Official History Spotlights Iraq Rebuilding Blunders

A 513 page federal history on the Iraq reconstruction was compiled by the Office of the Special Inspector General for Iraq Reconstruction, led by Stuart W. Bowen Jr., a Republican lawyer who regularly travels to Iraq and has a staff of engineers and auditors based here. Here are some of the accounts in this first official federal historical document on the Iraq reconstruction entitled “Hard Lessons: The Iraq Reconstruction Experience" -

• Ignorance: Pentagon planners efforts were crippled by spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure.
• Lies: when the reconstruction began to lag — particularly in the critical area of rebuilding the Iraqi police and army — the Pentagon simply put out inflated measures of progress to cover up the failures. Colin Powell said the Defense Department “kept inventing numbers of Iraqi security forces — the number would jump 20,000 a week"
• Incompetence: The Bush Administration has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.
• Politics over planning: Republicans put a greater priority on making things "look good" for Bush because of the 2004 election instead of efficient and competent use of money. Office of Management and Budget balked at the American occupation authority’s abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua B. Bolten, then the O.M.B. director and now the White House chief of staff. “To delay getting our funds would be a political disaster for the President,” wrote the lobbyist, Tom C. Korologos. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” With administration backing, Congress allocated the money later that year.
• Poor planning: As an example of the haphazard planning, a civilian official at the United States Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency’s reference library, and his estimate went directly into a master plan.
• Early miscalculations: The history records how Jay Garner, Chief of the Office of Reconstruction and Humanitarian Assistance, presented Defense Sec. Donald Rumsfeld with several rebuilding plans, including one that would include projects across Iraq. “What do you think that’ll cost?” Mr. Rumsfeld asked of the more expansive plan.“I think it’s going to cost billions of dollars,” Mr. Garner said.“My friend,” Mr. Rumsfeld replied, “if you think we’re going to spend a billion dollars of our money over there, you are sadly mistaken.”

Conclusions:

"...the government as a whole has never developed a legislatively sanctioned doctrine or framework for planning, preparing and executing contingency operations in which diplomacy, development and military action all figure.”

And to think in the midst of this recession in America, billions of dollars are flying out of America every week to try to repair the damage of the Bush legacy.

Two economists take an unflinching look at the final costs of invading Iraq in a book, "The Three Trillion Dollar War: The True Cost of the Iraq Conflict," by Joseph Stiglitz, a Nobel prize-winner in economics, and Linda Bilmes, a budget and public finance expert at Harvard's Kennedy School of Government. How do the authors arrive at the $3 trillion figure of the title, and the still bigger numbers they report inside? To the administration's own requests for money they add other costs to the taxpayer that either appear elsewhere in the budget (such as the bonuses required to attract recruits put off by the war) or do not yet appear at all (such as the future disability claims of wounded veterans).

In comparison the $600 billion so far authorized for Iraq is just a down payment of the $3 trillion figure.

Iraq War Results & Statistics at December 10, 2008
4,209 US Soldiers Killed, 30,848 Seriously Wounded
By Deborah White, About.com

For your quick reading, here are key statistics about the Iraq War, taken primarily from data analyzed by various think tanks, including The Brookings Institution's Iraq Index, and from mainstream media sources. Data is presented as of December 10, 2008, except as indicated.

U.S. SPENDING IN IRAQ

• Spent & Approved War-Spending - About $800 billion of US taxpayers' funds spent or approved for spending through mid-2009.
• U.S. Monthly Spending in Iraq - $12 billion in 2008
• U.S. Spending per Second - $5,000 in 2008 (per Senate Majority Leader Harry Reid on May 5, 2008)
• Cost of deploying one U.S. soldier for one year in Iraq - $390,000 (Congressional Research Service)
• Lost & Unaccounted for in Iraq - $9 billion of US taxpayers' money and $549.7 milion in spare parts shipped in 2004 to US contractors. Also, per ABC News, 190,000 guns, including 110,000 AK-47 rifles.
• Missing - $1 billion in tractor trailers, tank recovery vehicles, machine guns, rocket-propelled grenades and other equipment and services provided to the Iraqi security forces. (Per CBS News on Dec 6, 2007.)
• Mismanaged & Wasted in Iraq - $10 billion, per Feb 2007 Congressional hearings
• Halliburton Overcharges Classified by the Pentagon as Unreasonable and Unsupported - $1.4 billion
• Amount paid to KBR, a former Halliburton division, to supply U.S. military in Iraq with food, fuel, housing and other items - $20 billion
• Portion of the $20 billion paid to KBR that Pentagon auditors deem "questionable or supportable" - $3.2 billion
• Number of major U.S. bases in Iraq - 75 (The Nation/New York Times)

TROOPS IN IRAQ

• Iraqi Troops Trained and Able to Function Independent of U.S. Forces - 6,000 as of May 2007 (per NBC's "Meet the Press" on May 20, 2007)
• Troops in Iraq - Total 152,350, including 146,000 from the US, 4,000 from the UK, 900 from Poland, 650 from South Korea and 800 from all other nations
• U.S. Troop Casualties - 4,209 US troops; 98% male. 91% non-officers; 82% active duty, 11% National Guard; 74% Caucasian, 9% African-American, 11% Latino. 19% killed by non-hostile causes. 54% of US casualties were under 25 years old. 72% were from the US Army
• Non-U.S. Troop Casualties - Total 314, with 177 from the UK
• US Troops Wounded - 30,848, 20% of which are serious brain or spinal injuries (total excludes psychological injuries)
• US Troops with Serious Mental Health Problems - 30% of US troops develop serious mental health problems within 3 to 4 months of returning home
• US Military Helicopters Downed in Iraq - 68 total, at least 36 by enemy fire

IRAQI TROOPS, CIVILIANS & OTHERS IN IRAQ

• Private Contractors in Iraq, Working in Support of US Army Troops - More than 180,000 in August 2007, per The Nation/LA Times.
• Journalists killed - 135, 91 by murder and 44 by acts of war
• Journalists killed by US Forces - 14
• Iraqi Police and Soldiers Killed - 8,792
• Iraqi Civilians Killed, Estimated - A UN issued report dated Sept 20, 2006 stating that Iraqi civilian casualties have been significantly under-reported. Casualties are reported at 50,000 to over 100,000, but may be much higher. Some informed estimates place Iraqi civilian casualities at over 600,000.
• Iraqi Insurgents Killed, Roughly Estimated - 55,000
• Non-Iraqi Contractors and Civilian Workers Killed - 556
• Non-Iraqi Kidnapped - 306, including 57 killed, 147 released, 4 escaped, 6 rescued and 89 status unknown.
• Daily Insurgent Attacks, Feb 2004 - 14
• Daily Insurgent Attacks, July 2005 - 70
• Daily Insurgent Attacks, May 2007 - 163
• Estimated Insurgency Strength, Nov 2003 - 15,000
• Estimated Insurgency Strength, Oct 2006 - 20,000 - 30,000
• Estimated Insurgency Strength, June 2007 - 70,000

QUALITY OF LIFE INDICATORS

• Iraqis Displaced Inside Iraq, by Iraq War, as of May 2007 - 2,255,000
• Iraqi Refugees in Syria & Jordan - 2.1 million to 2.25 million
• Iraqi Unemployment Rate - 27 to 60%, where curfew not in effect
• Consumer Price Inflation in 2006 - 50%
• Iraqi Children Suffering from Chronic Malnutrition - 28% in June 2007 (Per CNN.com, July 30, 2007)
• Percent of professionals who have left Iraq since 2003 - 40%
• Iraqi Physicians Before 2003 Invasion - 34,000
• Iraqi Physicians Who Have Left Iraq Since 2005 Invasion - 12,000
• Iraqi Physicians Murdered Since 2003 Invasion - 2,000
• Average Daily Hours Iraqi Homes Have Electricity - 1 to 2 hours, per Ryan Crocker, U.S. Ambassador to Iraq (Per Los Angeles Times, July 27, 2007)
• Average Daily Hours Iraqi Homes Have Electricity - 10.9 in May 2007
• Average Daily Hours Baghdad Homes Have Electricity - 5.6 in May 2007
• Pre-War Daily Hours Baghdad Homes Have Electricity - 16 to 24
• Number of Iraqi Homes Connected to Sewer Systems - 37%
• Iraqis without access to adequate water supplies - 70% (Per CNN.com, July 30, 2007)
• Water Treatment Plants Rehabilitated - 22%

RESULTS OF POLL Taken in Iraq in August 2005 by the British Ministry of Defense (Source: Brookings Institute)

• Iraqis "strongly opposed to presence of coalition troops - 82%
• Iraqis who believe Coalition forces are responsible for any improvement in security - less than 1%
• Iraqis who feel less secure because of the occupation - 67%
• Iraqis who do not have confidence in multi-national forces - 72%

• 
  

Laissez-Faire Capitalism Should Be as Dead as Soviet Communism

Huffington Post
by Arianna Huffington - December 22, 2008

It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

We've only just begun to bury the financially dead, and the free market fundamentalists are already looking to deflect the blame.

In a comprehensive piece on what led to the mortgage crisis and the subsequent financial meltdown, the New York Times shows how the Bush administration's devotion to unregulated markets was a primary cause of our economy to ruin. But the otherwise fascinating piece puts too much focus on the "mistakes" the Bush team made by not paying attention to the warning signs popping up all around them.

"There is no question we did not recognize the severity of the problems," claimed Al Hubbard, Bush's former chief economic adviser. "Had we, we would have attacked them."

But the mistake wasn't in not recognizing the "severity of the problems" -- the mistake was the [conservative] ideology [against government oversight and regulation of business] that led to the problems. Communism didn't fail because Soviet leaders didn't execute it well enough. Same with free market fundamentalism. In fact, Bush and his team did a bang-up job executing a defective theory. The problem wasn't just the bathwater; the baby itself is rotten to the core.

A Stake In The Heart Of The Center-Right Hype

HuffingtonPost.com
by Marty Kaplan
December 22, 2008

As the country went to the polls this past fall, the meme that America is a "center-right" country surged. Between the last week of October and the first week of November, the number of times that phrase appeared in the print and broadcast outlets tracked by Nexis grew an astonishing 168%. While Republicans used those words' sudden currency to clamp a ceiling on the meaning of Obama's victory, Democrats fought back with myth-busting poll results about the political parties that Americans identify with, and about peoples' positions on campaign issues. Here is some additional data that drives a final stake into the center-right talking-point. Norman Lear Center and Zogby International - asked a scientific sample of adults to look at 21 pairs of statements. Each pair dug down to core political values. Each pair had a red (or conservative) answer and a blue (or liberal) answer. What did we find out? On some issues, the country has a lopsidedly blue point of view. For example, 77% of our respondents agreed that "it is our duty to help the less fortunate"; 76% said that "government is too involved in regulating morality"; 76% believe that "corporations generally act without society's best interests in mind." Fifty-two percent were blue, and 48% were red - a finding that's significant beyond the poll's +/- 1.8% margin of error. The country leans to the left, not the right. (If you'd like to see all 21 pairs of political values questions, and how people answered, here's where to find that.) A surprisingly small number of the 3,167 people in the survey gave answers that were all blue or all red. Instead, almost all the adults polled offered mixtures of red and blue answers. And when we analyzed those mixtures, we found that they formed three statistically significant clusters, which we called red (41% of the sample), blue (34%), and purple (24%). (The poll's findings omit the country's 5% of self-identified libertarians, who are all over the map on the issues.) Purples - the nation's center - leaned to the red end of the spectrum on eight issues, and they leaned to the blue end of the spectrum on 12 issues. (They were split 50/50 on one issue: whether religion should be left out of public life.) Over all, 56% of the purples identified with blue answers, and 44% of the purples identified with red answers. In other words, the center of the country leans to the left, not the right.

Obama Talks Bipartisan Unity As Republicans Prepare To Bash And Obstruct

Updated December 23, 2008 at 10:00 AM

As incoming President Barack Obama talks bipartisan unity and works to staff his White House and assemble his Cabinet, Republicans are preparing a toolbox of minority tricks and tuning up the vast right wing noise machine so they are ready to obstruct Democrats at every turn.

Today, the New York Times had an article about how right-wing talk radio is gearing up to aggressively go after President Obama over the next four years. The eight years of Clinton-bashing during the Clinton administration years may seem tame by comparison. Rush Limbaugh demonstrated his commitment to this Obama-bashing crusade today on his radio show by blaming Democrats for the current economic crisis. This theory is quickly becoming a right-wing favorite. Karl Rove and Bill O’Reilly also recently claimed that the economic crisis was deliberately manufactured — not by Democrats but by journalists who wanted to help elect Obama.

After years of habitually resisting and belittling attempts to use a key House committee as a mechanism to investigate and hold the White House accountable, Republicans are saying they now want to get into the White House oversight game.

Rep. Darrel Issa (R-CA), who will become the ranking minority member of the House Oversight and Government Reform Committee, is making clear President Obama will be firmly in his sights.

A day after he was formally selected as ranking member last week, Issa ousted 14 of 39 Republican committee staffers, including many senior aides. Outgoing staffers said they were told the panel's minority will shift its focus away from legislation toward oversight of federal agencies.

By bringing in aides with investigative backgrounds, committee Republicans believe they can increase their capacity to conduct independent investigations, despite lacking the majority's subpoena power.

To be sure, Republicans plan to push the talking point that President Barack Obama should be as subjected to Congressional scrutiny as any of his predecessors, and Republicans will press an adversarial relationship in every legislative-executive branch interaction in the 111th congressional session.

Of course, a look at Issa's past performance he'll hardly be interested in an even-handed approach to good governance as he will be in using his committee perch for partisan grandstanding.

Sen. Arlen Specter (R-Pa.), the ranking minority member of the Judiciary Committee, has said he will attempt to slow down the process of confirming Eric Holder as Obama's attorney general, citing lingering "concerns" about the nominee’s role in various areas while part of the Clinton Administraion. Specter's "concerns" are bogus as it has come to light that this is nothing more than a Republican obstructionist strategy being driven by Karl Rove. Ceci Connolly, national staff writer for the Washington Post, said as much on Sunday, passed on a bit of hill gossip the Sunday edition of "The Chris Matthews Show." Connolly said, "Word on the street is that Karl Rove is going to be helping lead the fight against Obama's nominations as part of the Republican Party's strategy.

Arizona Sen. Jon Kyl, the second-ranking Republican in the U.S. Senate, warned president-elect Barack Obama that he would filibuster Obama's appointments if those nominees were not to acceptable to conservatives. (I'll add, by the way, that Kyl was one of the conservative Republicans who, in 2005, supported the "nuclear option," against Democrats which would have eliminated filibustering from congressional rules leaving Democrats with no voice in the Senate, period. That, of course, was when Republicans controlled congress.) Senators from South Carolina, Georgia, Oklahoma, Texas and Kentucky, have also vowed to obstruct Obama's agenda by filibustering Obama's nominations and legislative proposals.

Remember when the Republican party was accusing Democrats of being obstructionists for just mentioning the word "filibuster" as the Republicans push a very partisan congressional agenda, particularly the confirmation of extreme right-wing judges, when Republicans controlled congress? Republicans were singing a different tune after they became the minority party in the 110th Congress. The number of cloture votes forced by Senate minority Republicans skyrocketed in the 110th Congress following the Democratic takeover of the Senate and Harry Reid's assumption of the majority leader position.

The Senate voted on 112 cloture vote motions in the 110th congress controlled by Democrats, exactly double the number (56) of cloture votes in the 109th Congress, when Democrats were in the minority and Republicans were in control. The 110th congress cloture motions were two-and-a-half times as many as the average number of cloture votes (44) over the previous nine Congresses. Of these cloture motions, 51 were rejected (meaning that Republicans succeeded in Filibustering an up-or-down vote) and 61 were passed....
With the Republican minority numbers slipping to just 41 Senators for the 111th Congress (assuming Al Franken wins in MN) Republicans seem prepared to use the threat of filibuster (cloture vote motions) to stall Obama from quickly forming a functioning administration and to kill all legislation they deem too progressive. Gee, if Republicans can make it look like Democrats can't govern by obstructing government, then maybe Republicans will have an issue to run on in 2010 to pick up a few House and Senate seats.

And then there is that old Republican "lawsuit" strategy to harass the Democrats and distract the media. Republican politicians like to campaign against "lawsuit abuse," the idea that trial lawyers are clogging the judicial system with pointless lawsuits. None-the-less right-wing groups like Judicial Watch, which as Politico notes existed almost solely for the purpose of harassing the Clinton administration, are gearing up to go after the Obama administration.

Judicial Watch President Tom Fitton announced his group was considering filing suit to prevent Hillary Clinton’s appointment as Secretary of State, based on the Ineligibility Clause of the Constitution. This [lawsuit] saber-rattling over the secretary of state appointment calls to mind the tactics of the Larry Klayman era. [Klayman was the founder and former Chairman of Judicial Watch.]

As the group ponders its latest legal action, it still awaits a pending FEC complaint it filed back in April against the junior New York senator over a fund raising event where Elton John performed. The complaint alleged that John wasn’t permitted to help Clinton raise money because he is not a citizen of the United States.

Also, last week a Judicial Watch investigator went down to Bill Clinton’s Presidential Library in Little Rock, Ark., to comb through papers that had been released on account of a Freedom of Information suit. The group is looking for information to use against Hillary Clinton and other Obama appointments that were associated with the President Clinton's administration.

Jake Siewert, who served as Bill Clinton’s White House press secretary, tells Politico that they "initially underestimated the amount of damage that Judicial Watch could do through the press and nuisance lawsuits." The incoming White House will not only have to deal with Judicial Watch's lawsuits, but seemingly an avalanche of lawsuits from the conspiracy theorists who still refuse to accept that Barack Obama is qualified to become the next president.

As Alan Keyes' running mate, Wiley Drake, tells the OC Weekly, that they intend to make this issue dog the Obama administration "much like the White Water and then Monica Lewinsky controversies dogged Clinton’s presidency":

...it will be even more so than the Lewinsky thing. I think it will dog Obama because one of our attorneys, Gary Kreep [of the United Justice Foundation] said we will do everything we can to fight this battle. If we win this case, we will keep him out of the White House. If we lose, Gary and his committee of lawyers, and many of us are supportive of this, if Mr. Obama is indeed inaugurated, we will file a lawsuit against the inauguration for being illegal and against the chief justice of the Supreme Court for swearing in a usurper. And then, typically on the first day of office, the president signs a bunch of bills. Every bill or document he signs, we will file a separate lawsuit. For every decision he makes, it’s gonna to be tied up in court.

Related Links:

• Republicans Struggling To Figure Out How To Criticize Obama
• Joe Conason writes that the wingnuts are starting the same old crap that they used on the Clintons

Bush Admin Hamstrung by Conservative "Trickle-Down" Ideology

House of Representatives Speaker Nancy Pelosi, Rep. Barney Frank and other Congressional Democrats are drafting legislation to target the remain $350 billion allocation of the Troubled Asset Relief Program (TARP) to reduce home foreclosures. "Absolutely nothing has been done to respect that part of the TARP legislation," Pelosi told reporters as she discussed Congress's agenda in coming weeks.

Secretary of Treasury Paulson argues the Conservative Ideology perspective that TARP funds should be used to generally prime the banking system pump to have loan availability back into the economy rather than to use TARP to target home foreclosures directly. Paulson says that Banks are expected to increase their loans because of the TARP federal aid. Paulson says, "It may be slow, but as funds for lending "trickle-down" through the market, more homeowners will resolve their foreclosure problems." Conservatives are still trying to make that old "trickle-down" economics thing work - will they never learn any new tricks?

Treasury Secretary Henry Paulson said Friday that Congress will need to release the last half of the $700 billion rescue fund because the first $350 billion has been committed. Paulson said he intends to allocate the second installment of $350 billion to financial system much as he allocated the first installment of $350 billion. Paulson, a former Wall Street market executive, pumped $250 billion of the first TARP installment, in market fashion, to buy stock in hundreds of banks as a way to bolster their balance sheets and get them to resume more normal lending.

Key Democrats, including House Speaker Nancy Pelosi and House Financial Services Committee Chairman Barney Frank, complain that the Treasury's $700 Troubled Asset Relief Program, or TARP, has done little to help struggling homeowners as it pumped the first $350 billion into the balance sheets of banks and other financial firms with little visible benefit. She and Frank are preparing "legislation that specifically requires that provisions of the TARP legislation [to target the foreclosure problem] be honored, when congress releases the additional funds," Pelosi said.

After receiving $350 billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the TARP money or they simply refuse to discuss it.

"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?

None of the banks provided specific answers. The answers, or more accurately the lack of answers, highlight the secrecy surrounding the Troubled Asset Relief Program. Congress intended for the banks to lend the money to resolve the home foreclosure meltdown - not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no regulatory oversight or even a review process in place to make sure that's happening and there are no consequences for banks who misuse the money. After all, Republicans, and in particular George Bush, are not ones to let facts and experience get in the way of ideology, particularly on something as abhorrent as government oversight and regulation of business.

Perhaps one reason banks are mum about how they are using TARP funds is, according to an AP study, that after banks received the taxpayer money top executives rewarded themselves with cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management. The AP Study found that the total amount of bonus money given to nearly 600 bank executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.

Even though neither the Banks nor Treasury Secretary Paulson can specifically outline how the banks have used TARP bailout funds or how the funds are being used to address the home foreclosure problem, Paulson is insisting that congress release the second TARP installment of $350 billion directly to banks.

Legislation demanding that the second installment of $350 billion be targeted for home foreclosure mitigation will be ready within the next couple of weeks, said Steven Adamske, an aide to Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee.

Most Democrats -- in Congress and on President-elect Barack Obama's team -- favor pressing lenders to renegotiate troubled mortgages. That is the tack of the Streamlined Modification Program, championed by Federal Deposit Insurance Corporation Chairman Sheila Bair. The SMP is aimed at trimming foreclosures and ending fire sales by offering a guarantee to lenders that modify a mortgage so payments are trimmed to 31% of a home owner's gross income.

If banks cut interest rates or stretch out the life of a loan, Washington would cover part of the lender's losses should a homeowner re-default. Bair says the plan would save 1.5 million homeowners at a cost of $24.4 billion. When Bair first suggested pushing lenders harder to modify iffy mortgages last spring, it was dismissed by the Bush Administration. Since then Bair has very successfully instituted many of her ideas at IndyMac, the failed thrift the FDIC took over in July. Secretary Paulson argues that Bair's plan is inappropriate for the Treasury's $700 billion rescue, because it would be an expenditure rather than an investment that would earn a return.

Congress may delay releasing the second installment of $350 billion to President Bush's Secretary Paulson and wait to release the funds to Obama's Treasury Secretary, Timothy Geithner, who supports directly targeting the money for foreclosure mitigation. Senate Republicans have threatened to filibuster legislation to directly use TARP funds for foreclosure mitigation.

If the previous year of record foreclosure rates, falling home values, a declining stock market, and continuing inflation have seemed like too much catastrophe for the US economy to bear, just wait. A second (Tsunami Size) wave of foreclosures are set to begin in the spring of 2009. This is when another round of Option ARMs mortgages will begin to reset making monthly mortgage payments instantly unmanageable for millions of additional home owners. This will be the first major test for the Obama Administration and Congressional Democrats.

Option ARMs mortgages were sold, at the height of the mortgage bubble, to homeowners eager to cash in on rising property values and keep their mortgage payments as low as possible. What makes the coming option ARM resets most worrying is who they were marketed to and what the "option" part of the mortgage really means. These borrowers had relatively good credit ratings when they took the loans, but many people taking these loans did not fully understanding how they worked and why their "apparent" interest rate and monthly payments were so low.

Since congress repealed the 1968 Truth In Lending Act in 1994, mortgage brokers selling the option arms mortgages were not compelled to fully explain how the mortgages worked. To the contrary, the language of these mortgages was often convoluted and opaque, explicitly designed to mislead the borrower.

Option ARMs mortgages allowed homeowners to pay only a small portion of the interest on their loan every month for the first two or three years. The larger portion of the interest payment was added back into the total mortgage amount over that two or three year period until the "reset" date. In other words, borrowers keep making monthly payments only to find out that their loan amount got bigger every month. When the payments reset, based on the prevailing interest rates and interest inflated loan total, which is now far greater than the property's value due to all that accrued interest, the monthly mortgage payments become instantly unmanageable for many homeowners.

The steep declines in real estate markets over the past year due to the foreclosure crisis is helping to fuel a self-sustaining cycle of foreclosures, followed by property value decrease, followed by more foreclosures. This helps to accelerate how quickly and how deeply homeowners find themselves "underwater" in a house they can't sell for the amount of their interest inflated mortgage. And few homeowners feel good about sending in a higher mortgage payment every month when they realize their equity has been completely eliminated by the interest inflated loan amount and the collapsing U.S. housing market. So, in 2009, banks are facing a second wave of mortgage holders who will have no other option than to just walk away from their house when their payments reset.

Related Postings:

• Tim Geithner, Obama's Secretary of Saving the World
  
• AP Study Finds TARP Funds Given To Banks Went To Bank Execs As Bonuses
  
• Where'd the bailout money go? Shhhh, it's a secret
• GOP Blind Faith In Unregulated Markets Stoked Economic Crisis
  
• Federal Data Disproves Conservative Spin Democratic Sponsored Minority Lending Cause Of Mortgage Meltdown
• Conservative "Hooverism"
• Reassessing Reagan's "Government Is The Problem" Proclamation
• Republicans Borrow and Spend to Massive Debit

Post Script:

Secretary of Saving the World
Tim Geithner's daunting to-do list at the Treasury Department.
Slate.com

Timothy Geithner, the New York Fed chief, was tapped by President-elect Obama to serve as Treasury Secretary. In the last year, the United States has effectively nationalized the financial sector. Thanks to Secretary Paulson's and Secretary Bernanke's occasionally frantic efforts to fend off systemic collapse, the government now largely owns AIG, Fannie Mae, Freddie Mac, and chunks of several banks as well as oodles of dodgy assets pledged as collateral for loans. Paulson and Bernanke have spent, promised, loaned, guaranteed, or assumed in liabilities amounts that are now approaching $14 trillion.

Secretary Geithner will have to function partly as a money manager to decide what to do with the portfolio of shares Treasury now holds in big banks like Citi. Like a private-equity magnate, he'll have to decide the appropriate capital structure and ultimate disposition of companies, like AIG, that have become wards of the state. And with the remaining $350 billion of the Troubled Asset Relief Program, he'll be the investment banker in chief, deciding who might be bailout-worthy.

AP: $1.6B Went To Bailed-Out Bank Execs

Newsweek
By Associated Press Writers FRANK BASS and RITA BEAMISH
Dec 21, 2008

On the verge of failure, bank executives collected financial bonanzas, AP study finds.

Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue.

Read the rest of the story in Newsweek.

Bush White House Philosophy Stoked Mortgage Bonfire

GOP Blind Faith In Unregulated Markets Stoked Economic Crisis
A MUST READ!

The New York Times
By JO BECKER, SHERYL GAY STOLBERG and STEPHEN LABATON
Published: December 20, 2008

WASHINGTON — The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”

It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.

“How,” he wondered aloud, “did we get here?”

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

“There is no question we did not recognize the severity of the problems,” said Al Hubbard, Mr. Bush’s former chief economics adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

Looking back, Keith B. Hennessey, Mr. Bush’s current chief economics adviser, says he and his colleagues did the best they could “with the information we had at the time.” But Mr. Hennessey did say he regretted that the administration did not pay more heed to the dangers of easy lending practices. And both Mr. Paulson and his predecessor, John W. Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

For much of the Bush presidency, the White House was preoccupied by terrorism and war; on the economic front, its pressing concerns were cutting taxes and privatizing Social Security. The housing market was a bright spot: ever-rising home values kept the economy humming, as owners drew down on their equity to buy consumer goods and pack their children off to college.

Lawrence B. Lindsay, Mr. Bush’s first chief economics adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Mr. Bush meet housing goals.

“No one wanted to stop that bubble,” Mr. Lindsay said. “It would have conflicted with the president’s own policies.”

Read the rest of the story in The New York Times

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Related Postings:

• Federal Data Disproves Conservative Spin Democratic Sponsored Minority Lending Cause Of Mortgage Meltdown
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TX Senate Dems Making Deal With Dewhurst On Voter ID?

Capitol Annex

Via the Houston Chronicle, word comes that some Senate Democrats may be ready to cut a deal with the Devil on the issue of voter identification.

Why Democratic senators, with at one extra Democratic voice in the chamber this session, would want to allow any voter identification measure to pass the chamber is beyond comprehension.

Dewhurst plans to try again and already has been talking to several Democratic senators about making a deal. One thing he is offering is an exemption for senior citizens from the ID requirement or, at least, exempting seniors from having to pay a fee for their IDs.

Several details, including the cutoff age, apparently have yet to be worked out.

Exemption for seniors

The bill approved by the House in 2007 would have exempted voters 80 and older from the ID requirement, but that provision was stripped out by the Senate State Affairs Committee.

Sen. Mario Gallegos of Houston, who joined his Democratic colleagues in killing the ID bill two years ago, despite a difficult recovery from a liver transplant, said Dewhurst has approached him about reviving the senior exemption provision.

Gallegos said he is willing to talk some more but isn’t ready to drop his opposition to the bill yet, particularly since he hasn’t seen the proposal in writing.

“The seniors’ provision is a good idea, but I have concerns that the bill would still discriminate against other people,” he said, including immigrants who have recently become citizens.

Any Democratic senators who are seriously considering making a deal with Dewhurst over this should consider the potential political consequences, including losing their seats to primary challengers.

Democrats wanting to “negotiate” with Dewhurst over Voter Identification is equivelant to Sam Houston winning the Battle of San Jacinto, going out and recruiting more troops, and then coming back and telling Santa Anna, “oops, my bad! Let’s forget all about the Alamo and Goliad, and help you save face so you can get re-elected.”

Not to put too strong a point on it, it is bullshit.

Read

Gov. Perry Making Abortion A Centerpiece Of 2010 Primary Campaign

Capitol Annex

By proclaiming his unwavering support for “Choose Life” license plates–an issue that has failed to pass the Legislature five times in the last five sessions–Texas Governor Rick Perry has sent the clear signal that he intends to make abortion a centerpiece of his 2010 primary race against U.S. Senator Kay Bailey Hutchison, who does not as strongly hold the pro-life position.

In announcing his support for the legislation to create the plates, he sent a clear message to the Texas GOP primary voters–a massive number of which are evangelical Christians

[Read more...]

GOTV Consideration - Young Democrats Use Cell Phones Only

The portion of homes with cell phones but no landlines has grown to 18 percent, led by adults living with unrelated roommates, renters and young people, according to federal figures released Wednesday. The figures, covering the first half of 2008, underscore how consumers have been steadily abandoning traditional landline phones in favor of cells. The 18 percent in cell-only households compares with 16 percent in the second half of 2007, and just 7 percent in the first half of 2005.

Leading the way are households comprised of unrelated adults, such as roommates or unmarried couples. Sixty-three percent of such households only have cell phones. About one-third of renters and about the same number of people under age 30 live in homes with only cells. About a quarter of low-income people also have only wireless phones, nearly double the proportion of higher-earning people.

The demographic segments with the highest cell phone only response are the same demographic segments that are most likely to be Democratic voters:

• Nearly two-thirds of all adults living only with unrelated adult roommates (63.1%) were in households with only wireless telephones. This is the highest prevalence rate among the population subgroups examined.
• One-third of adults renting their home (33.6%) had only wireless telephones. Adults renting their home were more likely than adults owning their home (9.0%) to be living in households with only wireless telephones.
• Men (18.0%) were more likely than women (14.4%) to be living in households with only wireless telephones.
• Adults living in poverty (26.0%) and adults living near poverty (22.6%) were more likely than higher income adults (14.2%) to be living in households with only wireless telephones.
• Adults living in the South (19.6%) and Midwest (17.8%) were more likely than adults living in the Northeast (9.8%) or West (13.7%) to be living in households with only wireless telephones.
• Non-Hispanic white adults (14.6%) were less likely than Hispanic adults (21.6%) or non-Hispanic black adults (18.5%) to be living in households with only wireless telephones.
• Adults with college degrees (17.1%) were more likely to be living in wireless-mostly households than were high school graduates (12.5%) or adults with less education (10.0%).
• Adults living with children (18.1%) were more likely than adults living alone (10.1%) or with only adult relatives (12.8%) to be living in wireless-mostly households.
• Adults living in poverty (10.8%) and adults living near poverty (10.3%) were less likely than higher income adults (17.1%) to be living in wireless-mostly households.
• Adults living in metropolitan areas (15.0%) were more likely to be living in wireless-mostly households than were adults living in more rural areas (12.1%).
  
• More than one in three adults aged 25-29 years (35.7%) lived in households with only wireless telephones. Approximately 31% of adults aged 18-24 years lived in households with only wireless telephones.
• As age increased from 30 years, the percentage of adults living in households with only wireless telephones decreased: 19.1% for adults aged 30-44 years; 9.2% for adults aged 45-64 years; and 2.8% for adults aged 65 years and over.

The findings have major implications for Democratic candidates and political organizations who will organize Get Out The Vote programs in future election cycles. Traditionally, Get Out The Vote programs use landline phone numbers to contact and motivate voters. In recent months researchers have concluded that people who have only cell phones have more prgressive political views than those who do not. Growing numbers of political pollsters now include cell-only users in their samples, which is more expensive in part due to legal restraints against using computers to call them.

The cell phone only adoption curve is steep and continuing at pace. Cell phone only households will likely exceed 20% during the 2010 election cycle.
The most progressive segments of the electorate will continue have the highest cell phone only adoption rate. Future Democratic GOTV phone banking operations must find ways to reach this segment of potential voters via cell phone numbers rather than landline phone numbers. Future phone banking operations should also consider leveraging this demographic evolution by including "text messaging" as part of the GOTV program.

Can Texas Go Blue Like Colorado?

The survey, conducted by David Hill, who operates the Houston-based Republican Hill Research firm, raises questions about whether the Republican Party might be in trouble in Texas after a decade of political dominance. Hill's survey states, in no uncertain terms, that for GOP candidates to succeed in Texas they must look beyond the party's base voters and wrap up 80 percent of independent voters that he calls the Critical Middle.

A well executed Get Out The Vote program to get just the members of your own party out to the polling places on election day is only part of what it takes to win elections with today's electorate. The other part of winning is planning and executing a Get Out The Vote program to identify, contact and motivate the "independents" that may be persuaded by your party's or candidate's message.

In Colorado the Republican GOTV effort got more Republicans to the polls on election day than did the Democratic GOTV effort - it was the independent voters that switched Colorado's color from red to blue in the 2008 election.

Democrats can win in Collin County, as well as other Republican "dominated" counties of Texas, by extending our GOTV effort to identify, contact and motivate the "independents" living in our counties.

The map at left shows the U.S. Congressional districts carried by Democratic candidates in the 2008 election. This shows that Democrats can win in large sections of the state and with the help of independents more counties can turn blue.

Who are the independents in Collin County? On election day 2008 there were 424,821 register voters in Collin County. Of that number 56,968 registered voters were in "suspend" status leaving 367,853 active voters. 298,647 people voted in the 2008 election in Collin County which means that 69,206 active voters did not vote. (Collin County elections data)

County level Democratic party organizations in each county that have not yet turned their county blue should start identifying the independents. Democratic organizations in Collin County should immediately start preparing for the 2010 election by answering a few basic questions: Who are the 56,968 registered voters in "suspend" status and what will it take to make them not only active voters again, but active Democrats? Who are the 69,206 active voters did not vote this year and why didn't they vote? Are they disaffected Republicans? How many might be persuaded to vote for the "right" Democratic candidate? It is among these numbers that Democrats will find the votes to turn Collin County blue.

Consider these excerpts from an article in The Denver Post.

Colorado Election Turned Out Surprises
The Denver Post
By John Ingold

More Republicans than Democrats voted in Colorado, but unaffiliateds helped color the state's big races blue.

According to new numbers from the Colorado secretary of state's office, Republicans in November voted in greater numbers than Democrats and — even more surprising — also turned out in higher percentages when compared with the parties' numbers of registered voters. In a state at the heart of the Democrats' Western strategy, Republicans still accounted for the largest voting bloc and yet lost in all of the highest-profile races.

That brain-twister, say political pundits, underscores the challenges both parties face moving toward what are expected to be equally contentious 2010 races for governor and U.S. Senate in a state that is now of decidedly mixed political leanings.

About 15,600 more Republicans voted in the election than Democrats, out of a record 2.4 million total voters statewide. In terms of turnout, slightly more than 80 percent of all registered Republicans voted this year, compared with about 79 percent of registered Democrats.

Statewide, Republicans still outpace Democrats in terms of total registered voters — though the numbers are closing and Democrats now count more active voters among their ranks than Republicans.

Independents, who make up the largest group of registered voters, trailed Republicans and Democrats in turnout this year. About 100,000 fewer unaffiliated voters cast ballots than did Republicans or Democrats. About 67 percent of registered independents voted in the election.

The key to the election, though, was how those unaffiliated people voted, said David Flaherty, chief executive of voter tracking firm Magellan Data and Mapping Strategies, which works with Republican candidates.

"The Republican get-out-the-vote effort executed very well," Flaherty said. "But at the end of the day, doing all those things right, it's about appealing to unaffiliated voters."

Home Owner's Insurance Reform In 2009 TX Legislative Session

Texans are paying the highest rates for homeowners insurance in the nation -- six years after an insurance crisis led Gov. Rick Perry and numerous state leaders to promise lower rates that never came. Meanwhile, insurance companies have enjoyed record profits.

With Democrats winning more seats in the Texas State Legislature in the 2008 election, homeowners will have an all-too-rare chance at genuine reform when the Legislature once again debates homeowners insurance in the 2009 state legislative session.

In the two legislative sessions since 2003, Speaker Craddick (R) made sure that few reform bills escaped the House Insurance Committee to come up for votes in the full House.

But next year the dynamic will change for two reasons. The House is more closely divided between Democrats and Republican, meaning Craddick, an opponent to reform, may not be speaker. Craddick can't win speaker's chair again for the 2009 legislative session without a block of support from Democrats, and neither can any other Republican. It would be very surprising if many, or any, Democrat(s) back Craddick for the speaker's chair.

More important, the Insurance Department is undergoing sunset review, the regular process by which the Legislature examines state agencies. That ensures that an insurance bill will move through the Legislature. Many Democrats and Republicans, having heard from angry homeowners in their districts, are pushing for more stringent regulation.

With foreclosures on the rise in Texas, many lawmakers realize that reducing consumers’ insurance bills may allow more folks to keep their homes. Also, Republicans may be more anxious to make a show of "supporting the average Texan" after the Houston-based Republican Hill Research firm, raised such serious questions about whether the Republican Party might be in trouble in Texas after a decade of political dominance. Continued Republican opposition or foot dragging on meaningful Home Owner's Insurance Reform in the 2009 legislative session will give Democratic candidates a giant hammer to swing at their Republican opponents during the 2010 election cycle.

• Read more about Home Owner's Insurance Reform in the 2009 legislative session in the Texas Observer
• Read more about Craddick and the 2009 legislative session Speaker's race at burntorangereport.com
• Read more about closely divided legislature at Fort Worth Star Telegram