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Len - Your prediction post on VMC
For what its worth, I took you seriously back then, and it served me very well over the last 2 years.
Great predictions! And many thanks.
How are you riding out this depression?
Hey Rogue! I'm just trying to keep my job right now. Rumors of big layoffs this week at IBM, so everyone is a little nervous right now.
Still trading pretty actively. I'm almost entirely doing swing/position trades these days. Still buying some options on occasion, but the volatility premiums have pushed me more towards the Ultra-long/short ETF's.
So I'm basically building large short positions on the rallies, and waiting for the next crash. Once we crash and see that reversal volume show up, I've been going long SSO or even TLT.
I'm a buyer of TBT anywhere below 39-40, that should be an easy double once the treasury bubbles bursts.
Hope you're doing well. Good to see your still ahead of the curve.
Hello Old Friends!
Hope everyone is doing ok and enjoying the depression.
Heavily invested in SRS, TBT, and TWM at the moment (all short ETF's), and will be adding with every rally.
The crash cometh.
OT: Lefty Frizell
He also wrote 'Long Black Veil', which has been covered by just about every musician under the sun.
Great trivia question. Johnny Cash recorded his version 4 times, and almost everyone considered it his song.
List of recorded versions:
* 1959 Lefty Frizzell, US Country single #6
* 1960 The Country Gentlemen, Country Songs, Old and New
* 1962 The Kingston Trio, New Frontier
* 1962 Burl Ives, The Versatile Burl Ives!
* 1963 Jerry & Sarah, Top of the Tangent, Palo Alto 02-02-1963 Jerry Garcia and his first wife Sarah.
* 1963 Joan Baez, Joan Baez in Concert, Part 2
* 1965 Johnny Cash, Orange Blossom Special
* 1968 Johnny Cash, Johnny Cash at Folsom Prison - US Pop album #13, US Country album #1, UK album #1
* 1968 The Band, Music from Big Pink - US Pop album #30
* 1969 The Byrds, Boston Tea Party', live recording; citation: http://www.bootlegzone.com/album.php?name=yd045§ion=51
* 1970 Joan Baez, (I Live) One Day at a Time
* 1970 Bill Monroe, Kentucky Bluegrass
* 1970 Johnny Cash, Johnny Cash 1970
* 1972 New Riders of the Purple Sage, Gypsy Cowboy
* 1974 Sammi Smith - US Country single #26
* 1980 Jimmy Ellis aka Orion
* 1984 Marianne Faithfull, Rich Kid Blues - originally recorded 1971
* 1984 Baby Opaque featuring Ian Mackaye. MP3
* 1986 Nick Cave and the Bad Seeds, Kicking Against the Pricks
* 1988 The Proclaimers
* 1992 Michael Nesmith
* 1995 Don Walser, The Archive Series Volume 2
* 1995 The Chieftains with Mick Jagger (vocal), The Long Black Veil
* 1995 Don Williams, Borrowed Tales
* 1999 Mike Ness, Cheating at Solitaire
* 1999 Dave Matthews Band, Listener Supported - US Pop album #15
* 2000 Jerry Garcia, David Grisman, Tony Rice, The Pizza Tapes - originally recorded in 1993
* 2000 Daryle Singletary That's Why I Sing This Way
* 2000 John Duffey, Always In Style: A Collection
* 2002 Jason & The Scorchers, Wildfires + Misfires
* 2003 Johnny Cash, Unearthed
* 2003 The Pine Valley Cosmonauts (vocals by Sally Timms & Edith Frost), The Executioner's Last Songs: Volumes 2 & 3
* 2003 Rob Coffinshaker "Fairytales from the Dungeon" single.
* 2004 Ani Difranco, Gillian Welch and Greg Brown, Live in Madison, WI
* 2004 The Stranglers, single
* 2006 Mike Connolly
* 2006 Crooked Fingers, Like a Version 2 (Australia)
* 2007 Stoney LaRue, Live At Billy Bob's Texas
* 2007 David Gray,"a thousand miles behind" live USA
* 2007 Professor Louis and the Crowmatix (The Spirit of Woodstock)
* The Stanley Brothers
* John Anderson
* Bobby Bare
* Chris Ledoux
* Banks & Shane
* Steve Wynn & Concrete Blonde
* Bob Dylan
PBG.to getting crushed
Down $4.5 to $41.50.
I had my stops hit @ 54 in the last 2 weeks and got out. But I may have to start grabbing some here on the dips.
Len, re: Payment vs foreclosure
The catalyst here is the monoline insurers. That is the 'tell' if you ask me. If there is going to be a bailout anywhere, it is going to be with MBIA and Ambak. They have insured billions in bonds, yet do not have the capital to support more than a few defaults.
I dont know if the government has intervened yet or not, but I know the rating agencies still have them both at AAA, when they are obviously under capitalized. One insurer just got delisted, and only then did they lose their AAA rating.
If your bonds are no longer insured against default, then you are most certainly better off renegotiating with the borrower than taking the assets, even if you renegotiate short. But you can only keep this up for so long, then its Kaboom because you yourself become under capitalized.
Nobody wants an asset that is decreasing in value. (psst... this is deflationary)
Hey Bob,
I have a dictionary, and know what deflation is. Not sure what point you're trying to make there. I think you need to read what I wrote more closely. I dont recall making a flatout statement that we are headed for deflation. I actually thought I posited an intelligent reason to consider it. Sorry if you disagree.
I've been on the inflation side of this equation now for about 8 months. And yes, I'm so short in this market, I have pads on my balls. And I know that is a thorn in the side of you and many of the posters on this board. Its also the reason I've all but ceased to post here anymore.
Greenspan lowered rates to fight deflation yes, but Bernake raised them back over 5%. Was that still fighting deflation?
You say stagflation is much likelier, but you give nothing to support your position.
Your 2-3 dimension argument is specious at best, poorly explained at worst. You fail to explain any correlation between globalization advancements and moving 3 dimensional objects, whatever they are.
Good luck to you too Bob. This is my last post here. I decided a while back that I wont renew my IHub subscription this year. I'll still lurk, but I see that I am not really welcome here anymore, and contrarian arguments are taken more and more emotionally around here than ever.
Good luck to everyone here on VMC, I truly wish you all the best.
Bob
PS One last thing. Countrywide is bankrupt! And they have been since I made my prediction. They just havent admitted it yet.
How about Inflation & Deflation?
This is a great article explaining the forces on both sides of the equation.
Inflation in goods bought with earnings (food etc.) and deflation in goods normally bought with debt (housing, cars, home stuff).
Can we Have Inflation and Deflation All at the Same Time?
http://www.kitco.com/ind/fekete/sep282007.html
Very few people understand the „continental drift” that threatens with a fracture of the U.S. (and hence, the world) monetary system. There are two tectonic plates: one, the supply of Federal Reserve notes (FR notes), and the other, the supply of electronic dollars in the form of an inverted pyramid that rests on the supply of FR deposits. The fault line between the two tectonic plates, like San Andreas fault in California, is a worrisome source of unpredictable earthquakes that could cause massive and permanent damage to the U.S. and world economy.
too large to post the whole thing, more at link...
Len: I'm following, now take me home.
Bond demand falls, bond rates increase, bonds get sold at higher rates, and our debt increases. The government spends this money on its obligations and introduces it back into the economy.
Now what is the net effect of this? Higher interest rates for borrowing? Less ability to borrow? Less government services and entitlements? What if nobody buys our bonds at any price, and we default?
And how does this balance with the destruction of currency taking place in the CDO/SIV market?
Is this really a battle between inflationary and deflationary forces?
Yeah, my head is spinning trying to grasp all of this.
Hey Len: Total Agreement
My position is not so much an argument as a thesis. Until recently I was 100% convinced we were headed toward hyperinflation or stagflation.
Its the lack of demand for credit that I believe will drive deflation, at least in that macro economic area.
Your points about other areas of the economy continuing to inflate is spot on, but I think as the recession takes hold, demand for fuel will fall(your theory that I hijacked), causing an ease in prices, which should reduce the overhead costs of perishables.
Deflation is a decrease in the size of the money supply, and I believe that is what we are seeing when these SIV's and CDO's get marked to market @ 70% loss. Destruction of currency.
"because the FED must keep printing money"
The FED does not print money. They only set rates between lending institutions.
The US Treasury sells bonds, the proceeds of which are used to create currency. If we dont sell bonds, we dont create new currency. The demand for our bonds is falling, thus demand for new currency is falling, thus deflation.
Tricky stuff I agree. If we see other central banks, ECB, BOE, BOJ, begin to reduce rates, the dollar will soar, and prices will fall.
On Edit: USD index back above 76, and above the 3 month trendline. The FX and Bond markets get it.
Gil:
'Do I want to reduce cash flow or see my Triple A-rated bond go south?'
That is the 64 Million dollar question I think.
A reduced payment vs foreclosure.
Good perspective!
OT Yield: This is pure insanity.
So the government is going to invalidate legal contracts between borrowers and lenders?
What does this do the long term value of these loans? Are the banks just expected to eat the losses?
I give this plan about as much hope as the Super-SIV fund that Citibank tried to create so they could dump their billions of worthless paper.
This plan would destroy the value of the underlying assets. On the other hand, it may be cheaper for the banks than foreclosure.
My head is swirling with all this data. Stop the ride, I want to get off.
Ari: This is a bear market.
In a bear market, everyone gets hurt, longs, shorts, everyone. The volatility and whipsaws throw many off the horse.
We're down 800 one week, and up 800 the next, but the overall trend is down, both technically and fundamentally.
The market is now driven by the news cycle, not economics or earnings.
Yesterday and today are great examples. Unemployment numbers up, consumer confidence falls through the floor, consumer spending drying up, Dell misses, CFC on the verge of BK, and ARM resets are just beginning.
But Bernake hints at a .50 bps cut and the market rockets.
IMO, we're one dislocating event from an all out crash.
"birth of the renewed bull market"
Good luck with that.
Consumer spending down. Foreclosures skyrocketing. Worldwide credit crisis. 4Q earnings all warning.
Sold to you.
LJ: Deflation potential
"$190,000 to $200,000 area of median price for homes is looming closer with the latest $207,800 median price for October...LJ"
What we are witnessing is asset deflation, and its only just beginning.
Why would anybody buy a house now when price reductions are increasing month to month? What do we think the price of the $190,000 house is going to be a year from now?
And now we see that consumer spending is drying up, reducing demand for consumer goods. Reduced demand = deflation.
Rogue: Lower Credit Demand = Deflation
This has nothing to with elections, it has to do with the demand for credit and the willingness to lend, which is coming to a screeching halt.
The inflation has already occurred for the most part. We inflated home values over the past 7 years with cheap and irresponsible credit. We created trillions of new dollars through home valuations.
Now all that money needs to come out of the system. That means currency is actually going to be removed, not added.
If we cant sell bonds to increase our debt, the price of those bonds must come down (yield will inverse) to attract buyers. This is deflation.
This is why the FED will continue to drop rates. They cannot get anyone to lend any money. They will drop to zero! And it will have no affect whatsoever. Except short equity pumps.
ETrade is just the start. In one transaction, selling $2.5BB worth of paper for .33, they removed $1.5 Trillion from the economy.
Again, I have been in the hyperinflation camp for a while now, but I think that strategy is dead wrong now. Not saying its going to happen right away, but I think over the next 12 months we are going to commodities freefall.
The dollar is just the first currency to fall because we are the epicenter of the credit contraction. We're going to get hit bad, but it be nothing in comparison to what is going to happen to the rest of the world.
The Euro will be right back where it was when it was created before too long, IMO. The dollar will again become king.
Zen: Dollar will appreciate after the 2008 election
I'm changing my thinking on this. I thought we were headed for hyperinflation as well, but I've since reconsidered.
I think we're going to see inflation, but only after severe deflation. IMO, we're headed towards a severe deflationary spiral.
Why? Credit demand is coming to a halt. No demand for credit, no demand for currency.
Treasury can't just issue currency. They have to sell bonds. No one is buying our bonds anymore. Thus demand for our currency is falling.
Precious metals are going to get crushed in a deflationary situation. Gold is going to get crushed.
The USD bullish position is cash, and US treasuries.
I sold all my gold and silver positions last week, and I dumped all my UDN (dollar short ETF).
ETrade opened the gates of hell today by marking $2.5BB of HELOC paper to .33 on the dollar. Almost a 70% loss. There is 6.5 Trillion worth of HELOC paper out there. 6.5 Trillion x 33% = $2.14 Trillon in HELOC paper. 30% is $1.5 Trillon of losses in HELOC paper alone.
Not including Alt-A, or the Neg ARM loans.
I thought we were headed toward hyperinflation, but I'm now joining the deflation camp.
CFC says BK rumor is FALSE!!
I would say that is the death nail.
As soon as they deny the rumor, we know its true.
re: they did survive for two months
Just rib'n ya. I'm actually thinking about getting a call or two here on the bounce.
I sold the last of my puts yesterday. Big profit, so I cant complain about missing this fall today.
Lots of great short opportunities here with good meat on the bone. DSL and FED are both plays to zero, and the HB's are getting whacked today.
Len - Oil picks.
I made my pick ages ago, and I'll stick with my original prediction.
http://investorshub.advfn.com/boards/replies.asp?msg=19160406
r59 re: CFC - Bankruptcy is not in the cards
I take it you're not writing any puts on these guys today?
Broke below 10, and rumors are circling that they are BK.
Not counting chickens here, but its not looking good for the number one mortgage lender in the country.
Everyone who lost money keeps their trap shut...
Not me. It was a rally monkey day for me.
I wont get into amounts, but it should be well known by now that I'm short just about everywhere.
How about DSL folks? From $60 2 weeks ago to $42 today, and still falling.
The next big short is Mohawk, MHK. Bought lots of PUTS on them today.
Testimony of Robert Kuttner
Before the Committee on Financial Services
U.S. House of Representatives
Washington, D.C.
October 2, 2007
http://www.house.gov/apps/list/hearing/financialsvcs_dem/testimony_-_kuttner.pdf
Mr. Chairman and members of the Committee:
Thank you for this opportunity. My name is Robert Kuttner. I am an economics and financial journalist, author of several books about the economy, a magazine editor, and former investigator for the Senate Banking Committee. I have a book appearing in a few weeks that addresses the systemic risks of financial innovation coupled with deregulation and the moral hazard of periodic bailouts.
In researching the book, I devoted a lot of effort to reviewing the abuses of the 1920s, the effort in the 1930s to create a financial system that would prevent repetition of those abuses, and the steady dismantling of the safeguards over the last three decades in the name of free markets and financial innovation.
The Senate Banking Committee, in the celebrated Pecora Hearings of 1933 and 1934, laid the groundwork for the modern edifice of financial regulation. I suspect that they would be appalled at the parallels between the systemic risks of the 1920s and many of the modern practices that have been permitted to seep back in to our financial markets.
Although the particulars are different, my reading of financial history suggests that the abuses and risks are all too similar and enduring. When you strip them down to their essence, they are variations on a few hardy perennials – excessive leveraging, misrepresentation, insider conflicts of interest, non-transparency, and the triumph of engineered euphoria over evidence.
The most basic and alarming parallel is the creation of asset bubbles, in which the purveyors of securities use very high leverage; the securities are sold to the public or to specialized funds with underlying collateral of uncertain value; and financial middlemen extract exorbitant returns at the expense of the real economy. This was the essence of the abuse of public utilities stock pyramids in the 1920s, where multi-layered holding companies allowed securities to be watered down, to the point where the real collateral was worth just a few cents on the dollar, and returns were diverted from operating companies and ratepayers. This only became exposed when the bubble burst. As Warren Buffett famously put it, you never know who is swimming naked until the tide goes out.
There is good evidence--and I will add to the record a paper on this subject by the Federal Reserve staff economists Dean Maki and Michael Palumbo--that even much of the boom of the late 1990s was built substantially on asset bubbles. [“Disentangling the Wealth Effect: a Cohort Analysis of Household Savings in the 1990s,”http://www.federalreserve.gov/pubs/feds/2001/200121/200121pap.pdf]
A second parallel is what today we would call securitization of credit. Some people think this is a recent innovation, but in fact it was the core technique that made possible the dangerous practices of the 1920. Banks would originate and repackage highly speculative loans, market them as securities through their retail networks, using the prestigious brand name of the bank – e.g. Morgan or Chase -- as a proxy for the soundness of the security. It was this practice, and the ensuing collapse when so much of the paper went bad, that led Congress to enact the Glass-Steagall Act, requiring bankers to decide either to be commercial banks—part of the monetary system, closely supervised and subject to reserve requirements, given deposit insurance, and access to the Fed’s discount window; or investment banks that were not government guaranteed, but that were soon subjected to an extensive disclosure regime under the SEC.
Since repeal of Glass Steagall in 1999, after more than a decade of de facto inroads, super-banks have been able to re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s – lending to speculators, packaging and securitizing
credits and then selling them off, wholesale or retail, and extracting fees at every step along the way. And, much of this paper is even more opaque to bank examiners than its counterparts were in the 1920s. Much of it isn’t paper at all, and the whole process is supercharged by computers and automated formulas. An independent source of instability is that while these credit derivatives are said to increase liquidity and serve as shock absorbers, in fact their bets are often in the same direction – assuming perpetually rising asset prices – so in a credit crisis they can act as net de-stabilizers.
A third parallel is the excessive use of leverage. In the 1920s, not only were there pervasive stock-watering schemes, but there was no limit on margin. If you thought the market was just going up forever, you could borrow most of the cost of your investment, via loans conveniently provided by your stockbroker. It worked well on the upside. When it didn’t work so well on the downside, Congress subsequently imposed margin limits. But anybody who knows anything about derivatives or hedge funds knows that margin limits are for little people. High rollers, with credit derivatives, can use leverage at ratios of ten to one, or a hundred to one, limited only by their self confidence and taste for risk. Private equity, which might be better named private debt, gets its astronomically high rate of return on equity capital, through the use of borrowed money. The equity is fairly small. As in the 1920s, the game continues only as long as asset prices continue to inflate; and all the leverage contributes to the asset inflation, conveniently creating higher priced collateral against which to borrow even more money.
more at link...
Bearish on Downey Financial (DSL)
I've posted before about DSL. It got a nice bump after the rate cut, but the fundamentals are still abhorrent for these guys.
I found some good points on the credit bubble blog.
http://www.creditbubblestocks.com/2007/03/bearish-on-downey-financial-dsl.html
Downey has branches in CA and AZ, and focuses on residential mortgage lending.
* As of June 2006, 89% of DSL’s approximate $15.4 billion residential real estate portfolio was secured by properties located in southern California
* 78% of the residential mortgages were based on borrower stated income. 10% were underwritten with no verification of borrower income and/or assets.
* This is especially bad because mortgage fraud is so prevalent in southern California.
* 19% of the Company’s loans were originated in 2006 and 40% were originated in 2005
* In 2005, approximately 81% DSL’s one-to-four unit residential real estate loans were originated or purchased through outside mortgage brokers. Of course, this creates severe moral hazard.
* 85% of its residential portfolio consists of adjustable rate mortgages subject to negative amortization with the majority structured as option-ARMs
* They sell the conservative, fixed rate loans and keep the toxic loans as investments.
* They claim to have mortgage insurance for the portions of any loans that exceeded 80% LTV when originated. However, they do not purchase mortgage insurance when negative amortization pushes loan balances above 80% LTV, nor when declining property values increase the LTV. Furthermore, we know how pervasive bad appraisals are. Finally, the mortgage insurers will be able to claim fraud and negligence on Downey's part. Downey's insurers will be able to stall and avoid paying claims when Downey needs liquidity. Also, the mortgage insurers might themselves go bankrupt.
* Property values are set to fall so far in CA that even the uninsured 80% will experience losses.
* For every dollar's worth of assets, the company has $0.91 cents in debt. In itself, this is a reasonable amount of leverage for a bank to have. However, if the assets depreciate by 9%, the company's equity will be wiped out.
Risks to the trade:
* Trades at about 1.3 times book value. Publicly traded S&L's trade at about 2.9x BV and financials at about 3x. (Track these multiples here.) People could look at DSL as a "deal" and so it is a takeover candidate. Of course, there were rumors about a New Century buyout [at a multiple of book value] as recently as December 2006.
* High short interest.
* Hedge fund presence. (I think it's clear by now that some of these managers were out of touch with residential real estate conditions on the ground in the southwestern US.)
* The real estate market might have bottomed. We might be entering a strong selling season.
Downey has fallen only 15.5% from its all time high. I'm short.
"out of your mind to short the US dollar"
I've been short the US Dollar, and in Euro and Yen ETF's for the past six months.
Maybe you need to be out of your mind to make money in this market, but this elementary. Look at the M3 data, money expansion is at an all time high, and inflation is skyrocketing. Food and energy costs are going through the roof.
I'll keep all of these positions until rates rise. Again, this is easy math.
r59: CFC
Good play on those PUTS!
Lets see, in the last 2 months they have borrowed what? $130 Billion? at rates far above prime? and dilluted the stock by some 30%?
Foreclosures continue to increase, and home sales continue to fall. Granted I'm not a financial expert, but I dont see how they are going to generate enough business to pay off these debts. And as their liquidity dries up, they'll require more and more financing.
There are obviously big players helping to make sure our number one mortgage company doesnt go tits up. I still dont see how they survive. The rate cuts only helped the ARM rates, 30 year fixed rates actually increased. No predictions this time, but I'm pretty confident my JAN, MAR PUTS will pay nicely.
r59, CFC
1st, wife and i in Rome right now. typing on an Italia PC, so I cant get too long winded.
obviously my 2 wwek call was a bit agressive. still think that b of a deal was death spiral financng.
they got that $12 mil for their prime paper i would guess, not sure of the rate. i would still characterize this as desperation financing, short covering, and hype of rate cuts, wich wont help if you ask me.
i still think they are hanging by a thread, having borrowed what, $130 mil in the last month... cant find a question mark on this pc.
my puts are all out in jan, mar, so i didnt put my money with my prediction, which was probably a little too emothion based. do you see any chance these guys pull it out...question mark here. i dont, but i wont predict when they file chap 11 anymore... too many players keeping things afloat.
hope all is well back home... the dollar crashing sure did make this trip exoensive! hey i found the exclamation button!!
"gold should continue to do well"
cl001, I agree Gold and other precious metals are going to do well here in the long term.
Just a word of caution though, if the market takes a turn south, which I believe is in the cards, there will be margin calls on Gold, and the price will come down in my opinion.
Not saying having Gold now isnt a good thing, but I believe we'll see lower Gold prices as the wreckage piles up, and some of these financial companies are force to liquidate positions.
At least thats how I'm playing it for now. I dont want to miss the Gold train, so I'm hoping it slows down enough for me to get on here soon.
Congrats on gains.
Great SHORT opportunities
I know this is a touchy subject around here, but I think this is worth mentioning.
The larger Home Builders have all fallen from the 40's to high twenties in the last 2 months. And while this still remains a good shorting opportunity for CTX, LEN, KBH, and RYL, the IV (implied volatility) on the option prices is extremely high, so you'll pay a premium, and the risk/reward is reduced because the stocks have already lost half their value.
The real shorting gems right now IMO, First Federal Financial Corp. (FED), and Downey Financial Corp (DSL).
FED is a large mortgage lender for So.Cal. FED is presently @ $49 after falling below $40 a few weeks ago when they announced a 1,350,000 share buyback plan (with borrowed funds of course). Judging by the stock's price action, it appears the latest buyback is complete, and the stock is ready to fall again.
DSL is another large California option-ARM lender with a large presence in sub-prime. The stock is presently @ $55 after recent strength and rate cut rumors. But their mortgage default numbers are rising exponentially, and its only going to get worse for them.
http://www.creditbubblestocks.com/2007/09/survey-indicates-downey-foreclosures.html
PUTS on FED and DSL are still fairly affordable. The IV on DSL FEB PUTS @ $55 strike is only 50, half that of the home builders.
I think 6 month PUTS just OTM are a great trade here, and potential zip code changers.
Len: Negative for August
And revised way down for July and June.
There is certainly going to be a rate cut now, but its too late for that to have any effect, as the LIBOR continues to rise anyway, and the BoE didnt cut yesterday.
These are recession numbers, and I dont think stocks are going to like it.
Yen already gapping up, futures falling fast. Going to be a rough day I'm afraid.
Republicans and Actors: Says something huh?
I find it kind of humorous that the 'dyed in the wool' Bushbots are all fawning over Fred Thompson, a person who portrays a part in a TV show.
I'm starting to think that Conservatives really cant tell the difference between whats real and whats fake.
Its like they fall more in love with perception than with reality. What the hell has Fred Thompson ever done?
If you ask any brain damaged Conservative, I'll bet they say he served on that nuclear sub that captured the Red October, and convinced Sean Connery to defect.
We should just replace the word gullible with Conservative.
GOP : Authoritarians Have Taken Control
Understanding the Contemporary Republican Party: Authoritarians Have Taken Control
http://writ.news.findlaw.com/dean/20070905.html
This is very much in line with what I have been observing for a while now. Republicans are bred to be followers. They need to be told how to think. This is why the neo-cons went after the religiously right, they are the most easily tricked, and the most pliable. Just throw them some raw meat, gays, Muslims lurking in the dark, and the Mexican invasion, and you got yourself 50%. The same way Hitler did it!
Last year, I published Conservatives Without Conscience, but it struck me as a bit too self-promoting to use this space to talk about the book. The core of the book examines a half-century of empirical studies that had never been explained for the general reader. Not being a social scientist, I was thrilled when the book became a bestseller and countless political and social psychologists wrote to thank me for translating their work for the general reader.
At this point, I feel that this material is simply too crucial to understanding current politics and government for me to continue to ignore it in my columns for FindLaw. In addition, I want to refer to these findings throughout my commentary on the 2008 presidential and congressional elections, so it is time to set forth a few basics from this work.
Conservatives Without Conscience ("CWC") sought to understand the modern conservative movement, and in particular it's hard turn to the right during the past two-and-a-half decades. Conservatives have taken control of the Republican Party, and, in turn, the GOP has taken control of the government (all three branches, until 2006).
Who are these people? Of course, we know their names: Jerry Falwell, Pat Robertson, Newt Gingrich, Tom DeLay, Bill Frist, Dick Cheney and George W. Bush - to mention a few of the obvious. More importantly, what drives them? And, why do their compliant followers seem to never question or criticism them? Here, I am thinking of people like Rush Limbaugh, Sean Hannity, and Ann Coulter - to mention a few more of the conspicuous.
In this column, and those that follow, I hope to explain the rather remarkably information I have uncovered. It explained what for me what I had previously thought inexplicable. And based on my mail, it seems to have done the same for a lot of CWC readers. So let me see if I can extract a few key points that may help to understand what happened, and why it happened.
In the first two columns of this three-part series, I will offer some basics to provide context, and some of the relevant data. In the last of the three, I will drive home the points I believe are most relevant.
How Conservatives Think (Or Fail To Do So)
Most conservatives today do not believe that conservatism can or should be defined. They claim that it not an ideology, but rather merely an attitude. (I don't buy that, but that point is not relevant here.)
Conservatives once looked to the past for what it could teach about the present and the future. Early conservatives were traditionalists or libertarians, or a bit of both. Today, however, there are religious conservatives, economic conservatives, social conservatives, cultural conservatives, neoconservatives, traditional conservatives, and a number of other factions.
Within these factions, there is a good amount of inconsistency and variety, but the movement has long been held together through the power of negative thinking. The glue of the movement is in its perceived enemies. Conservatives once found a common concern with respect to their excessive concern about communism (not that liberals and progressive were not concerned as well, but they were neither paranoid nor willing to mount witch hunts). When communism was no longer a threat, the dysfunctional conservative movement rallied around its members' common opposition to anything they perceived as liberal. (This was, in effect, any point of view that differed from their own, whether it was liberal or not.)
To understanding conservatives thinking, it is important to examine not merely what conservatives believe, but also why they believe it. I found the answers to these two key questions in the remarkable body of empirical research work, almost a half-century in the making, undertaken by political and social psychologists who study authoritarian personalities.
Authoritarian Republicans: Understanding the Personality Type
While not all conservatives are authoritarians, all highly authoritarian personalities are political conservatives. To make the results of my rather lengthy inquiry very short, I found that it was the authoritarians who took control of the conservative movement in the 1980s, and then the Republican Party in the 1990s. Strikingly, these conservative Republicans - though hardly known for their timidity -- have not attempted to refute my report, because that is not possible. It is based on hard historical facts, which I set forth in considerable detail.
Authoritarian control continues to this day, so it is important to understand these people. There are two types of authoritarians: leaders (the few) and followers (the many). Study of these personalities began following World War II, when social psychologists asked how so many people could compliantly follow an authoritarian leader like Adolf Hitler and tolerate the Holocaust. Early research was based at the University of California, Berkeley, and it focused primarily on followers, culminating in the publication of a The Authoritarian Personality (1950) - a work that broadly described authoritarian personalities. The book was quite popular for decades, but as the Cold War ended, it had been on the shelf and ignored for a good while.
Given the strikingly conspicuous authoritarian nature of the contemporary conservative movement, and in turn, of the Republican Party, those familiar with the work of the Berkeley group thought it time to take another look at this work. For example, Alan Wolfe, a political science professor at Boston College, observed that the fact that "the radical right has transformed itself from a marginal movement to an influential sector of the contemporary Republican Party" called for a reexamination of this work. That is exactly what I did, although I did not discover Dr. Wolfe's call for it until well into my project.
The Authoritarian Personality relied heavily on Freudian psychology, which was not without critics, although neither Dr. Freud's work nor that of the Berkeley scientists has been proven incorrect. The weakness of this early work was the lack of empirical data backing up its conclusions. But in the half-century since its publication, that weakness has been removed, based on others' empirical work. A number of researchers have examined and reexamined the Berkeley Group's conclusions, and no one more thoroughly than Bob Altemeyer, a Yale and Carnegie-Mellon-trained social psychologist based at the University of Manitoba.
Professor Altemeyer's Findings
Altemeyer's study addressed flaws in the methodology and findings of The Authoritarian Personality, and he then proceeded to set this field of study on new footings by clarifying the study of authoritarian followers, people he calls "right-wing authoritarians." The provocative titles of his books -- Right-Wing Authoritarianism (1981), Enemies of Freedom (1988), and The Authoritarian Specter (1996) -- and of a few of his many articles found in scholarly journals -- such as "Highly Dominating, Highly Authoritarian Personalities" in the Journal of Social Psychology (2004) and "Why Do Religious Fundamentalists Tend to Be Prejudiced?" in the International Journal for the Psychology of Religion (2003)--indicate the tenor of his research and the range of his interests.
Working my way through this material, with the help of a copy of the Idiot's Guide to Statistics, for Altemeyer writes for professional peers, I realized that, since I do not have a degree in psychology, I should get guidance to be certain I understood the material correctly, because it seemed to me that the information he had developed was exactly what I needed to comprehend the personalities now dominating the conservative movement and Republican Party. Altemeyer, who is the preeminent researcher in the field, graciously agreed to tutor me in his work. I introduced him to FindLaw readers in an earlier column, when I thought it would be interesting to get his take on the writings of the very authoritarian Tom DeLay, as he explained himself in No Retreat, No Surrender.
At the outset of Conservatives Without Conscience, I provided a quick and highly incomplete summary of Altemeyer's findings, explaining that his empirical testing revealed "that authoritarians are frequently enemies of freedom, antidemocratic, anti-equality, highly prejudiced, mean-spirited, power hungry, Machiavellian, and amoral." To be clear, these are not assessments that Altemeyer makes himself about these people; rather, this is how those he has tested reveal themselves to be, when being anonymously examined.
Altemeyer has tested literally tens of thousands of first-year college students and their parents, along with others, including some fifteen hundred American state legislators, over the course of some three decades. He has tested in the South and North of the United States. There is no database on authoritarians that even comes close in its scope to that which he has created, and, more importantly, these studies are empirical data, not partisan speculation.
About a year after I published my outline of his work, Altemeyer prepared a digest of his research for general readers, The Authoritarians, which he has posted online for one and all to examine at no cost. In his book he walks readers thorough his research in a manner that requires neither an advanced degree nor a copy of the Idiot's Guide to Statistics.
In the next two columns, I will examine the implications of Altemeyer's findings, for they explain a great deal about the operations of the Republican Party as presently constituted.
West Bend Stir Crazy Popper!!
http://www.westbend.com/westbend/catalog.cfm?dest=itempg&itemid=2494&secid=6&linkon=sect...
We've been using this thing for years. Really simple, easy to clean, and makes the perfect batch everytime.
Too bad West Bend is private.
'With politicians like these, who needs terrorists?'
I think Ron Paul just said George Bush and Dickhead Cheney are worse than terrorists.
I've been saying they ARE Terrorist.
1987 and 2007 chart... scary.
Not that this is by any means an indicator of things to come, but the similarity is eerie.
'customer has to be responsible for something'
Nelson, I totally agree. And I'm not by any means abdicating the responsibility of the borrower.
But for Countrywide not to even consider personal income, and not even offer a primary loan to a lender when they qualify is at least unethical, at worst criminal.
Regardless, it should be clear to all of us now that the practice of moving people into sub-prime mortgages because of high profitability is a flawed business practice. And Countrywide is by far the biggest offender.
*Populist Crap Warning*
Countrywide is getting what they deserve, and I hope it gets alot worse for them before it gets better.
Oh Baloney!
These guys are shysters to the highest degree. These are unethical lending standards, a predatory lending practices.
Not to mention false advertising. I wont even get into failure to issues 1099's.
And my bet is that this is just the beginning.
"The lexus dealer is not a crook because he doesn't sell used 79 ford wagons."
No. But the Lexus dealer that sells you a Lexus and then replaces all the parts in the vehicle with parts from a 79 wagon is.
As to my populist crap, try the ignore button, its working great for me.
What a bunch of crooks!
I hope these guys go under more than ever now.
"According to the former sales representative, Countrywide’s big subprime unit also avoided offering borrowers Federal Housing Administration loans, which are backed by the United States government and are less risky. But these loans, well suited to low-income or first-time home buyers, do not generate the high fees that Countrywide encouraged its sales force to pursue."
Dude, that has to be your most twisted post to date.
A eugenics plan to rid the world of black babies?
Did you take a drive through 'crack alley' this weekend and get yourself good and high?
"But GOOG should do just fine I'm sure."
Up to 30% of Google's advertising revenue is from financial companies.
Once the financials of these big bank/finance firms start showing all the valueless assets on their books, and their revenues come down... I'm shorting the hell out of Google.