Monday, March 8, 2010

Barker's Newsbites: Monday, March 8, 2010


It's a new week, folks...

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6 comments:

William R. Barker said...

http://apnews.myway.com/article/20100308/D9EAEV100.html

Oil prices headed higher toward $82 a barrel Monday...

Oil has soared 18 percent since Feb. 5...

March 8, 2010 at 12:22 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052748704187204575101663745849200.html

Everyone knows Democrats are planning to use the budget reconciliation process to get ObamaCare through the Senate.

Less well known is that Democrats are plotting add-ons to that bill to get other liberal priorities enacted—programs that could never attract 60 votes.

One of these controversial measures rewrites the Higher Education Act to ban private companies from offering federally guaranteed student loans as of this July. The Democratic plan is to make this public option the only option mere days before colleges send out their financial aid packages to incoming students.

Secretary of Education Arne Duncan portrays the changes as eliminating subsidies to private companies, but no one should misinterpret these comments to mean that taxpayers will benefit. The plan that passed the House includes $67 billion in "savings," according to a Friday estimate from the Congressional Budget Office. But the bill also has more than $77 billion in new spending.

The net loss to taxpayers isn't limited to $10 billion. After inquiries from Senator Judd Gregg (R., N.H.) and Rep. John Kline (R., Minn.) last year, CBO explained that "savings" estimates are artificially high because of government accounting rules that undercount the risks of default when the government is originating the loans, while the new spending estimates are artificially low.

Taxpayers have even more reason than academics to fear the impact, in part because the public may not learn the details before this plan becomes law. Democrats aim to bring their education revolution to the floor without a committee vote or even a hearing in the Senate.

Both the House-passed bill and the President's budget increase Pell Grants and also create automatic future increases, so individual grants will grow faster than inflation every year. Colleges will pocket the money by raising tuition, so we have yet another federal program ensuring that higher education costs continue to rise even faster than health-care spending.

Mr. Obama's budget also calls for making Pell Grants a mandatory entitlement. At least now they are subject to annual appropriation and their growth can be slowed when tax revenues fall or other priorities rate higher. Mr. Obama would prefer spending that is quite literally out of control.

"Various changes that the President proposes to the Pell Grant program would add another $0.2 trillion to the deficit between 2011 and 2020," CBO said Friday. That could turn out to be a very optimistic estimate if unemployment remains high and more people seize the educational opportunity to which they have just become entitled. Still another taxpayer trap will be sprung if the President's proposal to forgive some debt incurred by "overburdened" borrowers is included in the bill.

The federal education takeover is another example of the Democrats' willingness to use whatever tactics are necessary to advance their agenda to concentrate power in Washington—while they still can.

March 8, 2010 at 12:35 PM
William R. Barker said...

http://article.nationalreview.com/427195/bernanke-finally-fingers-mark-to-market/brian-s-wesbury-robert-stein

Late last month, during testimony before Congress, Federal Reserve chairman Ben Bernanke made the following eye-popping statement: “Commercial real-estate loans should not be marked down because the collateral value [the estimated value of the property on the market] has declined. It depends on the income from the property, not the collateral value.”

It would have been much better for the economy if Bernanke had been this clear about mark-to-market accounting back in 2008. If he had, the U.S. might have avoided the Panic of 2008. But it’s never too late, and now that mark-to-market ideology is affecting the ability of the Fed to exit its quantitative-easing policy, Bernanke is finally onboard.

A little background is in order: In November 2007, the Financial Accounting Standards Board (FASB) reinstated mark-to-market accounting for the first time since 1938. This rule uses bids (exit prices) to value assets. In retrospect, it is clear that this accounting rule was a potent pro-cyclical force behind the 2008 panic. Mark-to-market accounting does not solve problems; it creates them by acting as a pro-cyclical force.

Simply, mark-to-market accounting needs to die. It should be stabbed in the heart with a cedar stake, shot with a silver bullet, and then buried under six feet of garlic powder. Like the evil killer in a horror flick, we need to make sure it never gets up off the floor again.

March 8, 2010 at 2:50 PM
William R. Barker said...

http://article.nationalreview.com/427180/obamas-new-poverty-measurement/robert-rector

This week, the Obama administration announced it will create a new poverty-measurement system that will eventually displace the current poverty measure. This new measure, which has little or nothing to do with actual poverty, will serve as the propaganda tool in Obama’s endless quest to “spread the wealth.”

Under the new measure, a family will be judged “poor” if its income falls below a certain specified income threshold. Nothing new there, but, unlike the current poverty standards, the new income thresholds will have a built-in escalator clause: They will rise automatically in direct proportion to any rise in the living standards of the average American.

* CUTE! ANYONE EVEN MINIMALLY FAMILIAR WITH STATISTICAL METHODOLOGY WILL UNDERSTAND HOW MANIPULATIVE AND MISLEADING THIS TECHNIQUE IS. STILL... UNDERHANDEDLY CLEVER IS STILL CLEVER.

The current poverty measure counts absolute purchasing power — how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. As the nation becomes wealthier, the poverty standards will increase in proportion. In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms.

[I]f the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple.

[C]ountries such as Bangladesh and Albania will have lower poverty rates than the United States, even though the actual living conditions in those countries are extremely bad. Haiti would probably have a very low poverty rate when measured by the Obama system because the earthquake reduced much of the population to a uniform penniless squalor.

* FOLKS... THIS IS ORWELLIAN! COM'ON! THINK ABOUT HOW INSIDIOUS SUCH WILLFUL MANIPULATION IS... THINK HOW THE "NEW METHODOLOGY" WILL BE (MIS)USED BY THE MEDIA AND ACADEMIA TO CREATE A FALSE PORTRAIT OF ECONOMIC REALITY...

What has the Obama measure to do with actual poverty? Not much. For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. But only a small number of the 40 million per­sons classified as poor under the government’s current poverty definition fit that description. ... The new Obama poverty measure will stretch this semantic gap, artificially swelling the number of “poor” Americans, and sever any link between the government’s concept of poverty and even modest deprivation.

In honest English, the new system will measure income inequality, not poverty. Why not just call it an “inequality” index? Answer: because the American voter is unwilling to support massive welfare increases, soaring deficits, and tax increases to equalize incomes. However, if the goal of income leveling is camouflaged as a desperate struggle against poverty, hunger, and dire deprivation, then the political prospects improve. The new measure is a public-relations Trojan horse, smuggling in a “spread the wealth” agenda under the ruse of fighting real material privation...

March 8, 2010 at 2:51 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052748703862704575100063274885270.html?mod=WSJ_Opinion_LEFTTopOpinion

Nationwide, the average black 12th grader reads at the level of a white eighth grader. Yet Harlem charter students at schools like KIPP and Democracy Prep are outperforming their white peers in wealthy suburbs. At the Promise Academy charter schools, 97% of third graders scored at or above grade level in math. At Harlem Village Academy, 100% of eighth graders aced the state science exam. Every third grader at Harlem Success Academy 1 passed the state math exam, and 71% of them achieved the top score.

When Seth Andrew, a founder of Democracy Prep, set up his charter middle school in 2006, it occupied the same building as a traditional public middle school that opened the same year. "We both opened with sixth grade and about 100 kids, though we had more special-ed children and English language learners," he says. "After two years in the same building with the same kids on the same floor, this school was the lowest-performing school in Harlem, and we were the highest-performing school in Harlem."

[S]tudents at Democracy Prep are told to cross the street before walking past the district school down the block "to avoid, literally, raining textbooks—books being thrown out of the school at them. That's the school my son is zoned for. If he wasn't in Democracy Prep, that's the school he'd be in—the school with the book throwers!"

The people who live in Harlem and other large urban centers know better than anyone the devastating impact substandard schools have on their communities. Just 2,000 of the nation's 20,000 high schools produce almost half of all high-school dropouts. But nearly half of all black high-school students wind up in one of these "dropout factories." ... [And] 60% of all black male high-school dropouts in their mid-30s have prison records.

This year, Harlem's charter schools received more than 11,000 applications for 2,000 available slots. More than 7,000 children are on wait lists. Yet the United Federation of Teachers and its political acolytes in the New York state legislature are hell-bent on blocking school choice for underprivileged families.

March 8, 2010 at 2:51 PM
William R. Barker said...

n an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

* THIS IS INSANE...

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage.

Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

* AND THIS IS OUTRIGHT THEFT! BY WHAT AUTHORITY DOES THE GOVERNMENT CLAIM SUCH POWER...?!?!

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

* AND IF ANYONE WOULD KNOW ABOUT FRAUD, IT'S A FORMER EXECUTIVE AT FANNIE MAE!

March 8, 2010 at 10:03 PM

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