Blogs » Democratic Economic Talking Points » The Oracle Has Spoken!


Yes the Oracle has spoken, but again he has made some inaccurate statements – blunders if you will.

Take nuclear energy for example, the Oracle says:

"There's not a need to blame the Green Movement for our lack of an alternative energy policy, if you're not willing to blame the oil companies. The Japanese incident, lack of funding, no plan for the waste, and the ten years it takes to come online, are the biggest drawback to nuclear energy."

The "green movement" has blocked the development of nuclear energy. They blocked every aspect of the nuclear fuel cycle from mining uranium, refining, power plant construction, operation, spent fuel disposal and research and development. They have done this for 40 years.

But surprisingly Obuma actually says he supports nuclear energy even after the Japanese tsunami. But he may be supporting it the way he supports the drilling of oil and natural gas - who knows for sure. Contrary to what the Oracle says there are procedures for handling spent fuel, several in fact - most requiring reprocessing. The French have been doing it for years and we did too until Jimmy Carter stopped it.

For sure green energy is one energy source Obuma definitely supports. He supports it with massive subsidies for wind, solar, ethanol, you name it. Even Al Gore is against using corn to make ethanol – ethanol is not green and neither is wind and solar energy.

And also contrary to what the Oracle says, according to “The World Nuclear Organization” it takes about five years to construct a nuclear power plant - not ten. This does not include the time spent on legal delays and red tape caused by anti-nuclear groups and their merry band of lawyers, who are in it for the money - they probably could give a crap about the issue.

But for the sake of argument suppose it does take seven years or so to build a 3,000 megawatt nuclear power plant. A nuclear power plant has a capacity utilization of about 85% compared to 30% for a wind turbine. Therefore to equal the power generation of the nuclear plant about 3,270 wind turbines would have to be installed each with a capacity of 2.6 megawatts, in addition that amount of natural gas powered generators would have to be found for backup. Each wind turbine would require a land area of 78 acres - the total land area required would be about 255,000 acres. Hmmmm……I wonder how long it would take to install a wind farm of that size? I would guess at least 10 years, probably much more. That would be a “big drawback” – yeah, a real bummer.

Then the Oracle offered this piece of his wisdom, “In the conservative mind, Fannie & Freddie was the major culprit of the 2008 financial crisis (not so)……”

In their book “All the Devils are Here” Bethany McLean and Joe Nocera lay much of the blame for the financial crisis on Fannie and Freddie (F&F). F&F were in the very eye of the financial hurricane. These government GSE’s held a competitive advantage with an implied government backing that drove private banks out of the prime home mortgage business. They got into the subprime business mainly because F&F were not allowed to be in that business at least initially.

Mortgage backed securities (MBS) made subprime lending possible. Credit agencies gave these securities AAA ratings. This was essential in order to sell these securities to investors. The credit agencies gave them AAA ratings because it generated revenue and profits for them – this was a root cause of the financial crisis. If the credit agencies would have just said they couldn’t rate these securities because they were too complex that would have been the end of the story.

Subprime lending became very profitable and eventually Fannie and Freddie through their lobbying efforts got into the business and that’s when things really got crazy. The authors, McLean and Nocera said in their book that the crisis would not have been as big and as toxic without F&F and the very large sums of money they supplied to the subprime mortgage originators.

The authors pointed out that in the end it was not a failure of regulations but a failure of the regulators. The link provided below sums up F&F’s role in the financial debacle.

“The subprime mortgage crisis had its origin in the program the directors of Fannie Mae initiated in the late 1990's to pursue social welfare goals rather than maintain financial viability. Lenders were strongly encouraged to reduce the requirements for mortgage below what had been found to be the minimum adequate levels. Having pushed the lenders into the subprime mortgage market Fannie Mae made the financially infeasible feasible by being willing to buy such subprime mortgage and to grant default insurance on such mortgages.”