The Real Paper Tiger

By Douglas Kohn
Kohn@Fordham.edu

Russia is an enigma wrapped in a riddle and shrouded in mystery. Much of the world is up in arms with angst about the resurgence of the legendary Bear. But what is Russia today? Is it making a serious and competent attempt to restore its former place in the world? Is it truly an emerging market as envisioned by Goldman Sachs? The answer to most of these questions is an emphatic no.

Russia is a country in static, constant decline, lashing out as its neo Nazi fringe distorts its politics, rampant abortion distorts its demographics and oligarchs swallow up the vast majority of its wealth.

First we must look at demographics. When the Soviet Union collapsed, so did the future of the Russians as a people. In 1992, Russia had 148 million people. Today, in 2008, it has under 142 million. The Russian birthrate is paltry and its abortion is at a level unprecedented in human history. 64% of all pregnancies in Russia are aborted. Russia has by far the highest abortion rate in the world.

What does this say about the former superpower? Not only is a moral outrage and wanton disregard for human life, it says much about the Russian psyche. It is a litmus test. The ultimate statement of belief in a bright future is to have a child. Russia, clearly does not believe in its future. Even the most Liberal pro choicer would see this is a horrible reflection on a society. Combined with high rates of alcoholism and drug use (half of all of Russia’s premature deaths are alcohol related) clearly shows this is not a functioning society.

That being said, Russia could still cause many problems in the world. Their economy, as with the economy of the Soviet Union, has been given steroids due to the high price of oil. But what is this really but fleeting wealth? Vladimir Putin himself once stated ‘if you can start a business in Russia you deserve a medal.’ I guess he would be the one to know. This is not a real economy. Russia has very little long term strength in every aspect of its existence.

We also have to be aware of Russia’s history. There is no question that the United States completely mistreated this historically great and powerful nation. We made grave errors in moving our NATO based empire up to Russia’s borders. Russia must have its sphere of influence and there is nothing the United States can do about it. For 45 years we spent all our energy avoiding a shooting war with the old Soviet Union. Why should we now risk one with Russia when we can really just wait out the price of oil and let their demographic crisis remove them as a serious threat?

The Case for Attrition

By Douglas Kohn
Kohn@Fordham.edu

As anyone well knows, America is being very nearly overwhelmed by illegal migration and uncontrolled borders. While certain numbers of immigrants greatly enrich our country, being overwhelmed by monolithic and culturally confident blocks of immigrants is not only a drain on resources and a potential security threat, but also puts our very culture at risk.

The most obvious historical comparison that one can draw is that today’s illegal migrants were yesterday’s Visigoths entering Rome. The Visigoths originally came into the Roman Empire, not as conquerors, but wanting to share in the fruits of being part of the greatest civilization of the age. Ultimately, the Visigoths were too culturally alien to be properly assimilated into Rome, went into open rebellion and eventually helped engineer the collapse of the Empire.

Overall, this is a wholly depressing picture. But there is great hope that the situation is improving.

Today’s illegal migrants are in much the same position, having flouted American law they now live underground and it is impossible to even count them properly. Estimates range from 12-20 million with practical solution in sight.

What can be done?

The answer is to muddle through. The answer is attrition. There are many new technologies available that are starting to have an impact on the situation. Using the internet, employers now find it possible to screen nearly everyone who comes to work for them to make sure they are citizens. In poll after poll of the illegal migrants that we can locate, the word of the day is fear. They are now living in constant fear of having the authorities find them, are finding fewer job opportunities (not just because of a poor economy) and a general atmosphere of hostility. 2008 is the first year since 2002 that the ‘official’ number of illegal migrants has started to decrease.

This is attrition. It is impractical to have one massive roundup of illegal migrants and deport them all at once. It would also lead to an unnecessary humanitarian crisis. Gradually tightening the grip, with small busts of smuggling rings and punishing employers will do the trick. It will take time but there are signs it is happening. Patience is of the utmost importance in dealing with this situation.

We also must put some of the problem of immigration into perspective. We will always have to cope with some level of illegal migration, though none of it should be openly tolerated. The wall and better border enforcement will help but it would not be a cure all. The wall is not going to cover the entire Mexican border. For the wall to be effective it would need two layers and several large towns would have to be destroyed for the wall to run through it. This would be prohibitively expensive and logistically impossible.

For more perspective on the situation, we need only look at immigration in Great Britain. Britain is an island nation that finds in its midst thousands of illegal migrants from as far away as China and Southeast Asia. It is impossible to stop all of it, though with proper awareness and better enforcement, it can be reduced from today’s overwhelming problem to a minor inconvenience.
As of right now, this immigration problem could prove to be a fatal illness; however, through patience and proper policy, it may be reduced to the equivalent of a chronic ailment.

Never Fear, The Bottom is Here!

By Devin Velnoskey
Velnoskey@Fordham.edu

After yesterday’s explosion of 936 points on the Dow it seems as though the worries of last week’s bloodbath throughout the world markets is all but a distant memory. The Dow posted its largest percentage point gain since March of ‘33, giving investors hope that a 10,000 point Dow Jones Industrial Average was still attainable by the conclusion of the fiscal year. To close within striking distance of 10,000 points after touching below 8,700 points and being down 21% last week is something truly unprecedented.

But what’s new considering Friday’s market had a 1000 point swing before it closed down 128 points Friday afternoon? Anything can happen these days when the opening bell rings, the previous two weeks prove it. Volatility is the buzz word on the Street these days but after the Bulls stampeded the Bears on Monday many people think the bottom is in and the worst may soon be behind us if it is not already.

The problems of the credit crisis have mostly dissipated in the minds of many traders and investors. The government’s $700 billion bailout, their backing of inter-bank loans and increasing FDIC insurance, and buying stock in the US banks has, in coordination with similar policy actions throughout Europe, contributed to soaring world markets yesterday.

But not so fast my friend, while all this government action was needed and has eased frozen credit markets, and seems to have solved the crisis, there is still reason to be concerned.

Last week’s triumph of bears was due to more than just uncertainty in the market or the bailout. Deleveraging, coupled with hedge fund redemptions and margin calls, all created the blood red boards seen around the world. And Monday’s stampede of bulls was a result of traders and investors not being able to pass on valuations and bargains throughout the market.

The lack of volume in yesterday’s session means that just as last week there were no buyers, yesterday there were no sellers, so everyone was trying to catch the rising tide for it lifts all boats. Both instances come down to one word: fear. Fear has been driving the markets for the past two weeks, if not longer. When markets were down big last week the fear was centered on what more the government would or could do to ease the crisis.

Monday’s fear was if you didn’t buy you would miss out on the rally and a chance at big money. Markets run by fear are concerning. Whether or not the stock market rises or falls right now is not as important as knowing what fear is driving investors and traders at any given moment. Find the fear, trade it and make the fast money. Miscalculate and you could be taken out in a body bag. The credit crunch may very well be behind us, but there is still the impending recession for monetary and fiscal policy makers to worry about, that is the fear driving markets for the next few weeks.

Election 2008 Poll: Expect the Unexpected

By Eric Goncalves
Goncalves@Fordham.edu

Fordham University’s College Republicans recently ran a political poll on the Rose Hill campus to survey the political inclinations and electoral views of the University’s students. The simple four question poll asked students to list their political views, the issue they believed was most influential in the upcoming election, the candidates that they were considering voting for, and if they were familiar with Larry Kudlow.

Upon analyzing the results, there were many unexpected numbers. Ruling out the outliers who were voting for Al Sharpton or Chad Ciocci, the numbers were actually quite surprising. Out of the fifty-two students surveyed, a majority of which viewed themselves as Moderately liberal (about 30%), more than half were voting for McCain/Palin while Obama/Biden fell short with just over 40% of the votes. On a considerably liberal campus in a blue state, it is surprising to see such a result. With Obama leading the national polls, it gets people to think: How much do these polls really reflect the people taking them?

If they do show something, the poll taken by the Fordham College Republicans depicts that not all is lost for John McCain, and despite the deficit he is facing in the national polls, there are some liberals who know that although Barack Obama can make great speeches he may not be the best candidate to lead our great country.

Just don't call us neo-cons!

By Chadwick Ciocci
Cciocci@aol.com

Let’s be clear: LF is NOT neo-conservative! Please, please, please- we are anything but. Neo-conservatism is the philosophical inheritance of Woodrow Wilson and FDR and inherently liberal with its lofty ideals and militarism. True conservatives are non-interventionists and believe in an American foreign policy that protects our vital interests first and doesn’t pursue an idealist goal like spreading democracy worldwide.

Please, just don’t call us neo-conservatives!

The Free Market can save the U.S.

By Sean Radomski
SRadomski@Fordham.edu

It is impossible today to pick up a newspaper without reading about the apocalyptic financial crisis and the bailout bill that will supposedly prevent a second Great Depression. Not surprisingly, the media has been quick to assign blame to President George W. Bush’s economic policies. While attacking Bush’s policies may be a good way to score votes this November, it does not address the fundamental cause of this financial crisis. The current economic slowdown has been fundamentally caused by excessive government intervention into the economy, dating back to the Carter Administration.

That fact that the origin of the problem is the Carter Administration, which is notoriously known for long gas station lines, high inflation, and even higher interest rates, should not come as a surprise to free-market advocates. In an effort to further so called “economic justice,” Carter signed into law the 1977 Community Reinvestment Act (CRA) in an attempt to promote “affordable housing.” The CRA forced banks to make loans to minorities and consumers with poor credit and allowed regulators to impose fines on the banks if they did not meet these standards.

Fast-forward 26 years to 2003, the year when mortgage giants Fannie Mae and Freddie Mac were found to have committed accounting fraud. In an attempt to sidestep Congressional criticism, Fannie and Freddie offered to increase loans to low income, poor credit consumers in accordance with the CRA. This move was political music to Rep. Barney Frank’s ears who believed that Fannie and Freddie were “not facing any kind of financial crisis,” and that “the more pressure there is on these companies, the less we will see in terms of affordable housing.”

His Senate counterpart, Sen. Christopher Dodd also praised the mortgage giants for “riding to the rescue” and believed that they “need[ed] to do more” in terms of “affordable housing.” Conversely, while Democrats in Congress were praising the call for more “affordable housing,” Treasury Secretary John Snow was urging for the creation of a new agency to monitor the mortgage giants. In fact President Bush publicly called for reform of Fannie and Freddie 17 times before this year, but his call fell on the deaf ear of the Democrats in Congress. It should be noted that Sen. Dodd, Rep. Frank, and current Presidential candidate Sen. Barack Obama have received $133,900; $40,100, and $105,849 in campaign contributions, respectively, from Fannie and Freddie since 1989.

To add fuel to the fire, from 2003-2005 the Federal Reserve kept the federal funds rate at 1%. The Fed kept the rate low in an attempt to stimulate economic growth after the “dot com” bubble had burst. Low income consumers with bad credit (yes, the same ones targeted by the CRA, Fannie, and Freddie) saw this as an opportunity to take out a subprime mortgage and buy a house. The rapid increase in home ownership fostered by the 1% interest rate drove up home prices and created a housing bubble. However, once the Fed raised interest rates and those with subprime mortgages could not keep up, the bubble burst.

The bursting of the housing bubble has led to the failure of many financial firms, such as Bear-Stearns and Lehman Brother, that had mortgage-backed securities on their balance sheets. Their failure has led to the call for a massive $700 billion bailout bill that will enable the Secretary of the Treasury to buy these securities, thus removing them from the firms’ balance sheets. The theory is that with now clean balance sheets, the firms will draw capital, thus unfreezing the credit market which will allow Main Street consumers to receive much needed loans.

This bailout bill is flawed and is bad for the American economy because it fails to remember the key principle of capitalism: reward those who perform well. Instead, the bill does the complete opposite and rewards the companies that made poor investments.

If passed this bill will set a frightening precedent that encourages bad investing with the knowledge that if you fail, the government will save you at the expense of the American tax payer. The bill’s logic is also flawed in assuming that once these toxic assets are off balance sheets, capital will flow to the firms. Why would anyone risk investing his hard earned money in a company that has so recently shown poor judgment?

Excessive government intervention into our countries financial system in the triple threat of the CSA, Fannie Mae and Freddie Mac, and the Federal Reserve has led to this crisis. The last thing we need is $700 billion of more government. The fastest way to fix this mess is eliminate the mark-to-market accounting rule that has artificially lowered firms’ asset values.

Mark-to market accounting requires firms to value their assets at the price they could fetch on the open mark right now. If this rule is eliminated, firms will be able to value the assets at an estimated future market price; thus increasing the value of the balance sheets. If mark-to-market were eliminated earlier this year, Washington Mutual and Wachovia would not have been sold and Lehman Brothers would not have failed. As for the firms that still cannot make it: let them fail. This will weed out the poorly managed companies, making sure they are not around in the future to make the same mistakes. This will allow stronger, well run firms to gain market share and protect the future of the American economy.