IT) services remained solid. IT firms in the San Francisco District noted recent growth was spurred by business investment to enhance production efficiency. In the Minneapolis District firms noted solid demand for IT services from corporate clients.

Accounting activity improved slightly, spurred by merger and acquisition work. Contacts in the Boston and Dallas Districts noted increases in consulting activity since the last report. Healthcare consulting picked up as businesses responded to regulatory changes following healthcare reform. Appraisal and title companies noted continued strength during the reporting period, and there were some reports from architectural firms that activity had picked up.

Demand for transportation services appears to have slowed, although reports were mixed. Freight companies in the Cleveland District noted steady to declining volumes over the past six weeks, and Kansas City's report said transportation firms saw unexpected weakness. Rail companies in the Atlanta District reported positive, but slower growth of automobile and industrial goods shipments, while port activity in the Richmond District was mixed. Dallas' report said intermodal and railroad cargo volumes edged up, but growth in international container trade volumes flattened, and small parcel shipping volumes declined in September. San Francisco reported a pickup in demand for trucking services.

Consumer Spending and Tourism
Retail spending was flat to moderately positive in most Districts, with the exception of the Richmond and Atlanta Districts, which noted declining traffic and sales. Contacts in the Kansas City District noted sales were stronger than expected; back-to-school spending boosted sales in the Philadelphia and Dallas Districts. Retail spending grew modestly in the Minneapolis and San Francisco Districts, and was flat in the Cleveland, Chicago, and St. Louis Districts. Retailers said consumers are slowly regaining confidence, but remain price-conscious and were largely limiting purchases to necessities and nondiscretionary items. There were reports, however, of a pickup in sales of moderately priced household goods in the Philadelphia, Dallas, and San Francisco Districts, and gains in apparel sales were reported in the Atlanta and Chicago Districts. Inventories were at desired levels. Looking ahead, retailers in several Districts expected modest sales growth through year-end. In particular, some contacts in New York planned to add more holiday staff than last year.

Most Districts reported that sales of new vehicles held steady or rose during the reporting period. Sales of used vehicles were strong as well. Inventories remained tight, particularly for popular vehicles. Used car prices rose, reflective of solid demand and lean inventories. Respondents' outlooks were for slight growth in sales through year-end.

Reports from most Districts pointed to continued improvement in travel and tourist activity. The Richmond District reported that tourist activity strengthened, and contacts in San Francisco noted that growth in business travel and convention activity led to rising visitor counts and hotel occupancy rates. Hotel occupancy for popular tourist destinations in the Minneapolis and Kansas City Districts also rose during the reporting period and was above year-ago levels. New York's report noted that hotel occupancy rates remained high in Manhattan, but October bookings were somewhat weaker than expected. Atlanta noted that tourist activity in some areas was still being affected by the Gulf oil spill, but losses incurred in these areas were offset by increased activity in Northeast Florida, Georgia, and Tennessee and respondents' outlooks for the remainder of the year were positive. Airline traffic was stable to slightly down according to the Dallas District, but conditions were much better than a year earlier thanks to strength in business travel. Restaurants and food service contacts in the Kansas City and San Francisco Districts also noted slight increases in activity.

Real Estate and Construction
Housing markets remained weak. Most District Beige Book reports suggested overall home sales were sluggish or declining and were below year-ago levels. There were scattered reports of some improvement in sales in a few Districts, however. Philadelphia noted an increase in sales of existing homes, and Richmond, Kansas City, and Dallas reported upticks in sales of higher-priced homes. Sales reports were mixed in the St. Louis and Minneapolis Districts, with increases in some metro areas and declines in others. Home inventories were elevated or rising according to most District reports. Home prices were generally stable since the last report, although Kansas City noted a decrease in prices, and New York and Minneapolis reported declines in some metros. Homebuilders in the Atlanta District reported downward price pressure and expressed concern about rising foreclosures and bank-owned properties coming to market.

Single-family construction activity was at very low levels, but had improved somewhat in the Chicago, St. Louis, and Kansas City Districts. Atlanta reported a softening of construction activity overall, and Minneapolis said single-family building activity was mixed across metros. Builders in the Dallas District said they had pulled back on starts considerably after the run-up earlier in the year.

Respondents' outlooks suggested sales and construction would remain subdued through year-end. There were some reports that tighter credit standards for buyers and small builders, along with general economic uncertainty, were stalling activity.

Conditions in the commercial real estate sector remained subdued. Reports suggested rental rates continued to decline for most commercial property types. The one exception was the apartment sector, where higher leasing activity led to fewer concessions, most notably in Manhattan. Office, industrial and retail rental markets remained weak, although there were a few reports of slight increases in leasing activity in the Richmond, Chicago and Dallas Districts. Commercial property sales were low overall, but contacts in the Chicago and Dallas Districts said investment demand for distressed commercial properties remained strong. Given lackluster demand for commercial space, nonresidential construction activity was limited to mostly public projects, according to District reports. Industry contacts appeared to believe that the commercial real estate and construction sectors would remain weak for some time.

Banking and Finance
Lending activity was stable at low levels across most Districts, but there were some reports that demand picked up slightly. The Richmond and Dallas District reports noted increased lending activity, and Chicago said credit conditions continued to improve in the District. Reports from Richmond and Dallas suggested that competition for quality loans had picked up. Some contacts noted there was pressure to price loans slightly more aggressively.

Demand for commercial and industrial loans remained weak as businesses continued to postpone capital spending plans because of economic and public policy uncertainties. However, merger and acquisition lending picked up in a few Districts. Commercial real estate lending remained subdued and loan standards were still tight.

On the consumer side, lending was sluggish, but there were scattered reports of improvement. Contacts in the Cleveland and Dallas Districts reported growth in auto loans. Residential mortgage lending and refinancing activity increased in several Districts, and San Francisco reported an increase in demand for nonconforming mortgage loans.

Credit quality changed little on balance. New York reported a decrease in delinquency rates on consumer loans, however, and overall quality improved in the Philadelphia and Richmond Districts, according to reports.

Agriculture and Natural Resources
Agricultural conditions were mostly favorable. Fall harvest was generally ahead of its normal pace, and above-average yields were expected in most reporting Districts. There were a few exceptions, however. Widespread rains flooded farmland and delayed harvests in the Minneapolis District while dry weather affected some crops in the Atlanta and St. Louis Districts. Unfavorable weather conditions and resulting crop losses abroad continued to boost export demand for U.S. agricultural products. Commodity prices strengthened further, boosting optimism among producers in the Dallas District and spurring higher cropland values and capital spending on agricultural equipment in the Kansas City District. Additionally, corn producers in the Chicago District were holding on to recently harvested corn in hope of even higher prices.

The energy sector continued to expand, with activity rising further in the Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts. The Minneapolis District reported that mines were operating near capacity, and coal production was robust in the Cleveland and Kansas City Districts. Firms in the Dallas District noted strong domestic land-based drilling and a pickup in overseas demand had offset losses resulting from the moratorium in the Gulf of Mexico. The Cleveland and Kansas City Districts reported that strong activity had prompted hiring and an increase in capital spending at some energy firms. Respondents' outlooks were mostly positive, although low natural gas prices had dampened the outlook for producers in the Cleveland and Dallas Districts.

Prices and Wages
Input costs rose slightly, but prices of final goods and services were stable across Districts. Upward pressures on agricultural commodities and industrial metals prices were reported by several Districts. In addition, shipping costs increased in the Philadelphia, Atlanta, and Dallas Districts, and retailers in the Philadelphia and Chicago Districts reported higher wholesale prices. Pass-through of rising input costs to final prices remained limited although there were scattered reports of increases. Prices of petrochemicals rose in the Dallas District, and a few manufacturers in the Boston District said recent price increases on some of their products had been successful. Some manufacturers in the Atlanta District noted rising costs of materials and employee benefits would likely be passed on to customers in the near-term, and several manufacturers in the Cleveland District announced plans to raise product prices in an attempt to recover rising costs. In response to rising food costs, food producers in the Dallas District reported plans to raise prices, and menu prices at restaurants rose modestly in the Kansas City District.

Wage pressures remained minimal. Most District reports found little evidence of wage increases in general. There were widespread reports across Districts that firms anticipated increased costs of employee benefits as a result of healthcare reform.

Hiring remained limited, with many firms reluctant to add to permanent payrolls given economic softness. Reports from staffing firms were mixed. Staffing firms in the New York and Dallas Districts noted a slowdown in demand for their services, and contacts in the Cleveland District said new job openings declined. Richmond's report noted demand for temporary workers picked up slightly since the last report, and staffing contacts in the Philadelphia District said clients were adding positions as workloads increased. The Atlanta report noted a preference for increasing staff hours and using temporary help rather than hiring additional full-time staff.

Difference Between the North and the South

What is the difference between the North and the South?

The North has Bloomingdale's; the South has Dollar General.
The North has coffee houses; the South has Waffle Houses.
The North has switchblade knives; the South has .45's.
The North has double last names; the South has double first names.
The North has Indy car races; The South has stock car races.
The North has Cream of Wheat; the South has grits.
The North has green salads; the South has collard greens.
The North has lobsters; the South has crawfish.
The North has the rust belt; the South has the Bible Belt.

Hope

Republicans Get Good News in Polls as They Close the Ballot Gap on Democrats
March 18, 2009 12:14 PM ET Michael Barone

By Michael Barone, Thomas Jefferson Street blog

Republicans have the lead in the generic ballot in the Rasmussen poll and are running even in that question in the latest NPR poll. The Republican lead in Rasmussen is 41-39 percent, with Democrats at the low end of the 39-50 percent range they've been over the past year and Republicans at the top end of their 34-41 percent range.
Is this just statistical noise? Quite possibly. But if I were chairman of the NRCC I would sure be looking at targeting a whole lot more races than I had imagined I would three months ago.
Rasmussen tells me that he has been tracking this question since January 2004 and that "Occasional polls may have shown the Rs ahead, but it's been a long time." He agrees that this may just be statistical noise, but notes that the gap between the parties has closed since the November 2008 election, and that that is more the result of the Democratic number sagging than of the Republican number rising.
The NPR poll similarly finds party identification today at 42-42 percent, as compared to 51-40 percent Democratic in October 2006. Note that this also represents a decline for Democrats, not a gain for Republicans.
I think there's a danger for Republicans in over reliance on these numbers. That if they just hang back and criticize Obama or the Democrats, then everything will be all right again. That's one possible scenario, but far from the only one, or even the most likely. If in war the enemy gets a vote, in politics the other party gets a chance to do things differently too, as Bill Clinton did successfully (for him, and almost for his party) in 1995-96.
Republicans need to present alternative public policies and their vision for the future. Equality in the generic vote is not enough if most people scorn both parties. Which seems to be about where we are now.

Obama Health Care

Britain apologises for 'Third World' hospital

Mar 18 01:27 PM US/Eastern
The British government apologised Wednesday after a damning official report into a hospital likened by one patient's relative to "a Third World" health centre.
Stafford Hospital in central England was found to have appalling standards of care, putting patients at risk and leading to some dying, according to a report on Tuesday.
Between 400 and 1,200 more people died than would have been expected in a three-year period at the National Health Service (NHS) hospital, according to an investigation by the Healthcare Commission watchdog.
"We do apologise to all those people who have suffered from the mistakes that have been made in the Stafford Hospital," said Prime Minister Gordon Brown, questioned on the matter at his weekly grilling in the House of Commons.
Receptionists with no medical training were left to to assess patients arriving at the hospital's accident and emergency department, the report found.
Julie Bailey, whose 86-year-old mother Bella died in the hospital in November 2007, said she and other family members slept in a chair at her bedside for eight weeks because they were so concerned about poor care.
"What we saw in those eight weeks will haunt us for the rest of our lives," said the 47-year-old. "We saw patients drinking out of flower vases they were so thirsty.
"There were patients wandering around the hospital and patients fighting. It was continuous through the night. Patients were screaming out in pain because you just could not get pain relief.
"It was like a Third World country hospital. It was an absolute disgrace."
The British premier, who has trumpeted huge increases in spending on the NHS since his Labour party took office in 1997, said there were "no excuses" for what happened to patients at the hospital.
Health Secretary Alan Johnson said: "I apologise on behalf of the government and the NHS, for the pain and anguish caused to so many patients and their families by the appalling standards of care at Stafford Hospital.
"Patients will want to be absolutely certain that the quality of care at Stafford Hospital has been radically transformed, and in particular, that the urgent and emergency care is administered safely," he added.
Copyright AFP 2008, AFP stories and photos shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium

My Best Friend

This is a story about the MAN I am fond of calling my best friend. We do not talk everyday nor every month. But when we do talk it is like we are young boys again.

I would like to start in the beginning...I had just moved to Georgia and I was 15 years old and going through a tough time because I had just moved in with my lovely Aunt Jean and Uncle Henry who took me in while my parents were going through a messy divorce. I met this guy who could not have been more different in a lot of ways than me. He was one of those guys that everyone likes and I was a shy guy who had a hard time making friends. He must have sensed that and he reached out to me. He had the most wonderful family with two great Sisters and two great parents. His life was the complete opposite of mine. How we ended up being good friends I will never know except that providence brought us together.

We spent a great deal of time together in our work, school and interest in music. Then he had a major change in his life and he met the most wondeful girl Lisa and a few years later they got married. At this time my friend John started going through a transformation that was amazing to watch. I think he was a guy who always was a believer in Christ but with the help of Lisa he took that belief into action. He would volunteer for as much involvment in the Church as I think he could fit into his busy life while trying to raise a young family and make a decent living at the same time.

As John got older he started doing even more volunteer work. He has made numerous trips abroad for mission work and has raised the two most lovely children I think I have ever met. It is unusual to have a friend that not only do you like but you look up to as a true hero. John Schilling is in fact a hero of mine. There are very few people in life that you meet that have the characteristics of honesty and morality that as a peer you wish you could be as good as they are. I do not know how he became the Man he is but I am truly honored to call this Man my best friend.

Alec Baldwin - Supply Sider?

Alec Baldwin, Right on Taxes
By Mark Goldblatt

In one of the more ironic interviews in recent memory, Alec Baldwin last week told local cable news host Dominic Carter that Governor David Paterson should keep the current tax incentives for film and television companies that set up shop in New York. "I'm telling you right now," the actor warned, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television production is going to collapse, and it's all going to go to California."
Currently, film and TV companies get a 30% tax break on production costs for shows shot in New York. Baldwin's point was that if you take away that incentive -- in effect, if you raise the tax rates on these companies -- you're going to wind up with less actual tax revenues coming into the state's coffers. A lower percentage of something is still more than a higher percentage of nothing.
What the uber-liberal Baldwin has lately wrapped his mind around is the message conservative economists have preached for decades: Hiking the government's cut of taxpayers' earnings doesn't necessarily mean hiking the total tax dollars the government is taking in.
It's an idea everyone understands, intuitively. Once you start tinkering with tax rates -- and this goes for any kind of tax -- you run the risk of affecting people's behavior. Suppose, for example, New York Mayor Michael Bloomberg and the City Council decided to address the city's dire budget deficit by raising the sales tax on goods and services purchased in the five boroughs from the present 8.35% to 99%. Sounds logical, on paper. Think of all the extra money the city would rake in!
Except we all know what would happen. Consumers would immediately stop buying stuff in the city. They'd shop in New Jersey or Long Island or Westchester County instead. Raising the sales tax from 8% to 99% would more likely bankrupt the city than close its budget shortfall. On the other hand, if you raised the sales tax to 9%, you probably wouldn't affect people's behavior very much -- and you might well wind up with greater revenue. But when it comes to tax increases, there's always a point of (literally) diminishing returns.
If Baldwin has had his moment of clarity, we can only hope that President Obama will soon follow suit-- since the relationship between tax rates and tax revenues seems to be a genuine intellectual blind spot for him. During an April 2008 presidential debate, moderator Charlie Gibson pointed out to candidate Obama -- who had proposed raising the tax rate on capital gains from 15% to as high as 28% -- that when the capital gains tax rate had been raised, during the 1980s, the government collected less money, and when it had been lowered, first by Bill Clinton and then George W. Bush, the government collected more money. Obama's response? "I would look at raising the capital gains tax for purposes of fairness."
Cutting off your nose to spite your face may, under certain circumstances, be fair. But it's always foolish.

Israel

Power Line Blog: John Hinderaker, Scott Johnson, Paul Mirengoff

The shape of Benjamin Netanyahu's coalition government has become clear; it will be "right wing." Netanyahu originally hoped to bring in Tzipi Livni and the supposedly centrist Kadima party. But Livni refused to join, citing her commitment to negotiating a "two-state solution" with Palestinians.
Livni may have been acting on principle. Or she may have been hoping to force her arch-rival to form a government that both she and anti-Israelis throughout the world can demonize.
Netanyahu next approached the left-wing Labor party. He was hamstrung, however, by the demands of his largest coalition, Israel Beiteinu, which outpolled Labor in February's election. Israel Beitneinu insisted on the Foreign Ministry (for its leader Avigdor Lieberman) and the Justice Ministry (for Daniel Friedmann who currently holds the post).
The selection of Friedmann apparently meant that Labor would not join the government. But Netanyahu still hoped to bring Labor's leader, former Prime Minister Ehud Barak, into his government as a "professional appointment" without his party. Barak seemed interested, but the members of his party were adamantly opposed, and Netanyahu has reporedly given up on this prospect.
Thus, Israel will not have a "national unity" government. In the case of Kadima, the party leader stood in the way. In the case of Labor, the party leader seemed willing, but not the party.
Israel, then, looks to be returning to something like its traditional model, in which the two main factions are a leftist party and a party of the right. The Kadima ploy, a party that attempted to occupy a middle ground, may have run its course. The party itself remains, but its leader has lost any claim to being in "the middle."
This is a victory for clarity. How Netanyahu's coalition will fare is another question

Japan Economics

POWELL: Avoid Japan's mistakes
Benjamin Powell

Those who think the $787 billion "stimulus" bill will chase the blues from the economy should look at Japan's experience in the 1990s, where a succession of interest-rate cuts and Keynesian spending initiatives did little but prolong the downturn. The result was a decade of lost growth.
The United States is facing a financial crisis remarkably similar to the one that struck Japan. We would be wise not to repeat the same mistakes. In both cases, low interest rates helped fuel a financial bubble and inflate stock and real estate prices. The bubbles eventually burst, pummeling stock and real-estate values.
So far the magnitude of the U.S. recession pales in comparison to Japan's. Japan's real estate prices plummeted nearly 80 percent from 1991 to 1998. The Nikkei stock market index fell approximately 70 percent. Much of the contraction occurred in the years following the initial crisis as one government initiative after another failed to revive the economy.
Japan tried decreasing interest rates, bailing out and nationalizing banks, and enacting multiple fiscal stimulus packages. Nothing worked; and there's nothing to indicate similar measures will work better today.
The Japanese adopted fiscal stimulus bills early in the crisis. Between 1992 and 1995 the Japanese passed six different stimulus packages totaling 65 trillion yen. The average yearly stimulus amounted to a little more than 3 percent of the total Japanese gross domestic product (GDP). The nearly $800 billion U.S. stimulus bill amounts to about 6 percent of GDP.
Yet bigger is not better. In 1998, Japan's stimulus effort amounted to about 8.5 percent of GDP. The results were negligible.
The Japanese were a little slower to cut interest rates. By the mid-1990s, however, the official discount rate, or the rate at which financial institutions borrow from the central bank, was down to 0.5 percent. It reached zero a few years later. The U.S. Federal Reserve has been quicker to act. The federal funds rate - the rate at which banks lend to other banks - already is down to near zero percent. But the results are the same: nada.
Washington already has approved $700 billion to bail out ailing banks - and the administration is getting ready to ask for more. Large-scale bank bailouts and nationalization didn't occur in Japan until 1998 and 1999. And when the Japanese finally did step in to bail out their banks the economy responded - with the two worst years of economic decline during the entire troubled decade.
America's move to act swiftly and boldly misses the point. Bank bailouts and fiscal stimulus bills don't work because they strive to maintain the status quo. But the status quo is the problem and exactly what needs to be corrected.
The U.S. housing bubble drew too many workers and too much capital into construction and related industries. So funding public works projects to keep those companies in business is the wrong solution.
Like the Japanese, President Obama is stressing the benefits of infrastructure spending in his proposed stimulus package. He recently boasted, "My plan contains the largest investment increase in our nation's infrastructure since President Eisenhower created the national highway system half a century ago." In response, Caterpillar Corp, a manufacturer of heavy construction equipment, promised it would eventually rehire some of the 22,000 workers it had laid off, though more short-term layoffs were possible.
To achieve long-term economic recovery, market forces, not political forces, need to direct capital and labor to their most productive uses.
"Stimulus" bills that emphasize public works and infrastructure merely prop up the overexpanded construction industries. Yet it these very same businesses and industries that most need to shed workers and contract before recovery can occur. When acts of Congress delay layoffs and restructuring they also delay recovery.
As painful as it might be in the short term, the United States economy would be better served if we allowed the recession to run its course. Unemployment would surely rise and there would be considerable short-term pain. But in the end, capital and labor would be reallocated to other industries and uses, correcting the excesses of the bubble. That would help the economy begin growing again.
Benjamin Powell is a research fellow at the Independent Institute, Oakland, Calif., and an assistant professor of economics at Suffolk University in Boston. He is co-editor of the forthcoming book, "Housing America: Building Out of a Crisis."