I just figured out a secret that I don’t think most people in America have noticed. The fact is it’s not much of a secret, it’s more like the elephant in the room. And Democrats have successfully avoided mentioning it for a while now.

Looking at the supposed “stimulus” package that is trying to be shoved through Congress before the public realizes what’s in the package I noticed something. Now we have to step into the way back machine called facts for a moment. Democrats be prepared.

“So, if you make $31,850 or more you may not feel like Bill Gates and Warren Buffett but you are going to get taxed like them.”

Remember that? It was March of 2008 when all the Democratic candidates (including then-Senator Obama) voted to increase taxes on anyone making more than $31,850. It was at that time that Democrats started to insist with high order of polispeak that only the rich would suffer under their leadership.

Of course that leadership also was asleep as the mortgage crisis grew and then spawned the credit crisis. Both of which are still evolving into bigger problems. But I digress.

As then-Senator Obama won the Primaries, he began to discuss, vaguely, his economic and tax plans. It was a central point that he envisioned the rich as the sole point of higher taxes. This of course raised the question, what is rich?

The Obama campaign started to almost answer that question with anyone making around $250,000. That later went down to $200,000. Shortly after that it became $150,000. Then the nation got distracted, as financial institutions fell left and right. The only question at that point was who else Rep. Barney Frank might blame the collapse on other than himself.

Now we can move up to the present.

The House Democrats (minus 11 bi-partisan Democrats who joined the entire Republican membership) voted to pass the bloated, non-immediate, useless, stimulus package that also seeks to fund Honey bees, fix NASA, and study ‘global warming’ among other useless actions. But in this current version of the non-‘stimulus package’ there is a provision for tax rebates.

The money is to be provided to the public, as a savings each month for 4 months of about $120. But here is the catch. It’s only good for up to the first $8150 you earn, so if you exceed that amount before the 4 months are up you lose out.

Worse yet is who will get that money. And this is the elephant. You must make less than $75,000 (or $150,000 jointly). And there is the new definition of rich. The answer that has been over 6 months in the waiting has presented itself.

So if you thought Obama would only tax the rich, hello you very likely are now part of that group. Honestly I never considered making $75,000 as rich. It isn’t poor but its just as far from Bill Gates.

Think about that. Middle class income is a cut-off point for Democrats in Congress, and President Obama who is all in favor of the stimulus package as is. Can anyone tell me this is what they expected when they voted for President Obama?

If this is the threshold for who gets help, and who pays for that help, it seems more lopsided than even during the Primaries where Democrats were leapfrogging each other to sound more moderate and friendly to the public. But Congress is not partisan, nor are the current batch of polispeak promise socialisic – according to the self-admitted major news media.

Let’s be honest. If President Obama told the American public the truth, that he considered $75,000 rich, he never would have been elected. No wonder he never gave a firm answer. And why Democrats have avoided the issue entirely, because the public backlash would sink the approval ratings faster than Nancy Pelosi can waste money. And that is very fast indeed.

Well you may not hear the truth in many other place, but you have heard it from me. If you doubt this, just look up the provisions of the stimulus plan. It’s right there for you to see.

Labels: Barney Frank, Congress, Democratic Party, Nancy Pelosi, stimulus package

Democrats are really something. I don't say this because I favor Democrats. Nor because they are special in any way. And let me clarify this - I am speaking about politicians and not people.

Democrats are just as prone to polispeak. They break campaign promises just as often. They have scandals, ignore constituents, and promote special interests as much as any other political group. But the thing that really gets me is the style they have in doing all this.

Democrats don't just get caught stealing money, they have it sitting in their refrigerator. They don't just nominate (or appoint) officials that no one has heard of or lacking experience, they go out and get people that are particularly unqualified.

Just look at recent events. In New York State we had a Democratic Governor that was actively looking to appoint Caroline Kennedy. She has no experience, has no defined political positions, and her best argument for the position is her last name. Why did she not get the position as Senator? Because she has a massive number of skeletons in her closet; and even with that information Gov. Patterson was still courting her at the last minute.

Then there is Illinois. Gov. Rod Blagojevich was caught trying to sell the Senate seat. Rather than resign, he turned the tables and made an appointment to the position. Thus making the story about the lack of Black Senators, the question of the validity of the appointment, the credibility of the appointee, and the division in the Democratic Party.

In fact the Governor of Illinois is still causing an uproar. because instead of defending himself he is talking about how he wanted Oprah Winfrey for the job. Talk about unqualified.

Yes, Winfrey is intelligent, and popular. Yes she does good deeds, and has a ton of cash. In fact she is the exact equal of Caroline Kennedy. Including the fact that she has no qualification for public office. The closest she has ever come to anything political is her lavish support of President Obama during the Primaries and election. And that puts her on the list of possibles.

Democrats don't just have balls, they are crazy. They seem willing to substitute qualifications for publicity. They seem to promote opinion polls versus positions. And they do so in a hoard of media cameras as if they were entertainers or celebrities. And then they expect us to blame EVERYONE else when things go wrong - like Barney Frank insists.

Other political parties have at least an equal number of foul-ups in their ranks. They all have prima donnas and power-hungry opportunists. But in the Democratic Party it seems that this is the best features in their top ranks.

I just can't wait to see what will happen next. Las Vegas should be running betting pools over what will happen first. Barney Frank blaming the extension of bank failures on someone else (likely the Bush Administration for another 18 months), Secretary of State Clinton being questioned about receiving tens of millions from foreign Governments while in discussions with those nations on behalf of America, Vice President Biden saying something racist and/or stupid, or House Speaker Nancy Pelosi and Majority Leader Harry Reid insisting the time of the Congress is best spent combing thru every document and comment ever made in the prior 8 years.

And all the while bulbs will be flashing, and news media will be gushing as President Obama tells the nation that he will change things while they stay exactly the same.

Yet its other political parties that are bad for the nation, filled with malcontents, and ineffective. Only Democrats would have the balls to look the nation in the eyes and spew that polispeak.

Labels: Barney Frank, Caroline Kennedy, Congress, Democratic Party, Gov. Patterson, Gov. Rod Blagojevich, Nancy Pelosi, Oprah Winfrey, Polispeak, Secretary of State Clinton

So now President Obama seems to be interested in providing up to $100 billion for those in foreclosure or about to be. It's a really great gesture. It will surely help his approval rating. And it will help guarantee that he receives the full $850 billion he has wanted for the Democrat proposed stimulus plan.

But I am opposed to this. Not because I don't want people to keep their homes. But because this is a terrible idea.

First there are the homeowners who are not in foreclosure. Those of us that are doing everything we can to maintain our homes are at a disadvantage. We get nothing from the proposed stimulus except the $120 a month that has been stated. Which is little to nothing compared to the cost of a mortgage, and raising a family, while trying to save enough money to ensure that if we lose our jobs we have something as a cushion.

In fact, it seems almost beneficial to allow your home to go into foreclosure these days. The Government is so busy trying to ensure you cannot lose your home that they are basically encouraging people to do so. You can negotiate a lower interest rate, defer payments, extend the life of a mortgage, remove interest, and soon there will be payments from the Government to subsidize your home. Given all that, why the hell is it worth struggling to stay out of foreclosure?

Second, in spending money on the foreclosures it is that much less money spent on the economy. Given I think the stimulus plan is as much of a waste as the Bush stimulus plan, basically a political look good tool or polispeak for the masses. But if spending money is the plan to turn the economy around, why dilute that plan?

In effect the average American will be paying back, at some point in the future via taxes, the money they receive + the money given to homes that are not their own + money given to businesses that made bad business decisions. And that is just the looking forward money (and does not include his new spending for new Government programs). The Government has already obligated us to pay back previous money received + several bank bailouts (which did nothing to improve the stock market and retirement accounts) + auto industry money + bailing out an insurance giant. All while inflation is creeping higher.

And none of the money going to any business or institution has any guarantee of repayment. Nor if there were repayment, any way planned of how that money would be assessed. The money could be used to fund pet politician projects (like ACORN was initially set to receive) or some other Government inspired spending spree. We don't know.

Which says nothing of the fact that the Government has no idea how the money will be spent, or where it is spent. Billions are unaccounted for at this moment, and the Obama Adminsitration has stated it intends to add tens of billions more into the pot with little better knowledge than before. Unless you believe that Congress got a lot smarter since the elections in November. The majority of politicians that were there before are still there. Like Barney Frank and Chris Dodd, who couldn't figure out what was happening in the economy until after the problems hit the news. And they head financial oversight committees, still. Think they are any smarter or more adept than 3 months ago?

But again on the foreclosures. I have enough trouble paying my mortgage, my household expenses, taxes, and preparing for higher corporate taxes. It's hard enough to do all that in an economy that is just flat, and this is anything but. Now the Obama Administration believes I should add on someone else's house? Which I will never get a benefit from.

That's a hard sell to me. Probably why I did not vote for President Obama. These are no surprises. But they are as bad a set of decisions as I expected them to be. This is not going to help the economy, though I expect it to temporarily help the approval ratings of Congress (which needs it badly).

I don't entirely blame President Obama though. This entire stimulus plan was the idea of House Speaker Nancy Pelosi. She has been fighting for this for months, increasing the amount each month as she went along. Pelosi has had the distinction of being the worst Speaker of the House, with a Congress of the lowest approval rating, that accomplished the least things, at a higher cost, than I believe any other Congress has done in 111 sessions. That's like betting on the horse that went lame and was pulled from the race. Obama made the bet so he gets that blame, but Pelosi made the horse lame and that's on her all the way.

Spending tens of billions on foreclosures sounds nice, but that's all it is. Polispeak. It is almost entirely probable that it will have no effect except a long-term negative. In fact it may speed up the downward trend President Obama was elected to fix. But it's going to happen, so be prepared.

Labels: Barney Frank, Chris Dodd, Congress, corporate taxes, Nancy Pelosi, Polispeak, President Barack Obama, Speaker of the House

Ah the joy of politics. There is nothing like it. Only in politics can a person give a promise to millions of people, publicly, and then get a promotion when they fail miserably to follow thru. Only in politics can promises on the campaign trail be reversed 180 degrees once elected. Only in politics can a politician accept money that most would call influencing and still become one of the most powerful people in the free world.

It's called polispeak, at least by me. The act of saying and doing anything necessary to bolster a politicians power base and rise in the ranks while deluding the public. And there are plenty of politicians in office right now that are masters of this.

Barney Frank is one such politician. He adeptly changed his position on the mortgage crisis several times, matching the prevailing wind of public sentiment well enough to be untouched politically. How else could a politician say on tape that real problems don't exist and that he is on top of all the factors involved, then have all those problems explode in his face, and yet still maintain his elected position. Polispeak. Just blame everyone else and ignore what you have said before.

And another favorite is Senator Clinton. She has now become Secretary of State. Which is a joke. She has fought and won the ability to receive, via the William J. Clinton Foundation, tens of millions in donations from foreign Governments while she holds this post. She previously failed on promises to her Upstate New York constituents, promising to bring in 200,000 jobs and losing over 30,000 instead. She has reversed her position on illegal immigration so fast that only video of her conversation makes it possible to see how fast she polispoke (3 positions in 2 minutes at the same Primary debate, and in the same question). And she negotiated herself out of millions in debt (from her presidency run) and into a promotion while maintaining her bid for a future run at the Presidency and ignoring the racial comments she made in the campaign.

But let us not forget the polispeak of President Obama. He successful convinced the nation that he is not a far-left liberal, though his voting record is explicit in making that clear. He reversed his position on gay marriage. He avoided the weight of his political past, particularly his direct and close association with an admitted unrepentant terrorist, with a mere sentence. He has altered his positions somewhat on Iraq, the economy, and several other issues - even before getting sworn in. And his initial approval rating looks to be through the roof.

Politics is a unique field. And for those adept at polispeak it is the only place to be. It's even better than being a lawyer. Amazing.

Labels: Barney Frank, Polispeak, President Barack Obama, Secretary of State, Senator Clinton

Oh the horror. Now you have your choice of what the horror is. The $188 billion spent on the mortgage/bank bailout so far, the latest news from AP stating that in 2007 banks paid $1.6 billion on salaries and compensation, or the fact that Barney Frank dares to question anyones work ethic.

"Most of us sign on to do jobs, and we do them best we can," said Frank. "We're told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!"

Frank is head if the Banking Committee in Congress and failed to do his job all year long. He thought the sale of Bear Sterns would end the crisis. Then he thought that Freddie and Fannie Mae were fine. Then he thought AIG would end the mess. And so on. He either needs new batteries in his calculator, or we need a new head of the Banking Committee - you can guess which I suggest.

But back to the point at hand.

I don't care that last year the banking industry spent way too much money. That has nothing to do with the current problem. That's the thing these days in politics. You need ratings or you want to get positive results, polispeak on the past and you look like a genius. Too bad that hides the fact you don't know your ass from your elbow right now.

Have many executives gotten paid too much? Hell yes. I have no problem with the thought that an executive that comes to a company and improves it such that the jobs are secure and profits are up, getting a bonus, that is the concept after all. But being paid exceptional amounts for piss poor work and endangering the company makes no sense. I mean it's not like an executive can't survive on the tens of millions they get paid as salary in the top companies.

But this is an issue going forward. It really doesn't matter if the CEO gets a driver, or financial planning advice as a perk. That isn't enough money to matter. In total that is maybe 3 employees of the company saved, and nothing else. It wouldn't even show up on the companies liabilites sheet.

Though seeing where the company valued it's mortgages, and when, makes a big difference. Looking at what debt instruments the company is still using makes a difference. Looking to see if the bank is loading every bad debt and problem asset into the bailout money is worth knowing. The other stuff is a trifle meant only to gain readers and sell newspapers.

Executive pay is in all the headlines these days, driving the mantra of Democrats that regulation is good. But all this bluster hides a couple of simple things. You can't legislate good or bad business decisions. Oversight means nothing if the person in Congress is not smart enough to understand what they are reviewing. And the most important, the more the Government is involved with private business the more screwed up and like the Post Office it becomes.

So when you think of the horros of 2008, perhaps that last thought is the only one that really matter.

Labels: Barney Frank, Congress, credit crisis, Democratic Party, mortgage bailout

So I saw an interesting thing the other day on the Jon Stewart . It was a discussion between Stewart and Mike Huckabee. As you might imagine it was confrontational, but not to the degree of say Bill O'Reilly and Rep. Barney Frank.



The crux of the first part of the conversation was on their differences on fiscal conservatism versus liberal policies. Stewart advocates larger Government. By that he means larger influence of Government in the daily affairs of the citizenry. He wants a Government that mandates what cars are made, what profits are allowed and who is lent to. He wants a Government that spends more to provide a mandated healthcare and smaller military.

Huckabee is the opposite of all these things.

But Stewart makes good points in his argument, tinged with sarcasm and humor. Which is great for a parody, but fails to deal with the issues at hand on a more serious level.

Take what Huckabee points out. This Democrat-led Congress failed on every level, and in each Party, to deal with the mortgage crisis which led to the credit crunch. In fact several members of this Congress either lied or have no idea what the hell is going on when they stated the economy was fine. That major financial institutions were secure - which was said at several points in the year - just prior to several major meltdowns. How can we expect a Congress that inept to resolve issues in the stock market, or anywhere for that matter.

And Stewart makes a common misconception as well. He makes the assumption that regulation prevents bad policy. The 2 are not the same.

It was bad policy decisions that made the U.S. auto industry focus on SUV's when hybrid and smaller cars were more logical decisions. Regulation would not change that. And it was the bad regulations, mandating unqualified lenders get home loans, that caused the mortgage crisis in the first place. And bad regulation practices let lead-coated toys into the nation. And it was lack of action by these same oversight groups that failed to prevent or even anticipate the meltdown of Fannie Mae and Freddie Mac as examples.

And one thing I want to directly point out that Jon Stewart said.

"Conservatives would say 'I want a big military'. Well that's Government... The fact that you would trust the Government with tanks and nuclear weapons but not to pass out cheese to poor people. You know, you've got to figure, so...I don't get it!"

Get this. In New Orleans the Government with some 15 agencies failed to provide water to people in the Dome for 3 days during Hurricane Katrina. But there has never been a nuclear weapon that has gone off accidentally or been lost. Nor has a tank been lost. The Government has proven in multiple actions that it is quite good at protecting this nation, when allowed to do so, and engaging in war or military actions.

But in terms of helping the citizenry it is far less efficient. Part of the reason why is the fact that the Government is so big concerning domestic issues that its right hand does not know where is or what is being done by the left. Big Government hurts the people, smaller Government does so less.

Liberals seem to want a Government that is involved with all aspects of daily life. They want Government to make decisions for them, or to assist in that decision process. Yet we see that the more Government there is, the less that is done or done efficiently. So why do Liberals expect that a Government-run healthcare system will be more efficient or helpful than FEMA or the VA or the Post Office, as an example.

And that is no joke at all.

Labels: Barney Frank, Bill O’Reilly, Congress, credit crisis, Jon Stewart, Mike Huckabee, mortgage crisis

So you want shock and awe? How about the fact that Congress is about to give the major automakers $15 billion more in bailout money. Yeah, what I thought. A yawn.

It's not a surprise to anyone that the auto industry is getting the bailout money. A loan from us to them as Congress likes to put it. And it will be paid back as soon as February. Or so Congress wants to polispeak the spin.

But the real facts are simple. Congress is pulling out any stops on spending money. They are giving money away to basically every big business that walks up to them. I expect that airlines should be next.

So far we have given more than a trillion dollars in this year alone. Forget about the combination of nations that it would take to equal the amount that has been spent. The thing is that none of this is helpful, though Congress keeps saying they think this will do it.

Our money has been poured hand over fist to the financial industry, and we got fewer loans being made, more ownership and intervention from the Government, and a promise that in some far off day we will get paid back. Of course you have not heard a single word on how we will get paid anything back, or what will that money be used for since it won't be in our pockets. But the taxes to pay for it until we do one-day get repaid will come out of our pockets.

And we gave $25 billion to the automakers about a month ago. So the current $15 billion might make it to the end of the month. Then they will ask for more, blaming Congress for being stingy and not helping enough for them to get to do what they need to. But don't fear Congress will appoint a Governmental agent to watch over the auto industry.

I expect that will be someone like Treasury Secretary Paulson, or Fed chairman Bernanke, or maybe like Congressman Barney Frank. And you know all of them were right on the job, wide awake, making sure things couldn't get any worse. Oh damn, we are seriously in the crapper aren't we?

The worst part of this is the fact that a Government agent overseeing private industry, with the ability to mandate changes in their business practices that is solely motivated by politics, is a far cry from capitalism. It is yet another desperate attempt to avoid the pain needed to innovate and become more efficient. Which means it is ultimately a failure of massive proportions that will be passed down the line a bit for someone else to deal with. Hopefully not the politicians in office currently.

For all the bluster, and there were loads of it especially from the financial oversight genius Barney Frank, the fact is this is the worst case scenario and we all knew it was going to happen. From the moment that Congress sat to listen to the auto makers we knew it. The only questions were how much and when. Now we know.

The fact that our politicians lack courage is bad. The fact that they are protecting their political supporters (the UAW as one example) above helping the nation is worse. But the fact that our elected officials have no clue what is going on is the most troubling of all.

So there goes another $15 billion. Compared to the $500 billion+ stimulus plan for 2009, or what has already been spent in 2008 it's not a big deal. Until the snowball of what Congress is doing moves just a bit closer, faster, larger. And then they won't be able to print the money fast enough.

Labels: Barney Frank, Ben Bernanke, car czar, Congress, credit crisis, mortgage bailout, Polispeak, Treasury Secretary Paulson, UAW

I had some extra time today so I decided to take a look at what has happened this year. I wanted to go back and take a look at the various buyouts and bailouts that the Government has backed, and the promises made so far. And the numbers are horrendous.

The main focus so far is on the $1.5 trillion that has been authorized and/or spent thus far. $700 billion for the bailout of mortgages and the credit crunch, and now another $800 billion for mortgages and consumer loans. But those numbers are not the full amount of cost this year.

The year started with the bailout of Bear Stearns. It cost $29 billion to allow JPMorgan to buy that failed brokerage house. And we were promised that would fix everything. Then there was the $150 billion stimulus package that was promised to fix the sagging economy, which failed. Then came Fannie Mae and Freddie Mac, which Representative Barney Frank publicly pronounced as healthy and secure, that cost $120 billion each (not including the $600 billion that is now part of the $800 billion bailout package). And the numbers are still not done.

AIG cost $120 billion by itself. That though was said to be included in the $700 billion authorized by Congress. That means of the 1/2 of the funds given to Treasury Secretary Paulson only $230 billion was available for everything else needed. Not counting the tens of billions given to banks, or the money spent to buy bad loans at unknown valuations.

Of course there was also Citigroup. This cost $20 billion plus $306 billion for guarantees of their bad loans, for a total of $326 billion. Now that is a problem because if the funds came out of the same pool as AIG, we are in a bigger negative than the spending is already creating. A double negative of sorts. And yes I know that guarantees are not the same as cash, but a guarantee must be backed by something besides words. Which means cash from somewhere.

But let us not forget the $25 billion given to the auto industry. And that has nothing to do with the additional $25 billion that is being asked for now, just roughly 5 weeks later. Which is separate money. And that precedent is going to lead to the requests of the airline, credit card, home building/construction and other industries. If the Government is handing out money to businesses, it would be folly not to get in the line.

So the total is $1.94 trillion dollars. Which does not include Citigroup or the additional amounts from the auto industry. Including that figure we get $2.27 trillion in money that never existed and must be repaid. To be exact that means that every American, each of the 300 million citizens, owes $7,567 to the Government.

It is expected that some of these loans and stock purchases will eventually break-even or turn a profit. The expectation is that will happen in 10 - 15 years. Though it is absolutely unclear how the public will be repaid, though the Government will collect all the money. Thus it is possible that the Government will receive money from the public and hold repayments from loans - effectively being paid twice. And it is very likely that any repayment will be funneled into Government agencies instead of the public, as was attempted by Democrats with the first version of the mortgage bailout bill.

But even if 40% of the loans were to make a 50% profit, the bulk of the debt incurred will still be greater. And that does not cover the direct cash infusions made without a loan or repayment provision - which is about 70% of all the funds so far as I can gather.

And the fun does not end there. Remember that President-elect Obama, pushed by House Speaker Nancy Pelosi, has promised a now $700 billion second stimulus plan. The exact details of this plan are unclear, but some amount will be given to the public and some will be used to fund public works. Or so the loose plans state so far. That would mean that in 1 year the cost is $2.97 trillion.

And President-elect Obama still is pushing to add over $800 billion in new spending for new and/or expanded programs. That makes it $3.77 trillion. Or in terms of cost to you and I - $12,567. That's for every man, woman, and child alive right now - working or not.

Put in different terms, this money could have completely funded the entire NASA budget (roughly $419 billion unadjusted for inflation) since inception nearly 10 times over. We could have funded 1,000 moon landings ($36 billion unadjusted) including all the research and development.

Let me make it more personal. That amount is more than the entire net worth of Oprah Winfrey, Bob Johnson, Tiger Woods, Michael Jordan, Tom Cruise, Bill Gates, George Soros, and Warren Buffett combined and multiplied by 10. It's enough money that every single American citizen, of any age, could go to the average college for 2 years. It's enough money to give every American alive today a 10% down-payment on a $120,000 house.

And there is no guarantee, in fact there is reason to highly doubt, that it will get better.

Labels: AIG, Barney Frank, Bill Gates, Citigroup, Congress, Freddie Mac, mortgage bailout, Nancy Pelosi, NASA, Oprah Winfrey, Tiger Woods, Treasury Secretary Paulson, U.S. economy, Warren Buffett

This year Christmas has come before December, especially if you are a money center bank, a brokerage house, insurance company, or car manufacturer. For regular people though the holiday may not arrive at all. Such is the way things happen when the Government gets involved.

The news is out now that Citigroup will receive another $20 billion, with guarantees for $306 billion in assets, before the holiday season ends. In fact they should have the money, your money, in hand before the holiday season officially starts this Friday. Santa it seems has a 401k.

The good part of this is that Citi should not fail. Thus money will be stable in over 100 countries around the world, for the time being. Another bonus that New York City officials must love is that Citi will not be sold off in parts, and thus tens of thousands of additional jobs should be secure. And there is a better than 50% chance that many of the major bonuses that help the Big Apple float will be paid out (contractual obligations don’t end when the company gets a Government bailout). And in all honesty that is a good thing for the U.S. economy too, as long as they spend the money and not hoard it in fear of future layoffs.

The bad thing is that none of the officials tasked with resolving the financial crisis the nation is in foresaw this event. Chriss Dodd and Barney Frank didn’t see it coming, not because they were asleep at the wheel like when they promised Fannie Mae and Freddie Mac would be ok, because they were too busy blaming anyone but themselves for missing the problem. Treasury Secretary Paulson missed it. Fed Chairman Ben Bernanke missed it too.

Not one of these men, each tasked with identifying this continuing problem, envisioned this problem. They have dozens of staffers and hundreds working behind the scenes crunching numbers. Yet they all missed the chance of this happening. And the public is left to assume that it was so sudden they couldn’t have known.

Not true.

“I believe that the move to junk rating of ACA, the probable $6 - 12 billion loss at JP Morgan [significantly higher than expected], eventual losses from Citigroup - which reinsures itself, oil breaking $100 a barrel, and the multiple overseas investments will all hit the market in mid-January 2008. Thus I think a move to 11,000 is more than probable.”

I said that in December of 2007. That’s without being a stockbroker for years, without financial racords, conversations with CEO’s, discussion of the Fed, data from international sources, or Congressional committees. Just me reading the news and analyzing the public information.

I in fact went on to say

“Will those experiencing deflation outweigh the inflation fears? And if more people lose their homes how much of our financial institutions are we willing to sell to avoid the harshest realities of a crash?”

I knew Citigroup was in trouble a year ago. I knew there would be a major crisis from the mortgage industry, and that a bear market would hit the stock market. And I defined it several times, months in advance, in detail. The main thing I have been wrong on is the severity and speed at which all these things happened.

My point about this is simple. If I can figure out how bad things were, and most likely will continue to get, then what the hell were all these people whose only job is to figure this out doing!?

If they can’t get off they political posteriors, open their Government entrenched eyes, and understand the degree of a problem that is apparent to a guy on a computer in Binghamton – without even a stock ticker – they why are we giving them control of $700 billion and more? How can we expect that a single dollar of that money will be put to a use that is effective?

Case in point. Citigroup is in big trouble. They insure themselves internally. They are failing. So what is the value of the $306 billion in assets today, what was it yesterday? Are we guaranteeing a value that was intially set for these assets, the current market value of these assets, or are we getting to pick up the debt and bad loans of Citigroup mixed in with actual assets? The difference is very important. And I doubt if Barney Frank and Chris Dodd are even aware that this question should be asked.

I asked how much are we willing to sell to avoid a problem a year ago. Today I am looking forweard and I have to ask a different question. How much of the American capitalist system the nation functions on are we willing to lose to avoid the pain of this crisis? And if we are willing to comnpromise the basis of our economy, how do we prevent losing the freedoms a solcialist nation cannot tolerate?

Labels: Barney Frank, Ben Bernanke, Chris Dodd, Citigroup, Federal Reserve, financial news, mortgage bailout, New York City, Treasury Secretary Paulson

I just love the way that Congress is trying to look tough these days. An auto industry bailout? Hold on, we need details. Right.

Come on, this is the same group of people that handed $700 billion to Treasury Secretary Paulson without a plan. It was the same group of people that fell asleep when Fannie Mae, and Freddie Mac were in trouble (someone wake up Barney Frank). And it was these very same people that gave away $25 billion to the auto industry about a month ago.

Does anyone seriously believe that they won’t bailout the auto industry, and receive neither repayment terms, nor assurances of industry improvement. They couldn’t even create a bailout for the financial industry that could prevent Paulson from moving the money around however he chooses, and that was a concern of House Republicans from the start. With even more Democrats in Congress, and the continued misleadership of Harry Reid and Nancy Pelosi is a better outcome likely?

I’m reminded of a quote from Ben Franklin I believe.

“Doing the same thing over and over, while expecting a different result is the definition of insanity.”

I apologize to Franklin is I got the quote wrong. But the point stands. And it will stay in place until the mid-term elections in 2010. Won’t the damage be interesting to see then.

The fact is that the U.S. automakers need to fail. Let several go bankrupt. It won’t be the end of the world. It will actually be the best thing that could happen.

When large companies fail a couple of things always happens. Several smart businessmen rummage through the wreckage and find bits that they can create new companies with. Those new companies will in part of the gap the old company had, but mismanaged. That spurs growth as a new corporation grows in that niche.

Also the old behemoth of a company slims down. Much of the old baggage is discarded, and the company refocuses on whatever they do best. Renewed energy flows and the company normally creates profits the old company could never do.

This is all good for the economy, though the jolt during the process is unpleasant. But it creates a stronger economy than the one existing before it. And more people are employed after these events than before.

The worst aspect of the auto bailout is the fact that it will be followed by an airlines bailout, and a retail bailout, and probably another financial markets bailout. The Government has made a precedent of stepping into the markets and private industry, because they are afraid of the pain. And in each case it has proven one thing. The Government has no idea what it is doing.

The more socialized things become the more the Government is compelled to step in. The more money is thrown around to avoid feeling bad, the worse everyone feels. Because the Government is incapable of fixing anything, nor can they regulate bad decisions out of business. And they shouldn’t. Bad decisions are normal business and are resolved in the marketplace over time.

Only in America is the concept of perfect markets feasible. It’s stupid and regrettable. But it also seems inevitable. Were that not so, the auto industry execs would never have taken separate corporate jets to fly to D.C. and speak with Congress. They did it because they know they will get the money.

I stated that the Dow Jones will hit 7600 in 2009. But if Congress throw more money at the problems in the markets, and involves more politicians that sleep when they should be watchful (Frank and Chris Dodd) I could be very wrong to the upside.

Labels: auto industry, Barney Frank, Congress, Freddie Mac, Harry Reid, mortgage bailout, Nancy Pelosi, Treasury Secretary Paulson

The bailout deal that was rejected on Monday by the House of Representatives was a bad deal. And the result was a Congress divided, a media blitz, polispeak galore, finger pointing, and a 777 point drop in the Dow Jones Index.

Most focus on the drop in the Dow Jones. The media love to play that up. I even heard the number increasing as the night went on. Some newscasters call the drop “a nearly 800 point drop”, or “nearly a 1000 point fall”. Talk about exploiting the facts to gain viewership.

The fact is that nothing that happens will stop the drop in the market. The second that short-sales are allowed back into the market, bigger drops will occur. All that stopping these trades has done is increase the power of the drop. Because while the numbers look big right now, the actual affect is not nearly as big. That’s because of the current value of the Dow Jones Index. But as the Dow drops, these big sell-offs become more meaningful and powerful. And they feed a bear market like honey.

But the bailout, now trying to be spun into a “loan” by pundits and politicians, is horrible. Because it fails to answer 2 simple questions. How much is being assumed in bad debt, and how do taxpayers get repaid?

The first problem goes like this. Under the deal laid out on Sunday, at least 3 separate payments would be given to Treasury Secretary Paulson to buy bad loans. The value of what he pays for the loan is unknown. Would he pay the original price of the loan, the current value, the real absolute value? No idea, nor was one required by the legislation. Thus he could buy all the bad debt at the top price, ensuring taxpayers could never break even or be repaid.

The second problem is that there has been nothing said on how taxpayers get the money back. The money is coming out of our pockets. We know that. To the tune of about $10,000 per person. And it will likely be collected from higher taxes for EVERYBODY. But how are we to be repaid. Will we get tax credits in the future? Or a check? Or guaranteed lower taxes (though how much lower and lower than what level is yet another question)? If you can’t say how we will get repaid how can we believe we ever will.

To deal with these 2 major issues the politicians that were trying to rush this version of the bailout proposed this bit of eyecandy. Executives would no longer get ‘golden parachutes’. Yea! It’s nice that the Government is in effect starting on the path to regulate how much money anyone should be paid. It’s very socialist of them. Still I can agree that paying someone that bankrupts or severely damages a company millions is folly. Though I see no problem paying them is they create a bigger stronger more profitable company than they took charge of. But the legislation is unclear if a great executive doing a great job is free of the same stipulations and restrictions.

And all of this says nothing to the power suddenly endowed to the offices of Secretary of the Treasury and Fed Chairman. They get control of more money than 1/3 the countries of the world make combined. And if you think that Congress can watch over those positions and keep them in check remember that it was the brilliant and attentive eyes of Banking Committee leader Barney Frank that said in July of 2008 that Fannie Mae and Freddie Mac could not fail, and that he saw no problems in the financial markets.

And another unseen problem of the bailout deal that was thrown out is its effect on the nation. This deal would have effectively kicked out the last leg holding New York as the financial center of the world. And it still might happen. And with that loss of status means tens of millions of dollars lost to the nation and New York State.

This is not a game with obvious consequences. Some things have to be thought about. And because some of those most responsible for this mess don’t want the blame, they are insisting on the most speed in passing the buck and a deal.

The bailout will cost over $1 trillion by the time it’s all said and done. The stock market will fall as the dust settles and every industry with debtors lines up to be next to be paid. And eventually things will improve. Such is the nature of markets and trade.

But if the main questions I have asked are not answered in future bailout proposals, because of the rewording of what the deal is called, or political favor to a Presidential candidate, or rushing to soften the ultimate downturn of the bear market, or just because no one was smart enough to ask, then the real cost will be far worse than just the money thrown away.

Labels: American economy, Barney Frank, Congress, Dow Jones Index, Federal Reserve, small business, stock market, Treasury Secretary Paulson

You have to be impressed by the Congressional Democrats. They have balls. Not brains, just balls. Because that is the only way they can make the claims they do about the bailout deal.

In listening to the Democrats, Barney Frank in particular you would think that the Republicans are staging a massive political coup. That the Republicans are the only reason why the bailout deal that was voted on today failed was their votes. That this is all about politics and the upcoming election.

But if you stop listening to the polispeak in Congress and look at the vote numbers and you see another picture.

The vote was 228 – 205 against the deal. That includes 94 Democrats, which could have easily made the difference and passed the deal no matter what the Republicans did. But they chose to go against their Party and Treasury Secretary Paulson, and President Bush.

Why? Because the deal was horrible. Because there is no confidence in the deal. Because the rush to pass the deal makes you wonder what is in it. Like the fact that a previous version included a stipulation that if this bailout actually got any money repaid that money would not go to taxpayers but would fund a Democratic initiative called ACORN (which has federal problems currently).

Or how about the fact that I have yet heard how the public, that will be buying these assets (bad mortgage loans) could or will get the money back. We will spend $10,000 each, out of our pockets, and if this ever makes break-even or profit there has been no discussion how we get that $10,000 back in our pockets directly. And under the current plans you never will. That is not a political problem, that is just a bad deal.

If this were as political as Democrats would like it to be, then this bad deal would have passed, Senator Obama would have the credit for it (or at least Senator McCain would have the blame) and they would use this to win the election. That didn’t happen.

If this were political, Republicans could have voted for this deal claimed it was because of Senator McCain’s influence and used that to win the election. It’s just that simple.

But Senator McCain, the Republicans, and 94 Democrats are not being political. They are doing their jobs. They are trying to structure a deal that works for taxpayers like you and me. They want to answer (I hope) the question of how the money comes back to you and me, if it ever makes money.

If we want to really be political about this, we can ask why Barney Frank and Chris Dodd could not see the impending problem as late as July of this year yet they are the heads of the Banking and Finance Committees in Congress. They were informed by supposedly brilliant minds on the exact status of the problem, and they crafted laws and regulations to control what happened. They also made enormous amounts of money from the very people they were (supposedly) watching.

Look, here is the reality. Senator Obama and McCain are Senators. One of them will be the next President. They are effectively the leaders of their respective Parties. They need to get into this fray (well at least Obama does as McCian is) and do their jobs. They need to forge a deal, stand together and say they endorse the deal. At that point it will have to pass. And to forge the deal they need to answer the question that I feel is most important, how I get my money back.

Everything that is short of this is polispeak. Every moment that Obama avoids this problem, every moment that they don’t answer the key question, every moment we have no deal endangers America and makes our near-term future that more bleak. And no matter how many Democrats blame Republicans, or how many deny their failure to do their jobs, the outcome remains the same.

Labels: Barney Frank, Chris Dodd, Congress, Democratic Party, Presidential election race 2008, Republican Party, Treasury Secretary Paulson, U.S. economy

I love listening to Harry Reid. He is absolutely partisan and 2-faced. He is the best example of what polispeak means. Listening to hear him talk today you just can’t escape this.

He is speaking about Republicans that didn’t want to go to the meeting at the White House yesterday, but he has no comment on the fact that Senator obama wouldn’t go until the President asked him to be there.

He speaks about Senator McCain and blames him for the failure of the deal, but fails to mention that there was no deal. House Republicans, and many in the Senate never liked the Paulson bailout proposal. There was no deal, except as expressed by Democrats and the media.

He wants to blame McCain, but he forgets that he stated earlier this week that there could be no deal if McCain was not on board, which he was not. He refers to McCain as an outsider, yet McCain is an active Senator with responsibilities to those that elected him.

Democrats like Chris Dodd and Harry Reid, and Barney Frank want to make it seem like this deal is good for America, yet those that look closely at the deal think it is not. And they want to add to the bail out items that are not part of the issue. They want to include the $50 billion that House Speaker Nancy Pelosi advocates, that does not have to do with the bailout but is another stimulus plan that is ineffective and a waste of money.

Democrats are being very political here. They are trying everything they can do to phrase this as a Republican or Senator McCain problem. They want to rush forward and throw money at this problem. That type of plan did not work when Bear Sterns failed, or when Fannie Mae and Freddie Mac failed, or when Lehman failed, or for AIG. They seem to think that throwing your money, my money, at this problem is more than just filling a leaking tub with more water.

Not one Democrat can state that the Paulson plan, as proposed and what they are trying to advance, will work and prevent another problem in a month. Not one can explain why a single person in the position of the Treasury Secretary, should be left with virtually sole responsibility and accountability of nearly $1 trillion dollars.

Harry Reid, and Chris Dodd are speaking about how they will be in D.C. and working on this deal all night tonight, and Saturday and Sunday if necessary. They are saying this is the most important issue before them. Yet they support that Senator Obama go off and focus on a debate, that can be postponed. This is the most important issue in America right now, that’s why all of Congress is doing their jobs – except for Democratic Presidential candidate. And the Republican Presidential candidate is the one being blamed for doing his part of the job.

Either Obama or McCain will be President in a little more than a month. One of those 2 will be faced with the resulting issues that this mortgage crisis bail out will cause. But Democrats believe that neither should be involved in the terms or process of this deal. That seems smart doesn’t it.

I find it completely partisan and polispeak when Barney Frank states that everything is fine in 2003 and July of 2008, and now is trying to blame everyone else for what he failed to stay on top of. Chris Dodd is no better. And as I mentioned above Harry Reid has flipped as well. Not to mention how Senator Obama sprinted from the meeting with the President yesterday to get out and in front of cameras, instead of going back to Congress to wotrk on the deal more as McCain did, is quite telling on who is using this as a means to win the Presidential election.

Our elected officials need to stop with the politicing and focus. This deal needs to resolve the liquidity issue, and ensure that we are prepared for the difficulties to come. It does not need to give away money to pet projects that otherwise would never pass. It is not an ad for the election campaign. It is not a gift to Wall Street, nor an open invitation for every company and industry with sagging sales to line up at the door. Neither should it be the start of the American Government as a real estate broker/business.

Anything short of that is false and stupid, and baseless polispeak meant only to prop up the political futures of selected individuals.

Labels: Barney Frank, Chris Dodd, Harry Reid, mortgage crisis, Nancy Pelosi, Presidential election race 2008, Senator Barack Obama, Senator John McCain

I just can’t step away from the most pivotal issue in the election and the lives of Americans right now. The spin in the media is that Senator McCain is avoiding Senator Obama on a debate of foreign policy – something McCain has experience at for decades and Obama has a speech in Germany. And many are calling the deep desire of McCain to serve the nation, as was called for by Harry Reid yesterday, a political stunt. Though they ignore the school boy-esque scolding that Obama received when the President called him to the White House today.

But I am tired of hearing Democrats and some media pundits running around blaming every economic woe of the nation on Republicans. There is certainly more than enough blame for all the politicians in Congress, which is why it has the lowest approval rating ever. Republicans have screwed up and spent more than they should. But Democrats have been no better, in fact those that are critical to the finance of the nation have been particularly blind. Mr. Magoo could have foreseen more with their level of information and influence over the years.

But lest my words be seen as partisan, which to an extent I am sure they are as with any pundit or blogger, I present talking heads from across the spectrum of the cable news media and pundits, as well as politicians themselves. Listen to those that we have elected, and their votes and assurances. Then tell me this is only a Republican caused problem.

And please explain to me why we should believe that those that planted the seeds for this problem, and fostered it to the debacle we are required to deal with today, should be believed when they say they have a solution

History of mortgage crisis back to 2003


Fannie Mae and Freddie Mac contributions – Sept 18 2008


Chris Dodd was watching closely but did nothing – August 2007


Treasury Secretary Paulson progress made – February 2008


Barney Frank – Improving regulation of Fannie Mae and Freddie Mac July 14 2008


Obama accuses McCain of opposing reform


Have Republicans tried to do anything?


S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005 - A bill to address the regulation of secondary mortgage market enterprises, and for other purposes.

So I also ask this, If Senator McCain did not go to Washington D.C., if the President did not call Senator Obama to the White House, are you sure there would be a resolution to the bailout crisis? Would that resolution be in the best interest of the nation?

Is a debate, that could be easily rescheduled, more important than the potential of 4 out of 5 Americans losing their homes and jobs?

And lastly, isn’t it a bit hypocritical that Democrats claim that the debate must happen because America wants this; yet they defended Senator Obama when he refused for 2 months every request that was made for Obama to join McCain in speaking directly with Americans at town hall meetings across the nation?

Labels: Barney Frank, Chris Dodd, Congress, Democratic Party, financial news, Freddie Mac, mortgage crisis, Senator Barack Obama, Senator John McCain, Treasury Secretary Paulson