The Binary Circumstance

Ralph Nader, whose messianic complex seems to know no limits, has announced he’ll run for president again.

I think we should just declare McCain the winner now.

Maybe the Republicans are paying Nader to run?

I think both Democratic candidates are so weak that McCain will be difficult to beat as it is and any votes that Nader siphons from the democratic fuel tank will be costly.

But since I don’t like any of the candidates, what do I care?

Nader makes some very important points but he obviously doesn’t have much clout with the voters as he never gets much support.

I got a good laugh when I read this passage because I found myself agreeing with Hillary Clinton, Mike Huckabee and Ralph Nader all at the same time:

[Hillary] Clinton called Nader’s announcement a “passing fancy” and said she hoped his candidacy wouldn’t hurt the Democratic nominee.

“Obviously, it’s not helpful to whomever our Democratic nominee is. But it’s a free country,” she told reporters as she flew to Rhode Island for campaign events.

Republican presidential candidate Mike Huckabee, speaking shortly before Nader’s announcement, said Nader’s past runs have shown that he usually pulls votes from the Democrat. “So naturally, Republicans would welcome his entry into the race,” the former Arkansas governor said on CNN.

Nader vociferously disputes the spoiler claim, saying only Democrats are to blame for losing the race to George W. Bush. He said Sunday there could be no chance of him tipping the election to Republicans because the electorate will not vote for a “pro-war John McCain.”

“If the Democrats can’t landslide the Republicans this year, they ought to just wrap up, close down, emerge in a different form,” Nader said.

I totally agree that the Democrats need to emerge in a different form. They need to get back to their roots which are in classical liberalism and laissez-faire, more akin to libertarianism than socialism.

According to Moody’s Economy.com, one in 10 homes is now underwater with the owners owing a mortgage that is worth more than the house.

That can only mean more foreclosures and people walking away from their homes.

Nearly 8.8 million homeowners, or 10.3 percent, are in over their heads, its chief economist, Mark Zandi, estimates.

As a result, millions of U.S. homeowners have the incentive to abandon their properties.

With an already unwieldy supply of homes for sale, more inventory could prolong a recovery of the hard-hit U.S. housing sector, suffering one of the worst downturns in history.

Zandi earlier this week told Reuters he expects home prices to drop by 20 percent from their peak in 2006.

As more foreclosures further decrease property values, then more houses will go underwater.

The nationalization of Northern Rock by the government of Great Britain is now complete. There were objections over totally insignificant issued like freedom of information, but they were apparently overruled.

While Prime Minister Gordon Brown has asserted that state control is the best option for taxpayers who have already funded subsidies to Northern Rock to the tune of 55 billion pounds ($107 billion), rival mortgage lenders fear that the government support will lead to an unfair advantage.

Unions fear broad job cuts for the bank’s 6,250 employees.

The nationalization was almost blocked in Parliament on Thursday, when the House of Lords initially rejected provisions that would exempt Northern Rock from the Freedom of Information Act.

The opposition Conservative Party also accused the government of covering up the fact that it will not acquire a separate bank trust as part of the nationalization.

The trust packages Northern Rock mortgages into tradable securities and critics said the off-balance-sheet vehicle could be used to siphon off bank assets.

Lawmakers, however, dropped their objections late Thursday, allowing the nationalization to go forward. [emphasis mine]

What’s the government’s first job?

A strategic review of the bank now begins and a government-appointed committee will determine how, or if, shareholders will get any returns on what was once thought a safe investment in a bank with roots dating back to 1850.

If they hide information, how is the public supposed to uncover it? What if they shortchange the shareholders? How will it be uncovered?

In the latest sign that the global credit crisis is probably far worse than governments are letting on, Great Britain is nationalizing mortgage lender Northern Rock and apparently offering shareholders very little in return. That either means that the company really is worth very little, or the government is basically stealing it from private owners.

LONDON (AP) — Prime Minister Gordon Brown’s government faced accusations of mismanagement Monday as it began nationalizing stricken mortgage lender Northern Rock PLC — the first time in 20 years that a private company has been taken into public ownership.

The government repeatedly insisted a private sale was its preferred option. But after five months of intense speculation about the future of Britain’s most public casualty of the global credit crunch, Brown said that nationalization was the best choice until market conditions improve.

“We will, and always have, put the interests of taxpayers first,” he said.

The opposition Conservative Party said Britain’s reputation as a major financial services center had been dealt a serious blow.

“The nationalization of Northern Rock is a disaster for the British taxpayer, a disaster for this government and a disaster for our country,” said Conservative Party leader David Cameron.

[…]

Meanwhile, trading in the stock was suspended to make way for nationalization, leaving shareholders unable to sell their holdings after the government first announced its plan Sunday.

Under British rules on nationalization, shareholders will be offered compensation for their holdings at a level set by a government-appointed panel.

The panel will calculate a figure based on the bank’s value without government guarantees — a figure most analysts expect to be very little or nothing at all.

The stock closed at 90 pence ($1.75) Friday, valuing the company at 379 million pounds ($738 million). The price has fallen more than 80 percent since Sept. 13, one day before Northern Rock revealed it had sought the emergency funding.

It should be noted that Gordon Brown has not shown a talent for timing markets well in the past. In 1999, he sold off half the gold reserves of the Bank of England at the market’s bottom, and by announcing the sale to the world before it began he depressed the market by 10% before he sold the gold.

…But “the timing of the decision was ludicrous,” says Peter Fava, then head of precious metals at HSBC.

“We told them [the BoE] – you are going to push the price down before you sell it.”

That’s just what happened, of course. Gold sank by almost one-tenth on the back of Gordon Brown’s decision to announce his sales ahead of time.

“I was surprised they had chosen the auction method,” adds Martin Stokes, a former vice-president at J.P.Morgan. “It indicated they did not have a real understanding of the gold market.”

Clueless or not, however, it didn’t matter. The Bank of England had no say in the matter. It only got to advise the government on HOW to sell the gold. The fact of the sale itself had already been decided by the Treasury. And since then, says the Times, the government has defied all calls to release minutes and emails written at the time.

The paper says the government is now embarrassed by its decision to sell gold. But you wouldn’t know it from Gordon Brown’s behavior; the guy’s not embarrassed at having destroyed the UK pensions industry, for instance, or taxing dividend payments so badly that sales of mutual funds to private investors have collapsed. Why would he be embarrassed by selling gold at the end of the 20th century? Everyone else was doing it, after all.

Given his past, it’s very comforting to know he’s now working his magic on the global mortgage crisis. (Sarcasm intended.)

I would suggest that he may be a contrary indicator. Forcing the sale of Northern Rock shares might indicate the market has hit bottom. But this is different. He’s not selling Bank of England gold this time, he’s forcing private citizens to sell their shares to the government at a price determined by the government.