Tuesday, September 30, 2008

Day of Judgement

How lovely that the political landscape seems to reflect the events yesterday and today in my faith, Judaism. Last night began Rosh Hashanah, the beginning of the Jewish New Year, and the first of the High Holy Days. We celebrate several things on this day, the creation of humankind, the beginning of the New Year, and we give thanks having had a good year. We also ask for forgiveness for sins against G-d (sins against fellow human beings must be worked out with them :) and finally to be inscribed in the Book of Life. (The Book of Life is not sealed until Yom Kippur, 10 days later, so we have a week to work with! lol. Some of us need the extra time!)

Here is a nice (and brief) explanation of the deeper meanings of Rosh Hashanah.

Worldly Day of Judgement

On the financial markets, it seems to me also a day of judgement. The markets are making radical corrections for all the excesses of the last 10 to 15 years. It's scary and painful, as these things usually are.

Unlike Reaganomics, the effects of this crisis truly can trickle down to the middle class. Losing that kind of asset volume in a single day is hard to comprehend (we lost $1.2 trillion in the 777 point dive the markets took yesterday) much less extrapolate to full effects and outcomes.

The most dire part of this to me is not the correction, however. It's that the complexity of the problem is so enormous, that even the very best minds ON THE PLANET can't seem to agree on one of the fundamentals of problem solving: defining the problem. They are struggling with defining the problem (although we can describe it, which is a start). Here is my arm chair quarterback attempt:

Banks are struggling with bad mortgages and other debt and can't figure out how much bad debt they are carrying overall, because valuation of these debts is tough in stable times, and nearly impossible when "the markets" are as crazy as they are now.

The value of the banks is tanking because the value of their assets are low and losing value.

People tend to want to get their money out of "failing" banks, even when their deposits are FDIC insured. (This is what happened with WaMu - they had a "stealth" run on the banks, over the last couple of weeks, and therefore they didn't have enough assets to support their debts, so the feds took them over and sold them.)

Failing banks makes the stock market tank, because the market depends on stability and there ain't none right now.

Once we have a better handle on the problem (which means, in part, determining how big is the problem) then we can chart a course. I'm all for taking the time to think this thru rather than having a shot-gun wedding.

In addition, if we are going to help save Wallstreet's bacon, we have to put some serious constraints on their behavior (also known as regulations) and a huge STOP on overblown executive compensation. In my world, when someone blows it, like these top execs have, then they get to suffer the consequences. Cut salaries and kill the golden parachutes. Or let them go out of business. (shrug)

As far as Main Street or the middle class, how is it that Congress is so dense about how to help? Once again they prove to have zero idea of what people need. Homeowners need time to get back on their feet, unemployed people need extended benefits, all taxpayers need a rebate so they can either save it (what a concept) or buy some essentials, like expensive gas! or repairs on their cars.

Small businesses could use a hand too. Again, some tax relief is the easiest way to help the most people quickly.

I hear people saying don't help either group, not Wallstreet or Mainstreet. This doesn't make sense to me. For one thing, it doesn't seem practical - since when does Congress sit around when there is an opportunity for grandstanding and partisan bickering?

Further, this is a real opportunity to change "business as usual" not only on Wall Street but in Congress. It's also a chance to rein in the Out of Control Administration (I'd personally like to hand them their head on a platter).

btw, I never thought that we should do nothing, and let the ship entirely sink. There is just no good reason to give Wallstreet and the Treasury a blank check and unlimited power, respectively.

The only thing that will work is a comprehensive fix - if we bail out investment banks, and do it right, we will also help Main Street - and that doesn't need to be implied or indirect assistance, but real changes.

Here is a brief article about why the bailout bill failed yesterday. Note that, if you listen to the 3 min audio, that the former head of the FDIC, William Issac, who also headed up the savings & loan bailout, has a low cost idea of how to fix this.

Now that would be some good news!

Here is Defazio's (Dem - Oregon, voted against the bailout) take on it. Check it out.

Sunday, September 28, 2008

Bailout Won't Cost Top Executives of Failed Firms a DIME

Here is something I found today, reported at CNNMoney on the new bailout plan (which I noticed they have begun to try to sell us as a "buy in" - ha!)

Limiting executive pay: Curbs would be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, companies that participate will not be able to deduct the salary they pay to executives above $500,000.

They also will not be allowed to write new contracts that allow for "golden parachutes" for their top 5 executives if they are fired or the company goes belly up. But the executives' current contracts, which may include golden parachutes, would still stand.

And the valuation of assets looks as clear as mud - no one knows how bad the problem is, and no one can say what assets are worth, especially in this market.

If the plan "costs the taxpayers money" then

If it ends up with a net loss, however, the bill says the president must propose legislation to recoup money from the financial industry if the rescue plan results in net losses to taxpayers five years after the plan is enacted.

In addition, Treasury would be allowed to take ownership stakes in participating companies.

Stemming foreclosures: The bill calls for the government, as an owner of a large number of mortgage securities, to exert influence on loan servicers to modify more troubled loans.

In cases where the government buys troubled mortgage loans directly from banks, it can adjust them more easily.

Exert influence?? That doesn't sound like real help for homeowners to me.

Friday, September 26, 2008

Beware and Auto Industry starts to Whine

From Robert Reich:

Congress knows the public is furious. That's why it's insisting on the above-mentioned provisions. But Congress and the Administration, and Wall Street, also know that the public -- and the media -- can easily be hoodwinked into believing that certain limits and protections have been built into the deal when, on closer inspection, they haven't. Wall Street is masterful at creating the appearances of value when there's no value there, and many of our representatives in Congress are well-versed in the art of creating the appearances of public gains when the gains are mostly private. So the media has to dig hard and look at the details of this deal.

Meanwhile, when no one was looking, American automakers are on the way to getting their own sweetheart deal from Congress -- billions, ostensibly to convert to more fuel-efficient cars. On a much smaller scale, this bailout is almost as outrageuos as Wall Street's. Detroit has known for years that it would eventually have to create fuel-efficient cars, but it kept producing SUVs and trucks because that was where the profits were. Japanese automakers in the US did the right thing, took the risk, made the investments in fuel-efficient technologies. But they're not getting bailed out.

More Financial News

Here is an article where Newt Gingrich questions the idea of a bailout.

And here is one that show McCain tried to stop this problem (the entire collapse) a few years ago. Clearly a biased article, but if true, very interesting.

And here is one opinion, from a leading economist, who served under Reagan, that we shouldn't do a bailout at all!

Note that Congress can't even figure out to close the markets for a few days or a week in order to have time to solve the problem. Isn't closing the market more sensible than seizing banks like Washington Mutual and selling off to JP Morgan?

Bottom line is that Congress is trying to figure out a solution WITHOUT KNOWING HOW MUCH BAD DEBT Wallstreet has. This is the biggest problem they face, lack of critical information.

The other big problem is that I don't hear of enough help for the average people who are actually the driving force in the economy. If we all hold on to all our money because Wallstreet blew it, then no one wins, we all lose.

Remember - the only defense is being informed and being actively involved.

It's not only your right, it's your obligation.

Wednesday, September 24, 2008

Financial Crisis


If you have not been paying attention to the economy and the bailout you should start bleating like a sheep being led to slaughter. Please take a moment to get involved.

If you are retired or have a few moments at home, and even if you are working full time, it is critical TODAY that you call and email our representatives to express your outrage and determination that we taxpayers should not pay for the bailout of hotshot Wallstreet firms who have been running around the financial playground of our country like a bunch of Wild Boys. They know we are mad, but if you aren't part of the solution, you're asking for it.

Here is an easy site to get your representative's phone number and electronic address/form.

Make no mistake - Wallstreet and Congress created this mess.* Our elected officials looked the other way because there was "prosperity"** and it was easier than making sure the rules were good and being followed. Compensation for the Wallstreet Bad Boys has been so astronomical that it begins to make the Enron scandal look tame.

This blog, by Robert Reich, former Secretary of Labor, is one of the best sites for intelligent, concise explanation of how we got into this mess, and what to do to fix it so that We The People are protected. (You can copy and paste his recommendations into an electronic message to Congress, if they make sense to you.)

NPR has a piece here on alternatives to a bailout, and how a similar "bailout" crippled the Japanese economy for a decade.

Here is another good news piece from NPR: It notes that (thank G-d) Congress is wary of the bailout that the Bush Administration is begging for, in their sudden realization that they could be presiding over the worst economic melt down in our country - yes, this crisis will rival the Crash of 1929 in the history books.

What makes me apoplectic is that all this was preventable, and now Bush is using FEAR, the only tool in his arsenal, to try to force us to pay the tab for CEOs and top executives who have made BILLIONS on our backs.

Do not assume that all will be well. It will work out only if there is a serious effort to fix the fundamental issues - transparency from Wallstreet firms, regulations that keep them in line, and a bailout that DOES NOT land on the back of taxpayers without guarantees that only the government can provide.

How ironic that Bush said last night this is "not normal market conditions" yet the market is doing exactly what it is designed to do: punishing those who take extraordinary risks, and while doing so earn higher than normal rates of return.

I am an armchair economist, so if any of you have information to add to this, please comment here.
* Ok, yes, and many of us have taken advantage of the easy credit they offered. Unsecured debt is very bad. Period.

Wednesday, September 10, 2008


I found myself pulling a 22 rifle out of the closet yesterday and quickly unpacking it from it's case. Wasn't a good day for the meter man.

My enlightened side laughs at my Southern side. It was pretty much an automatic response to someone protractedly beating on my front door, then going into the back yard, with determination, to poke around, get under my deck and then up on the back deck. The climb to the deck required some amount of sheer will because the steps were built by trolls in the age before treated lumber and screws. The climb is always aided with ropes and stupidity.

I didn't see any ropes, but this guy had the other required attribute. There was a gate at the top of the stairs, which he wisely decided not to cross in his one display of intelligence during our brief 10 minute interaction. He was off the deck and coming around the sun porch by the time I made it out there with the rifle in hand.

Brandishing is a good description of my angry waving it at him, along with some choice words about how he needed to get his ass out of my backyard.

Where I'm from you don't ever point a gun (aim) at anything unless you're going to shoot it. And you don't shoot at something unless you're going to kill it. So I didn't jam the rifle into my shoulder, bring my head down and swing the barrel toward him. I wasn't sure it was loaded, but again, you don't point a gun at someone even if you think it's not loaded. (Gun safety 101 is good for anyone, imnsho. There's serious wisdom in not pointing anything loaded, like a bad temper, at someone without due intention.)

Anyway he decided that brandishing a meter back at me was probably not enough protection so our brief encounter ended with him safely on the other side of his pickup truck, at the street, apparently writing me up. Funny he never delivered any documents to the door...

After a few minutes I cooled off enough to cancel the local 911 service I'd called in the heat of the moment. It had been a good move, in case I needed back up. (A 22 caliber bullet, for those who don't know, is just enough to make a guy mad unless you happen to hit his heart or brain, in which case you can kill him dead. So in self defense you can only count on a 22 slowing them down, and will give you a chance to make a better plan, while you are hoping they aren't really set on causing trouble or high on something seriously mind altering.)

More likely, he would have needed medical attention to get that small bullet out of his butt-cheek.

Then I was going to check the firearm, to see if it was indeed loaded. Some strange, meaning unfamiliar, action in the bolt made me want to test it, but I was dissuaded by cooler heads. Mom talked me out of discharging in the city limits. Oh yeah, I'm in Atlanta now!

I'm not in Kansas, Missouri or rural North Carolina any more. Not necessarily a good idea to fire off a round in the backyard.

This is the second time I've met an intruder with potentially deadly force on my property. The first was about 18 years ago in Charlotte when a realtor met me and a small but effective derringer at the door when he came in without permission while I was home alone. It was a similarly brief encounter.

There is something about someone being stupid that really can make you want to shoot them. (The trick is not being equally stupid and doing it.)

Having a gun around simply reinforces the belief that you don't have to talk things out. Hmm... sounds like a guy thing.

Now that I think about it, all of this strikes me as essentially male.

Watch this -

1. Someone does something stupid: Him, banging on the door, then exploring the backyard.

2. Someone got pissed off: Me.

3. (Fire) Power was brought into play and displayed, with some expertise.

4. Threats were made. Credibility established.

5. Retreat and cooling off followed.

6. Situation resolved in no time and life goes on, in spite of the paperwork.

I like tools that are effective. Sometimes they are so effective they become elegant.

Still, I don't particularly like the NRA (National Rifle Association) primarily because they didn't kick Dick Cheney out when he shot his "friend" (friends don't shoot friends). And I don't like them because, like Cheney, Bush, Rove and other radicals, they are zealous to the point of stupidity. But, like Unions, they have their place.

Communication Failures that Matter
Overlooking the fact that our electric company did inform the household of the updating of meters in our area, and that said communication was not duly disseminated (I had no idea they were coming and couldn't read the small print on his itty bitty truck), and that he did have a meter in his hand, assessed to be new thru the window, if we put this in economic terms, I have zero motivation right now to be helpful when they send me a moron to install the meter.

Flexible Boundaries
Consider how a child, in contrast, would be greeted at my back window. No question I'd want to know what they were doing out there, and would handle the situation, but with an entirely different attitude. Children don't constitute a threat. Boundaries don't need to be protected. In fact more children should be comfortable with roaming across their neighbors' yards. It's as American as apple pie and necessary to their healthy development, even if it ticks off a senior citizen or two.

If I had been in the great outdoors, on either public land or someone else's property, I'd view any meter man with a fairly indifferent gaze.

But IN my home, with a gun, and an obnoxious zealous intruder, the entire scene played differently.

There have been times in my life when I questioned one of the fundamental underpinnings of capitalism: ownership of property, in this case, real property.

Yesterday was not one of them.