The Health Care Fight: Don't Throw in the Gauze Just Yet

How could half be totally wrong and the other half be totally correct?  Likely, they are not.  Congress is made up of those two halves, but they don't represent the whole of us.  The others are an equal number in the middle, who are either too confused or apathetic to take issue.  And, intelligence is a constituent with virtually no representation in Congress.  So, here we sit, with what might be the 'will', but not the 'way' to fix the abomination we call our health care system.

From my perspective the attention is 30 years late; thirty additional years of a cancerous tumor I diagnosed in 1980.  It's taken many decades of runaway price increases; trillions of wasted dollars going to an industry blessed with the storybook goose that lays the golden egg.  And over in this corner we have the Democrats (Dems) with notions of regulating insurers and a public insurance option as the cure, and in the other corner we have the Republicans (Pubs) prescribing a regimen of shifting the purchase of health insurance to the consumer and putting further limits on medical liability claims.

Little do the liberals and progressives realize that the 'Teabaggers', those staunch and loud opponents of health care reform, have provided the country a service.   While their fears are misguided, they have halted implementing an insufficient fix, though any fix might be better than the status quo.  But a poor fix, could delay by many years, or decades, rooting out the actual problem.   On the flip side, the Pubs' plans are a mixed bag, also better left stifled.  With any luck, both the delay from this stalemate and the intense pressure to do something will drive more thought by those who have the power to make changes.

Right now, I would say that the medicine ball is in the Pubs' court.  The New York Times asked five conservative 'thinkers' to speak out with their best ideas for slowing the growth of health care expenditures and expanding the number of insured Americans.  I'll try to sum up their pitches, and then will grade each on problem solving.

Newt Gingrich, the former Speaker of the House of Representatives and founder of a for-profit consultation group, dubbed the Center for Health Transformation, which appears to be a front for undisclosed lobbying services, responded that 'frivolous' malpractice lawsuits against health care providers (the gift of a political 'red herring' for conservatives that just keeps on giving) is what ails us and that by us limiting the accountability of health care providers we can bring about affordable health care.

James Pinkerton, former domestic policy aide for Reagan and Bush I, and fellow at the New America Foundation, a policy think tank, summed up his thoughts with, "A 'more health' plan is a win for individual health, a win for economic growth and, yes, a win for the cause of long-term health savings." Looking past his beauty pageant response, I've tried to cull out his proposal and inferred that he wants to spend more on medical research and in so doing it will, both, give Americans what they really want, which he says is more or better health care, and will be the economic engine of our new economy.

Mark McClellan, former Medicare administrator under Bush I, and director of the Engelberg Center for Health Care Reform at the Brookings Institution, references a few commonly raised solutions, but uses most of his ink on the notion of performance based compensation, though he couches it with a more Republican friendly 'cost savings' measure of performance. He acknowledges that Dems are out front on the 'performance' concept and challenges Republicans to get on board by seeing that Medicare is capable of measuring patient outcomes.

Charles Kolb, former domestic policy adviser to Bush I, and president of the non-partisan Committee for Economic Development, promotes weaning Americans off of their employer provided health insurance to create a far more competitive market in health insurance, and placing some type of risk adjustment compensation mechanism in the mix to incentivize coverage among all health risk categories. He adds that ending the current tax exemption of payments for employer sponsored insurance would help to publicly provide insurance for those currently uninsured.

Bill Frist, former Senator from Tennessee, and a surgeon, also endorses some frequently mentioned measures, but offers that they will never provide the fundamental change the system needs. He adamantly promotes packaged based compensation, by insurers, instead of fee for service, which he cites promotes volume over both quality and efficiency. Packaging would entail all the services, personnel and pharmaceuticals needed to treat a particular health care 'event'. He, also, harshly criticizes leading Democrats for lacking any faith in market economies or "in the power of hundreds of millions of people to make smart choices about their health."

Half of the Times inquiry, how to expand the number of insured Americans, was virtually untouched by the writers, but perhaps space didn't allow for addressing both subjects.  On the positive side, it seems that a good portion of the Republican establishment is now admitting there is a problem beyond simply blaming trial attorneys.  In fact, I was surprised to see one of the responses go so far as to suggest results based compensation, a pretty revolutionary idea for health care here in America, and another propose a change in the structure of health care pricing away from itemized treatment to packaged case management for health care events, also a sea change in our system.

I am surprised, because those notions go beyond simply urging the control of prices by positioning consumers to make cost/benefit value judgments in their choice of health care services.  They are suggesting that an entity other than the patient make a judgment on the quality and efficiency of care; that is the stuff of warning signs at 'Teabagger' rallies showing why we should fear government run health care.  Perhaps, some of these conservative 'thinkers' don't reflect the intellect of their base.

I've given grades, in order: F, F, B-, C, B-

Gingrich is so lacking in depth as to be almost pathetic.  He is a front for the insurance industry, still pushing his tort 'reform' agenda to allot more profits for insurers and health care providers who want to, with damage caps, budget in their maximum liability for negligence.  His home state of Georgia implemented such legislation in 2005, and I've not yet been apprised that health care in Georgia has become more affordable or available in the interim; but logically more risky for the patients.

James Pinkerton appears to have had little exposure to the price of health care today.  His call for improving research is admirable, but not a subject of any controversy or pertinent to the problem at hand.  Kudos for thinking broadly, in recognizing the economic impact of 'medical industries', but his notion that spending more money to get healthier and therefore be more productive is hardly worth comment.  Yet, with America losing so many of its economic sectors to international competitors, medical research and innovation is an industry worthy of investment; but don't confuse it with the practice of health care.

McClellan goes for the efficiency method of reducing costs, suggesting that providers should be compensated based on how much their care reduces long term costs.  It is closely aligned with results based systems, a positive sign, as long as the health of the patient is one of those results.  He suggests that providers show "the way they prevent and manage illnesses reduces complications and cost Medicare less."  As a former Medicare administrator, he believes Medicare is capable of creating a means to measure such results and appropriately apply them, given the resources.  I'm going to take a leap here, by likening his proposal to that of the British health care system, though perhaps he intends it only for current Medicare recipients.   

Though, given a grade of C, Kolb did a good job of identifying much of the problem, but failed to go beyond the marketing of insurance in his analysis.  He chastises liberals for unrealistic idealism and conservatives for hypocrisy, and correctly recognizes our market-inadequate health care system he calls "a pre-World War II dinosaur awaiting extinction."  He is the only one who specified a means to help cover those currently uninsured, though it lacked any punch.  He should take his market oriented thinking to the next level, the point of health care consumption, beyond insurance consumption.

Bill Frist, certainly, doesn't lack passion for the subject.  He astutely recognizes a need to utilize the power of value judgments in markets, but doesn't really followup on that idea.  His central solution, which is to price health care by packaging related treatments instead of the current piece meal method, has the right goal but isn't alone likely to stem the rise of or reduce prices in health care.   Yet, in his argument, I see he places an emphasis on value; that along with his perception of market functions indicates he believes we need to achieve a point at which consumers are using value judgments to make cost/benefit comparisons, and from there both quality and efficiency will ensue, the only means to moderate prices. 

While their responses give me some hope that wisdom will prevail, I recognize that Congress is not a think tank.  We don't elect our best and brightest to run a large part of our lives, yet we insist on it in the operating room.  Odd, isn't it?

-RLee

Bipartisanship is Driving Us Into the Poor House

Enough already with this constant media complaint of Congress' lack of bipartisanship.   Have you seen the results of bipartisan legislation?   Have you really?!  The briefly heralded bipartisan 'job' bill that came out of the Senate Finance Committee represented all that is wrong with our maladjusted means of spending our collective wealth.   It contained spending and tax cuts to net out to another $85 billion of debt.  There is more spending for state and local government road projects and lots of goodies for businesses, though, on the good side it supposedly plugs a few tax loop holes.

As for 'jobs', the Congressional Budget Office analyzed that even the best of the tax cut proposals, a break on employer paid social security, would produce only 8 to 18 jobs for every $1 million of new federal debt.   I think even that is optimistic, as most of the tax avoidance would come from routine rehiring for existing positions.   Employers will simply give preference to hiring candidates who've been unemployed for 2 months (the minimum to qualify for the tax break) or more.  It might redistribute employment a bit, but isn't going to produce a wave, or even ripple, of increased hiring.  Tax cuts for business entities don't produce jobs, increasing demand for products and services produces jobs.

The spending side of the proposed bill wasn't any better, possibly worse, at creating jobs in the appropriate sectors, though it certainly insures plenty of work for those who've had it.  The bill was initially overlooked for its details by the media, and instead triumphed as a huge success in achieving bipartisanship.  Fortunately, one side blinked before it went too far, and now a new proposal, only slightly less objectionable is going forward for debate.

There are 535 people who vote on a budget of trillions of dollars.  Those people are driven by a need to pass a test to get into their next term of office, and 435 of them face that test every two years, and the other 100 must raise on average $5,600,000 (The Campaign Finance Institute, 11/06/2008) every six years as an additional qualification for a new term.   Roughly one half of them is working to get the approval of one economic group and the other half is working to get the approval of another economic group.  Who, legislatively, is looking out for the economic health of the United States?  No one, really.

We can't even presume that if every member of the present Congress were to develop amnesia simultaneously, thus forgetting who they had to please in order to get reelected, it would have any appreciable impact upon legislative results.  That's because the political dye has already been cast by a bi-polar electoral system, whereby every viable nominee in the general election has resolute political views in tight alignment with a 25% minority of the electorate at one end, or the other, of the political spectrum.  

Some of the problem is just simple human psychology and a failure to have structured our government to account for it.  What can be done?  For one thing, we need to revert to the original Constitutional concept of insulating the Senate from popular whims and common intellect.  James Madison is surely smirking, with an 'I told you so' grin from his celestial view of our experiences with and use of the document which he largely authored.   Sure, we had many problems with legislative appointments of Senators, primarily graft, but we were so unimaginative as to how to deal with it that we kicked a leg out from underneath ourselves.  Doh!

Another affliction with which we have burdened ourselves is a politically bi-polar legislative body.  The public financing of political party nominating processes, known commonly now as 'primaries', has entrenched the two parties into the psyche of the electoral body much like deep tire tracks in a snow and ice covered road, tainting alternative candidates with the lack of any popular endorsement.  Oddly, enough, primaries were the supposed cure to another problem in the process of choosing members of Congress, that of the major political parties selecting candidates in a clandestine manner, producing special interest minded legislators.

Is there a means whereby we can have the electorate equally consider candidates for the House of Representatives, without the influence of party affiliation, and yet allow political alliances to coalesce behind a single candidate?   Let's think on it.  You know, that thing that James Madison once did.

-RLee

Hercule Poirot: It was the Underwriter, In the Study, With the Fraud Instrument

     
If the housing market crash was made into a murder mystery, perhaps, the American public would 'Clue' into the facts of the crime.  A Belgian detective would guide us through the canards, false leads and 'tell tale' clues intricately woven into the unfolding mystery, to reveal the surprising culprit to a gasping audience.  And, unlike the revelation on the Orient Express and contrary to the assertions of American punditry, here the murderer is . . but one.

Though I needed no impetus for this story, a recent New York Times report can be blamed for instigating me.  The report was not really news, as stories about 'underwater' homeowners walking away from their homes have sporadically appeared since the start of the housing market crash in 2007.

This subject tends to pop up and fade quickly amidst the larger attention the banks have been getting over their self inflicted liquidity crisis.  Each story mentions the mechanics, economics, ethics and prevalence of walking away, and most of these are laced with implications of personal wrong doing, guilty consciences, and the portrayal of banks as victims in this scenario.

It's natural, for most of us, to react to debt default with a wince, though that's only true when it applies to an individual. We've become so accustomed to corporate or business bankruptcies, as just routine, that they don't evoke any emotions at all, unless it involves us personally. Though a company must deal with some practical issues of renewing credit lines, it's just business, not personal, whereas, individuals have to fear both the stigma to their credit worthiness and to their social reputation, even if its only imagined.

The stories on this subject reflect that double standard as they reveal the personal angst of homeowners contemplating defaulting, yet cast few aspersions on the culpability of banking institutions, many of whom have been rescued by the federal government with their jobs spared in the process. The banks are betting on the guilt, shame and prospective effects on credit and employment, which a mortgage default could have on an individual, to keep such acts to a small trickle. Thus, the banks aren't bending over backwards to aid their mortgage clients.

The report, "No Help in Sight, More Homeowners Walk Away", by David Streitfeld, adds some new information and thinking to the routine story. It gives some numbers on those who walk away as part of an investment decision as opposed to those who do it because they are struggling to keep up with the monthly loan payments. And, it is the first story of this type, I've read, that turns the corner on assigning guilt and responsibility. But, before getting to that corner, the usual questions of personal ethics are raised.

Mr. Streitfeld interviewed a homeowner who was in the 'underwater' predicament and reported this, "Others, like Mr. Koellmann in Miami Beach, made only one mistake: they bought as the boom was cresting."    Mr. Streitfeld likely took liberty to call Mr. Koellmann's purchase a 'mistake' because Mr. Koellmann himself referenced it as such, saying, "I took a loan on an asset that I didn’t see was overvalued.   As much as I would like my bank to pay for that mistake, why should it?”

Streitfeld's contention, "they bought as the boom was cresting," implies that Mr. Koellmann, and others, knew that real estate was over priced, relative to today's pricing, at the time they bought; or that they should have known it was going to drop in value, to where the price is today.  But, Mr. Koellmann's statement indicates he wasn't aware that the property was over priced (at the time of purchase).  Thus, the question then is, 'Should Mr. Koellmann have known the price was high relative to what it would be three years later?'  For me, the answer is, "Of course not!"

Consumers are very good at comparison shopping, at least those who find it necessary due to finances or those who simply don't like 'over' paying for anything, which encompasses most everyone.  If I were to interview Mr. Koellmann, I'd likely discover that he'd spent a long time looking for a property to purchase, made a lot of comparisons, in other words he performed due diligence.  At the time Mr. Koellmann purchased his condominium, he paid the price which was the value of the property, unless there was some other fraud related specifically to his condominium.

The housing market is the most competitive market we know.  While we are often worried about monopolies and oligopolies in many of our markets, we have at the other end . . . the housing market, where there is almost a 1:1 ratio of buyers and sellers.  That astounding number of suppliers for a product means that no one seller or type of seller, such as builders and renovators, can affect a price rise above that set by the market, i.e. supply and demand.  Only fraudulent acts on a massive scale could impact either supply or demand to the detriment of the larger market.

Fraud on the supply side has not occurred on any sustained or large scale basis.  It has occurred sporadically and its appearance brought about the widespread use of building codes.  County and municipal code enforcers, private building inspectors and value judgments by consumers have acted as regulators on the supply side of the housing market equation.

Like most products, supply follows demand.  Therefore, demand is the driving factor in the expansion of the housing market and its variation determines real estate values.  Note, also, demand must be measured in dollars, thus, Mr. Koellmann's contribution to demand is more than a single unit, it is the amount of money he is able and willing to, or ultimately does, spend on residential real estate.  This is important in order to understand that increasing demand, which drives prices up is not simply the result of a market expansion in the number of buyers, but the total amount of money chasing the available supply.

Wikipedia: In economics, demand is the desire to own anything and the ability to pay for it and willingness to pay. (emphasis added)

That definition, if quantified would be the total amount of money tendered for a product or service.  If in a microcosm of the housing market there exists 10 houses, demand in that microcosm is the sum of the money which 10 buyers are able and willing to tender for their purchase.  If buyers are able and willing to tender more to own the houses, then the value of the houses increase by that amount.   There isn't anything else which determines value, only a supply of a commodity and a demand for that commodity as measured in dollars. 

In the U.S., demand in the housing market is most often created by an arrangement between one who desires to purchase real estate and a lender who agrees to front an amount of money for the purchase, based, in theory, upon an assessment that the borrower has the ability to pay.  Unlike on the supply side, where a rather vigilant exercise of government regulation is performed by building-code inspectors, there is no exercise by government in validating the demand side. 

Demand facilitated through mortgage financing became prevalent in the United States after the Great Depression and grew to fully dominate the market.  The home construction industry and the mortgage banking industry grew simultaneously in conjunction with each other.  Throughout this history, increases in demand resulted from three factors, 1) population growth, 2) increases in median household wealth, adjusted for inflation, and 3) the reduction of risk to lenders by actions of the federal government.

In the twentieth century, the federal government took steps to broaden the consumer market for owner occupied homes by facilitating a reduction in risk for lenders.  Seeing an economically viable market, not being serviced by lenders (most being too small to assume much risk), entities and policies were put in place to offer loan guarantees (thus distributing risks) and a source of funds for lending (through brokering the loans as investments).  The two largest of these entities are the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Fannie and Freddie are huge actors in the mortgage market.  Their combined holdings or guarantees represent close to half of the mortgage holdings in the U.S.  At first glance, that makes them a serious suspect in this caper.  The two have had their critics, but if anyone provided a check on the viability of home loans, it is them.  Though they were under political pressure to aid in the effort to broaden home ownership among Americans, they also were a private entity with shareholders, and were the only secondary market guarantor or buyer who had a systematic process of standards and practices to qualify the loans they would back or purchase.

In Congressional testimony, of 2007, the then President and CEO of Fannie Mae said this:

     Unfortunately, Fannie Mae-quality, safe loans in the subprime market did not become the standard, and the lending market moved away from us. Borrowers were offered a range of loans that layered teaser rates, interest-only, negative amortization and payment options and low-documentation requirements on top of floating-rate loans.
      In early 2005 we began sounding our concerns about this 'layered-risk' lending. For example, Tom Lund, the head of our single-family mortgage business, publicly stated, "One of the things we don't feel good about right now as we look into this marketplace is more homebuyers being put into programs that have more risk. Those products are for more sophisticated buyers. Does it make sense for borrowers to take on risk they may not be aware of? Are we setting them up for failure?"

 Mudd, Daniel (April 17, 2007). Excerpt from "Opening Statement as Submitted to the U.S. House Committee on Financial Services"

Loans not qualifying for purchase by Fannie or Freddie, and not intended to be held by the lender, were destined for private market securitization.  Those loans were not subject to any standards of underwriting outside of the banks who originated them.  Underwriting is the process (and responsibility) of assessing a potential borrower's ability to repay a proposed loan and, in the case of mortgage loans, assessing the value of the collateral.

This underwriting process is wholly within the lending institution originating a loan and is the pivotal step in the bank's approving or denying a loan.  Of course, the process uses as its guide a standard minimum risk level set by the bank.  Degrees of risks in lending are a well researched subject, with vast quantities of historical data available to ascertain risks levels for given factors.  Thus, changing one's long established minimum standards is a step which is virtually certain to bring a proven result.  

Lenders found they had a growing and private secondary loan market (i.e. not Fannie Mae or Freddie Mac) where they could pass off the risk of an issued loan without its investment quality being questioned.  And that market was willing to pay them handsomely for their tainted products, allowing them to profit both on issuing the loan and then selling it.   Mortgage underwriting standards and ethics among lenders diminished considerably in the years leading up to the housing crash.  This Wikipedia excerpt explains the run up of investment money:

So why did lending standards decline? In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with financial innovation such as the mortgage-backed security (MBS) and collateralized debt obligation (CDO), which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U.S., with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain.

Note: The reference to 'mortgage brokers selling the loans' should be clarified.  While brokers receive fees for their service, they act only as a marketer of products (loan packages) offered by one or more mortgage banks; underwriting responsibility is with the lender/mortgage bank. 

Though accurate in pointing out the culpability, the article's choice of words in phrasing the last sentence is far too lenient.  While the author is merely summarizing the cause and effect which produced the injury, it sidesteps the responsibility of the chief actor here whose reaction to the incentive (cause) is THE very ACTION responsible for the housing surge and collapse.  No other actor among all the many who have been accused had the singular ability to produce this event.  Other players could have threatened, lied, cheated, or bribed, but none whether individually or in tandem with each other could have brought about this particular calamity on such a massive scale.   It was all contingent upon that singular act of underwriting.  

The backup systems meant to detect and aid in correcting a violation by this actor failed in their roles, these being banking regulators under the direction of the Federal Reserve, the Federal Reserve's officers and Board of Governors who are specifically given the task to be wary of signs of systemic risks to the U.S. economy, and the private security ratings agencies.  Their failures are large, and they should be held accountable in as severe a manner as is available.  And, yet, still the triggering violation of ethical responsibility lies with the mortgage underwriter.

There are always those who attempt to bribe someone to violate their legal, ethical, or moral responsibility for some gain.  All professions have their role in our system of commerce, whether a bank clerk, store clerk, minister, soldier, public official, auto mechanic, doctor, financial adviser, journalist, or security guard.  All perform critical functions within that system which are relied upon by all others within the system.  It isn't accepted that one is alleviated of responsibility by virtue of receiving sufficient bribes to do so.

Relaxed underwriting standards generated more lending, translating into more demand for housing, which of course pushed prices upward in most markets, which triggered builders to create more supply, which also created more issues with housing affordability.   And as prices went higher lenders became even more scurrilous, going still lower in their underwriting standards to find new borrowers, thus continuing the pretense of rising home values, and threatening the entire American economy.

The 'lowering of lending standards' is the simple language used to explain the vast increase in sub-prime loans and the subsequent housing boom and bust.  The description is far too benign, which is one reason why those acts have failed to ring the right cord with the public and the media.

It must be understood that these acts were not inadvertent.  Mortgage banks (lenders) intentionally and strategically lowered underwriting standards.  It defies all common sense to believe that there could exist a case of such widespread and simultaneous gross incompetence in lending.   Rather it must be that these were acts of conscience and deliberate efforts to deceive, by producing more mortgage product than could otherwise be produced using safe and prudent lending practices.   Mortgage lenders produced loans which they knew were not viable for the borrower or safe investments for any lender.   They committed professional and ethical fraud in their transactions with the borrowers and legal fraud when selling the loans to investment banks and others.   It also must be believed that lenders were all too aware of the growing cumulative ill effect of their fraudulent acts on the very collateral which secured the loans they issued.

The ability to pay is the essence of demand, for without financial ability no demand exists.  Banks provide that ability to pay a seller by fronting the money.   Demand for housing rose precipitously only because of the artificial stimulus generated by the rampant fraud in mortgage banking.   And, yet, media analysts, either embarrassed by their own incompetence in not correctly calling the crisis or acting at the behest of the banks, and political spinsters, with their own agenda, wrongly incriminated others to suit themselves.

Many professionals and homeowners who simply performed as any market would have them do, became scapegoats to shift attention away from the banking industry, or to falsely castigate a political opponent.   Prejudice and bias were unsparingly used to create a web of faux villains from builders, appraisers, home renovators, and home buyers, who were cast as speculators or too stupid, too poor, or too greedy.

Among the worst aspersions were those cast upon home builders, who in fact reacted to the market properly by increasing supply as demand rose.  If the President or the head of the Federal Reserve Board had informed the country in 2003 that the increased demand in the housing market to come over the next few years was only temporary (phony) and therefore builders should not build anymore homes, then sure, blame the builders.  But, that didn't happen.   In other words, there wasn't Over Building; at the time the home supply wasn't even keeping up with the growth in ($) demand; evidenced by the precipitous rise in prices.

The case could be made that more houses should have been built given the increased demand.  The problem was that demand (willingness and ability to pay) was being fraudulently manipulated to appear greater than, in fact, existed.  When actual demand increases, increases in production are desirable responses, being the most fundamental inhibitors of increasing prices.  It is the suppliers/producers who then invest, and risk, their capital to produce additional supply for the market.  The housing industry has, for as long as anyone can remember, been among the most stable and safe business sectors in America, but the unprecedented and unforeseen actions of the mortgage banks poisoned the entire market leaving builders holding a tremendous debt load and bringing financial ruin to many. 

Lenders (mortgage bankers) who participated in these underwriting scams, individually and severally, are guilty of tortiously interfering with the business prospects of builders, and possibly other businesses, who sustained economic damages as a direct result of the collapse in the housing market.  Builders should have, either individually or in class action, sought recompense from culpable mortgage lenders through the civil courts, using common law provisions.

The seeming complexity of the whole event allowed vast amounts of red herrings to appear, political spin to go unchecked, victims to go unacknowledged and villains to slither away undetected.   Virtually everyone in the media who makes their living observing, reporting, analyzing, advising and otherwise offering commentary upon the financial markets, everyone in government who had any role being responsible for regulating those markets, and virtually every top management official in the nation's mortgage and investment banks, were all guilty to some degree in abetting the cover-up.

It continued with books such as, "Our Lot" by Alyssa Katz, about which the author states: 

I think the message of my book, unfortunately, is that it's to some degree everybody's fault, including, I should say, liberal activists, with whom I'm extremely sympathetic, and think were right.

The book is a good presentation of evidence, but fails in its examination.  It does not distinguish cause and effect and thus ultimately fails to identify the pivotal acts which were the genesis of the economic calamity.  It is intellectually lazy or perhaps timid, foregoing any analysis of the process or identifying the roles played by each actor and the purpose of those roles, i.e. the formal function which each role has in maintaining the health of the housing market.

Any astute analysis would have keyed in on the mechanics of the whole process, identified the critical failure and thus where the professional responsibility rested, as would any good mechanic in looking for the 'source' of an engine break down.  By generalizing with its blurred focus it conveniently avoids confrontation.   The book's only virtue is its historical overview of our national failure to prevent the occurrences of real estate booms and busts.     

The media's massive use of generalizations to assign culpability, whether from ignorance or self-interest, are not only wrongs themselves for the injustice rendered to the victims, but indicate that the fundamentals are not understood, or at least not acknowledged.  The latter indicates that the badly needed changes to our financial checks and balances will not occur and abuse will follow in another generation, whereupon another book shall appear waxing over our historical failures to prevent such events.   

To knowingly offer incentives that encourage wrong doing is reprehensible (yes, the investment banks), but when the wrong doing itself is executed by professionals charged with a specific role for which they are accountable and the wrong doing is a direct violation of that role, who do we hold ethically and legally responsible?

It was the Underwriter.

-RLee

DADT: It's Just Wrong

I hadn't planned to write on the "Don't ask, don't tell" controversy. I didn't believe I could add anything to the arguments which have already been publicly exhorted again and again.  But in reading a New York Times opinion piece, I was reminded of a 'rationale' frequently used to argue against the 1993 law, and while I share the goal of those seeking to repeal the law and policy, I find this particular argument distasteful.

Since Bush launched us into the 'War Against Ourselves' in the Middle East, there has been much made of the military losing valuable Arabic translators, and others who have skills high in demand, as the result of gay service members being forcibly discharged under DADT.

In 1993, having just elected the first President to ever speak before a gay political group during his campaign, there was modest hope for a growth spurt to occur in America's normally glacial pace of social progress.   And yet, I very soon found myself having to stand, literally, in protest to a reactionary and villainous Congress, who quickly sought to subvert any moves by the commander-in-chief to end the persecution of gay service men and women.

Almost two decades later, the reason for ending a shameful burden placed upon gay men and women serving in the military is no less powerful today than it was then, or has always been.  Removing that burden, not imposed on heterosexuals, is simply 'the right thing to do'.

To argue that the unjust discrimination should be ended as part of a 'quid pro quo' is almost as shameful as the policy itself.  Yes, I see the strategic rationale of it as an argument, and understand that, as a practical matter, anyway the change can be achieved will have a substantial positive impact upon many thousands of lives, but it feels wrong.

A logical retort to such an argument is to propose that it be temporarily suspended only when the military's resources are stretched, and/or to selectively apply it, exempting those specialty services which are high in demand.  For proponents of DADT, that seems a quite reasonable solution for the 'problem' which the argument presents, being that it retains the notion that under 'normal' circumstances military service by gay men and women is a debility.   

It is not unusual, for even the most normalized among us, to imagine life if we were different in a variety of ways, such as being blind, paraplegic, in a racial minority, deaf, or a number of other mental, physical, or social ways. People can empathize with those who are different, particularly when the difference is a mental or physical disability, but also in circumstances where merely being different is a hardship.

Yet, one difference, though so widespread across all cultures, gene pools, continents, history, and even animal species, has been, not only deprived of empathy, but vilified, demonized, even rhetorically denied its natural origins.  The resulting isolation, fear and deprivation of essential psychological needs have made it, possibly, the harshest of all differences with which to live.

Heterosexuals have found it difficult to grasp that beyond the two physical manifestations of sexual identity there exists a myriad of mental manifestations of sexual identity.  Our scientific and medical professionals have been, reprehensibly, absent in educating Americans on this subject, permitting the viral psychosis of homosexual phobia to prosecute a quiet holocaust against good people for centuries.

"The love that dare not speak its name," from a poem by Lord Alfred Douglas in 1894, is a more appropriate title for the poorly named 1993 law.  However, the phrase "Don't ask, don't tell" does zero in on the real problem, that ignorance is both a predominant characteristic and preferred policy of the American people, two facts of which they are ignorant. 

-RLee