Newsweek: Populist Rage

Kazin, an author and professor of history at Georgetown University, writes that as Congress and President Obama rush to balance solidarity with a new wave of populist anger alongside the need for smart policy during a crisis, “they might reflect on how well previous politicians fared at the task. History does not repeat itself. But sometimes it does hum a familiar tune.” Kazin’s essay is one of several that make up the March 30 cover package “The Thinking Man’s Guide to Populist Rage” (on newsstands Monday, March 23). The package examines how populist rage, while it can be cathartic, can also lead to bad decisions. But it can also present opportunity.

Author Rick Perlstein writes that populist anger in America is the anger of dispossession. “That’s how most Americans are thinking now about the bonuses paid to feckless financial engineers,” Perlstein writes, adding that we “do not like to reward those who do not produce.” He writes that the meltdown is complex as is the decision making. But if it happens only in “antiseptic back rooms, government experts negotiating with corporate experts, proud to tune out the public’s righteously simplifying indignation, those policies will fail… Take away taxpayers’ sense of ownership stake in an issue (especially, as with AIG, when taxpayers literally own the company) and their rage will not go away. It festers … And that’s when the ‘bad’ kind of populism — the hateful kind; the violent kind; the demagogic kind — can flourish.”

Newsweek Contributing Editor Robert J. Samuelson writes that great reform waves often proceed from scandals and hard times and that the outcome of the present populist backlash may not be benign. “The parade of big companies to Washington for rescues, as well as the high-profile examples of unvarnished greed, has spawned understandable anger that could veer into a vindictive retribution… If companies need to be rescued from ‘the market,’ then why shouldn’t Washington permanently run the market? That is a dangerous mindset. It justifies punitive taxes, widespread corporate mandates, selective subsidies and more meddling in companies’ everyday operations.”

Author Robert H. Frank writes that anger over the AIG bonuses is spilling onto a broader range of targets. “And unless we’re careful, we’ll shoot ourselves in the foot. Even before AIG’s moment in the spotlight, angry populists had begun calling for executive pay caps at 20 to 25 times the average American worker’s salary. If applied to the financial-industry executives who steered the economy into the ditch, such caps would be defensible.” There are also many executives in other industries whose pay, at least in hindsight, was vastly greater than any reasonable measure of their value added. “Yet any broader effort to cap executive salaries would do more harm than good.”

Chapman University presidential fellow Joel Kotkin writes that populism is far from dead and “represents a force that could shape our political future in unpredictable ways… The critical issue facing the new administration is finding useful ways to channel this disenchantment.” He writes that populist rage creates the political support for taking far bolder steps against Wall Street. “A good first step would be to allow the TARP – backed giant banks to come under some sort of federal control, or bankruptcy process, effectively wiping out the holdings of the financial malefactors and decimating any hopes for future bonuses.”

Former governor of New York, Eliot Spitzer, writes that “anger-fed populism now is no better a policy compass than libertarianism masquerading as capitalism was during the Bush administration. This may become evident all too quickly as public rage — generated by the catastrophic risk-taking of many Wall Street traders — is fanned by Washington legislators desperate to make up for their own decade of neglect.” He writes that the economic cataclysm we are living through now is the consequence of 30 years of intentional destruction of the rules needed to keep capitalism on track. “Just as democracy needs rules or it descends into anarchy, so capitalism needs rules to guide the behavior that becomes wealth creation. What we should be seeking, and what has not emerged from the cacophony of Washington, is a principled guide to the intersection between government and the market.”

Read all the essays at online at the Newsweek site:

• Michael Kazin essay
• Rick Perlstein essay
• Robert J. Samuelson essay
• Robert H. Frank essay
• Joel Kotkin essay
• Eliot Spitzer essay

In all the discussion and bitching about AIG there is a strong undertone of “we need to get revenge on these guys”.  I can understand that desire but I think there are many people who are not really clear on why the US government felt that propping up AIG was money well spent.

The blog post excepted below by Felix Salmon explains in clear and simple terms exactly why in this case, the best solution to a problem is to throw money at it.

Why AIG Wasn’t Allowed to Fail

Felix Salmon

Justin Fox wonders whether we should have just let AIG fail — or at least the holdco and the AIGFP subsidiary. They certainly deserved to fail. So why did we bail them out?

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Here’s the fear: AIG goes bust, and can no longer make good on the promises it made when it said that it would pay out on a CDS contract in the event that a certain credit defaults. Default protection sold by AIG, in other words, becomes worthless. Now let’s say you’re a CDS desk at, say, JP Morgan. You’re buying and selling default protection all the time, and so long as the amount you’ve bought, on any given credit, is equal to the amount you’ve sold, you reckon that you have no net exposure.

The minute that AIG fails, everybody else’s net position alters substantially, and in a very unpredictable way. The protection that JP Morgan bought from AIG is worthless, while the offsetting protection that JP Morgan sold to some hedge fund remains outstanding. So JP Morgan now has a large position it never wanted.

Now there’s a good chance that JP Morgan will have hedged its counterparty risk to AIG — but that doesn’t make the risk go away, it just shunts it elsewhere in the financial system. And the web of connections between the thousands of counterparties in the CDS market is so complex that no one really has a clue who would have ended up holding the multi-billion-dollar bag. All those AIG losses which are currently being borne by the government wouldn’t have disappeared if AIG had failed: they would simply have turned up somewhere else in the financial system.

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Remember that what regulators were most worried about at the time was systemic risk. Whether or not AIG deserved the money was pretty much beside the point: the key thing was that if it didn’t get the money, the entire global financial system would be put at risk of collapse. In which light, the cost of the AIG bailout looks positively modest, compared to its benefit.

via Why AIG Wasn’t Allowed to Fail – Finance Blog – Felix Salmon – Market Movers – Portfolio.com.

With oil prices dropping down below $45USD a barrel its easy to forget the impact of $100USD+ prices of just eighteen months ago.   People were driving less and trading in their gas guzzling SUVs for more fuel efficient vehicles. Now that prices have come down there is far less pressure on American’s to use less petroleum. Today, Securing America’s Future Energy (SAFE) President and CEO Robbie Diamond issued the following statement today in response to the release of government data showing that the 2008 trade deficit for petroleum and refined products was more than $380 billion, representing more than 56 percent of the entire national trade deficit:

“This week, we once again have been presented with clear and compelling evidence of the tremendous threats posed by our dependence on petroleum, most of it imported. Petroleum and petroleum products represented more than $380 billion of our total $677 billion trade deficit in 2008. In other words, our addiction to oil accounted for more than 56 percent of our entire national trade deficit. This is an unprecedented and unsustainable transfer of wealth to other nations, many of which are hostile to American interests.

“In the long term, the only way to significantly and permanently reduce our oil imports is to significantly and permanently reduce the amount of petroleum we consume, primarily through long-term electrification of the transportation sector. In the meantime, it is crucial that Congress and the president safeguard our economy and national security. Improving fuel efficiency standards is one way to do this. Another vital step, which will reduce our trade deficit and strengthen the dollar, is to take affirmative steps toward the responsible, safe expansion of domestic oil and natural gas production. Ending our dependence on oil is a matter of economic and national security, and we cannot wait any longer.”

World Oil Expenditure as a Percent of World GDP

In September, SAFE’s Energy Security Leadership Council — a distinguished group of business executives and national security leaders led by General P.X. Kelley (Ret.), 28th Commandant of the Marine Corps, and Frederick W. Smith, Chairman, President and CEO of FedEx Corporation — released A National Strategy for Energy Security, a comprehensive set of solutions to the very real threats posed by our nation’s dependence on oil.

The National Strategy presents a bold vision: the electrification of our transportation sector, which today accounts for nearly 70 percent of the total oil consumed by the U.S. Because that is a long-term goal, the recommendations also detail the policy steps necessary to reach it while preserving our economic and national security in the short and medium term, including dramatic increases in funding and reforms to our research, development, and deployment system; demand reductions; and an expansion of domestic oil and natural gas production.

Securing America’s Future Energy (SAFE) is an action-oriented, nonpartisan organization that aims to reduce America’s dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy.

Scarborough Kids Internet Panel

Teens are confident that the Obama administration will be able to resolve the current economic crisis, according to a recent study from the Scarborough Kids Internet Panel (S.K.I.P.), an Internet panel tracking youth behavior and sentiment. Three-quarters (75%) of teens in the study said they are optimistic that the new administration will help solve current economic problems. African-American and Hispanic teens appear to be more optimistic than Asian and Caucasian teens.  Almost half (46%) of African-American teens are “very optimistic” about President Obama’s ability to help the economy, versus 31 % of Hispanic teens, 24% of Caucasian teens and 20% of Asian teens.

The vote of confidence is well-timed, as teens are feeling the impact of the crisis at home. Three-quarters (74%) of teens surveyed said that they are worried about the economy, including almost one-quarter (23%) who are “very” worried and 51% who said that they are “somewhat worried.” Twenty percent are “not very worried” and 6% “aren’t worried at all.”

Eighty-six percent of teen respondents think their parents worry about economic conditions, and 70% have discussed the economy with their parents.  Almost half (47%) said that they would like to talk to their parents more about the issue and 64% of teens stated that they were discussing the downturn with their teachers at school.  Eighty-one percent of teens are also interested in understanding more about the causes of the current problems.

The survey identified some health related behaviors being impacted by the economy. Many teens report that they have made adjustments in their household to accommodate changing financial situations.

In order to save money:

• 15% of teens dropped out of a sport or recreational activity
• 13% missed doctors’ appointments
• 11% stopped or cut back on taking vitamins
• 33% changed eating habits. The most frequent change cited is a reduction in eating out, particularly at quick service restaurants
• 20% have cut back on eating organic food

“The weakened economy is undoubtedly affecting the majority of American families, and teens are not exempt from feeling household financial stress,” commented Steve Seraita, Executive Vice President of Scarborough Research. “Knowing the sentiments of kids, teens and their parents can help marketers tailor messages and new products to meet current needs.  Even if a family is not able to afford a certain brand or product right now, marketers can stay top-of-mind and continue to engage and maintain the relationship with their consumers. Doing so will better position their brand to regain market share when families are able to spend again.”

“There is also a message in this research study for government organizations and policy makers that are looking to use some of the stimulus funding earmarked for youth education/health programs,” further commented Mr. Seraita. “The study clearly demonstrates that teens are feeling the financial pinch in their households and perhaps the new programs can help fill-in the gap where their families have cut back.”

This S.K.I.P. survey was fielded from December 30, 2008 through January 10, 2009. Survey participants were between the ages of 13 and 17.

The reader response to the article was so good, they have released a second edition using suggestions from Propublica and Huffington Post readers.

Bush by the Numbers 2.0 (Readers’ Edition) – ProPublica
by Kristin Jones – December 16, 2008 2:37 pm EST

Thanks to all the readers who have sent us suggestions for updating Bush by the Numbers, our look at the 43rd president’s impact across American life. We have incorporated some of the best and earliest-submitted ideas below. We will continue to update the chart, so keep your suggestions coming. And don’t forget to cite your sources!

This bottom row of the chart is a nice way of seeing the growth of the income divide from when Reagan took office to the present.  You can also see the widening of the gap during the dozen years of Republican congressional control.  You can also see the Federal budget surplus increasing under Clinton and its disappearance following Bush’s massive tax cuts.

The deeper history of United States policy in the Middle East was almost completely ignored in favor of this simplistic view that lent itself as a justification for what has become the “War on Terror”.  Repeated claims that we were attacked because of who we are instead of for our foreign policy made manufacturing consent for the Bush Doctrine possible.

The fact that they both generally avoid simplistic and blatantly false ‘feel good’ answers was what first drew me to Senator Kerry in 2004 and then Senator Obama in this election.   In 2004 it seems that a good portion of the US voting population was not ready for nuanced and complex explanations of world events.  This year, it seems more and more people are ready to sit down and listen to explanations that are longer than a sound bite.

The McCain campaign is suffering all across the country because the more details Americans hear from Obama and Biden the more they see their world view and governing philosophies as relevant to their lives.  At the same time, it seems that the more people hear McCain and Palin try to explain the core tenets of their policies (Drill Baby Drill!) the more likely to see these simplistic and superficial solutions for what they are – emotional Bandaids for people hurting economically.

Last night I received an e-mail from John McCain that opened with this:

My Friends,

Millions of Americans on Main Street are feeling the effects of our current economic crisis largely brought on by corruption and greed at Fannie Mae, Freddie Mac and Wall Street. Our next president must come into office with a plan to address the very root the failing housing market. (emphasis mine – full letter below)

When I read that line condemning two mortgage company and an entire segment of the economy I couldn’t help thinking back about 9/11 and how the terrorists “hate our freedom”.  McCain seems – from the first paragraph – eager to redirect the anger that Americans justifiably feel towards his party’s policies onto two companies and a geographical spot in lower Manhattan. Of course, there had to be three entities since politicians love their trinities.  I guess we can all be grateful he hasn’t actually called them the Economic Axis of Evil.

To be generous to McCain I have to state that I doubt he really believes this himself and that he is just using this as a political tool to deflect attention from the relationship between core GOP policies of ‘free’ markets and deregulation and the current economic mess we are in right now.

Even if McCain knows better himself, as a candidate who is not willing to face up to reality both publicly and privately, he is no position to lead us out of this mess.  This problem with the MCCain camp and reality is not new.

As long as Palin has been running for VP, she has been repeating her position on climate change. “A changing environment will affect Alaska more than any other state, because of our location. I’m not one though who would attribute it to being man-made,” Palin was quoted in a Newsmax interview.

McCain’s e-mail blaming the economic woes on Fannie Mae, Freddie Mac, and Wall Street fits nicely with McCain’s answers about climate change.  Both are designed to sooth troubled voters and stop further conversation on the topic.  The problem with those kinds of answers is that they preclude real issues discussion about real issues.  Without those kinds of in-depth examinations there is no way to build a consensus on how to move forward.

If the economic crisis is a result of such a simplistic cause as McCain claims then the solution must involve simply attacking those villainous entities.  If climate change should not be attributed to people, then ‘people’ will not necessarily need to be part of the solution. As long as the McCain campaign keeps up this propaganda campaign aimed at providing simple causes for complex problems, the American people should continue to expect massive shocks to the financial system as reality ‘rears its head’.

Senator McCain, my friend, you are doing a major disservice to the people of America by not opening up and admitting that the current economic ‘perfect storm’ is the result of years of policy changes that have led to people gaming the financial system across the board.  Blaming this on a few bad apples the way Bush did when Enron’s and other corporate accounting abuses came to light instead of publicly acknowledging that this problem is systemic seems anathema to the idea of you as a Maverick and a Straight Talker.

My Friends,

Millions of Americans on Main Street are feeling the effects of our current economic crisis largely brought on by corruption and greed at Fannie Mae, Freddie Mac and Wall Street. Our next president must come into office with a plan to address the very root the failing housing market.

Last night, during my debate with Senator Obama, I announced my plan to fix the root of our problem and I’d like to share a little more with you today.

If elected president, I will direct my Treasury Secretary to implement an American Homeownership Resurgence Plan to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis.

America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage.

For those that cannot make inflated payments or their mortgage exceeds the value of their home, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages.

This Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes.

By purchasing the existing, failing mortgages the resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.

I am ready to lead our country out of this financial crisis and I am ready to work with anyone and everyone who will help. Together, I know we can work together to find solutions for these challenging times. Please do your part today and spread the word about my new plan by forwarding this email on to your neighbors, friends, family and coworkers. Thank you for your time and support.

Sincerely,

John McCain

P.S. Homeownership represents the very core of our American economic system. This is not the time for politics. We must move aggressively to provide relief and stability for all Americans.

Many under funded startups in Asia and Europe have overly aggressive and optimistic growth plans that could cause the airlines to cancel or defer orders. For example, Robert Stallard, a director at Macquarie Capital, questions whether SpiceJet has a strong enough balance sheet to secure credit for the 16 Boeing 737-800s it has ordered and says it might not even qualify for a sale/leaseback. “The question that has yet to be answered is not whether there will be a downturn, but how bad it will be,” says Stallard in the AVIATION WEEK article.

Anselmo offers two outcomes: the optimistic view that “Boeing and Airbus can afford to lose orders and still make it to the industry’s next up-cycle with minimal pain;” and the more negative answer “that a steep change in global energy demand has created a permanent era of high prices and sent the airline industry into uncharted territory.”

The article confirms that this is a GLOBAL problem.

No region is immune to the pain. Fuel now makes up 65% of Air New Zealand’s operating costs on long-haul routes. “There could be a significant downturn ahead for carriers in the Asia-Pacific region,” predicts Stallard. “The only way that airlines can react is to raise prices, which will further dent demand.”

These publications are regularly update as social, environmental, and govermental factors change in these nations. Most follow a basic format that includes statistical sections on:

• Geography
  • Area
  • Cities
  • Terrain
  • Climate
• People
  • Nationality
  • Population
  • Population Growth Rate
  • Religions
  • Languages
  • Education
  • Health
• Government
  • Type
  • Date of Independence
  • Creation Date for Constitution
  • Branches of Government
  • Political Subdivisions
  • Suffrage (Voting Rights guidelines)
• Economy
  • Gross Domestic Product (GDP)
  • GDP Growth
  • GDP per Capita
  • Natural Resources
  • Agriculture
  • Industry
  • Services
  • Trade
  • Currency

After the statistical information, the rest of each Background Note reads much like an encyclopedia entry. Unlike an encyclopedia, however, these electronic documents are kept up to date with changes included as often as several countries per day in tumultuous periods. These are primarily designed to brief government officials and the press, but anyone interested in the world can benefit from reading them.

The bulk of each entry contains narrative on the nation’s People, History, Government and Political Conditions, Economy, Foreign Relations, Relations with the USA, and Travel and Business Information.

As with any material of this sort, you need to keep in mind that this material is specifically crafted to help US interests and maintain the United States view of history.  There will be many cases where the US version of events does not jibe with the views held by the citizens of the nation being written about.  However, if you keep that aspect of the document in mind, it can be very informative of what the US State Department wants the world to believe.

For example, here is the section on U.S. – Afghan Relations from a Background Note last updated in December of 2007.

The first extensive American contact with Afghanistan was made by Josiah Harlan, an adventurer from Pennsylvania who was an adviser in Afghan politics in the 1830s and reputedly inspired Rudyard Kipling’s story “The Man Who Would be King.” After the establishment of diplomatic relations in 1934, the U.S. policy of helping developing nations raise their standard of living was an important factor in maintaining and improving U.S.-Afghan ties. From 1950 to 1979, U.S. foreign assistance provided Afghanistan with more than $500 million in loans, grants, and surplus agricultural commodities to develop transportation facilities, increase agricultural production, expand the educational system, stimulate industry, and improve government administration.

In the 1950s, the U.S. declined Afghanistan’s request for defense cooperation but extended an economic assistance program focused on the development of Afghanistan’s physical infrastructure–roads, dams, and power plants. Later, U.S. aid shifted from infrastructure projects to technical assistance programs to help develop the skills needed to build a modern economy. The Peace Corps was active in Afghanistan between 1962 and 1979.

After the April 1978 coup, relations deteriorated. In February 1979, U.S. Ambassador Adolph “Spike” Dubs was murdered in Kabul after Afghan security forces burst in on his kidnapers. The U.S. then reduced bilateral assistance and terminated a small military training program. All remaining assistance agreements were ended after the December 1979 Soviet invasion.

Following the Soviet invasion, the United States supported diplomatic efforts to achieve a Soviet withdrawal. U.S. contributions to the refugee program in Pakistan played a major part in efforts to assist Afghans in need. This cross-border humanitarian assistance program aimed to increase Afghan self-sufficiency and help Afghans resist Soviet attempts to drive civilians out of the rebel-dominated countryside. During the period of Soviet occupation of Afghanistan, the U.S. provided about $3 billion in military and economic assistance to Afghans and the resistance movement.

The U.S. supported the emergence of a broad-based government, representative of all Afghans, and actively encouraged a UN role in the national reconciliation process in Afghanistan. Today, the U.S. is assisting the Afghan people as they rebuild their country and establish a representative government that contributes to regional stability, is market friendly, and respects human rights. In May 2005, President Bush and President Karzai concluded a strategic partnership agreement committing both nations to a long-term relationship.

Note that only the last two sentences address US – Afghan relations since the invasion that unseated the Taliban in 2001.

In addition to the textual information, each Note includes a map of the country’s with major cities and its capital noted along with the names and locations of bordering nations.  Usually the Dept. of State includes a photograph meant to capture some element of the nations culture.  In the case of Afghanistan the photo includes a broom seller in a marker in Herat.

A full list of the Background Notes can be found at http://www.state.gov/r/pa/ei/bgn.  For real junkies like me, you can sign up for Email updates so you will know when when updates are published.

Yesterday however, I ended up writing a very lengthy comment in response to Will Taft’s blog post Why Obama Might Be Our Next President over at Healthy Living For People and Planet Earth. The comment was so lengthy that Will, with my permission has posted the comment as a guest post.

I took a rather contrary and bearish position in regards to his main premise that the media is making the economy sound worse off than it is in order to stir up opposition to another Republican president. I took the position that the economy is actually in far worse shape than the mainstream media portrays it. The guest post turned out to be very pessimistic and doesn’t offer anything in the way of ideas for a solution or even a way to mitigate the worst of the problems.

I did, of course, make reference to my pet theory that the GOP wants to throw this election and my reasons for believing that.

If you’d like to read the post, it can be found at Is The Media Downplaying Economic Trouble?.

In recent months, a lot of people have been handed financial get-out-of-jail-free cards. C.E.O.s who presided over billions in losses have walked away with tens of millions in compensation. The Federal Reserve has showered cheap money on banks and brokerages. Even Bear Stearns caught a break when, last week, J. P. Morgan agreed to quintuple the price it will pay to take over the firm. But there’s one group for whom forgiveness has not been forthcoming: ordinary consumers struggling with piles of credit-card debt. For them, escaping the burden of their bad decisions and their bad luck has become much harder.

That’s because of a law that Congress passed in 2005 which has made it more difficult for people to write off their debts. Filing for bankruptcy has become much more expensive. More important, while lower-income people can still declare Chapter 7, which takes away your assets but then discharges your debts, most middle- and higher-income people now have to declare Chapter 13. That means they have to pay their creditors monthly for five years before they’re free.

The bankruptcy law he is referring to was the 109th Congress’s S. 256 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It was one of the most partisan bills to make it into law under the Republican majority before the Democratic party won back a majority in 2006. This bill was the result of much lobbying by the banking and credit industries.

The 2005 bankruptcy bill was opposed by a wide variety of groups, including consumer advocates, legal scholars, retired bankruptcy judges, and the editorial pages of many national and regional newspapers. While criticisms of the bill were wide ranging, the central objections of its opponents focused on the bill’s sponsors’ contention that bankruptcy fraud was widespread, the strict means test that would force more debtors to file under Chapter 13 (under which a percentage of debts must be paid over a period of 3-5 years) as opposed to Chapter 7 (under which debts are paid only out of existing assets), the additional penalties and responsibilities the bill placed on debtors, and the bill’s many provisions favorable to credit card companies. Opponents of the bill regularly pointed out that the credit card industry spent more than $100 million lobbying for the bill over the course of eight years.

Opponents of the bill argued that claims of bankruptcy abuse and fraud were wildly overblown, and that the vast majority of bankruptcies were related to medical expenses and job losses. Their arguments were supported by an in-depth study by Harvard University medical and legal scholars, which found that more than half of bankruptcies were attributable to unpaid medical bills.

This bankruptcy bill was actually first drafted in 1997 and introduced in 1998. The House of Representatives approved a version titled the “Bankruptcy Reform Act of 1999″ and the Senate approved a slightly different version in 2000. After the differences in the bills were reconciled, Congress passed the “Bankruptcy Reform Act of 2000″. President Clinton, however, employed what is known as a “pocket veto” by waiting for the congressional session to adjourn without signing the bill, a legislative maneuver tantamount to a veto.

In the years since 2000, the bill was introduced in each Congress, but was repeatedly shelved due to threats of a filibuster from its opponents and because of disagreements over various amendments.

The increase in Republican majorities in both the Senate and House after the 2004 Federal elections breathed new life into the bill, which was introduced in its current form by Republican Senator Chuck Grassley of Iowa. The bill was supported by President George W. Bush. Tom DeLay also championed the controversial legislation in the House.

“I’ve never seen a bill that was so one-sided,” said Consumer Federation of America chair (and former Ohio senator) Howard Metzenbaum, at the time. “The cries, claims and concerns of vulnerable Americans who have suffered a financial emergency have been drowned out by the political might of the credit card industry.”

The new law adds a number of new requirements for bankruptcy filers that attempt to make the filing process more difficult and costly. These additional requirements include:

• Mandatory credit counseling and debtor education. All potential bankruptcy filers must now undergo credit counseling via an “approved nonprofit budget and credit counseling agency” prior to filing for bankruptcy. Chapter 13, Chapter 7, and Chapter 11 filers must also complete a course in “personal financial management” after filing the bankruptcy.
• Additional filing requirements and fees. The new law increases the amount of paperwork involved in filing and raises the filing fees for debtors earning over 150 percent of the federal poverty level.
• Increased attorney liability and costs. Attorneys representing bankruptcy filers are now required to conduct an investigation of their clients’ filings and can be held personally liable for inaccuracies. Most bankruptcy attorneys predicted that this will result in increased attorneys fees and will make attorneys less likely to take on some cases. In addition, bankruptcy filings are now subject to audit in a manner similar to tax returns.
• Fewer automatic protections for filers. The new law eliminates some of the protections bankruptcy filers previously had, such as stopping or delaying evictions, avoiding driver’s license suspensions, and delaying child support proceedings.
• Increased compliance requirements for small businesses. The new law increases the bureaucratic compliance obligations and shortens the deadline for Chapter 11 reorganizations involving small businesses, a series of new requirements not applicable to larger businesses.
• Increased amount of debt repayment under Chapter 13. The new law made several changes that effectively increased the amount of debt that Chapter 13 filers will have to repay. In addition, the “super discharge” provision, which allows filers to discharge many of their debts under Chapter 13 in return for agreeing to a payment plan, is significantly curtailed under the new law.
• Increased length of time between discharges. The new law increases the length of time from six to eight years between which a filer can receive a Chapter 7 discharge after a prior Chapter 7 case.

You may be wondering what this all has to do with the current election campaign. With three candidates left in the news – the presumptive nominee for the Republicans, Senator John McCain, and the two remaining Democratic party candidates, Senators Clinton and Obama – its a pleasure to get a glimpse of their behavior in the Senate on bills that came up while all three were holding their Senate seats.

The voting on this bill is one such glimpse. As more and more voters report that finances and the economy are gaining in importance in terms of their selection criteria for our next president, I think its worth taking a look at how the candidates handled this bill that, by all metrics, made it more difficult for consumers to get out from under debt and get their lives back on track while nailing down protections that the credit card companies have wanted for years.

Over all, 74 Senators voted in favor of the bill’s passage while 25 Senators voted against it. Those 74 Senators who voted for passage included every single Republican Senator. Every one of the 25 Senators who voted against the bill were Democrats. As any American school child knows, 74 + 25 = 99 while there are supposed to be 100 Senators voting.

Senator McCain was one of those Republicans voting in lock step to pass this bill. Senator Obama was one of that 25% of the Senate that voted against the bill. And that missing vote? That was Senator Clinton not voting. This bill affects Americans from the boardroom to the poor house yet Senator Clinton skipped the vote entirely.

In this case, sitting out the vote paid off – literally.

As Mother Jones reported in July of 2007:

All told, in 2006, financial and credit card companies gave $7 million in campaign contributions, and banks $25 million, to candidates of both parties, according to the Center for Responsive Politics. Leading the pack, with $378,000, was Hillary Clinton.

It will be very interesting to see if Pennsylvania voters are paying enough attention to see which candidate is really voting in their best interest.

A complete roll call of the final Senate vote for passage of the bill is included below the cut.

Alphabetical by Senator Name

These guest workers are limited to "specialty occupations". The government regulations define a “specialty occupation” as requiring theoretical and practical application of a body of highly specialized knowledge in a field of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, law, accounting, business specialties, theology, and the arts, and requiring the attainment of a bachelor’s degree or its equivalent as a minimum.  An H-1B work-authorization visa is strictly limited to the worker holding a postion with the sponsoring employer and is not a "Green Card" sort of thing granting the Visa holder unlimited access to the US job market.

Care is taken to ensure that these workers do not depress wages for US workers.  The US Department of Labor is responsible for ensuring that foreign workers do not displace or adversely affect wages or working conditions of U.S. workers. Employers applying for one of these visas must attest that wages offered are at least equal to the actual wage paid by the employer to other workers with similar experience and qualifications for the job in question, or alternatively, pay the prevailing wage for the occupation in the area of intended employment, whichever is greater.

Congress sets the number of applications that will be approved each fiscal year and this year, like last year, the number is very low.   This year the limit is 65,000 applicants with a Bachelors degree and additional 20,000 slots are reserved for people with post graduate degrees.  Today’s numbers are not out yet but if last year is any indication we already have more applications than we have slots. The ceiling set by the Republican controlled Congress was 115,000 in both 1999 and 2000 and 107,500 in 2001 before dropping back to 65,000 for fiscal year 2002.

Last year, by the afternoon on the day applications were accepted, more than 150,000 had been received. The USCIS rejected all petitions received after close of business the second day, and then passed out the 85,000 available visas in a random lottery system.  The USCIS is expecting the same thing this year.

I don’t understand why the new Democratic majority has not eased these restrictions.   These visas bring more highly skilled and highly paid workers to the US.  These skilled workers may be sending some of their salary to their home country, but they are also spending money here in the US economy.  The money they spend on rental housing, food, clothes, entertainment, and everything else helps merchants in the local economies where they work.

The alternative to making more of these visas available is far worse.  Every region in the US has had jobs disappear over the borders included by NAFTA and overseas to where labor is cheap and plentiful.  Manufacturing jobs are not coming back.  Call center jobs are have begun to stabilize but many of those are never coming back.  Congress would be doing the US economy a good deed by opening up more H-1B slots so American companies can fill the gaps in staffing here in America to keep more jobs from moving overseas.

Now, none of this is entirely new. Consider what Keynes said in 1931:

A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.

About the Patchwork Nation project

Nearly 305 million people live in the United States, according to the US Census Bureau. Yet in recent elections it’s all been about fitting into two categories: red states that vote Republican and blue states that vote Democratic. But this red/blue breakdown of political opinion doesn’t explain what underpins the voters’ decisions.

That’s what this effort, funded by the Knight Foundation, a nonprofit philanthropic organization based in Miami, explores in real time during the 2008 presidential campaign.

We’ve identified 11 places across the US that represent distinct types of voter communities. They are Monied ’Burbs, Minority Central, Evangelical Epicenters, Tractor Country, Campus and Careers, Immigration Nation, Industrial Metropolis, Boom Towns, Service Worker Centers, Emptying Nests, and Military Bastions. For example, Sioux Center, Iowa, typifies Tractor Country.

The project is headed by Dante Chinni and James G. Gimpel.   Dante Chinni is based in Washington, D.C. where he has been covering politics and the media for more than 10 years. He has worked as a reporter-researcher at Newsweek and a senior associate at the Project for Excellence in Journalism.  James G. Gimpel is a professor of government at the University of Maryland, College Park, where he has been on the faculty since January 1992. His recent research and teaching interests include American politics, political geography, voting and elections, state politics, US immigration policy, and public opinion.

They have taken the eleven "types" of places in the United States and selected individual towns and cities to act as proxy representatives for those voter communities.  The list below contains the types, the representative location, and a brief summary of each type of community.

• Boom Towns – Eagle, CO - Midsize cities and smaller towns with well-balanced economies of affluence, education, and professional employment; growing ethnic diversity, some retired elderly with high incomes.
• Military Bastions – Hopkinsville, KY - High levels of employment in military or related government employment; often adjacent to major military installations, private military contractors, or have a history of military-dependent economies; middle income, transient, younger populations, with some trade and service workers in the local economy.
• Campus and Careers – Ann Arbor, MI – High percentage of the population between 18-34, few retirees or elderly; includes university/college towns and locations with high employment in education and educational services; high levels of formal education; religious diversity, secularism.
• Minority Central – Baton Rouge, LA – Lower-income counties with large proportions of African-Americans and native Americans on Indian reservations; low population growth or steady population losses, high unemployment and poverty; low-end housing stock, including trailer parks; African-American locales are concentrated within the deep South.
• Emptying Nests – Clermont, FL – Middle-income, retirement age; and baby-boom populations; presence of evangelical and mainline Protestants, fewer Catholics, stable but not booming economies.
• Monied ‘Burbs – Los Alamos, NM – High-income counties, with high professional employment and formal education; high expenditures by consumers on new vehicles, luxury goods, property taxes, and charitable giving; midsize in terms of population and population density, primarily within metro areas; family age populations, low density; predominantly white, but with some Asian-American presence.
• Evangelical Epicenters – Nixa, MO – Briskly growing small and midsize towns with family age populations; middle income with some affluent and poor; low incidence of mainline Protestant and Catholic churchgoers, higher incidence of evangelical adherents, particularly in the South and border states; Mormons in the West; some minority presence, chiefly blacks (in the South) and Latinos (in the West).
• Service Worker Centers – Lincoln City, OR – Midsize cities and smaller towns with very high percentages employed in trade and service businesses but not manufacturing or agriculture; many new residents, growing Latino populations; more Catholics and fewer Evangelicals or mainline Protestants.
• Immigration Nation – El Mirage, AZ – High percentages of Latinos and Asians; immigrants living in midsize to larger cities; moderately high levels of unemployment; Roman Catholic with sprinkling of religious diversity; lower income with moderate to high percentage in poverty.
• Tractor Country – Sioux Center, IA – Predominantly white, smaller towns and more remote counties outside of metropolitan areas; low level of manufacturing employment, high levels of self-employment, employment in agriculture, as well as small-town retail and wholesale trade; Lutheran Reformed, and mainline Protestant adherents predominate in the upper Midwest.
• Industrial Metropolis – Philadelphia, PA – Older Northeastern and Midwestern cities once dependent on manufacturing; diverse populations, including significant Jewish populations; some high-end residents in established historically wealthy neighborhoods, mixed with lower income populations.

This technique takes things beyond the popular idea expressed in The Great Divide: Metro vs. Retro from back around the time of the 2004 presidential election.  Understanding WHY groups of people with similar backgrounds vote the way they do is going to be very important for any presidential candidate who wants to bring people back together on a national and regional level. 

Some of these community types may seem easy to ignore for some candidates.  There is always going to be the feeling that the "Evangelical Epicenters" and "Tractor Country", for example, are going to go Republican regardless of what each candidate says and does.  Blind acceptance of that kind of thinking played a large part in creating the divides that currently exist.

Following the rest of the election cycle through the Patchwork Nation site promises to be interesting.  The Christian Science Monitor has lined up bloggers from each of the representative communities to act as eyes and ears within their communities.   They have also created MessageBoards where you can register and discuss the issues with people from all over the country and the world. 

Another cool feature at the site is the ability to track candidates based on their appearances at each of the 11 types communities.  From there you can see which candidates are spreading out across different community types and which are limiting their appearances to onlya  few main areas.  You can also take the "How Do You Fit In?" survey to find out how well you fit in with others in your county.   My town, Philadelphia, happens to be the selected community used to represent the Industrial Metropolis community type and my survey results put me at 100% match with my community.

With all the bad economic news in the last year its easy to grow inured to more bad news.  Today the ever weakening US Dollar has created a new economic world.  For the first time in my lifetime the United States is no longer home to the world’s largest economy.   The Eurozone has overtaken the United States as the planet’s largest economy.

The interesting thing about all this, to me, is that the United States lost its position though bad economic policy and not through anything the average American had any control over this year.  By focusing more on preventing our big financial institutions from suffering from the effects of their investment decisions, we have a Fed thats been reducing interest rates to stave off problems that cannot be fixed by reducing interest rates.

By letting the value of the dollar fall it may have saved some investment bankers but at the cost of huge energy prices for Americans.  

Where does your stuff come from? Before the store, before the factory, where did it really begin? If it isn’t made of wood, cloth, or other living matter, it was dug out of the ground.

Number one of The Natural Step‘s four System Conditions is that “In the sustainable society, nature is not subject to systematically increasing concentrations of substances extracted from the Earth’s crust”. So ultimately, one day our industrial economy will be made up entirely of recycled and biologically grown material. That day, however, may be a long way off. How do we get there, and what is the world of mining like today? How rapidly are we depleting the minerals we have, and how do we get to sustainable mining?

This is a great article  exploring mining’s impact on the world and how we can live better lives with reduced mining if we put the scientific and economic resources into it.  It takes the time to explain exactly how much of a role mining plays in sustaining the lives of people throughout the world. People are starting to talk more about the idea of petroleum production peaking, but less press coverage goes to the fairly unsexy idea of exhausting known deposits of other minerals from antimony to zinc.

It points out that “…minerals are clearly a non-renewable resource on the time scale of our lives…”. It quotes the United States Geological Survey website that states “To maintain our standard of living, each person in the United States requires over 48,000 pounds of minerals each year.” (source: Mineral Information Institute)

There is a more indepth article on that topic called Earth’s natural wealth: an audit available at New Scientist.

This article examines how our current technology is exhausting the known reserves of many minerals at an alarming rate. The stats used are based on our current extraction and consumption levels. As noted in the Your Stuff’s Backstory article, we can recover some of the minerals we need through recycling, but with newer technology like LCD TV’s and computer hard drives driving the problem, many of the finished products using these minerals will not be available for recycling very soon.

The idea of a greener future is taking hold in a big way all around the world. A big problem we may face is availability and the rising cost of minerals needed to bring about that future. The New Scientist article quotes Hazel Prichard, a geologist at the University of Cardiff in the UK as saying: “”I get excited every time I see a street cleaner”. She is looking for ways to economically recover some of the platinum that our catalytic converters dump out our exhaust pipes and onto road. She hopes that street cleaners collection bins will lead to the recovery of some of that platinum.

In his 2003 State of the Union address, President Bush announced a $1.2 billion hydrogen fuel initiative to reverse America’s growing dependence on foreign oil. However:

It has been estimated that if all the 500 million vehicles in use today were re-equipped with fuel cells, operating losses would mean that all the world’s sources of platinum would be exhausted within 15 years. Unlike with oil or diamonds, there is no synthetic alternative: platinum is a chemical element, and once we have used it all there is no way on earth of getting any more.

It’s been noted that many of the amount of many of the rarer minerals remaining in the are a mystery to economists, since reserve numbers are a closely guarded secret of the mining companies. There are indications that seem to point to the scarcity problems we are facing.

Armin Reller, a materials chemist at the University of Augsburg in Germany, and his colleagues are among the few groups who have been investigating the problem. He estimates that we have, at best, 10 years before we run out of indium. Its impending scarcity could already be reflected in its price: in January 2003 the metal sold for around $60 per kilogram; by August 2006 the price had shot up to over $1000 per kilogram.

A third of the world’s {en:indium} comes from Canada (33%), with the US (7%) and Russia (5%) a distant second and third. Unlike gold and silver, indium is new to humans. It was discovered by Ferdinand Reich and Hieronymous Theodor Richter in 1863. The first large-scale application for indium was as a coating for bearings in high-performance aircraft engines during World War II. Afterwards, production gradually increased as new uses were found in fusible alloys, solders, and electronics. In the 1950s, tiny beads of it were used for the emitters and collectors of alloy junction transistors. In the middle and late 1980s, the development of indium phosphide semiconductors and indium tin oxide thin films for liquid crystal displays (LCD) aroused much interest. By 1992, the thin-film application had become the largest end use.

As recently as 2000 Indium was selling at $190.00/kg. As of last year, its selling for over five times that.

Indium is used to make indium gallium arsenide. This is the semiconducting material at the heart of a new generation of solar cells that promise to be up to twice as efficient as conventional designs. Reserves of both indium and gallium are disputed, but in a recent report René Kleijn, a chemist at Leiden University in the Netherlands, concludes that current reserves “would not allow a substantial contribution of these cells” to the future supply of solar electricity. He estimates gallium and indium will probably contribute to less than 1 per cent of all future solar cells – a limitation imposed purely by a lack of raw material.The Informed Reader blog from the Wall Street Journal has blogged about this problem, as well as the problems facing manufacturers who use hafnium and zinc, of which new supplies may run out in ten and thirty years, respectively.

I try to be optimistic about technology’s role in helping us address environmental problems in the present and the future, but if we don’t have the raw materials we need to build the energy and emission saving products of the future we are in worse shape than I thought.

However, I believe that Stern’s fundamental conclusion is justified: We are much better off reducing carbon dioxide emissions substantially than risking the consequences of failing to act, even if, unlike Stern, one heavily discounts uncertainty and the future.

Two factors differentiate global climate change from other environmental problems.

First, whereas most environmental insults — for example, water pollution, acid rain, or sulfur dioxide emissions — are mitigated promptly or in fairly short order when the source is cleaned up, emissions of carbon dioxide and other trace gases remain in the atmosphere for centuries. So reducing emissions today is very valuable to humanity in the distant future.

Second, the externality is truly global in scale, because greenhouse gases travel around the world in a few days. As a result, the nation-state and its subsidiaries, the typical loci for internalizing externalities, are limited in their remedial capacity. (However, since the US contributes about 25 percent of the world’s carbon dioxide emissions, its own policy could make a large difference.) Thus, global climate change is a public "good" — as defined in economic terms — on an enormous scale.

Read the Rest

"The people", in the form of the US citizenry that are not running the government or huge corporations, tend to like their science the same way they like their news – in short, catchy, easily (pre)digested form that can be transmitted via AIM with under 200 keystrokes.   As a result, much very well written, well researched, and important work zooms right past people who are more eagerly awaiting news on the status of Angelina Jolie and Brad Pitt’s relationship.

An interested reader would have to jump over to Forbes or the Financial Times to get the full picture and see that the biggest factor in the rise in oil prices are economic in nature.  Both stories about the issue on these and other financial news sites point out that it is the weak dollar that is pushing oil prices higher and higher recently.  I know most people in the US don’t seem to care about the value of the dollar but they really certainly seem to care when the pump price of gasoline goes up a few cents.  When the US dollar is weak it’s Americans who suffer most from rising energy prices. 

Most of the world’s oil is traded for US dollars.  In fact, several oil-producing Gulf Arab countries, including Saudi Arabia, peg their currencies to the dollar, since the dollar is the currency used in the international oil trade. When businesses or traders in a country like Canada or Australia wants to buy petroleum they must first buy US dollars and then use them to purchase the oil.   The cost of those US dollars determines the true cost of a barrel of oil in those countries.  Right now, with the US dollar at record or near record lows against other currencies the high price of a barrel of oil disproportionately affects Americans.

I did some number crunching to try to put this in perspective.  I looked at a few factors and applied them to the US dollar and five other currencies so you can see how this rise in price per barrel of US Light Crude has affected different currencies.  First I located the price per barrel for US Light Crude on June 1, 2007 and found it to be $65.08.  Second, I looked at the closing price yesterday (November 6th, 2007) of  $96.70.

Since oil is traded in US dollars we can see that this reflects a price increase of 48.59%.  You can do the math yourself with this formula:

Or for US Dollars

I’ll be rounding to two decimal places, so this becomes 48.59%

 As you can see, Americans who are already working in US dollars saw a nearly fifty percent increase in the cost of a barrel of oil between June 1st, and November 6h of 2007.

To work with the other currencies, I first converted them into US dollars at the exchange rate for that day.  So for the June 1 figures, I looked at the exchange rate for June 1st, for November 6th, I looked at November 6 rates.  This should put everyone onto a common level since we will be comparing apples to apples instead of juggling back and forth between currencies.  I will start with those who have benefited the least from the weak dollar and work up from there.  I am including graphs of these other currencies’ exchange rates with the US dollar so people can better understand that the term "weak dollar" is a bit euphemistic compared to the reality of just how weak it is at the moment.

Great Britain (GB Pound)

120 day graph of the GB Pound to Dollar exchange rate (June 1 – Nov 6, 2007)

On June 1st, it took 32.86 pounds to purchase enough Us dollars for a barrel of oil.  On November 6th, it took 46.36 to buy a barrel.  Based on the formula outlined above we can see that the increase for Great Britain is 41.08%.  In other words, the British are suffering from higher oil prices, but not as much as we are in the US. 

Japan (Japanese Yen)

120 day graph of the Yen to Dollar exchange rate (June 1 – Nov 6, 2007)

On June 1st, it took 7946.26 Japanese Yen to purchase enough Us dollars for a barrel of oil.  On November 6th, it took 11073.11 to buy a barrel.  Based on the formula outlined above we can see that the increase for Japan is 39.35%.  The Japanese are also suffering from higher oil prices, but not as much as we are in the US.

European Union (EURO)

120 day graph of the Euro to Dollar exchange rate (June 1 – Nov 6, 2007)

On June 1, 2007, it took 48.42 Euros to buy one barrel, and on November 6th, it took 66.43.  This is a 37.19% increase.  Bad, but not as bad as it is here.  

Australia (Australia Dollar)

120 day graph of the Australia Dollar to Dollar exchange rate (June 1 – Nov 6, 2007)

On June 1, 2007, it took 78.29 Australian dollars to buy one barrel, and on November 6th, it took 104.51.  This is a 33.49% increase. 

Canada (Canadian Dollar)

120 day graph of the Canadian Dollar to Dollar exchange rate (June 1 – Nov 6, 2007)

On June 1, 2007, it took 68.99 Canadian dollars to buy one barrel, and on November 6th, it took 89.37.  This makes Canada the big winner with an increase of "only" 29.54%.   Canada’s currency is making great strides against the US dollar lately and this current trend has not only increased their buying power in purchasing Us goods, its also given them a steep discount on the price they pay for oil.  It’s probably worth noting that Canada is a net exporter of oil, unlike the rest of the countries mentioned in this post.

We have had two terms of Bush spending his ass off, usually with the backing of a Republican congress that couldn’t be more eager agree with the president’s belief that the "war on terror" and economic growth and tax cuts justified running up massive deficits that everyone knows we can never repay.   More recently we have seen  two consecutive interest rate drops from the Fed while watching our housing sector tank and mortgage backed securities result in huge losses for financial institutions worldwide, we should not be surprised that nobody really wants US dollars to play a big roll in their portfolios.  I don’t think we are near  the end of this cycle and if we do see oil hit $100.00 USD a barrel we need to remember that we may be alone in paying the full price.

Notes: Graphs courtesy of www.x-rates.com and thanks to Lorianne for helping me find the formula I needed.

Barney Frank [D, MA-4], received over 50% of his campaign contributions from the finance, insurance, and real estate sectors in both the 2006 and the current 2008 cycles. This should not be a surprise considering he’s now the chair of the House Financial Services committee, the committee that oversees all components of the nation’s housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities.

According to the Wall Street Times article, Finance Panel’s Chairman Seeks Overhaul of Mortgage Regulations, Mr. Frank has proposed legislation that will eliminate many regulatory loopholes and gaps in the current mortgage lending practices. Many of these regulatory gaps are a result of increasing “securitization” in the credit markets. Securitization refers to the practice bundling together assets, accounts receivables, or loans into a pool that acts as a ‘meta-asset’ that can be bought and sold.

It’s this practice of “securitization” of mortgages that has caused the problems in the sub-prime loan world to spread far outside the mortgage industry itself. The collapse or downsizing of many mortgage companies has resulted, not from repayment problems, but from their inability to sell off bundles of their mortgages because buyers don’t consider them to be safe purchases as a long term investment. Mortgage companies were only too happy to issue risky mortgages when they knew they would be handing them over to someone else within months. This happened with Brian and my mortgage. It was issued by a small lender in Cherry Hill, NJ and then sold to Chase Manhattan before the ink was dry on our signatures. Ours was not a ‘sub-prime’ mortgage and it’s been happily earning Chase money for years now.

According to a statement from chairman Frank, the proposed legislation will "diminish predatory lending while continuing to support a rigorous mortgage market. It creates a national standard for giving mortgages, originating mortgages, which will cover every mortgage originator."

This proposal may have a mixed result on his find raising. He may end up losing contributions from lenders who do not put as much care and checking into the loans they issue but at the same time, this should make the insurance companies and hedge fund operators who buy the securitized mortgages feel more secure.   Mr. Frank earns a gold star for giving his campaign contributors what they need, even if its not exactly what they might want.

There will be resistance to this proposal, but this is capitalism at its best. Capitalism, at its heart, is all about economic incentives. The sale of securitized loans have done much to fuel the Us and World economies in recent years, and can continue to do so for the future. This legislation will make those securitized bundles of loans less risky for the people and organizations who buy them from the lenders. As Yves Smith at NakedCapitalism.com mentioned in The "No More Stupid Mortgages" Bill:

“Frank’s solution is to create liability for certain bad actions that become more likely in a world of securitization, like making stupid mortgages because they will nevertheless generate fees, and doing a once-over-lightly with due diligence.”

In Delay’s House, a big part of lobbying was based on preventing legislation from passing. Lobbyists like Jack Abramoff spent time and money to prevent the passage of legislation that would increase regulations that affect his clients. Hopefully, the Democrats in the house, with such outstanding committee leadership as Barney Frank’s, can keep the gears of congress turning so they can pass legislation that will help both our economy and citizens.