10.30.08
Posted in politics at 6:43 pm by paul
Voting in the States — and particularly in California — means understanding a lot of issues well enough to give a thumbs up/down on them. The current crop of propositions in San Francisco is a little intimidating (and available after the jump).
I am not writing about the propositions (4 and 8) that limit individual freedom for no common gain. I’m writing about the campaign against proposition H. This campaign centers around the terror of our elected officials (in this case, County Supervisors) being able to take on a financial obligation in our name, without consulting us. This is indisputably not how we do things in California; all bond measures have to be passed at an election, and usually with a 2/3 majority.
What a friend of Jacquie’s pointed out is that this is completely normal north of the border. Elected officials at the provincial and federal levels routinely pass legislation that means that their government will run a deficit. This deficit is covered by … wait for it … issuing bonds.
So there is nothing new about governments issuing bonds without an election, particularly in parliamentary democracies where elections are not scheduled. What is new is doing this at the municipal level.
I find it ironic that on the same ballot as H, there is E. Prop E “changes” the number of votes required to recall an elected official in San Francisco. It was placed on the ballot, as are many initiatives/propositions and including H, by the Board of Supervisors.
The “change” is that for most San Francisco districts, the number of signatures requires to recall someone would go up by 50 to 100%, if E were to pass.
I find it interesting that on the same ballot as the Supes are asking for new authority, they are asking that we diminish the primary check on that authority. That’s why I voted for H, and against E.
Read the rest of this entry »
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10.18.08
Posted in Uncategorized at 8:50 pm by paul
I’m late answering this question from a friend north of the border:
What do you make of the current financial situation down in the States? I admit that I’m rather confused by what’s being proposed here, and where all the money went in the first place — did it simply go to line the pockets of the Wall Street financiers and investment bankers?
My opinion of the bailout/rescue situation varies by the hour, alternately gleeful and despondent that the self-named Masters of the Universe find themselves at the mercy of Congress and a skeptical electorate who at best have a cursory understanding of financial markets.
The first thing I think happened is that we decided that, as closely as we regulate the percentage of loans that we have to have on deposit, we don’t care at all what the composition of the loans is that we are supposedly securing with those deposits. As a result, everyone had carte blanche to lend money on any or no terms, resulting in the real estate bubble of the past several years.
During that bubble, a phenomenon of American real estate — the “securitization” of mortgages — that is ordinarily unremarkable comes home to roost. Mortgages aren’t owned by the banks that issue them, as is standard (but not uniform) in Canada. The banks that issue them bundle hem and turn around and sell them as an investment vehicle. As an example, a bank might tell investors they have made mortgages for 1000 people and 990 of them will manage to pay them back, guaranteeing investors some specific return on your investment over 30 years.
Trouble arises when our expectations about who can pay back the mortgages changes. Today, sub-prime mortgage “bundles” are worth as little as 20 cents on the dollar, because so many of the mortgagees lied (or were told to lie by the mortgage brokers the hooked them up with willing lenders) about their income or assets to qualify for the loans.
The proposal is to buy up these clearly lousy bundles of loans and hold on to them until the mortgagees pay them off or enough of the mortgages are in good enough shape that the bundles can be re-sold. The former is a rosy scenario in which the $700 B bailout turns into $1T or so. Most likely is that the government gets far less back in payments than the purchase price of the bundled loans and that a substantial portion of the $700 B is lost.
If we were to “let ‘em hang”, the markets for all sorts of instruments — like business loans — would dry up, and with businesses large and small unable to raise money via loans, investments dry up and presto, recession.
Finally, where did the money go in the first place? Well, everyone — a lot of people anyway — borrowed on the “equity” in their homes. Now that equity was mostly based on the speculative (as opposed to economic) value of homes. Anyway they bought SUVs, hot tubs, big screen TVs, anything they wanted. Now that the value of the homes has fallen as a result of the burst bubble, millions of homeowners are underwater on their mortgages at the same time as the sweetheart early part of their mortgages are over, and the bubble burst.
Wall Street “made” no small amount of money charging people points on the loans as they were being made. [It is common practice stateside to charge people an 'origination fee' of upwards of 1% of the loan amount and to roll that in to the loan.]
In the short term this had positive economic effects, all that consumer spending put a lot of people to work — at least partially affording their home payments. So in short, all the money went in to the pockets of retailers and manufacturers. They in turn borrowed (!) to build extra capacity to handle the new demand. Now they are stuck with loan payments they can’t make for infrastructure they don’t need and can’t sell.
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10.05.08
Posted in politics at 10:18 am by paul
As you many know, I’m a big fan of Frank Rich’s column. We’re on the same page politically and that makes his column easy for me to read. One of my favorite things about it is the links he sprinkles in to it.
So as I was reading this morning, he mentioned that everyone’s favorite bailout package Emergency Economic Stabilization Act of 2008 contains some pork for a rider to extend a small tax credit to bicycle commuters.
I tried to read the bill, at least the sections where I found the string “bicycle” but unfortunately it is written in what a technical person would call a diff. The diff utility was written to minimize the size of the diff files produced, readability be damned. Even so, a diff file can be relatively readable to a human, if you are familiar with or have access to the original.
However, since I am not that much of a policy wonk, I can’t easily locate the original. Here’s the relevant portion of the bill:
SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE
COMMUTERS.
(a) IN GENERAL.—Paragraph (1) of section 132(f)
is amended by adding at the end the following:
‘‘(D) Any qualified bicycle commuting re-
imbursement.’’.
(b) LIMITATIONONEXCLUSION.—Paragraph (2) of
section 132(f) is amended by striking ‘‘and’’ at the end
of subparagraph (A), by striking the period at the end
of subparagraph (B) and inserting ‘‘, and’’, and by adding
at the end the following new subparagraph:
‘‘(C) the applicable annual limitation in
the case of any qualified bicycle commuting re-
imbursement.’’.
(c) DEFINITIONS.—Paragraph (5) of section 132(f)
is amended by adding at the end the following:
‘‘(F) DEFINITIONS RELATEDTOBICYCLE
COMMUTINGREIMBURSEMENT.—
‘‘(i) QUALIFIEDBICYCLECOMMUTING
REIMBURSEMENT.—The term ‘qualified bi-
cycle commuting reimbursement’ means,
with respect to any calendar year, any em-
ployer reimbursement during the 15-month
period beginning with the first day of such
calendar year for reasonable expenses in-
curred by the employee during such cal-
endar year for the purchase of a bicycle
and bicycle improvements, repair, and stor-
age, if such bicycle is regularly used for
travel between the employee’s residence
and place of employment.
‘‘(ii) APPLICABLE ANNUAL LIMITA-
TION.—The term ‘applicable annual limita-
tion’ means, with respect to any employee
for any calendar year, the product of $20
multiplied by the number of qualified bicy-
cle commuting months during such year.
‘‘(iii) QUALIFIED BICYCLE COM-
MUTING MONTH.—The term ‘qualified bi-
cycle commuting month’ means, with re-
spect to any employee, any month during
which such employee—
‘‘(I) regularly uses the bicycle for
a substantial portion of the travel be-
tween the employee’s residence and
place of employment, and
‘‘(II) does not receive any benefit
described in subparagraph (A), (B),
or (C) of paragraph (1).’’.
(d) CONSTRUCTIVE RECEIPT OF BENEFIT.—Para-
graph (4) of section 132(f) is amended by inserting
‘‘(other than a qualified bicycle commuting reimburse-
ment)’’ after ‘‘qualified transportation fringe’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2008.
Whew! Since you read every last word of that, and are intimately familiar with section 132(f) (of what?), you know exactly what this means.
The diff . When legislation is written as a diff, this equation becomes self-evident:
legalese + diff = obfuscation
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