Time for another illustrated review and comment on the news. Prepare yourself, as I take all that you know about your world, and comment snarkishly upon it. Prepare...to go over the edge.

1. The Economy

First and foremost on everyone's mind these days, except for the president (too busy weeping over his lame NCAA bracket), is the colossal mass of flaming goat excrement that is the remains of our economy. For those of you joining this crisis late, let's recap what's gone on:

a) In order to convince banks to loan to less credit worthy people, the government pressured banks to engage in subprime lending.

b) The federal reserve kept interest rates inexplicably low for decades.

c) Years of prosperity left investors world wide with trillions of dollars to invest and seeking a safe investment.

d) People realized that U.S. real estate almost never decreased in value over the long term, and even if a borrower didn't pay back a loan, there was still a brick and mortar secured asset which meant any money you loaned was insanely safe.

e) Financial types bought the rights to people's mortgages, bundled them all together, and sold pieces of the mortages to different investors. As the homeowner made the interest payments, the investor got a return on his investment.

f) Investors were so happy with their investments that they demanded more mortgages to invest in.

g) Loan companies lowered the standards to qualify for loans so that pretty much anyone could get a home loan, regardless of whether they had assets or even a job. Many of these loans had an adjustable rate, with a very low rate for the first months of the loan that then went way up later.

h) Financial types realized these loans were shaky, so they sold pieces of risky loans together with not-so-risky loans so that the investments looked good to the unsuspecting buyer.

i) everyone was buying so much real estate that demand went up, which drove prices way up.

j) prices for homes went up, which meant the value of everyone's home went way up. This meant a lot of people had more equity in their homes.

k) Unsavory lenders and greedy homeowners took out loans against all the equity they had in their house. People were convinced to go invest that money in the stock market, or the less savvy went and bought boats, play stations, cars, and gold plated bathroom tissue to flaunt their newly acquired wealth.

l) Realizing that Social Security was basically a giant government mandated ponzi scheme, baby boomers started pouring money into 401(k)'s and IRA's, which were linked to the stock market.

m) the stock market, fueled by these investment dollars soared, many people were happy, and investors kept looking for more places to put their money

n) around Valentines Day of 2007, Investment groups started noticing that people were defaulting on mortgage payments shortly after moving into their houses. Some weren't even able to make their first mortgage payments. Savvy investment types started closely looking at what they had been buying for their investor clients. After they went home to change their now soiled pants, the investment types called the financial types and politely told them that they would not be buying any more loans.

0) Financial types realized they were deeply screwed.

p) People started defaulting on loans and filing for bankruptcy in record numbers. Banks that held these mortgages realized they were deeply screwed. Not having any money left to lend, banks started declining money to anyone. About this time, I bought an Altima.

q) While consumers were losing their houses, the government was content to sit on its golden toilet seat and watch the whole thing unfold on the 96" plasma TV the government had mounted to its bathroom wall, whilst wiping its rear end with $100 bills and smoking cigars made out of illegal immigrant tax contributions.

r) Suddenly, companies started missing debt payments, resulting in the payout of massive credit swaps. Credit swaps are complicated and difficult to explain, but the basic thrust is that its similar to a life insurance policy that you can take out on someone else's debts (when they default, you get paid), sell to another person, and is not regulated in any way by the government. In fact regulation was expressly rejected by congress on a 96-0 vote (how's that for bipartisanship). At it's height, there was about 30x more liabilities than assets represented by credit swaps. Credit swaps were purchased from many sources, but one of the largest was money contributed to money market accounts, supposedly one of the safest type of accounts you could have because they never returned a loss.

s) The biggest money market holder posted a loss, which meant rich people were losing money. banks were now unwilling to lend money to pretty much anyone, and our debt glutted economy began to screech to a halt. Since rich, campaign contributing people were losing money, the government decided that it was appalled and went into panic mode.

t) The government decided to give a ton of money to banks so that they would lend the money out and credit would start moving again. The banks took their money, and promptly didn't lend it to anyone.

u) AIG, the largest holder of credit swaps, announced that it was about to go under, and threatened to hurt lots of rich campaign contributors if it went, so the government gave it a ton of money. AIG promptly gave its executives large bonuses and congratulated them for having sucha good year.

v) the auto industry announced that it was going under, and that if it went out of business the UAW would no longer be able to donate to DNC re-election campaigns, so the government gave them a ton of money. A number of people, myself included, called shenanigans at this point, said that we should force the automakers into Bankruptcy and said that they would just need more money later if we didn't.

w) Barack Obama is elected president, promises bi-partisanship, a solution to people losing their houses, lower taxes, and to restore the confidence of the market.

x) Barack Obama takes office, tells republicans to go screw themselves, does nothing to save a single home foreclosure, raises taxes, and destroys confidence in the market until it drops below 7000.

y) Barack Obama appoints a tax dodging nincompoop as treasury secretary, prints trillions of dollars for banks, fills out the lamest NCAA bracket in history, and continues to ignore homewoners.

z) Obama administration is shocked, SHOCKED, when the auto makers return and say they need more money. Considers forcing them into bankruptcy, $30 billion dollars after everyone else said that they should.

This review was not fact checked in any way and contains glaring inaccuracies. Sorry, it was all taken off the top of my head. Which brings us to where we are today. On the brink of what may very well be a depression. Obviously nothing on the scale of the Great Depression, but still, pretty stinking bad. What's more, we've been here for over two years and the prevailing wisdom among both parties in the government is that we can somehow spend our way out of this. Here's a pictoral representation of what continued undisciplined spending will bring.

More Unemployment

Inflation

Continued losses in the market

Possible death of the dollar

When are our president, and the incredibly clueless mr. Geithner going to wake up? We cannot print enough money to end this recession. We have to end the madness. Stop giving money to companies that are failures. I know giving money to failures seems counter intuitive to a group that is dedicated to public schools, but I think it is time to admit that throwing good money after bad in this case is just not working. Also, maybe the administration might want to reconsider its continued war on people with money. Who exactly do you think is going to pay for this recovery you want to have, Mr. Obama? Cause it's not going to be the minimum wage workers. Instead of worrying about fairly getting money to everyone, worry about getting money into the hands of people who can spend it. We have to end our current economic policy, which can best be described as:

2. Continued Foreclosure Crisis.

For those wondering, yes, I do read www.BlackCommentator.com regularly. But back to the issue. We're two years into this mess, and how many homes have we saved? Zero. We need to accept that until the housing market is stabilized, we're not going to start a recovery. The housing market is not going to stabilize until we get these recently built homes into the hands of people who can afford them. This is why I support, and you should support, the current bill that will allow bankruptcy judges to modify the mortgages on debacle-era homes, and if necessary reduce the principal on loans so that the owners can afford to keep their homes.

Will this lead to an increase in bankruptcy filings? Maybe. But, until we get the housing market stabilized there is no real economic recovery in sight. Until the houses are in the hands of people who can afford to own them, there will be no stability. We can either make them affordable to the people who currently own them in a relatively short period of time, or we can drag this out for years, as new wave of people finally run out of the means to pay for their overpriced house. I for one prefer that we get this over with quickly, stabilize the market, and move on.

I know a lot of people think that this is ridiculously unfair to the lenders. Why should they have to absorb a loss just because some schmo bought a home he couldn't afford. Well, ignoring the fact that the lenders have already been given a trillion dollars they don't deserve, let's talk about investing. A loan is an investment. Like any other investment a loan carries risk. You are NEVER guaranteed a return on an investment; housing is no different. These loans were made with the understanding that they were risky investments and this time the imprudent investors are going to get taken to the cleaners.

Besides, the lenders are already going to be hit with those losses. Right now its a matter of whether they are going to take the loss when they go through an expensive foreclosure process, take possession of the home and then sell the home for a loss on the open market and write off the loss. A mortgage cramdown (where a judge rewrites a loan) means that the bank takes the loss it was probably going to take anyway, but it avoids the foreclosure process and the debtor gets to keep the home. Banks can actually come out BETTER in this scenario because they will be getting the appraisal value for the house, whereas most houses being sold on the market today are actually going for below market value. Banks also get to save on the cost of the foreclosure. This is one of the reasons why many of the big banks have now embraced the idea of mortgage cramdowns.

It's not about fair anymore, it's about what works.

3. AIG

Speaking of things that don't work, let's talk about AIG. Believe it or not, I don't have any problem with AIG executives getting a massive bonus. I have a problem with us having given AIG any money in the first place. It's a failed company that ran around and staked it's future on risky ventures. It took a risk and should have to pay. As for the bonuses, I find it wholly disingenuous for the government to bend over backwards to allow these executives to get their bonuses, and then act shocked when the whole thing comes to light. I find it even more unethical to pass an ex post facto law (which the constitution prohibits, if memory serves) to tax those bonuses as a way of congress covering its own screw up. I don't care if the supreme court backs this law, it is wholly unamerican to single out a group for punishment that did nothing illegal.

On the subject of bonuses, let's talk about congress for a minute. Congress gave itself a payraise this past term, and gave out bonuses to its staff. As far as I am concerned, the failed workers of a failed government are far less deserving of a reward than the failed workers of a failed company. AIG lost billions, Congress has cost us TRILLIONS. So much money that our children's children will be saddled with the debt. If anyone should be giving back salary and bonuses, it is this congress.

4. Auto Bailout

Months ago, when the American Automakers showed up with designer hat in hand to ask for a bailout, pretty much anyone with half a brain (Mitt Romney), and even some people with less than half a brain (me) said we should tell them to pound sand and head over to the Bankruptcy court. We were told that was not an option, the economy wold hopelessly dies, etc. etc. Now, we're hearing reports that the automakers might be forced into bankruptcy. Nice going, government. Couldn't you have reached this conclusion BEFORE we gave them 30 billion dollars?

5. Gay Marriage in Iowa

Not content to accept the overwhelming will of the people, God, or even the dictionary Iowa has decided to allow gays to marry. As a student of the law (by student, I mean one who plays spider solitaire continuously while an angry lesbian lawyer rambles on) I am continually amazed at judges who substitute their own will for the will of the people and 6000 years of accepted moral history. Even societies which tolerated homosexual relationships did not afford them the status of a marriage. Period. But this is the internet, let's not judge positions based on rational argument and thought. Let's judge them by the people associated with each idea. First, let's look at the leading advocates of gay marriage:

Now, let's look at the leading opponent of gay marriage:

Sure, one is the Savior and Redeemer of mankind, but the other one, she had a talk show. She clearly must be qualified to dictate social policy.

And yes, God is anti-gay marriage. Remember Sodom and Gommorah? Here's a rough picture of what they look like now.

I'm guessing, and this is only a guess, that if he felt that strongly about the issue 4000 years ago, that he probably hasn't changed his views that drastically. Of course you are free to disagree with me, but the fact remains that no society has ever recognized a gay marriage, the majority of Americans OPPOSE gay marriage, and there is nothing in the law which permits or calls for it. If you doubt me, take the argument to the supreme court and just see how well that one goes. You are firmly, undeniably, and completely in the wrong and you need to accept it and back off. As for me, I'm officially marking down Iowa as a state to avoid. I predict a smiting in its future.

6. NCAA Tournament

Here at simsisms, we don't have a lot of time to follow sports, which is probably a good thing because if we'd watched the Padres last season we might have been forced to commit Hari Kari. However, we do like to keep up on what is going on. We were very glad to see that UConn finally got eliminated, and that UNLV didn't even make the tournament.

As for the championship game, if the lead picture didn't give you some idea of who we are pulling for, maybe this will:

Sorry, I can't stand Hanbrough. He's an over-rated hemophiliac and I can't see him amounting to much in the NBA. As much as it pains me to root for a team in Michigan, I gotta cheer for the underdog in this one. Also, while we're on the subject of Michigan, I found this picture, which I would like to publicily dedicate to my friend Nick.

As far as both teams go, I hope it is a good close game, and that the players enjoy this once in a lifetime experience. Go live it up afterwards, too. The nation understands that athletes train hard and are intensely dedicated. If you guys need to blow off some steam, don't worry, no one will look down on you. This country treats its star athletes like kings.

Or maybe not.

Sorry for the lengthy post. Feel free to leave a comment on the many controversial, strange, and frankly, wrong things I've just written about.