Friday, August 31, 2007

Consumer Confidence Index--August

The Reuters/University of Michigan August Consumer Sentiment Index came in at 83.4, markedly lower than July's unexpected high of 90.4.

Good economic news this summer has been eclipsed by the worldwide impacts of subprime mortgage defaults in the U.S. Central banks from here to Britain are still busily loaning money to institutions that uniformly claim sufficient liquidity. Barclay's has claimed that a "'technical breakdown' in the UK's clearing system forced it to borrow £1.6bn from the Bank of England."(source)

This morning the New York Times reports that "Freddie Mac, the nation’s No. 2 buyer and backer of home mortgages, set aside more than $300 million in the second quarter to account for bad loans, contributing to a 45 percent drop in profit."

Consumers have enthusiastically used home equity to continue spending. Consumer spending accounts for two thirds of economic activity. Numerous "homeowners" are now flipped, owing more than their homes' current market values.

The big question: what will happen when consumers decide or are forced to spend within the limits of their actual incomes?

Thursday, August 30, 2007

Consumer Debt, Health Care and You

The International Herald Tribune reports today about a growing trend in the U.S. "Patients in U.S. turn to no-interest loans for health care." Most procedures financed are elective or not covered by insurance (vision procedures and dental). But the article notes possibilities for expanding the practice as consumers face more and higher out of pocket costs within insurance plans.

Capital One and Citigroup and the CareCredit unit of General Electric offer revolving credit accounts and special no-interest plans (the sort you might tap for a dishwasher) with steep penalties for missed payments or default.

As you might expect, lenders and insurers pitch this market in terms of offering a needed service to society:

'"There's a place for credit solutions that are integrated within traditional health insurance programs, when an individual hits that out-of-pocket expense,' said Tom Beauregard, a senior vice president at UnitedHealthcare. 'The key is to make it voluntary, to make it simple and to offer favorable credit terms.'"(from the IHT article)

Here are some problems with this approach:

1. Credit increases the cost of doing business.
2. Credit reduces the profit per transaction. According to the article, dentists might receive only 75% of the bill in the case of clients with poor credit who default.
3. Growth of credit in the health care industry skews the understanding of medical care further toward a business model.
4. With appallingly low levels of financial literacy (as demonstrated by the subprime fiasco) possibilities for fraud or default are obvious. CareCredit reports that 80% of the interest free loans are paid on time. That means 20% incur penalties (remember, a mortgage default rate of .5% shakes the industry from top to bottom).

Do we really want to further financialize our lives?

Wednesday, August 29, 2007

Assessments of the Auto Industry from the Chicago Fed

September's Chicago Fed Letter (Transitions: the State of the Automotive Industry) considers the state of the auto industry. The summary of a recent conference, the letter examines areas of difficulty and ways for improvement.

According to Frits Pil, associate professor, University of Pittsburgh, “The auto sector is just starting on the path toward customer responsiveness.” Pil advocates a build-to-order approach rather than the current build-to-forecast method. The flexibility of a build-to-order approach could increase the profit margin per unit with a more efficient supply chain, leaner stocks, and less need for financing incentives.

Susan Helper, professor, Case Western Reserve University, acknowledges a lack of skilled workers in the entire manufacturing sector and suggests something called the learning lean model. This approach "focuses on organizational flexibility and quality while also combining lower waste practices within manufacturing. It promotes changes in training practices, which results in a work force with higher skills." The lack of skilled workers may affect manufacturers' efforts to develop better fuel economy or alternative fuel technologies.

Kristin Dziczek, senior project manager, Center for Automotive Research sees labor relations as a core issue for the industry. While manufacturers are struggling to remain competitive, the UAW strives to maintain a middle-class standard of living for members.

To grow more competitive automakers must address flexibility, fuel efficiency, skill level of workers, and development of alternative fuels. And this, even as they struggle with labor relations.

As Helper observed,“United States automotive manufacturing is not dead yet." Well, that's reassuring.

Monday, August 27, 2007

Lumberjacks, Autoworkers and Turbo-charged Minds

There was a time when Michigan was teeming with lumberjacks. More recently Michigan was teeming with auto workers. The lumber era spanned 1860-1910. Michigan’s auto era seems to have spanned 1901 to 1995, when 72.6% of the cars sold in the U.S. were made by the Detroit Three. (source) Ninety five years was a pretty good run.

The lumber era made fortunes, created communities and our early infrastructure; but the auto era created our culture. And that is why this transition to our next economy is so hard.

Michigan’s auto era created a middle class of white collar and blue collar workers. It created an expectation that your physical labor could be exchanged for a comfortable quality of life (a small tract house, maybe a cottage and a fishing boat). It also employed a large cohort of knowledge workers–accountants, engineers, designers, managers. Domestic labor designed and produced domestic goods for domestic consumers. A blue collar or white collar worker was, by design, also a consumer. The economy seemed to function of, by, and for, we the people.

But historic innovations in telecommunications and computing power changed that. Ideas, knowledge and funds became digitized--able to move around the globe around the clock. Our data were no longer constrained by space and time. A global economy in real time was possible (for example, call centers in India deliver customer service to credit card holders in the U.S. during our business hours). Corporations integrated information technology advances with global petroleum-based transportation. And that is how we got into this fine mess.

There is growing consensus that Michigan must move forward into the New Economy, which is knowledge-based and not particularly new. To get there from here everyone--from line workers to lawyers, plumbers to politicians--will have to make a paradigm shift.

If you want to stay in Michigan, you will have to think differently about everything. Don’t expect heavy manufacturing to fund your local charities, the state budget or your retirement. Do not mistake car culture nostalgia for a viable way forward. Pursue continuing education as if your life depends on it, because it does. Understand yourself as a stakeholder in a whole new way. Make demands of your legislators to facilitate structural changes supportive of knowledge-based enterprises. Start with education.

The resource for the 21st century is brains. Education is the foundation of a knowledge-based culture and economy. And perhaps we need to think about culture first. Michigan is succeeding at attracting well-educated workers from elsewhere. But to retain them--people who value educational excellence--we will have to fund education more vigorously. We must create a culture of lifelong learning.

We need to produce turbo-charged minds from kindergarten through Ph.D. V-8 minds are good for the environment, the culture and the economy. Lumber built our towns; cars drove our culture. Well-educated minds will create our future.

Friday, August 24, 2007

Pure Michigan Travel Campaign Wins Top Awards

From CNN

"The Travel Industry Association of America (TIA) honored Travel Michigan with a Mercury Award for the Best State Tourism Advertising Campaign for its Pure Michigan campaign. In addition to receiving the highest award from TIA, the Pure Michigan campaign also won a Mercury Award for the Best State Tourism Television Commercials."

This is quite impressive given the funding crunch in our state. In a June interview, (Summer Means Tourism)George Zimmermann, Vice President of Travel Michigan said,"In 1990 we had the seventh largest state tourism promotion budget and by 2005 we had dropped to 31st. We did get a reprieve when the 21st Century Jobs fund was created. That provided a one-time funding boost that brought us up to the $15.6 million level. So this year we're back up to 17th. But with the 2007 budget we're at the end of that money."

Now let's see if the legislature can maintain adequate funding for tourism promotion in Michigan. Travel Michigan certainly deserves full support, having proven the ability to leverage limited resources through information technology and advertising. Imagine what Travel Michigan could do with funding back up to the 1990 level.

It's Time for the Michigan State Fair

Now through Labor Day, September 3, you can attend the State Fair in Detroit.

The fairgrounds are located at the corner of Eight Mile Road and Woodward Ave., home to the State Fair since 1905. It is open from 10 a.m to 10 p.m. daily.

First held in 1849, this is the oldest state fair in the nation. It has run every year since with the exception of 1942-1946, during WWII.

Activities range from hog calling to baton competition, an all county talent show to a blue ribbon program for garden-grown, heirloom vegetables. For an overwhelming 13-page, detailed list of all activities click here.

This year's performers include The Spinners, The Platters, Alice Cooper and Marques Houston.

The popular Miracle of Life exhibit is back this year. The Fair website posts a running total of the births.

Information Resources for Michigan Bloggers

Are you looking for something good to read, something inspiring, something informative to jump start your creative process, help connecting the dots of your latest political hypothesis? Checkout these information portals:

Michigan Electronic Library--"MeL is the Michigan eLibrary, an anywhere, anytime library for Michigan residents. MeL contains magazine, newspaper and journal articles, books, and evaluated Web sites. MeL can be used by any citizen of the state at no charge 24 hours/day." Although this description is literally correct, it doesn't convey the breadth of resources available.

Michigan Legislature Website--track legislation every inch of the way

ZNet's Alternative Media Resource List--a gateway to progressive periodicals, radio, TV, books, publishers and booksellers

International Progressive Publications Network--a global, open database of newspapers, magazines, websites, and other media

Evaluation of Information Sources--an excellent collection to help you sift and select online (Victoria University of Wellington, Australia)

Happy reading!

Wednesday, August 22, 2007

I am the People, the Mob

Carl Sandburg

I AM the people--the mob--the crowd--the mass.
Do you know that all the great work of the world is
done through me?
I am the workingman, the inventor, the maker of the
world's food and clothes.
I am the audience that witnesses history. The Napoleons
come from me and the Lincolns. They die. And
then I send forth more Napoleons and Lincolns.
I am the seed ground. I am a prairie that will stand
for much plowing. Terrible storms pass over me.
I forget. The best of me is sucked out and wasted.
I forget. Everything but Death comes to me and
makes me work and give up what I have. And I
Sometimes I growl, shake myself and spatter a few red
drops for history to remember. Then--I forget.
When I, the People, learn to remember, when I, the
People, use the lessons of yesterday and no longer
forget who robbed me last year, who played me for
a fool--then there will be no speaker in all the world
say the name: "The People," with any fleck of a
sneer in his voice or any far-off smile of derision.
The mob--the crowd--the mass--will arrive then.

Remember, we are not consumers; we are people.

Tuesday, August 21, 2007

Detroit--Highest Metro Foreclosure Rate

Realty Trac reports that:

"Detroit posted a 70 percent month-over-month increase in foreclosure activity in July, pushing the city’s foreclosure rate to one foreclosure filing for every 97 households — more than seven times the national average and highest among 229 metro areas tracked in the RealtyTrac report. The city reported a total of 8,683 foreclosure filings during the month."

"Michigan’s foreclosure rate of one foreclosure filing for every 320 households ranked third highest among the states in July, up from seventh highest in June. The state reported 13,979 foreclosure filings during the month, a 39 percent month-over-month increase and a 130 percent year-over-year increase."

Nationally the rate was 93% higher than in July 2006.

Read Barbara Ehrenreich's Smashing Capitalism at Huffington Post. You will laugh a little before you cry.

Monday, August 20, 2007

Michigan Arts Funding--from 4th to 50th

From today's Port Huron Times Herald:

"Citing a $3 billion projected budget deficit, Granholm in March issued an order freezing all grants paid by state agencies, including $7.5 million of the $10.1 million promised by the Michigan Council for Arts and Cultural Affairs."

"The moratorium was lifted in June, but only after the council's budget was cut by $3.6 million."

"According to the advocacy group ArtServe Michigan, the decrease means Michigan's funding for the arts has fallen from fourth in the nation in 2001 to last among all 50 states."

I am not sure what to say. This is sickening.

Yesterday, I drove to Interlochen to see the Ann Arbor Pioneer High School Band perform. It was their 60th Annual Band Camp at the world renowned arts venue. The young musicians were phenomenal, my son among them.

This is also the 100th Anniversary of Pioneer's Band program.

Previous related posts:
Great Arts State?
Music, Prosperity and Legislative Priorities

Friday, August 17, 2007

Houses to Hedge Funds--The Great Chain of Owing

Subprime mortgage lending sits at the center of current global financial upheaval and at the same time in our backyard. How did this happen and what is happening in Michigan to protect consumers or borrowers?

How did we get here?
Prior to 1981, most mortgages were made through banks, credit unions and savings and loans–depository institutions. There was a high degree of local accountability as institutions would actually take in deposits and make long-term loans that would remain on their books. Loan officers were required to make sure borrowers could actually pay back the loan, because a bad loan meant a loss for the lender. In addition, depository institutions were interested in creating relationships with clients and communities.

Recession, deregulation and global influence
High interest rates during the recession of the 1970s decimated the savings and loans. Deregulation of the financial and securities sector in the 1980s and 1990s changed things even more dramatically. Mortgages went from local transactions between borrowers and lenders within communities to something entirely new–local transactions financed at a global level.

According to Kirt Gundry, Director of the Mortgage Examination and Investigation Section of the Michigan Office of Financial and Insurance Services (OFIS) “Mortgage lending is local in terms of the loan officer and the borrower, but it is global in terms of financing and where the lenders are. Most lenders, including banks, package loans and sell them on the secondary market. The secondary market will securitize those into big mortgage-backed debt instruments and then investors will purchase those bonds.”

Gundry sees a positive outcome from the current market,“Home ownership increased in this country because of the global marketplace and the greater access to credit. A lot of loans would not have been available in the old model.”

When borrowers begin to default though, the local once again becomes global and bites everyone in the mortgage-to-hedge-fund food chain. Homeowners face foreclosure, mortgage companies weaken or fold (American Home Mortgage, Countrywide), hedge funds vaporize (Bear Stearns among others), investors freak out, and central banks pump currency into the system to maintain liquidity and stave off a credit crunch.

An ounce of prevention
Here in Michigan, the Office of Financial and Insurance Services is responsible for licensing and examining mortgage companies. OFIS licenses entities–companies or sole proprietors, usually LLCs or corporations, due to liability issues. Loan officers work for licensees; there are no standards for loan officers. In Michigan, you could be a janitor one day and a mortgage loan officer the next.

OFIS recently issued best practices for subprime mortgage lending in Michigan reflecting recommendations from CSBS (Conference of State Bank Supervisors), AARMR (American Association of Residential Mortgage Regulators) and NACCA (National Association of Consumer Credit Administrators). But these are best practices, not regulations carrying the force of law. These amount to suggestions for prudent lending practices–the sorts of things that were standard procedure before deregulation.

Legal and profitable
Offering adjustable rate mortgages to subprime borrowers is not illegal.

Industry practices make it profitable for brokers to steer borrowers into inappropriate products. Lenders reward brokers/loan officers for steering customers into higher rate products when customers qualify for lower rates. The broker is given a bonus called a "yield spread premium." In a U.S. Senate Banking subcommittee meeting June 26,
John Robbins, the chairman of the Mortgage Bankers Association, told senators,"Are yield-spread premiums abused? Absolutely. Do borrowers understand what they are paying in yield-spread premiums? The vast majority of time they do not."(source)

Unclear Jurisdiction
According to Tim Doyle, Vice President with the Conference of State Bank Supervisors, issues of jurisdiction are still being worked out between the states and the federal government in the courts.

Because of the diversity of corporate structures found among mortgage originators, states have had a tough time regulating them. This April, in Watters v. Wachovia the U.S. Supreme Court ruled that state-chartered subsidiaries of national banks are exempt from state regulation. OFIS Commissioner Watters had advocated for state regulation of state-chartered subsidiaries. Numerous organizations filed amicus briefs, as well as every state attorney general in the nation (including Washington D.C. and Puerto Rico).

Doyle says, "Consumers who are having difficulty with a financial institution do face confusion over where to turn for help, because in some states certain types of institutions are exempt from state regulation."

In spite of regulatory murkiness Doyle says that more and more responsibilities have been placed on states to supervise the mortgage industry, even as mortgage brokers have proliferated. "There are about 90,000 licensed mortgage brokers across the country and the state agency staffs in many states have not increased with the growing responsibilities."

How many examiners are enough?

OFIS has 13 examiners to oversee nearly 3200 mortgage companies.

Even though OFIS augments its in-house examiners with additional contract examiners, Gundry says, “there isn’t enough regulatory presence in the market place to really keep an eye on all these companies. It would take us over 10 years to examine every mortgage company in Michigan just once. If we had 36 examiners, we could get the examination cycle down to 2 years. It would then be similar to banks, trusts and credit unions that are on an 18 month cycle. In those depository institutions, an examiner is coming in the door every 18 months. We’re coming in the door only if we think there is a problem.”

Could a higher number of examiners in Michigan have mitigated the impact of subprime lending here? “If we had been on a 24-month cycle and kept up with new licensees I think we could have definitely prevented some of this,” he allows.

Why aren’t there more examiners?
Actually there are. Prior to last year, there were only 6 examiners for the entire state. Last year OFIS was able to add seven more. OFIS examiners are funded by licensing fees and activity fees, not the general fund, yet OFIS cannot hire more examiners without approval of house and senate appropriations committees. In the midst of the state budget crisis and hiring freeze, hiring additional examiners is highly unlikely.

Hope for the future
States are attempting to collaborate and share information with respect to licensing. In February OFIS announced its participation in developing a nationwide Residential Mortgage Licensing System. At that time, Commissioner Watters said, "the system will give us an increased ability to hold industry professionals accountable for their actions, and should help reduce fraud and other illegal or unethical behavior such as predatory lending.”(source) As of February, 29 states had agreed to participate in the system expected to launch in January of 2008.

Real protection
In spite of the vastness of the mortgage lending industry and the shortage of examiners, Gundry's office is carrying out a lot of enforcement. In some cases licenses are revoked; in the most extreme cases, loan officers are prohibited from working in Michigan. Prohibition results from some type of fraud such as: overstating income or assets, understating liabilities or forging documents, even falsifying entire applications. A list of prohibited loan officers is posted on the OFIS website.

Advice to borrowers
With an industry in chaos, what are borrowers to do? Gundry had some sound advice, "Potential borrowers can find HUD approved non-profit credit counselors to help evaluate their situation. If they are getting ready to close on a house, they might want to have an attorney review the documents before closing.”

And what if you are already in your home and unclear about the terms of your loan? “If you already have a mortgage, get your loan documents out, locate the note and find out if you have an adjustable rate loan. You might want to consider refinancing to a fixed rate loan before the ARM resets. If you can’t refinance in time, at least you will not be caught off guard when your payment increases.” The Detroit News reported last week that loan activity in Michigan increased in July due to borrowers seeking to refinance out of ARMs to fixed rate mortgages.

Helping consumers, education versus rescue
Debate on how best to help consumers rages in Michigan and every state. Some propose bailout funds for homeowners, others take a hard line saying borrowers should take responsibility for bad decisions. More consumer education is certainly needed. A bailout fund in Michigan seems completely out of the question given all the other budget pressures and disagreements facing the legislature.

For now, it is still buyer beware.

Consumer Confidence Index--August Mid-month Figure

It's official, the preliminary August figure from the Reuters/University of Michigan Surveys of Consumer Sentiment is significantly lower than July's final number of 90.4. August's mid-month assessment came in at 83.3. (source)

The sharp drop comes as no surprise after weeks of turbulence in financial markets around the world. Yesterday brought difficult news about the housing sector.

From BusinessWeek, (Housing Starts: It's Going to Get Worse--Starts on new homes plummeted to a 10-year low in July, exceeding Wall Street's prediction by 25%), August 16:

"On Aug. 15, the National Association of Home Builders (NAHB) reported that the NAHB/Wells Fargo Housing Market Index had declined two points in August to 22, its lowest level since January, 1991—which also happens to be the worst month for housing starts in history. Derived from a monthly survey, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months."

In a consumer driven and consumer spending centered economy, this is bad news. The conventional wisdom holds that new housing stimulates retail spending by consumers who need stuff to put in their houses. And bigger houses mean even more stuff.
But when is enough, enough?

Consumer spending has accounted for more than two thirds of economic activity. A significant portion of this has been debt driven. How ironic that prudent financial behavior on the part of consumers (spending within their means) is seen as harmful to our economy.

"We have nothing to fear but fear itself." Who said that? A neighbor to the north! In an article today at, Avery Shenfeld, senior economist at CIBC World Markets (although he didn't attribute the quote to a person or context). His point was to reassure Canadians that they were relatively sheltered from economic turmoil south of the border. He was quoting F.D.R.

What F.D.R. did say in his first inaugural address March 4, 1933 was:

"So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."

That was then; this is now.

Wednesday, August 15, 2007

Michigan's July Jobless Rate, Still 7.2%

According to Michigan's Department of Labor and Economic Growth, Michigan's seasonally adjusted unemployment rate remained unchanged from June at 7.2%. Is this good news?

Interesting facts from the DLEG press release:

  • July's manufacturing decline was the most pronounced monthly drop in 2007.
  • Construction registered its fifth consecutive monthly employment decline in July. From February to July, this sector has shown a decrease of 13,000 jobs.
  • July marked the largest monthly decrease in statewide payroll jobs since January, and July's total jobs count was the lowest for thus far in 2007.
  • Since July 2006, education and health services was the only major industry sector in Michigan to show significant job growth (+10,000).
The national unemployment rate remained steady up a tenth of a percent to 4.6%

August Consumer Confidence Index--Preparing for the Preliminary Number Friday

In just two days, the mid-month preliminary Reuters/University of Michigan Consumer Sentiment Index will be released for August. July saw an unexpected rise in consumer confidence, but August will surely be lower. In the last few weeks, financial markets have grown highly volatile due to the subprime mortgage lending crisis in the United States.

Why does this matter to consumer confidence? Because consumers have been tapping their inflated home equity as though it is a personal ATM. Trouble is, it isn't real equity until you have paid off your mortgage. Some in the financial world might disagree with that statement. In truth, consumers were lulled into thinking residential real estate values would continue to rise with no end in sight.

And so tapping that "purchasing power" seemed to make sense. Some people did it to pay for luxuries, others for necessities. Indeed, after 9-11 consumers were urged to shop as a patriotic act. Imagine that, reckless spending as patriotic duty. Kind of resembles the attitude toward the actual cost of the war in Iraq.

Now, many "homeowners" are actually in negative territory--owing more than their properties are worth and locked into loan agreements with interest rates that will reset higher than they can afford. And this in a historically low interest rate environment.

But these really bad loans were made because the mortgage industry has shifted from the bailiwick of depository institutions (banks, credit unions and savings and loans) to the mercurial world of non-depository lenders. Since the 1980s most regulation of mortgages has been gutted. In plain speak, mortgages became securitized--fodder for big deals on Wall Street. Local non-depository lenders and brokers had no incentive to make prudent loans; bigger was better. More was better. In this go-go environment local accountability took a back seat to closing the deal at any cost.

As the subprime mortgage debacle continues rattling global markets, credit will tighten, property values will continue to decline, foreclosures will increase and the impact will reach the sectors that sell to home owners--places like La-Z-Boy and Home Depot.

Consumer confidence? If it remains high, the folks surveyed are either in excellent financial shape or deep denial.

Sunday, August 12, 2007

Pierogi in Detroit Today

Sweetest Heart of Mary , founded in 1889, is the oldest continuously operating Polish Roman Catholic Church in Detroit. Don't miss the 25th Annual Polish Pierogi Festival. Stop by and enjoy chicken dinners, pierogi, a cash bar, games, prizes, raffles and great music by the Kielbasa Kings and Misty Blues. Pray, eat, drink and dance.
12 p.m.--9 p.m.
Russell Street and Canfield.

Thursday, August 9, 2007

Subprime in Michigan: New Best Practices From OFIS

Defaults on subprime mortgages in the United States are at the heart of a global credit and finance crisis that has been rattling international markets for weeks. Today the BostonHerald reports that "France’s largest bank, BNP Paribas SA, announced that it was freezing about $2.2 billion worth of funds, citing the deteriorating subprime loan market in the U.S."

Subprime-backed hedge funds are all about repackaging really bad loans as a great investment opportunity--passing the buck or tossing the hot potato for profit.

As the U.S. housing bubble continues to pop, Michigan ranks fifth for foreclosures-- caught in the perfect storm of huge manufacturing job losses, subprime mortgages, unprecedented consumer debt, questionable mortgage lending practices and little regulation of the entire financial sector.

The Michigan Office of Financial and Insurance Services has issued regulatory best practices for mortgage originators that market and sell adjustable-rate mortgage products to subprime borrowers. (press release)

Michigan's OFIS has a big job--regulating HMOs, banks, domestic insurance companies, investment advisors, securities broker-dealers, consumer finance lenders, insurance agents and securities agents. It's a tough job, but someone has to try.

Since1981 the number of mortgage companies in Michigan has gone from zero to approximately 3,200.

And what are these best practices for subprime mortgage lending? You won't find a summary in the press release, but you can wade through the "regulatory guidance" yourself.

The document assumes subprime lending will continue.

The OFIS statement contains many shoulds, but not a single "must." These are not rules that must be followed. They are prudent measures that, if implemented, could spare a lot of consumers a lot of pain. Given the unfolding global financial news, they seem too little too late.

Offering risky ARM products to high risk borrowers might be immoral, but it isn't yet illegal.

Until federal government regulations or a global credit freeze stop non-depository lenders from making bad loans, caveat emptor.

Tuesday, August 7, 2007

Gov. Milliken, My New Favorite Republican

William Milliken is my new favorite republican. Once upon a time, long ago and right here, a republican governor signed revolutionary environmental protection legislation--fitting in a state with a motto boasting its natural resources. Passed in 1970, Michigan's Environmental Protection Act set an ambitious standard recognizing the right of anyone to sue over damage to the water, air or land. It was recognition of the commons--the resources we share as citizens--and our rights and responsibility to protect them. But the state Supreme Court on July 25th decided to negate that legislative intent.

Quoted in the Muskegon Chronicle, Milliken said:

"It was clearly the intent of the Legislature and clearly my intent when I signed that bill that any citizen would have the right to sue."

"They (the Supreme Court) have so narrowed down the ability of a person to bring a lawsuit, it has negated the intent of the Legislature."

How clear can you be? There it is laid out plain as 1+1=2. I'm no lawyer, but I thought legislative intent mattered in the Court.

According to the Chronicle, the majority said that the word "anyone" violated the U.S. Constitution. Chief Justice Taylor said that the U.S. Constitution only allows parties directly harmed to sue. Agreeing with him--justices Corrigan, Young, and Markman; dissenting Cavanaugh, Kelly, Weaver.

I'm seeking a pleasant peninsula, but according to this Court my right to sue is determined by my property ownership. So, my ability to advocate for environmental stewardship in the courts is restricted by location of my property lines or maybe the easement. Are property owners really the only citizens who can be directly harmed by significant environmental changes brought about by industrial activity? Of course not. All of us have a right to clean air, water and land. And all of us have the responsibility to protect what makes Pure Michigan.

Governor Milliken and the legislature said so. And that's good enough for me.

Blogging For Michigan, Not Against It

Coverage of the Senate blog blocking has widened.
Battle Creek Enquirer
WOODTV, Grand Rapids
Michigan Technology News
Red Tape Blog (geared to government documents librarians in Michigan)

In a partisan world there are us and them. It's quite binary like the ones and zeros that make cyberspace possible. Thumbs up or thumbs down. Boys on the bus and the rest of us slobs.

On election day, winner and losers. The blocking of Blogging for Michigan looks partisan. And that's a shame for the state of political discourse, policy making, public trust and transparency in Michigan government.

Now, of all times, we must come together for the sake of our state's future. Diverse opinion represents constituents' opinions. Legislators represent all their constituents not just the ones they agree with. Mature governing can tolerate, integrate and synthesize different perspectives into policy outcomes that move us forward. There's politics and then there's governing. Right now Michigan needs far less of the former and a vast helping of the latter.

Sunday, August 5, 2007

Blocking Political Blogs in the Michigan Senate

If you have children and internet access, you've probably worried about inappropriate content making its way onto the screen and into their impressionable minds. You may even use filters to keep your kids safe and protect their innocence. This week, while many liberal bloggers were in Chicago at the Yearly Kos Convention, Sen. Mike Bishop's chief of staff decided to protect employees from something called Blogging For Michigan, self described as "a managed progressive community." BFM's core contributors write "the purpose of this community is to provide news and commentary on issues that affect the people of Michigan. BFM believes strongly in the value of the Michigan progressive blogosphere and is committed to supporting high quality citizen journalism."

Several blogs have remarked on the situation. Check Among the Trees, Daily Kos, Michigan Liberal, The Conservative Media. And Senate Minority Leader, Mark Schauer weighed in at BFM.

After shaking off the initial outrage at what looks and smells like censorship, we can welcome this opportunity to consider the impacts, roles, and uses of blogs in the political realm. Blogs are as diverse as the people and groups who create them. Most have a point of view. Many are partisan. A large number make no contribution to civility in discourse and give shelter to the lesser angels of our nature, hidden with cyber identities. Some are even funded and promoted to disseminate disinformation. But, many blogs are the work of people who would otherwise not have access to the "conversation" for lack of wealth, social station, or celebrity. They are not now and never will be members of the club. A blogger needn't even own a computer to have an impact or share an idea, since many public libraries provide internet access.

Should blogs be considered part of the media or journalistic outlets? Some, definitely should. Bloggers keep the mainstream media on their toes by digging a little deeper, asking the next question, and breaking important stories. You cannot generalize about the skills, experience and intelligence of bloggers. You cannot categorically dismiss their research and writing. Some are outstanding writers and thinkers.

Should access to certain blogs be blocked in government offices? This depends on your understanding of the First Amendment. Are you concerned about Freedom of Speech or Freedom of the Press or both? Are the blogs you block political speech written by partisans or members of the press or a bit of both? And, in the absence of consensus around blogs as press, things are likely to get messier. Try this thought experiment: if you were sitting in your Senate office and political pamphlets contrary to your perspective started blowing in through the window would you close the window? If you closed the window and they stuck to it still readable what would you do?

Sen. Bishop's chief of staff said he blocked access to BFM because employees were accessing it too much and not doing their work on behalf of constituents. Couldn't he just have a conversation with the employees in question and advise them to get back to work instead of restricting access from all state Senate computers? And what about the state Senators who do want to read BFM at work?

to be continued...

Saturday, August 4, 2007

John Edwards' Object Lesson--Don't Bite Murdoch's Hand

Big money shapes electoral politics. Big media shapes opinion, frames debate, and secures the perimeter of public consciousness. Big money owns big media.

For example, News Corporation and its subsidiaries own Harper Collins, Zondervan, the Wall Street Journal, the New York Post, 20th Century Fox, the Weekly Standard, Fox News Channel, and TV Guide, to name just a few of its prized gems.

If you want to take down a serious candidate and you own lots of media, you are golden.

John Edwards recently called on fellow democratic presidential candidates to refuse donations from News Corporation owner, Rupert Murdoch. He also criticized Murdoch's purchase of the Wall Street Journal. But then Edwards was attacked as hypocritical by and the New York Post for accepting a book advance from Harper Collins (three entities owned by Murdoch's News Corporation). The New York Post today published Edwards Refuses to Return His Rupees, a piece that quotes blogger, Roger L. Simon:

"Bloggers, meanwhile, threw the book at him yesterday, searing him as a hypocritical fraud.

"We need a new, more extreme version of the word hypocrite for Edwards," wrote blogger Roger Simon, noting Edwards' penchant for $400 haircuts and the 28,000-square-foot mansion the former senator built for himself while running a class-warfare campaign.

"People like Edwards are more than just fakes - they are actually dangerous," Simon added. "Everything is about Edwards and his glory. It's not about anything else."

Edwards secured a book deal with Harper Collins and accepted a $500,000 advance and $300,000 for expenses. Edwards spokesman Eric Schultz said the candidate "did not receive one penny from this book. All of his proceeds went to charities, like Habitat for Humanity and the College for Everyone program." (source)

Nonetheless, the money came from a source connected to Rupert Murdoch and the presumption is that Edwards should have known better than to criticize fellow candidates for taking money from Murdoch while accepting a book deal from a firm connected in any way with Murdoch.

A rookie mistake or a set up? Maybe both. Now Edwards is catching even more heat for hypocrisy than after the overpriced haircut incident. And he will have to spend precious time explaining himself rather than promoting his policy positions. Very unfortunate for him, but even more so for the quality of political discourse this week.

Friday, August 3, 2007

U.S. House Moves to Allow Prescription Imports

If you live near the Canadian border and experience a financial burden from expensive pharmaceuticals, this is great news.

The measure was included in H.R. 3161, which the President already said he would veto on the basis of cost.

The Globe and Mail reports today that the President will veto the bill, which passed by a 237 to 18 vote. The statement from the administration expresses concern over consumer safety.
Curiously, the same bill bans import of meat and poultry grown or processed in China, but according to Reuters:
The White House said China's poultry inspection system "is equivalent to the system in the United States."
One hopes it is at least better than China's toy inspection system or pet food inspection system.

Michigan's own Mike Rogers is quoted in the Globe and Mail piece:
“I understand the intention to lower drug prices to the seniors, that is critically important,” said Rep. Mike Rogers, R-Mich. “What we're doing is throwing open the gates to every [drug] counterfeiter in the world.”
Supporters of the legislation want to provide consumers access to affordable medication. The pharmaceutical industry tried to block the measure.
No surprises really.

Thursday, August 2, 2007

Michigan's Political Blogosphere--a Very, Very Brief Visitors' Guide

Bloggers have arrived. They are gaining credibility and attracting ire. Clearly, they are changing the journalistic, political and electoral landscape.

Editor and Publisher reports that "bloggers making Freedom of Information Act (FOIA) requests to the CIA will likely get them processed for free under new rules that broaden the definition of who is part of the 'news media.'"

All democratic presidential candidates will make appearances at the Yearly Kos Conference, for liberal and antiwar bloggers, in Chicago this weekend.

Monday, conservative talker, Bill O'Reilly blasted the Daily Kos as a hate site on par with the Klan in an effort to discourage dems from attending the Chicago conference.

Michigan has a diverse and thriving political blogosphere. Consider this an introductory visitors' guide to the virtual landscape.

Liberal Community Sites
Michigan Liberal, the foremost liberal social blog with a relatively open culture. While open to anyone who espouses liberal/progressive values, many participants are democrats.

Blogging for Michigan, a relatively new site, is a "managed progressive community" providing news and commentary, while aiming for high standards of citizen journalism. This isn't a progressive soap box. Moderators expect writers to do some leg work in crafting posts.

Michigan GOP (That's Saul, folks!)
While the name is whimsical and inviting, reader comments are not allowed. Saul Anuzis, state party chair, drafts the daily posts. Other bloggers listed as contributors include Michigan Republican Party staff--Jeff Timmer, Sarah Anderson, and Rob Macomber. Based on statistics from BlogNetNews/Michigan, some of the daily posts get a lot of external links.

Republican Michigander, based in Livingston County, is the work of two writers. Although identifying as republican, comments are welcomed without restriction and some interesting dialog can result. Republican Michigander's tone tends toward pragmatism and reasonableness with a clear point of view.

Media Critique
While media critique is central to blog culture, some blogs devote themselves to exposing skewed or inaccurate reporting, or underreported issues in the public interest.
Media Mouse, based in Grand Rapids, "is an independent media group that formed in 1999 in response to the corporate media's unwillingness to cover movements for social change and a recognition of the need for more independent perspectives in Grand Rapids."

Comprehensive Directory
Absolute Michigan's Michigan Blog has an extensive list of all sorts of blogs based in Michigan. You could spend hours exploring.

Issue Oriented
These run the gamut and tend to be hosted by individuals and nonprofit organizations with an interest in specific policy and political outcomes. Here is a small sample.
Right to Life of Michigan's Blog
Republic of M, Gay Michigan
Great Lakes Guy
Michigan Nonprofit Association's Blog
Michigan Library Consortium Blog

As you travel, be sure to explore the blogrolls in the sidebars. You'll be amazed what's out there. You might even want to start your own blog. Enjoy your journey!

Wednesday, August 1, 2007

Granholm Featured in WaPo OpEd Column Today

See E.J. Dionne Jr.--Who's for Big Government

His point is that even though the big government versus small government rhetoric abounds at the state level, conservatives are willing to support big government programs if their constituents will benefit.
"Could there be any more of a big-government endeavor than the invasion of Iraq, pursued by a president from the party of small government? Do the domestic spying programs have anything to do with a small-government agenda?"
Well, no.

And there is always the farm bill.
"In the meantime, the coalition against excessive government entanglement in the farm economy crisscrossed all ideological boundaries, running from Rep. Jeff Flake (R-Ariz.) to Sen. Richard Lugar (R-Ind.) to Rep. Ron Kind (D-Wis.).

Kind's amendment to reform the farm program attracted an admirable band of supporters, including some of the most liberal and most conservative members of the House. Yet it was overwhelmingly voted down because a slew of farm-state conservatives uncharacteristically joined the Democratic leadership in opposing it.

Rep. Robert Goodlatte (R-Va.) said Kind's proposal "rips out the safety net for American farmers and ranchers." At last: a safety net many conservatives love. Democratic leaders, for their part, opposed Kind because they wanted an electoral safety net for their vulnerable members from farming districts."
Interesting, common ground among the very liberal and the very conservative.

Finally, to Granholm. On the issue of government provided health care, Granholm says that business leaders recognize such programs give competitive advantage to manufacturers in other countries.
"Shrewd industrialists who love the free-enterprise system have noticed how 'countries that have big-government health care' are at a competitive advantage, Granholm said in a telephone interview, and 'they're asking government to help them out.'"
Granholm also speaks to changing sentencing guidelines, as a way to help with budget woes.

Sadly, our partisan bickering and posturing over the budget and taxes has attracted national attention.
"Posturing on taxes will probably continue until very close to Michigan's fall budget deadline. But because the trade-offs between taxes and spending are clear, politicians can't afford to be too rhetorical."

All eyes are on you, Michigan legislature.

Finally, Granholm advocates investing in people through education and healthcare for the sake of our economy.
"Granholm argues that the United States is 'never going to be the cheapest place to do business,' in part because of its high labor and environmental standards relative to many of the emerging economies. She suggests that improving the country's competitive position will require 'investing in education, higher education and health care.'"
Right, we have standards for goodness sake! Let's not abandon standards that support a clean environment or educated citizens or fairly compensated workers. Sure, ditching those costly policies and regulations has seduced vast numbers of manufacturers to move abroad. After all, shareholders want better returns on investment and nobody likes a bear market.

Making commitments to invest in people will require a longterm perspective--a stretch for those focused on quarterly profits or election cycles.