john maddente | midwestern clarity

B ack in 2007 while waves of defaults occurred after sub-prime loans "reset" (an adjustable rate mortgage payment that increases after the prime interest rate increases) I asked one Loan Officer,  "Why did lenders write variable rate notes when they knew many borrowers had little capacity to make higher payments down the road?" What I heard in reply was that as risky as these credit bets were, if conventional higher fixed-interest rates were used, the borrower could not have qualified for as much of a loan.   My reaction?  Exactly. I'm reading a book by Bethany McLean and Joe Nocera - All The Devils Are Here - The Hidden Story Of The Financial Crisis (Portfolio/Penguin).  I'm learning more about the origin of sub-prime lending and the players behind it, but I'm struck by a rhetorical question the authors pose in Chapter Six, concerning the line between predatory lending and what I have called predatory borrowing : "But in the larger s...

Cameron and I are jousting again.   Wikipedia image This time the fodder is an hour-long interview with hedge fund manager, Kyle Bass which Cameron and I both viewed with great interest.   Taped last month, I encourage you to view it too . Cameron writes... “ John,  I watched that video, thank you for forwarding it. It was very insightful. There were a lot of things that really popped out but one especially. Bass states that Washington has a spending problem, but in the same breath he states that the solution is simple. He states we need to raise revenues 2 1/2% and reduce expenses by 5%.     Which is exactly what I wish Washington would do, but the Republicans stance against no new taxes and no compromise on that issue is hardly going to get that accomplished .” My reply to Cameron... Cam, Note that the spending reduction Mr. Bass calls for is two times the tax increase he calls for.  Perhaps that’s because giving (additional)...

Super committee fails - or did they? So, across the board (1/2 defense, 1/2 non-defense) federal spending cuts of $1.2T will begin January, 2013 without any tax increases.  That's the plan, but there is plenty of time for Congress to derail what strikes some of us as a modicum of progress.  Thankfully, President Obama says he'll veto any bill that attempts to overturn the sequester.  Republicans or Dems who try to do it to protect whatever it is they purport to be protecting -- will do so at their peril.  This is the 2012 issue to watch. GOP nomination and a narrowing field I felt many of the same hopeful moments and (ultimately) profound disappointments from Herman Cain's candidacy as I felt during the Sarah Palin VP run in 2008 .  My view has less to do with Mr. Cain's alleged personal indiscretions than his performance on the campaign trail which has become as painful to watch as Ms. Palin's was...

W hen the bill comes due, nations that have fallen prey to the entitlement vortex  can foster street violence and class wars.  Their leaders  can  also breed denial once they run out of money.    That's   the reaction of some  Greek politicians who don't appreciate the futility of their fiscal situation.  A year and a half ago, German officials averred that part of a Greek bailout plan could involve the sale or lease of state-owned assets, as well as, other austerity measures. This proposal did not amount to a wholesale transfer of Greece's sovereignty as its opponents claimed.  Rather, it was part of a larger plan to lift a struggling debtor out of its self-induced mess through privatization of government assets including some Greek islands.    In response  one Greek government official said, if such asset transfers came to pass, it will result i...

W ith a title like, "Are Economists Really That Smart" I had to read Bill Flax's piece in this month's issue of Forbes magazine , especially after digesting his first sentence, "Remember when Joe Biden admonished us to keep spending or else we'd go bankrupt?" Biden's statement reminded me of something Nancy Pelosi uttered before enactment of the unpopular Obamacare legislation affecting 1/6th of our national economy.  Of course, Joe Biden and Nancy Pelosi are not trained economists, nor am I, but these people are running the country.  This clip is only five seconds... My timing to read the aforementioned Forbes piece was good since I'd just finished fighting my way through Nassim Taleb's best selling book, The Black Swan .  (I say "fighting" because several technical aspects are beyond me). In their own ways, Messrs. Flax and Taleb fillet and roast the cadre of economists, public p...

The official position of this blog remains that the United States does not have a revenue problem, it has a spending problem .   I spoke with  Rep. Jim Sensenbrenner at a local Town Hall Meeting last April about an idea advanced by Tim Pawlenty to avoid default without raising the debt limit.  The U.S. Treasury has the power to sequence (i.e. prioritize) payments when bills come due.  So debt holders can indeed be paid first to avert default and buy time while a budget patch is passed.  The idea has been roundly ignored or dismissed as impractical.  Of course, the U.S. government also  has over a trillion dollars worth of other assets much of which could be liquidated to pay bills, but that's another post. Guy tilling soil in front of Financial Temple - Wikipedia The debt markets have not been as restive as the equity markets.  Bond markets know that the administrati...

American Thinker logo Published in American Thinker - 4.3.2011 By Tim Peterson, Robert J. Simandl, and John J. Maddente Right: noun : a just claim or title, whether legal, prescriptive, or moral.  That's the definition of the word used in connection with Wisconsin's government union employees and their demands to retain collective bargaining privileges.  This issue more than any part of the Budget Repair Bill, has captured the nation's attention. For weeks, we've heard demonstrators beating drums in Madison and equally vocal sympathizers in the media admonish anyone listening about "rights" of government union employees and the turmoil visited upon "the middle class" due to the Governor's Budget Repair bill.  We've also seen polls suggesting public support for some of their views.  We do not believe that: 1) government employee collective bargaining constitutes a "right" by any reasonable measure, o...

Published at Examiner.com 3.31.2011 Dear Madam or Sir, I take issue with the way Dennis Cauchon (and others in the media) have reported upon public opinion in Wisconsin, and summarized results.  Consider your USA Today/Gallup poll asking, “ Would you favor or oppose a law in your state taking away some collective bargaining rights of most public unions, including the state teachers union ?”  Apparently, 61% of your respondents answered “oppose” and so Mr. Cauchon’s February 23rd piece blared, “Poll: Americans favor union bargaining rights” Not so fast.  In the first place, “right” is an emotionally-laden word and also an inaccurate one when used to reference collective bargaining, since no such right is enumerated in either the U.S. Constitution or Wisconsin’s Constitution (or any other state constitution that I have yet to discover) .  A more accurate and reasonably framed question would have been, “Would you favor or oppose a law in your state th...

By Tim Peterson, Robert J. Simandl And John J. Maddente  Published in the Milwaukee Journal Sentinel 3.15.2011 R ight , noun : A just claim or title, whether legal, prescriptive or moral. That's the definition of a word used by Wisconsin's public-sector unions demanding to retain all collective bargaining privileges. For weeks, we've heard demonstrators beating drums in Madison alongside equally vocal sympathizers in the media talking about "rights" of public-sector union employees and "attacks" on "the middle class." We respectfully disagree with them. According to Encyclopedia Britannica, collective bargaining is "A process of negotiation between representatives of workers (usually labor union officials) and management to determine the conditions of employment. The agreement reached may cover not only wages but hiring practices, layoffs, promotions, working conditions, hours and benefit programs." West's ...

Madison, WI 2/19/2011.  John Maddente photo I t was a clear day at the Capitol . What wasn't reported quite as clearly, among other things, was the composition of the Pro-Walker forces, which were outnumbered I'm guessing, by about 20 to 1 -- thanks in large part to throngs of out-of-state demonstrators.  One problem with the media characterization, was that they consistently reported the Pro-Walker group only as a "Tea Party" rally.   Obviously, Tea Party members were out in force but the group contained a broader cross-section of voters including mainstream GOP members and even a few Blue Dog Dems including one courageous soul holding a sign labeled, "I'm A Teacher For Walker."  I believe that man has more company than most people realize, particularly among private school teachers that are non-unionized and paid significantly less in wages and benefits than their public school counterparts.   But back to the afternoon...

The following passage was shared with me recently.  It was written by a German writer,  Rainer Maria Rilke .  Mr. Rilke died in 1926 at the age of 51.  This piece is taken from his "Letters To A Young Poet" .  I find these words timeless, profound and moving.   Please consider sharing them with someone. _______________________________________________________________________________ Be patient toward all that is unsolved in your heart and try to love the questions themselves. Do not now seek the answers, which cannot be  given you because you would not be able to live them.  A nd the point is to live everything. Live the questions now.  Perhaps you will then gradually, without noticing it, live along some distant day into the answers.