Conservative's Conscience

2008 Crisis in the U.S. Financial System, Part Two of Two

There ain't no such thing as a free lunch. -- Robert A. Heinlein, The Moon is a Harsh Mistress, 1966, G.P.Putnam's Sons, NY

Some people forgot a basic rule of existence: There ain't no such thing as a free lunch.  And they became a part of the 2008 problem.

But the assumption is made here, perhaps rashly, that failure related to buyer ignorance or misdirected guile is a small part of the problem.  The major parts of it are:

o       Unremitting government pressure, primarily under the Community Reinvestment Act (CRA) to make troublesome loans or, alternatively, to be charged with racism and forced to forgo expansion plans because of that charge.

• The availability of Fannie Mae and Freddie Mac as a dumping ground for loans and as a bottomless source of liquidity out of which more lending could be made.
• The flooding of financial markets with Fannie/Freddie asset-based securities that were rendered valueless because of the housing crash.
• The unflagging support given by the creators and friends of Fannie/Freddie that made impossible the improved regulation of both, long before the housing crash took place.   
• Greed, symbolized by the payment of indecent wages and fringes to the executives of Fannie/Freddie and to Wall Street executives.

A relevant piece of legislation became law under President G.H.W. Bush in 1989 -- The Financial Institutions Reform and Enforcement Act.   Jim Wright and Tom Foley controlled the House; George Mitchell, the Senate -- Democrats all.  The bill was passed in the aftermath of the Savings and Loan debacle and it refined federal auditing procedures over banks, increasing even more the pressures under which they were forced to operate.

Just before Republicans took control of Congress in 1994, President Clinton signed into law the 1994 Riegle-Neal Interstate Banking and Efficiency Act, which added even more pressure on banks to make loans approved by the feds.

Franklin Raines, formerly associated with both the Carter and the Clinton administrations was Fannie's Chairman in 1999.  Under pressure from Democrats, he lowered lending standards to include those whose credit is not good enough to qualify for conventional loans -- in effect, sub-prime lending became approved lending under federal standards.

Frequently made warnings about the real value of Fannie/Freddie assets were regularly pushed aside by major players.  For example, Rep. Barney Frank said in 2000 that concerns were overblown; in 2002, he said Fannie/Freddie were great assets; in 2003, he said American people did not face a crisis. 

Richard Syron, former Chairman of Freddie Mac, ignored warnings of regulators and his own risk officer (who resigned). 

Alan Greenspan in 2005 warned for the second time about looming problems at Fannie/Freddie.  Republicans, including John McCain, supported tighter regulations for Fannie/Freddie but were defeated by Democrats led by Senators Dodd and Schumer.

Fannie/Freddie were taken over by the federal government in September 2008 -- the potential cost to taxpayers is $200 billion.

Now, after seeing several failures of gigantic financial institutions, the government has pledged to buy $700 billion in toxic assets from banks who cannot lend with such junk on their balance sheets.  In effect, the banking industry is being federalized; in effect, American democracy is headed for the men's room.  The hope is that liquidity will be restored.  Confidence is not universal.

There are lessons in all of this.

• After the Great Depression, Fannie Mae should have been closed.  If there is a need for a secondary mortgage market, the private sector will fill it.
• Social objectives should never be allowed to weaken good business procedure.  There are good reasons for down-payment requirements and for income tests and they should not be abandoned because somebody yells "unfair."
• The time to buy a house is when one can afford it.  To try to hasten that time through undue government intervention ultimately benefits nobody.  Renting is not shameful. 
• To the extent that FHA, Veteran or other loans waive or lower down-payment requirements, to the same extent the check on capacity to pay must be intensified. 

Scoundrels are involved in this drama whose actions should be examined and, where possible, prosecuted. 

Names like Barney Frank and Chris Dodd come to mind.  Rep. Frank, a cheerleader for Fannie Mae, was also a long-time intimate of a Fannie executive, Herb Moses.  Was he unduly lenient toward Fannie?

How could Chris Dodd be objective when, at the same time, he was a major beneficiary of political donations from Fannie's employees  and, according to press reports, received favorable mortgage loan treatment from Countrywide Financial Corp. (under investigation)? 

And how about the golden parachutes given to executives from Fannie/Freddie and from private sector firms who left a shambles behind?

Warning!  This mess began when politicians in charge agreed that home ownership is a right.  Their subsequent intrusion into the public sector with rules and regulations that forced modifications of sound business practices are the ultimate cause of the current crisis. 

Leaders of the same ilk are now moving with force into two other major sectors of the economy: health care and energy.  Their "we-know-best" attitude applied in these two fields will, if successful, have the same disastrous effect. 

The ultimate lessons?  Government must back off; lenders must be prudent.  And borrowers must remember the maxim of survival: There ain't no such thing as a free lunch.     

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2008 Crisis in the U.S. Financial System, Part One of Two

Ideas have consequences. -- Richard M. Weaver

The crisis in the U.S. financial system does not have its origins in the failure rate of sub-prime loans over the past few years.  Like many great historical events, its roots were planted decades ago when a noble idea -- own a home with initial assistance from the federal government -- evolved into a de facto right to home ownership enforced by government. 

Exactly when "dream" turned into "right," and "assist" became "enforce" cannot be precisely determined.  But the motivation for allowing such a perversion is always present and will inevitably spring into life whenever power falls into the hands of social engineers who genetically oppose free enterprise, and eagerly embrace the proposition that informed government action and lots of cash can remove all of life's hurdles.  

The ideal environment for humanists came into being with the 1960 election of John F. Kennedy, and it became a working political reality when Lyndon Johnson succeeded the assassinated Kennedy and went on to serve for five more years, during which the first shingle fell from the roof of the first foreclosure of 2008. 

Kennedy/Johnson ruled the White House for eight years supported by Sam Rayburn and John McCormack in the House, and Mike Mansfield in the Senate, Democrats all.  They had the government by the throat -- they could and did pass whatever social legislation they pleased.  House control under Democrats continued until 1994; the same was true of the Senate except for two years under Bob Dole during the 1980s. 

That 34-year period was as close to social-engineering heaven as left-wingers are likely to see (The same environment threatens to repeat after the 2008 election -- Obama plus Nancy Pelosi, House, and Harry Reid, Senate, leading Congress.). 

The seeds of the current crisis were planted during those years.  And they slowly grew the branches of destruction that encircled the financial system and, finally, squeezed the life out of it.     

 When did "dream" turn into "right?" -- "help" turn into "enforce?"

Franklin Roosevelt officially recognized the dream of home ownership when he signed several laws during the Great Depression aimed at helping distressed homeowners.  The now infamous Fannie Mae (Federal National Mortgage Association), for example, was formed in 1938 as a federal agency, its innocent-sounding mission to provide liquidity to a distressed housing market.

When World War Two converted the U.S. from being an economic cripple to the status of giant, one would have expected to see Fannie Mae close down and get out of private sector business.  But Washington being Washington where nothing is ever closed down, Fannie Mae continued in existence for the next thirty years (1938-1968) as a federal agency.

Fannie Mae in 1968 was turned loose under Lyndon Johnson as a government sponsored enterprise.  Congress at the time was led by two Democrats, John McCormack and Mike Mansfield.  Fannie's business function was to buy mortgages from lenders that it thereafter packaged and sold to other financial institutions as asset-based marketable securities.  The new government sponsored enterprise grew and grew and became a dominant force in the secondary mortgage market. 

Freddie Mac (Federal Home Loan Mortgage Corporation) was formed in 1970 under Richard Nixon.  Congress at the time was run by the same two Democrats, McCormack and Mansfield. Freddie's function was to join Fannie in the secondary mortgage market business.  Between them, they dominated the field.

ACORN, a grassroots organization that was to become a political and controversial powerhouse over the subsequent decades, was also formed in 1970.  It may be fairly described as a by-product of the civil rights movement that was so active during those years.

President Carter was in office when the 1977 Community Reinvestment Act (CRA) was passed.  Congress was controlled by Tip O'Neil (House) and Robert Byrd (Senate).  It may be arguably stated that this legislation was the proximate cause of the 2008 financial crisis. 

 The law was passed as a response to the charge that lending institutions were not providing equal credit opportunities to urban neighborhoods -- it may be fairly described as another godchild of the civil rights movement. 

Banks were thereafter subject to examinations by federal officials relative to the fairness of their practices; advocacy groups were given the right to protest bank practices.  The results of this oversight would be taken into account when banks requested planned expansions.  In other words, if banks didn't behave according to CRA rules, expansion plans could be denied. 

Groups like ACORN were handed the tools of power when this law was passed and, according to critics, they have used it to extort millions from banks.  The organization has repeatedly been scrutinized by the law following charges of voter fraud.    

Financial stress has been the result of laws activated over a period of 17 years (1960-77) that made government, through Fannie/Freddie, major players in the housing industry.          

Congressional committees supervised Fannie/Freddie.  What a comfort! 

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New Hampshire Foliage

Live Free plus Foliage

"You spent all day yesterday looking at trees and leaves?" my friend asked.

"Yup"

"And you drove over 400 miles to do it?"

"Uh huh," I replied.  "Do it every year."

That ended the conversation.  Obviously, my friend thinks I'm a bit weird. 

Perhaps so.  But I'm unapologetic about it.  True beauty is a nourishment that this Pilgrim needs to experience on a regular basis in order to maintain a sense of balance in an unbalanced world.

So what?  What does that have to do with trees, leaves and driving 400 miles doing nothing but looking at stuff?

Let me explain.

The stuff I looked at was the colorful foliage of New Hampshire; the "nothing" I was doing was the same kind of nothing one does in an art museum.

We are, I claim, given our five senses for more than purely functional reasons.  They are also a gift, given to us so that we may experience the pleasure of what we touch, hear, see, smell and taste. 

In that light the five senses become highways to our imagination, that marvelously unique human tool which can translate experiences into something that makes us proud of being human.  And that "something" can be called beauty. 

But beauty to me is more than something that brings pleasure to the senses.  In a deeper way, it is that which ennobles man (in the universal sense); it makes him taller; it uplifts him.

I need beauty, and I primarily seek it out through two senses: hearing, that permits me to enjoy great American music, and sight, that permits me to regularly slow down for a day and look at -- really look at -- this beautiful earth of ours.

What better time to do it than early October?  What better place than New England? What better state than New Hampshire with its White Mountains?

I take a very special route to get to the area that satisfies my appetite for the visual beauty  my eyes were created to see.  I came to it quite by accident.   

Years ago, after several years of getting stuck in traffic around Conway, NH (and after writing a letter of protest that was prominantly carried in the local newspaper), I vowed never again to drive through that town. 

I never have, but that decision presented me with a quandary: How do I get maximum exposure to foliage on the one hand, and skip Conway on the other?

Determination conquers all.  The solution is to take route 93 north; leave it at exit 35 to route 3; continue on route 3 north until it intersects with route 2; continue on route 2 east  through Gorham until it intersects with route 16; take 16 south until it intersects with route 302 west;  go through the mountains on 302 until it intersects with route 3; take route 3 south, which becomes 93 south, until it intersects with 112 east (Loon Mt. area); go through the mountains on 112 until it intersects with 16 (below Conway); take 16 to Spaulding Turnpike to 95 and home.  About 400 miles.

If you hit it right, the way up on route 93 will be spectacularly beautiful, especially, north of Concord.  Vast panoramas of yellows, reds, browns and greens will assault your eyes.  The same is true from Gorham to route 302.  Within the mountains, 302 will tempt you to stop and view, more than 112 will, but 112 is a more dramatic drive than the other, filled with steep ups and downs. 

The journey home is not as impressive, but it ain't chopped liver.

I feel better after this visual feast.  Can't tell you why.  But it's a fact.  When I get home I usually end up playing the organ and singing a few tunes.  Somehow the two activities seem to go together.  Don't know why.  Do you?"

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Why you should vote

The national election is upcoming.  So what?  You've ignored elections before; you'll do it again.  What's the difference?  Tierney or Baker, Frank, Markey, Delahunt, Kerry or  Beatty, Democrats, Republicans?  They're all the same.  Irrelevant! 

Most people and parties merge into one mass of inefficient self-seekers once they get elected.  They have no impact on your life, no matter who wins or loses.  You don't count.  

Wrong!  And you'll never be right unless by your apathy you, and others like you, finally become the dominant non-force in elections.    

But just as you and your soul mates can, by inaction, confirm your ineffectiveness so also can you become a powerful force for good by getting off your duffs and, one by one, expressing your outrage at the polls. 

Who wins does impact your life.  Your vote can make a difference. 

For example, the high price of gasoline is partly your fault.  Why?  Because by refusing to vote for new people you have relentlessly returned to Washington the same do-nothing politicians who have played politics with energy for almost forty years.

And they're up to the same old tricks again.  Pelosi and Markey-led Democrats in the House recently passed an energy bill that makes them look good (for the upcoming election) but doesn't have a chance to get through the Senate or, if it does, to escape a presidential veto. 

Foundational thinking for this bill is the same as that which is creeping into our laws and culture with the stealth of an assassin.  Few say it out loud, but Democrats flat out oppose the use of fossil fuels because the UN (through its Intergovernmental Panel on Climate Change), Al Gore and a number of supporting scientists say their use is the primary cause of a global warming that could cause devastation on the planet. And the energy bill they propose reflects this attitude.

Its key proposals, which are energetically supported by all Democrats including our local heroes, are:

o       Drilling beyond 50 miles from shore will be allowed if states approve.  This is supposed to be a "reaching-out" provision to Republicans.  Oil and gas drilling on New England's Georges Bank would be banned. 

o       Hit oil companies with tax and royalty penalties.

o       Release 70 million barrels of oil from the strategic reserve -- this is supposed to lower prices for gasoline.

o       Provide tax incentives for alternative energy industries.

o       Require utilities to produce 15 percent of their energy from alternative sources.

o       Give additional tax breaks for new energy efficiency programs including the use of bicycles for commuting (thank God). 

No mention of environmental restrictions, nuclear energy, limited oil refineries, safe near-shore drilling, development of Alaska drilling, etc.

What motivates people to propose such light-headed silliness?  We are an oil-based society.  It moves us around; it heats our homes; it's part of numberless products we use every day.  The need for it will not go away -- even if all transportation is moved in a different way, we will need about 40 percent of the oil we use today.

What sane nation tears down a society in order to make a debatable scientific point? -- man is the cause of global warming.  This is not settled science.  Over 30,000 dissenting scientists say so -- about one-third PhDs. 

Global warming, like abortion, has become an act of faith for Democrats.  Believe it, accept it, or perish.  But it isn't a scientific fact, it's a political belief, and it's infecting state and national politics to a dangerous degree. 

If you're not "Green" (wonderful, smart, caring), you're "Black" (evil, stupid, ruthless).  Balderdash! 

Go ahead.  Be Green.  Sit on your duff.  Watch prices rise.  Do nothing.  Complain about problems you refuse to face.  By your inaction, vote for the same people again. 

Einstein said that doing the same thing over and over and expecting a different result is a test of insanity.  Do you qualify?   

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The Gasoline Blues

Everyone in America has experienced the gasoline blues.  The $10 they once spent at the pump has graduated to $20 then $30 and beyond.  How come? 

In a presidential year, all eyes turn to Washington, and the blame-game begins, a useless exercise that yields little more than silly ideas from politicians like Markey, Tierney, Kennedy and Kerry who for decades have failed to deal with a problem that was obvious in the 1970s.

The need to blame someone also shows itself in resentment against the guy who pours the gas.  But, again,  emotion is misdirected.  Some gas station owners, I believe, are hurting as much as you are.  Sure, price is up, but volume is down and margins remain lean. 

Antoine Idanjian  owns Antoine's Service, Inc. in Peabody.  He and his well-trained, courteous employees sell me my gas and perform for me other services as needed.  So it was natural for me to check out with him the impact of high prices on gallons sold by a typical full-service station.

His answer was both amusing and informative, amusing because he flipped me a figure in an instant that in a corporate setting might have taken me at least a full day to get from one of the many vice presidents.  Antoine says his sales volume is down 30 percent, and competition from nearby stations has kept his profit margins stable. 

Driving has decreased under the onslaught of high prices which means fewer stops at Antoine's and a decrease in the probability that his other garage services will be requested.  I didn't ask him about that side of the operation but I suspect (as is true with all retail operations) that less "foot" traffic equals less business.

It's regrettable that you and the guy at the end of the petroleum chain are being hurt by high prices.  But regret turns close to anger when one sees politicians pointing fingers at everyone except the real culprits in this mess -- themselves.  And anger approaches fury when one is exposed to the daily battering by the Left that hypes hatred for oil companies and has predicted a recession for months (GDP growth in the second quarter, 3.3 percent).  In so doing, they cloud problem definition, which if continued will destroy the chance for problem solution.

You, for example, are not as bad off at the pump as you think you are.  The media when discussing the situation place full emphasis on gas prices and forget the other side of the equation -- the ability to pay.  Sure, prices have gone up over time, but so has income. 

In 1979, for example, average per capita income was $8,638 and 1,000 gallons of gasoline would cost $860 -- 10 percent. 

In 1981, when Reagan was dealing with his inherited inflation, unemployment and interest rates the 10 percent number went up to almost 11 percent.  At that point the price of gasoline versus per capita income was at its most punishing level. 

In the 1980s it dropped to the 5-6 percent range; in the 1990s, 4-5 percent and in 2007, as prices soared, it advanced to a bit more than 7 percent.

What does this mean?  It helps to define why you are hurting.  It isn't so much the price of the product that hurts you as it is changed lifestyle.  You, the wife and the kids are driving more.  That's why it hurts.  

The price at the pump will not be solved by releasing the oil reserve (Speaker Pelosi), or by inflating tires (Barack Obama) or by dropping taxes on fuel (John McCain).  These, at best, are but Band-aids on a super-serious energy problem.

Short term:  All sources of energy must be vigorously tapped.  Long term: Develop cars that don't need gasoline -- that single step will reduce oil imports by 44 percent.

Vote for those who agree; against those who don't.    

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Jeff Beatty -The Contender

 A U.S. Senator who will actually go to work for us

Jeff Beatty, John Kerry's 2008 opponent, is a stranger to politics.  For some, this may be an immediate disqualifier.  Others will shout: Hurray!

Beatty, the adopted son of Ray (a war hero) and Christine, lives in Harwich.  He worked his way through Rutgers State University as a teamster.  He joined ROTC and graduated in 1974 as a Distinguished Military Graduate -- top five percent in the country.

Beatty's military career began after graduation, and it reads like something from an adventure novel.  He became a member of Delta Force, an elite unit, and eventually became its Assault Troop Commander and Operations Officer.  Medals, including a Purple Heart, from that duty impressively report his experience in counter-terrorism.  In 1984, the FBI used him as a special agent in the Los Angeles Olympics to head up its counter-terrorism unit (just in case).  Duty in the same kind of work for the CIA followed in Europe and the Middle East.

He formed his own counter-terrorism company in 1992 which has since served many American cities, dealing with major events like Superbowls and international meetings.

Beatty is 56 with one more self-imposed hill to climb.  Politics!  And his web site says he's going to concentrate on six issues: Economy/Taxes/Budget; Energy, War, Immigration, Amendment II and Education. 

Economy/Taxes/Budget

 Beatty relates lower taxes to a healthy economy -- he signed the Taxpayer Protection Pledge.  He wants to downsize government; he recognizes spending is out of control. 

For short-term help to the consumer, he advocates a suspension of 40 cents per gallon in gasoline taxes and rejects the 50 cent additional tax on gasoline that Beatty claims Kerry wants -- to discourage driving.

Beatty laments uncontrolled spending levels that have forced national debt to rise and to reside in the hands of troublesome countries like China.

Energy

Before this race is over, Kerry will be called to account by this man.

Beatty supports a comprehensive energy program that fully utilizes America's assets and capabilities.  He will drill for oil and gas in all responsible places, develop nuclear power, build refineries, and invest in alternative sources of energy -- solar, wind, hydroelectric, etc. -- with goals to become energy independent, to reduce the use of fossil fuels to the minimum in the shortest possible time and (an interesting thought) to eventually become a net exporter of energy.

War

Iraq is one aspect of the war against terrorism, but it must be won, or all else could crumble.  He seeks victory, then the gradual withdrawal of 100,000 troops.  Beatty is opposed to artificial timetables. 

He would not have signed the 2002 Iraqi War Resolution that Kerry did.  He claims his decision was based on evidence -- that Kerry's was based on political ambition.  Since the war began, Beatty has favored a plan for victory; Kerry has supported the cut-and-run approach.

Immigration

   Close borders, build the fence and enforce the law.  Beatty's policy is clear.  He does not believe illegals should share in American welfare and educational benefits.  He wants to streamline the immigration, citizen-making process.

Beatty seems as indifferent to the cultural aspects of immigration as his opponent.

Amendment II - Gun Rights

 Beatty's support for gun rights is perhaps more absolute than Kerry's, but the distance between them shouldn't be troublesome to either candidate.

Education

 School choice is something that separates the candidates.  Beatty favors; Kerry doesn't.  Other than that, conservatives may find Beatty disappointing on this issue.  He seems to talk union-tongue -- more for teachers; smaller class sizes, etc.  No sign of recognizing the deep-seated problems.

Beatty is a hard hitter.  "What John Kerry knows about terrorism he has to get from Tom Clancy."  "There is nothing more tragic and disappointing than hearing John Kerry accuse someone of playing politics on national security, especially when he is, without doubt, one of the worst and deadliest examples of political hypocrisy."

Before this race is over, Kerry will be called to account by this man.

The Beatty website.

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A Look at Kerry's Record

Senator John Kerry will run for his fifth term in the Senate this year.  This is especially newsworthy for two reasons:

• He was the defeated Democrat in the 2004 presidential race.  As such he is a member of the elite in the Democratic Party.
• Fifty-one percent say it's time to give someone else a chance according to a recent poll. 

His opponent is Jeff Beatty, a soldier/businessman from Harwich who, according to his home page, intends to focus on Economy/Taxes/Budget; Energy, War, Immigration, Amendment II and Education during his campaign.  A review of the senator's record on these issues follows. 

Economy/Taxes/Budget

 The National Taxpayers Union (14 percent) and the U.S. Chamber of Commerce (0 percent) say thumbs down on Kerry.  The Citizens for Tax Justice, which promotes progressive taxation, like him (100 percent).   

Kerry's homepage contains useless generalities.  One searches in vain for any sign of understanding of what modern businesses must contend with in an open-market world.  His focus is to tax and regulate.

He has nothing to say about tax reform.  He generally opposes the most recent tax cuts, especially those related to death taxes, the marriage penalty, capital gains and dividends.  Of course, he wants to tax the "rich."

The need for budget reform and the massive problem of national debt get little of the senator's attention.

Energy

 Kerry by his behavior accepts the Al Gore version of global warming.  He consistently votes against more use of fossil fuels, and against the establishment of a nuclear waste depository, a precondition to the development of nuclear energy.  He supports almost any other reasonable project that will make us energy independent.

War

 Kerry supported the Iraqi invasion and, along with other Democrats, has quibbled about most everything ever since including the Patriot Act, which provides the tools needed to protect the homeland.  Two years ago, he wanted U.S. troops out of Iraq by July 2007; last year he wanted a pull-out by March 2008.  Had his wishes been granted, victory in Iraq -- now a distinct possibility -- would have been denied and only God knows what we would have left behind.

Concerning the troops, their welfare and their weapons, Kerry has a positive record.

Immigration

The U.S. Border Control gives Kerry a zero percent rating, indicating his open-border voting record.

More specifically, he favors the president's comprehensive immigration plan (in effect, amnesty for about 12 million illegals).  He disapproves of a fence along the Mexican border; he disapproves of denying funds to sanctuary cities; he will not vote for English as the national language.

Amendment II - Gun Rights

 The senator supports gun rights for individuals (he hunts).  He approves of more restrictions on that right that the National Rifle Association and others might like, but his position is not unreasonable -- anti-assault weapons, background checks, etc.

Education

 Kerry's record is full of approval votes for more funding for education.  The overall sense one gets from reviewing his record is: He thinks money and micro-managing from Washington answer the problem -- there is no sense he is tuned into the core of it, namely: The union-controlled, immigration-battered system is fundamentally flawed and needs a complete airing out.

A review of his record suggests he's been in semi-retirement since the 2004 election.  Page after page of his comments and votes reveal he has had little to say since that election, until the Obama campaign -- which gives credence to the speculation that he's running for Secretary of State.

He gets high ratings from teachers' unions, gay rights groups, pro-abortion organizations and other liberal groups, and he deserves them.  In 2003, for example, he was rated as the most liberal senator (96.5 percent).  There's no sign of change since.

Glamour?  Hair?  Liberal?  Kerry has them all -- if that's what you want.

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Richard A. Baker, Jr. - New Kid in the 6th District

The sixth district of Massachusetts has a colorful recent history. 

From 1937 until 1969, the North Shore district was represented by first George Bates, and then his son, William, both Republicans from Salem.

Following William Bates' death, Democrat Michael Harrington was elected to the seat and was followed by another Democrat, Nicholas Mavroules of Peabody. In 1992 Danvers' Peter Torkildsen regained the seat for the GOP; but four years later he was defeated by the incumbent, Democrat John F. Tierney of Salem.

In the last two elections, Tierney defeated Republicans Mark Smith and Stephen O'Malley with almost 70 percent of the vote.

 Now a new Republican challenger has appeared, Richard A. Baker, Jr., currently the Director of Intellectual Property Licensing for 3Com Corporation, responsible for a program reported to be one of the most extensive in the world.  He also holds many patents in his own name and has others pending. 

 Baker has spent most of his life in the sixth district and currently lives with his wife and son in West Newbury.  His Bachelor degrees in Science and English (a dual major) were earned at the University of New Hampshire; his post-graduate work in Intellectual Property and Computer Science took place at Franklin Pierce Law Center and Harvard University, respectively.

 It seems safe to say that Baker is no lightweight.  However, his political experience is limited to time spent on the Pentucket Regional School Committee. 

 In a nation professionally run by dedicated and efficient politicians, this meager resume of public service would be an immediate disqualifier.  But in one that has been ill-served for a half century by a horde of careerists he's a hot prospect, and a reasonable response to the most appropriate slogan of the day: "Who could do worse?" and its corollary: "Throw the bums out!"

 Baker openly reveals some issues that have driven him to seek election.2  For example, it drives him bonkers to witness herd voting on issue after issue, which he interprets as "a sign of a dysfunctional legislative body."  He vows to vote independently if elected, not blindly according to the rules of party discipline. 

 He vows as well to read the substance of every important bill before he casts his vote, a practice he finds egregiously missing in the current congress.

 Baker believes the job requires an easy familiarity with numbers, something he has gained during his many years as a business executive.  It is his view that too many of those who oversee the federal budget (like his opponent, "a lawyer without financial experience") are not by background as capable of understanding their task as they should be.  He makes similar comparisons relative to his management experience.

 Unsurprisingly, Baker has great concerns about the loose controls over U.S. intellectual property.  He sees American brainpower being regularly stolen by foreign competitors, which he equates to the theft of a highly valuable American asset -- the one that keeps us competitive in a world full of low-wage economic opponents. 

 Baker's comments on fiscal responsibility and the economy lack specificity and teeth, boiling down to his belief that he's more capable than Tierney in such matters.  But his approach to energy is impressive.  He sees it as a three stage problem.

• He encourages conservation and he would manage a downward trend in gasoline prices by making speculators nervous about the future price of oil.  When the price blipped up, he would release oil from the strategic reserve until it stabilized.  A few rounds of this behavior will lead speculators to turn elsewhere for their profits.  Also, he would outlaw the production of oil from corn because it is an inefficient process that also attacks food supply. 
• He would drill for oil wherever possible and reasonable because we can't get away from it in the short term.   
• He would encourage innovation and a system of rewards for those who develop more efficient energy solutions. 

 An interesting man with something to say.        

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Rep. John Tierney, Sixth District

 National Taxpayers Union says Tierney is 83 percent liberal

It appears the sixth district, solidly Republican for decades, has morphed into a Democratic stronghold.  Despite this, Republican opposition has again appeared in the form of Richard Baker, a businessman/scientist from West Newbury.  The question posed in this column is: What sort of an incumbent does Baker face?

 It's useful to begin with an overview of the man as seen by outside organizations.  The National Taxpayers Union says Tierney is 83 percent liberal, a rating supported by the overwhelming endorsement he gets from the well-known activist organizations for liberal causes -- feminists, gays, affirmative action enthusiasts, anti-war groups, unions and others. 

Foreign policy, the war/homeland security/immigration, federal budget/debt, energy, the economy/taxes, and hypersensitive social issues are arguably the most important problems facing the nation and its politicians today.  A few words about Tierney's position on such matters follow.

Foreign policy

Tierney generally opposes dealing with China; he generally resists attempts to reform or penalize the UN.  He approves the reduction of third-world debt.  He usually votes against free trade agreements.  Foreign policy doesn't stand out as his forte.

War/homeland security/immigration

On his web page, Tierney's focus -- during a war -- is limited to care for veterans, communication systems used by first responders and on the implementation of the recommendations of the 9/11 commission in regard to homeland security.

His voting record is more revealing.  In 2007 he wanted to pull troops out of Iraq; he disapproved of the invasion of Iraq and approved the invasion of Kosovo (1999).  He opposes the Patriot Act and its surveillance provisions; he opposes special drivers' licenses designed to hinder terrorists; he opposes military recruitment on college campuses; he opposes guns for commercial pilots.  The U.S. Border Control gives Tierney a 0 percent rating.  He approves amnesty for illegals (gradual citizenship). 

Federal budget/debt

On his web site Tierney proposes a return to the system that produced budget surpluses under Clinton (which was: Chop defense; inflate taxes).  He wants to increase the taxes of corporations and the rich.  He opposes the privatization of Social Security; he favors the 1980s approach to strengthening the system (i.e. increased taxes).  He favors universal health care -- wants the government to negotiate drug prices for Medicare drugs.  Tierney makes no mention of the desperate need for reform of the budget process.

In his voting record, Tierney wants to strengthen the Social Security Lockbox (it doesn't exist).  He approves the importation of drugs; he voted against tax-exempt Medical Savings Accounts.  He believes health care is a right; he opposes small business associations buying drugs; he disapproves of attempts to cap damages on lawsuits.    

Energy

Tierney encourages conservation and investment in alternative sources (no specifics).  He wants to take money from oil companies and reinvest it in clean energy (no specifics).  He wants to mandate CO2 emission reductions at utility plants.  He wants more math and science teachers and he wants to increase fuel economy standards.  He supports programs based on the assumption that fossil fuels must go.

The economy/taxes

Tierney voted against tax simplification, an increase in the child credit, the elimination of the marriage penalty, making existing tax cuts permanent, the elimination of the death tax and other attempts at tax reform.  He favors increases to the minimum wage; he wants to re-establish the Air Traffic Controller's Union (that went on strike under Reagan).  The AFL-CIO gives Tierney a 100 percent mark.

Social Issues

The moral/ethical dilemma of the age is abortion and its first cousin embryonic cell research.  Tierney's web page demonstrates he is consistently pro-abortion and a defender of embryonic cell research, even when it involves human cloning for research (Feb. 2003).

His voting record is consistent with his web page.  NARAL (pro-choice) gives him a 100 percent grade.   

There you have it.  Vote for Tierney and you know what you're getting.  Vote for Baker and hope for something better.

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Manny Out, Bay In-Consequence?

The Cleveland Indians, Central Division champs in 1999, had Manny Ramirez, 27, in left field -- he hit .333 with 44 home runs and 165 RBI.  A fixture in the middle of their lineup, he had led them to five straight division titles.  Manny was nevertheless a free agent at the end of the season and was scooped by the Red Sox with an eight-year deal for about $160 million.

 Why would any team let such a star performer get away?  The Sox found the answer to that question over the last seven-plus years and have finally adopted the same remedy -- dump him.  The balance between gifted athlete and petulant, teenage disposition is now dominated by the latter instead of the former and off he goes to the west, passing on his way to the Dodgers the incoming Jason Bay, 29, who will occupy his left field position for the foreseeable future. 

 Some in Red Sox nation will weep; others will cheer.  Who is right?  First, let's examine the case of the weepers.

 Manny, so it is claimed, is one of the best hitters in baseball history and will certainly end up in the Hall of Fame.  There's no argument with the last point.  His career home run production alone will qualify him for Cooperstown.  But the rest of the accolades are -- to be kind --a stretch.  To make this point one does not have to stray from Boston history, home to the records of two acknowledged superstar hitters, Jimmy Foxx and Ted Williams.

1)       Production per at bat; 2) strikeouts per at bat; 3) Ramirez to date; Foxx/Williams career.

 Current trends indicate that Manny's numbers are at their peak.  Hereafter, they figure to decline -- he is 37.  He will reside in the record books as an admirable hitter, but not a great one.

 Weepers also argue that the Sox are losing a devastating punch from the middle of their batting order.  This argument is based upon the historical Manny, not the current edition.  As a matter of fact, Pedroia and Youkilis out-produced him during the first half, and Lowell was only a bit behind him as a producer.  Manny peaked with the Sox in 2005 and has been going downhill ever since.  Over the past four years, David Ortiz has out-produced him.        

 Those who cheer Manny's leaving have a better case.  The Ramirez they are losing is on the downside of his career.  It's true that over the past four years he has out-produced the incoming Jason Bay by 18 percent.  But during the current year, he is only 8 percent better.  For that small difference in production efficiency, the Sox are getting a player who is a decade younger, a better fielder and a better teammate.     

 What will the theoretical impact of the trade be?

 Production should be better in the second half with a healed Ortiz and a dependable Bay in the 3-4 slots.  The loss of Hansen and Moss as part of the trade was affordable.  Hansen was getting nowhere with the team and might do better elsewhere; Moss, a good outfield prospect, had no chance to break into the Red Sox lineup.  Long term, the club should do better without Manny than they would have with him.

 The message?  Weep no more.  A colorful figure has left the scene but, as such, it will not have as much impact on the Sox as the productive trades recently made by the Yankees.  And one other penalty looms as a possibility.  The Dodgers and Sox could end up as World Series opponents.  And Manny would have his chance at payback -- if he feels like playing. 

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