The quality of debate in America has become so debased that for the most part we have become desensitized to the use of ad hominem attacks.
In logic and rhetoric, an ad hominem argument, which attempts to discredit the person mounting the criticism, is considered invalid, since the substance of the charge has not been addressed. It should be seen as a sign that the person using it is on weak ground, since they’d presumably address the issue if they had a good response.
The Wall Street gives us Shiela Bair, chairman of the FDIC and proponent of “freeze all the teasers” which was the genesis of the subprime relief plan launched on Thursday. She claims that investors against the program may be short the ABX. Even though efficient markets require having parties being willing to be on both sides of the trade, Bair seems to be of the school that equates being short as voting against growth and prosperity, which is only a stone’s throw away from being a communist.
If Bair was really concerned that the price of the ABX might be leading to howls of pain, she might have at least bothered to see whether ABX traders had in fact reacted to the announcement of the New Hope Alliance plan. Wonder why the Journal reporters didn’t consider that. After all, if the ABX hasn’t traded up, short investors aren’t hurting, and a lack of appreciation would be consistent with the widespread reaction that the plan won’t have much impact. Indeed, a reader was kind enough to indicate that the market “doesn’t seem to be responding yet to the plan” and had opened quietly on Friday.
In fairness, the Journal did give a wee bit of airtime to a spokesman at the end of the piece that acknowledged that even long investors might have reason to be unhappy.
From the Wall Street Journal (boldface mine)
A top federal bank regulator said some investors who are criticizing the new rescue plan for troubled homeowners also may be placing bets in which they would benefit from a jump in foreclosures.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., suggested hidden financial motives may be coloring the debate over the plan, unveiled by the mortgage industry and endorsed by President Bush this past week.
The plan would grant interest-rate freezes for certain borrowers who are unlikely to be able to afford the interest-rate increases scheduled to hit their subprime mortgages over the next two years.
“I do worry that some of the investors have taken short positions on the ABX,” an index based on subprime-mortgage-backed securities, Ms. Bair said in an interview.
Ms. Bair, who was a leading figure in developing the mortgage-rescue plan, didn’t identify specific investors who she believes are shorting the market. She said she had no evidence to back up her concern…
George P. Miller, executive director of the American Securitization Forum, didn’t dispute the notion that some investors who stand to incur losses from looser mortgage terms are opposing the plan. “It’s to be expected that an investor’s view of this could reflect their position in the capital structure of the investment,” he said.