It is official. The tea party has begun in full force. Tax revolts are officially beginning in a neighborhood near you. The things that I have been talking about for the past 5 weeks are becoming apparent to everyone now - even the administration. Trust me you, Team Obama is not terribly happy about what is happening either. I am working on a post in coming days about Russia which is a tremendously important topic. But as I research this topic thoroughly, I want to make mention of how someone brought to my attention the tax revolts that are taking place NOW.
Firstly, you would not be on this blog if we were not on the same wavelength. You want to feel a little pressure, a little push? Why don't you start with this 5:00 video from Rick Santelli. If it does not get you fired up, I don't know what will!
If you are like me, you are thinking about the straw that broke the camel's back right now. Was it the impending doom, the stock market crash, or was it deciding we were going to spend trillions of dollars on earmark ridden, "imperfect" legislation going to "infrastructure" projects? The accountability starts now and you know what? It starts with the man on the top.
Reteaparty.com is one of the organizing sites, although there appears to be an amalgamation of these sites. I am currently suggesting that it is a good idea to participate in peacable social discourse. We are not happy, nor are we impressed with the waves of money being thrown at problems that in the past were dealt with through business.
To draw a parallel, neither is the CEO of Wells Fargo, Richard Kovacevich, who is trying to figure out how to give back the TARP money because of the 'asinine' strings attached to it as bloomberg.com is currently reporting.
Sure, TARP helped bail out some bad banks. But the outlying consequences have already begun taking place. The government has no idea what to do with the fallout, as demonstrated by their dealing with the bailout recipient bonus issue. Did you guys really think big time corporate executives work for companies out of the goodness of their hearts? Of course they had contracts in place that make them get paid bonuses. Why are they acting so surprised? You bail out a bank and then expect its execs to fall on their own sword? You must be joking. If we would have let them fail, these same execs that are taking bonuses would have been forced out!!!
The discourse of the White House is pretty dismal - they seem to think that nothing good at all comes out of Wall Street. While I am certainly cognizant that there was some very funky business regarding CDOs (Collateralized Debt Obligations) credit default swaps and of course, hedge funds. I am also cognizant that the SEC has been neutered for much of the last decade. While Bernanke figures out what to do with mark to market regulations, (which may indeed help) we should remember that overall the Financial Services industry is NOT made up of a bunch of crooks.
Monday, March 16, 2009
Wednesday, March 11, 2009
Devil in the Details
In our newest screenplay, Fast Times at White House High, we are quickly finding out what the agenda really is. The question that begs to be asked is how much will we spend? How far will the interventionist policies encroach? How much money can we sink into a failing company?
Nancy Pelosi is preaching the beginning of a new round of stimulus spending, ostensibly saying, 'get your pens ready, there is more government to create.'
Our stock markets are reacting to the realities, namely, huge deficit spending, encroaching entitlement programs (remember the boomers and Social Security) and the general defilement of Capitalism.
The conservative right is getting accused of not seeking to solve the problem. Look at the White House's recent ploy. Rahm Emanuel took aim at Limbaugh and foisted him as the posterboy of negative conservatism and those who do not believe in the Obama juggernaut. While the ploy may have arguably failed, we must not forget the underlying idea was to promulgate the destruction of conservative agenda in all forms.
The Right simply has been rendered impotent. Tax cuts are laughed at by Congressional Democrats. Stopping governmental spending is being argued against with circular rhetoric. "We didn't start this mess, so don't get mad at us for trying to fix it.'
My question is, are you really fixing it or are you are beating it with a ball bat? When we see this video of Timothy Geithner in February, saying how government was going to differentiate between the 'good and the bad banks', the question that was never asked- was should we be doing that at all?
While we could debate all day on what qualifies as wise use of government money, is this not a question that entirely misses the crux of the problem.
Daily Precedence
The precedence is being set every moment of every day. AIG reported losing $61.9 billion in the fourth quarter last year. It was the largest quarterly loss in corporate history (reported by Reuters UK, 3.02). Meanwhile, unprecedented governmental actions are being taken. They could indeed cause inflation or they could serve to enrich the oligarchy at the top once again. So why, for instance, is the Wall Street Journal reporting today that over 50 percent of economists give the Obama administration a failing grade for the economy so far?
To grasp that, we might look at the Banking crisis for the moment - what should we have done? We might look at economist Joseph Stiglitz (Nobel Economics Laureate in 2001). Stiglitz's prescription is to let the banks go into bankruptcy.
When banks go bankrupt, they continue business, they reorganize, equity holders lose all, bondholders lose some. The result is desirable though, the ones who made the decisions before failure will most likely lose their jobs. Things change in a capitalistic way, things rearrange. Under normal circumstances, corporations would pick up the pieces. In this environment, Stiglitz does not think that will work and says that government money must be utilized after the reorganized banks reconstitute. I have my own reservations about this.
Fact is, either way, we are already beyond doing what Stiglitz prescribes. More importantly though, at its base, this is not just a numbers crisis, it is also a paradigm argument. It is political. It is polemical. Where government goes and where it stops is what this argument, the banking crisis, the economy, and everything within the crisis is all about. Few are really bringing that point up anymore either out of fear or lack of understanding. I for one, argue that the precedence is destructive.
Thanks for reading- C
Nancy Pelosi is preaching the beginning of a new round of stimulus spending, ostensibly saying, 'get your pens ready, there is more government to create.'
Our stock markets are reacting to the realities, namely, huge deficit spending, encroaching entitlement programs (remember the boomers and Social Security) and the general defilement of Capitalism.
The conservative right is getting accused of not seeking to solve the problem. Look at the White House's recent ploy. Rahm Emanuel took aim at Limbaugh and foisted him as the posterboy of negative conservatism and those who do not believe in the Obama juggernaut. While the ploy may have arguably failed, we must not forget the underlying idea was to promulgate the destruction of conservative agenda in all forms.
The Right simply has been rendered impotent. Tax cuts are laughed at by Congressional Democrats. Stopping governmental spending is being argued against with circular rhetoric. "We didn't start this mess, so don't get mad at us for trying to fix it.'
My question is, are you really fixing it or are you are beating it with a ball bat? When we see this video of Timothy Geithner in February, saying how government was going to differentiate between the 'good and the bad banks', the question that was never asked- was should we be doing that at all?
While we could debate all day on what qualifies as wise use of government money, is this not a question that entirely misses the crux of the problem.
Daily Precedence
The precedence is being set every moment of every day. AIG reported losing $61.9 billion in the fourth quarter last year. It was the largest quarterly loss in corporate history (reported by Reuters UK, 3.02). Meanwhile, unprecedented governmental actions are being taken. They could indeed cause inflation or they could serve to enrich the oligarchy at the top once again. So why, for instance, is the Wall Street Journal reporting today that over 50 percent of economists give the Obama administration a failing grade for the economy so far?
To grasp that, we might look at the Banking crisis for the moment - what should we have done? We might look at economist Joseph Stiglitz (Nobel Economics Laureate in 2001). Stiglitz's prescription is to let the banks go into bankruptcy.
When banks go bankrupt, they continue business, they reorganize, equity holders lose all, bondholders lose some. The result is desirable though, the ones who made the decisions before failure will most likely lose their jobs. Things change in a capitalistic way, things rearrange. Under normal circumstances, corporations would pick up the pieces. In this environment, Stiglitz does not think that will work and says that government money must be utilized after the reorganized banks reconstitute. I have my own reservations about this.
Fact is, either way, we are already beyond doing what Stiglitz prescribes. More importantly though, at its base, this is not just a numbers crisis, it is also a paradigm argument. It is political. It is polemical. Where government goes and where it stops is what this argument, the banking crisis, the economy, and everything within the crisis is all about. Few are really bringing that point up anymore either out of fear or lack of understanding. I for one, argue that the precedence is destructive.
Thanks for reading- C
Saturday, March 7, 2009
Ob(ama)fuscation
I want to step off the soap box for a minute. I want to take a look and see if there is anything so far, that I agree with for Obama's first several weeks in his administration. Anything at all? I keep looking and finding more and more evidence that what is happening is a trainwreck unfolding before our very eyes. One that happens not with the screech of air brakes in the beginning, but with an increase in speed. Ron Paul, a candidate I personally did not vote for in the Primaries, and whom I am a little leery about, mainly because he is from Texas (sorry Texas), has been absolutely spot on recently, tearing impetuous MSNBC demobrats and fellow congress members a new one with regularity. Something about watching a 70 year old man whip four 40 somethings on Morning Coffee just brings a smile to my face. His point - we are going to destroy the dollar. Second point - deal with the root of the problem not the symptom. I.e. deal with the monetary policy.
Ken Stern, CEO of Fisher Investments who manages 2 Billion in assets, had a similar message on a Bloomberg.com interview, "stop talking at Wall Street and start listening to it," referring to Obama.
Look, these are tough, succinct, real messages, and guess what? These folks mean business. They mean, you are not doing the right thing President Obama.
These are incredibly bright people saying, "look President Obama, you have been fed a line of bull and now, you are going the wrong direction. So change course, NOW." No one as far as Obama Administration is concerned is heeding any advice outside of his circle. Emanuel is out pointing fingers at Limbaugh for some befuddled, and admit it, misguided reason. Secretary of State Clinton is gaffing her way around the globe botching names and sleighting Europe's proud history. Geithner, is slow to pick the rest of his staff, continuing the incredible doldrum that Obama appointees and the slew of would-be appointees have created. Meanwhile, the entire world waits in balance. Day by day, hour by hour... Where are we headed? DJIA 5000, 2000? This is not a limbo contest.
So back to the original question, is there anything at all that I agree with so far? I guess there is one thing. I sure have a lot of cannon fodder everytime I look at the front page. This is not a time for cutesy journalism though. The voices of reason need to start being heard loud and clear. The bubble unfolded with nearly a decade of questionable lending practices and MBAs going buckwild with designer investments. It is going to take more than 5 weeks to fix for sure. Don't make it worse by walking in the opposite direction.
Ken Stern, CEO of Fisher Investments who manages 2 Billion in assets, had a similar message on a Bloomberg.com interview, "stop talking at Wall Street and start listening to it," referring to Obama.
Look, these are tough, succinct, real messages, and guess what? These folks mean business. They mean, you are not doing the right thing President Obama.
These are incredibly bright people saying, "look President Obama, you have been fed a line of bull and now, you are going the wrong direction. So change course, NOW." No one as far as Obama Administration is concerned is heeding any advice outside of his circle. Emanuel is out pointing fingers at Limbaugh for some befuddled, and admit it, misguided reason. Secretary of State Clinton is gaffing her way around the globe botching names and sleighting Europe's proud history. Geithner, is slow to pick the rest of his staff, continuing the incredible doldrum that Obama appointees and the slew of would-be appointees have created. Meanwhile, the entire world waits in balance. Day by day, hour by hour... Where are we headed? DJIA 5000, 2000? This is not a limbo contest.
So back to the original question, is there anything at all that I agree with so far? I guess there is one thing. I sure have a lot of cannon fodder everytime I look at the front page. This is not a time for cutesy journalism though. The voices of reason need to start being heard loud and clear. The bubble unfolded with nearly a decade of questionable lending practices and MBAs going buckwild with designer investments. It is going to take more than 5 weeks to fix for sure. Don't make it worse by walking in the opposite direction.
Wednesday, March 4, 2009
Pick your Poison
We have had a rough go in the last few years as conservatives, but now the academic elites with their leftist, socialist leanings are finally getting their way. The same people that made a cottage market out of debasing George W. Bush are now running the entire system. The same people who ran our name into the mud worldwide, are now in the sun and running rampant.
Are we now supposed to give a damn whether Rush Limbaugh is the Republican leader? You have got to be kidding me. He is a talk show host, a personality and a voice. I also have a personality and a voice. I don't have a seat on Congress, so I don't lead anything other than maybe my household - on a good day. Get over yourselves network television, I have turned you off for good! The RNC needs to stop taking the bait - Steele!! http://link.brightcove.com/services/link/bcpid1155201977/bctid14706770001
Maybe there is a problem that we are not quite honing in on. Maybe in between the guerilla warfare that goes on day by day in the news media, something truly is wrong. Are we all just sniping at each other so much that we are not getting things done properly? Are we the new tower of Babel?
President Obama said in the campaign he was going to seek peaceful relations with openly hostile countries. Yet in practice, so far it seems to be falling flat. He finds out that while he is just getting used to the new seat at the Oval Office, Ayatollah Khamanei, (or Khomeini) is inciting the Muslim world to resist Israel and Iran (Ahmadinejad) is calling for an Anti-zionist front (Breitbart 3-04-09). Russia has scoffed at his "help me with Iran" letter.. Later, President Obama denied the Quid Pro Quo assertion that was made in various news stories in an interview.
We should all say a solemn prayer realizing the great loss of life that has occurred over many years in the Middle East and most recently in Gaza. I am also aware of the delicate chess match we have, and hope that President Obama will be wise in his decisionmaking process of policymaking and diplomacy worldwide. However, we still remain with little chance of diplomatic relations with Iran, or Russia, who supplies them. Iran has a dead set, hardline stance toward Western politics that dichotomizes any discussion with the Western World. While Obama states we need to reboot the relationship, coming from a position of weakness is not appreciated - in Russia or the Middle East. Negotiation to them is synonymous with weakness in Russia.
Thank you for reading-
C
Are we now supposed to give a damn whether Rush Limbaugh is the Republican leader? You have got to be kidding me. He is a talk show host, a personality and a voice. I also have a personality and a voice. I don't have a seat on Congress, so I don't lead anything other than maybe my household - on a good day. Get over yourselves network television, I have turned you off for good! The RNC needs to stop taking the bait - Steele!! http://link.brightcove.com/services/link/bcpid1155201977/bctid14706770001
Maybe there is a problem that we are not quite honing in on. Maybe in between the guerilla warfare that goes on day by day in the news media, something truly is wrong. Are we all just sniping at each other so much that we are not getting things done properly? Are we the new tower of Babel?
President Obama said in the campaign he was going to seek peaceful relations with openly hostile countries. Yet in practice, so far it seems to be falling flat. He finds out that while he is just getting used to the new seat at the Oval Office, Ayatollah Khamanei, (or Khomeini) is inciting the Muslim world to resist Israel and Iran (Ahmadinejad) is calling for an Anti-zionist front (Breitbart 3-04-09). Russia has scoffed at his "help me with Iran" letter.. Later, President Obama denied the Quid Pro Quo assertion that was made in various news stories in an interview.
We should all say a solemn prayer realizing the great loss of life that has occurred over many years in the Middle East and most recently in Gaza. I am also aware of the delicate chess match we have, and hope that President Obama will be wise in his decisionmaking process of policymaking and diplomacy worldwide. However, we still remain with little chance of diplomatic relations with Iran, or Russia, who supplies them. Iran has a dead set, hardline stance toward Western politics that dichotomizes any discussion with the Western World. While Obama states we need to reboot the relationship, coming from a position of weakness is not appreciated - in Russia or the Middle East. Negotiation to them is synonymous with weakness in Russia.
Thank you for reading-
C
Sunday, February 22, 2009
The New, New Deal
A couple of readers have recently commented to me, that I am assessing the news but maybe not making loud enough statements of opinion. I take an analytical approach to figuring out problems and seek to synthesize a day or a few days worth of news into a post.
Because I know everyone knows where to go to get over-the-top statements telling you how to think; this is not my plan. Instead, my approach is to point out problems. If you are reading instead of looking at porn, I can only assume you have a somewhat intelligent mind that can do its own thinking.
I may also mention that I was also told by someone close to me in a recent discussion about the nationalization of Citibank that, "it does not matter what we (Citizens) do or think (when it comes to public policy)." Let me knock that statement out of the sky. IT DOES MATTER WHAT WE THINK!!! Do you think that the American colonies would have won the Revolutionary War if they had not already won the war of minds? So instead of just doing a news analysis today, I am going to take a historical approach.
Before the history lesson, let me just mention, that these are hard times that we have fallen upon. To illustrate this, just recently, I had made note of the Volatility Index (VIX) measured by the Chicago Board of Exchange. This measure is largely attributed with measuring "fear" in the marketplace. The reason I made note was not because I look at it with feverish intent but that, it was so much higher than I had ever heard it before. I was used to hearing numbers in the 20's, but now it is up in the 50's.
Similarly, the jobless rate is rising at a sickening pace, and here in California for instance, it has already hit double digits at 10.1%, just 3/10ths below the 1982 peak. This is uncertainty embodied. We must admit - fear is a big deal right now.
Would you like another factoid to prop up my argument?
The Obama Administration's thought is, that the way to prop up the economy is to inject money into the banks before they fail, thus keeping the prospect of lending alive. The intellectual elite from Stern School of Business, Harvard, MIT and other such academies are in agreement. Socialize is the word of the year.
A book I quoted from on an earlier post, seems to have been used almost to a "T" for shaping President Obama's economic policy so far. It makes sense because while winning fame politically, Paul Krugman is a Nobel Prize Winner in 2008 for Economics. This book, The Return of Depression Economics by Krugman, postulates that massive injections are needed to prevent catastrophic bank failures and that spending on infrastructure projects will keep the jobless rate lower.
To me, Krugman represents the leftist academic elite that has been making its power-plays on policy for years but finally has a sympathetic ear in President Obama. Krugman believes in the reformation that would be a kind of "New, New Deal (Krugman's words)." Do I need to remind you of the atrocity that continued under the New Deal which effectively prolonged a recession into a protracted Depression?
Let me take a moment to go over the accepted Depression facts and start by telling you that some are saying that we have never had a situation like we do today. These people are either lying, ill-informed or both. In 1929, Hoover used the Keynesian stimulus, much like we are today. Of great similarity the starting point was running a staggering deficit. Also similar was the rhetoric he used to push it through. Now take this statement and see if it sounds like something that President Obama recently said:
You might also examine the housing proposals President Hoover was pushing, banning foreclosures, and stopping auctions sales. Do these things not seem unbelievably, remarkably the same to President Obama's agenda?
To complete the story, after Hoover was run out of office on rails for the sickening decline in the economy, FDR decided he would just keep that Hoover ball rolling with the New Deal. It was a slickly packaged and well-marketed plan that was simply a continuation of governmental spending, along with some protectionist policies that ticked off the rest of the world and contributed to Global decline. FDR was the one who started doing the radio addresses. Who now is doing radio addresses regularly - you guessed it - President Obama? The parallels are ridiculously similar!
In the beginning, I thought President Obama was taking lessons directly from John F. Kennedy. But apparently, he is using almost every massive spending liberal from the last century as his influences.
It seems interesting when, his newly appointed Economic Recovery Advisory Board Chairman, Paul Volcker seems to be walking out of step with the general agenda.
Simply put, 'the stuff' is about to hit the fan. There is too much chaos occurring right now. I pointed out earlier that to me the appointment debacles (plural) for the Obama Administration showed a lack of planning and some marked ineptitude at the high office. Now, my question is exceedingly simple - Why are they spending money like drunken sailors in the South Seas? Do they really want a global Depression? If they do -WHY? Do they want to raid the coffers of hard working men and women?
I truly feel that there will be a point in the not-so-distant future where bold men take action. But we may not quite be there yet either. Right now, it is the watchful eye that will win the day.
Thanks for reading- C
*
Because I know everyone knows where to go to get over-the-top statements telling you how to think; this is not my plan. Instead, my approach is to point out problems. If you are reading instead of looking at porn, I can only assume you have a somewhat intelligent mind that can do its own thinking.
I may also mention that I was also told by someone close to me in a recent discussion about the nationalization of Citibank that, "it does not matter what we (Citizens) do or think (when it comes to public policy)." Let me knock that statement out of the sky. IT DOES MATTER WHAT WE THINK!!! Do you think that the American colonies would have won the Revolutionary War if they had not already won the war of minds? So instead of just doing a news analysis today, I am going to take a historical approach.
Before the history lesson, let me just mention, that these are hard times that we have fallen upon. To illustrate this, just recently, I had made note of the Volatility Index (VIX) measured by the Chicago Board of Exchange. This measure is largely attributed with measuring "fear" in the marketplace. The reason I made note was not because I look at it with feverish intent but that, it was so much higher than I had ever heard it before. I was used to hearing numbers in the 20's, but now it is up in the 50's.
Similarly, the jobless rate is rising at a sickening pace, and here in California for instance, it has already hit double digits at 10.1%, just 3/10ths below the 1982 peak. This is uncertainty embodied. We must admit - fear is a big deal right now.
Would you like another factoid to prop up my argument?
The Dow's 11.7 percent loss in February was its worst since 1933, when it fell 15.6 percent, and its sixth straight monthly drop. The half-year slide totals 38.8 percent, the worst since 1932, when it fell 45 percent.*If you watch the evening news you will here doomsayers like Nouriel Roubini, who seems to be a mainstay on CNBC, calling for the nationalization of large banks. As you will recall from previous posts, I do not subscribe to this theory for a variety of reasons. However, Obama and company do, and that is becoming increasingly clear.
The Obama Administration's thought is, that the way to prop up the economy is to inject money into the banks before they fail, thus keeping the prospect of lending alive. The intellectual elite from Stern School of Business, Harvard, MIT and other such academies are in agreement. Socialize is the word of the year.
A book I quoted from on an earlier post, seems to have been used almost to a "T" for shaping President Obama's economic policy so far. It makes sense because while winning fame politically, Paul Krugman is a Nobel Prize Winner in 2008 for Economics. This book, The Return of Depression Economics by Krugman, postulates that massive injections are needed to prevent catastrophic bank failures and that spending on infrastructure projects will keep the jobless rate lower.
To me, Krugman represents the leftist academic elite that has been making its power-plays on policy for years but finally has a sympathetic ear in President Obama. Krugman believes in the reformation that would be a kind of "New, New Deal (Krugman's words)." Do I need to remind you of the atrocity that continued under the New Deal which effectively prolonged a recession into a protracted Depression?
Let me take a moment to go over the accepted Depression facts and start by telling you that some are saying that we have never had a situation like we do today. These people are either lying, ill-informed or both. In 1929, Hoover used the Keynesian stimulus, much like we are today. Of great similarity the starting point was running a staggering deficit. Also similar was the rhetoric he used to push it through. Now take this statement and see if it sounds like something that President Obama recently said:
"We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counter-attack ever involved in the history of the Republic..."Gigantic - a better word might be gargantuan, from which we have the Hoover Dam, the Los Angeles Aqueduct and various other unbelievably expensive projects which would have been fine, if they did not coincide the economic crisis and thus contribute to tax rates increasing to 63% for upper income earners in depression years.
You might also examine the housing proposals President Hoover was pushing, banning foreclosures, and stopping auctions sales. Do these things not seem unbelievably, remarkably the same to President Obama's agenda?
To complete the story, after Hoover was run out of office on rails for the sickening decline in the economy, FDR decided he would just keep that Hoover ball rolling with the New Deal. It was a slickly packaged and well-marketed plan that was simply a continuation of governmental spending, along with some protectionist policies that ticked off the rest of the world and contributed to Global decline. FDR was the one who started doing the radio addresses. Who now is doing radio addresses regularly - you guessed it - President Obama? The parallels are ridiculously similar!
In the beginning, I thought President Obama was taking lessons directly from John F. Kennedy. But apparently, he is using almost every massive spending liberal from the last century as his influences.
It seems interesting when, his newly appointed Economic Recovery Advisory Board Chairman, Paul Volcker seems to be walking out of step with the general agenda.
Simply put, 'the stuff' is about to hit the fan. There is too much chaos occurring right now. I pointed out earlier that to me the appointment debacles (plural) for the Obama Administration showed a lack of planning and some marked ineptitude at the high office. Now, my question is exceedingly simple - Why are they spending money like drunken sailors in the South Seas? Do they really want a global Depression? If they do -WHY? Do they want to raid the coffers of hard working men and women?
I truly feel that there will be a point in the not-so-distant future where bold men take action. But we may not quite be there yet either. Right now, it is the watchful eye that will win the day.
Thanks for reading- C
*
Banks and Big Auto Foresee Tougher Challenges Ahead
Several news agencies are describing how banks receiving TARP funds like Citibank and Bank of America are sitting on the cash instead of lending. The idea is that they are seeking to stabilize their balance sheets and retain what shareholder value they can. This is debatable though because everyone knows, banks make money by lending. Stability for banks remains a perennially relative term when for instance, B of A back in 2007 lost $5.6 billion from CDO exposure. (As quoted in Bank of America's Investor Full Year Factbook 2007, Page 45)
http://library.corporate-ir.net/library/71/715/71595/items/283997/IRFactBookFullYear2007.pdf)
But lending is still occurring, albeit at low velocity, and that is an encouraging fact. B of A for instance, said in a press release on 2/17/09 that it has extended some $115 million in the 4th quarter of 2008 alone. While this may be a relatively small sum it d0es represents the understanding that at the macro level, bank executives realize if they do not lend, the economy will not right itself.
But for the next TARP, we should expect a money grab, and not just from banks. It will come from other ailing businesses as well. Automakers like GM have been vocally, and publicly asking for the cash. Conservatives, often point out that the key to the economic crisis is consumer spending and everything else should be secondary.
Unfortunately, the auto industry is in my view, doomed to fail. The industry itself has long been crippled by the money killing effects of Union Labor, old-timey business practices, and other fixable issues that render the overall business models perpetually stodgy and therefore unable to compete in the global marketplace. Their benefit plans and salary scales are out of wack; rank and file fabricators make as much money as many mid to upper level managers do in other industries. Until this nonsense discontinues, more failure lies ahead. The fact remains, consumer spending and consumer lending are the only way out of this mess. With everything else just mentioned, the US auto industry is on a uniquely treacherous climb.
President Obama was asked about the auto industry shortly after he was elected. The video below goes into some of the details, but also mentions some of the reasons why helping the auto industry is challenging. You may also note how the specifics were still scant:
Like the auto industry in some respects, banking has its own uniqueset of systemic and business practice-related issues. In my humble opinion, bank nationalization is a bad idea from the word "go." Our banks are in a model wherein investors, both conservative and speculative converge and figuratively hoist the banks on their shoulders. Bankers, advisors, and all types of financial people are in the business to win and take pride in the glory of being in the financial industry. In the current climate the luster is gone and the financial jobs are disappearing into thin air. Be that as it may, I think the baby and the bathwater metaphor seems to fit here. We hope our leaders can start to figure out how to free up some of the blockages internal and external that are plaguing the industry. Either way, investments will start flowing back in once things like lending and housing start to trickle back up.
Lately, the Federal Government is cracking down on the latest series of corruption, taking down Stanford Investments. Well dressed G-men in dark suits and briefcases invaded the corporate office in Texas and are sorting out mess the financial strife currently. I expect raids like this to continue occurring at increasing pace in the near future. The government is at least seemingly wise to the fact, that some of the ill was caused by corruption.
While each one of these investment "firm" takedowns has a cumulative effect on the consumer psyche, I think the long-term effect remains positive. While watching CBS video, you might note how far-reaching this particular investment firm reached politically. Was it just one man's hubris?
As the plot thickens, bold men and women educate themselves. They write letters to congressman and senators who are in the wrong. Work can be difficult in difficult times, but this country is worth fighting for, and sometimes the toughest fighting is not on the battlefield.
Good evening
-C
http://library.corporate-ir.net/library/71/715/71595/items/283997/IRFactBookFullYear2007.pdf)
But lending is still occurring, albeit at low velocity, and that is an encouraging fact. B of A for instance, said in a press release on 2/17/09 that it has extended some $115 million in the 4th quarter of 2008 alone. While this may be a relatively small sum it d0es represents the understanding that at the macro level, bank executives realize if they do not lend, the economy will not right itself.
But for the next TARP, we should expect a money grab, and not just from banks. It will come from other ailing businesses as well. Automakers like GM have been vocally, and publicly asking for the cash. Conservatives, often point out that the key to the economic crisis is consumer spending and everything else should be secondary.
Unfortunately, the auto industry is in my view, doomed to fail. The industry itself has long been crippled by the money killing effects of Union Labor, old-timey business practices, and other fixable issues that render the overall business models perpetually stodgy and therefore unable to compete in the global marketplace. Their benefit plans and salary scales are out of wack; rank and file fabricators make as much money as many mid to upper level managers do in other industries. Until this nonsense discontinues, more failure lies ahead. The fact remains, consumer spending and consumer lending are the only way out of this mess. With everything else just mentioned, the US auto industry is on a uniquely treacherous climb.
President Obama was asked about the auto industry shortly after he was elected. The video below goes into some of the details, but also mentions some of the reasons why helping the auto industry is challenging. You may also note how the specifics were still scant:
Like the auto industry in some respects, banking has its own uniqueset of systemic and business practice-related issues. In my humble opinion, bank nationalization is a bad idea from the word "go." Our banks are in a model wherein investors, both conservative and speculative converge and figuratively hoist the banks on their shoulders. Bankers, advisors, and all types of financial people are in the business to win and take pride in the glory of being in the financial industry. In the current climate the luster is gone and the financial jobs are disappearing into thin air. Be that as it may, I think the baby and the bathwater metaphor seems to fit here. We hope our leaders can start to figure out how to free up some of the blockages internal and external that are plaguing the industry. Either way, investments will start flowing back in once things like lending and housing start to trickle back up.
Lately, the Federal Government is cracking down on the latest series of corruption, taking down Stanford Investments. Well dressed G-men in dark suits and briefcases invaded the corporate office in Texas and are sorting out mess the financial strife currently. I expect raids like this to continue occurring at increasing pace in the near future. The government is at least seemingly wise to the fact, that some of the ill was caused by corruption.
While each one of these investment "firm" takedowns has a cumulative effect on the consumer psyche, I think the long-term effect remains positive. While watching CBS video, you might note how far-reaching this particular investment firm reached politically. Was it just one man's hubris?
As the plot thickens, bold men and women educate themselves. They write letters to congressman and senators who are in the wrong. Work can be difficult in difficult times, but this country is worth fighting for, and sometimes the toughest fighting is not on the battlefield.
Good evening
-C
Thursday, February 19, 2009
Iran Crosses the Red Line
As reported by Financial Times today, the Iranians have enriched enough fissile material to create a nuclear weapon. This is the point at which Israeli's vowed not to allow them to reach. When I am choosing what to write about, often it is the above and beyond winner. This surely would be the "above and beyond" story. The highly secret practice of enriching Iranian nukes has been a political football for sometime. Amazing how it seems it is going to fall squarely in the numbers of newly emblazoned President Obama. With everything else, you would hope that this would not happen so quickly. Yet it did.
So, on a day when 17 detainees were denied release from Gitmo'(we find it interesting that Obama does not say where released Gitmo prisoners should go yet), Speaker Nancy Pelosi was chided and urged by the Pope to stop her evil ways, the Skull and Bones Society (of Blueblooded Americans) was sued by the Apache Nation, and to top it off a political dissident Ayman Nour, was freed from prison in Egypt, the pick was still easy. As quoted by Financial Times "David Albright, the head of the Institute for Science and International Security, said: “If Iran did decide to build nuclear weapons, it’s entering an era in which it could do so quickly.” So here we are.
Sometimes poignant statements are made on their own without a brain to manufacture them. I think this is certainly one of those cases. I don't think I need to warn you of the specter of uncertainty that an Iranian nuke poses. But just in case, Iranian grand poobah, Ahmadinejad, the nebulous, smirking, grandstanding leader of Iran is just as proud of his little bomb as is Putin and his wunderkind Medvedev whom supplied him. We are in the midst of interesting times. If Israel moves, say hello to World War friends.
In the beginning of the Obama presidency, I wished him the best in my heart. Right now, I don't wish the best, I hope the best.
Raymond Burris, the appointee for Obama's Senate seat vacancy now has questions surrounding him for whether he actually lied under oath. He purportedly never was given money, but was he ever even asked by Blagojevich if he wanted some? It seems like a fair question. In the beginning, I gave Burris the benefit of the doubt because, at least in some ways, he appeared to be an earnest bidder, just trying to take the seat that he was given. He seemed to be weathering the storm he knew was coming from the scrutiny that Blagojevich bestowed on the seat. While I think some people still fake their way onto the House of Representatives, for the Senate you have to have a whole state vote for you, and even a small one, with its differing, opposing counties, is a very hard thing to do. You need a lot of friends, a lot of money and in most instances, some wherewithal of what you are actually doing. For Burris to get in the old boys club, he was surely going to have to go through some hazing, but now I am not quite sure he is up to snuff. I am starting to think someone should have told him that if he was hiding anything, anything at all, he might as well give up the ghost and move on because he was not going to make it through. It does not appear anyone afforded him that message.
So, on a day when 17 detainees were denied release from Gitmo'(we find it interesting that Obama does not say where released Gitmo prisoners should go yet), Speaker Nancy Pelosi was chided and urged by the Pope to stop her evil ways, the Skull and Bones Society (of Blueblooded Americans) was sued by the Apache Nation, and to top it off a political dissident Ayman Nour, was freed from prison in Egypt, the pick was still easy. As quoted by Financial Times "David Albright, the head of the Institute for Science and International Security, said: “If Iran did decide to build nuclear weapons, it’s entering an era in which it could do so quickly.” So here we are.
Sometimes poignant statements are made on their own without a brain to manufacture them. I think this is certainly one of those cases. I don't think I need to warn you of the specter of uncertainty that an Iranian nuke poses. But just in case, Iranian grand poobah, Ahmadinejad, the nebulous, smirking, grandstanding leader of Iran is just as proud of his little bomb as is Putin and his wunderkind Medvedev whom supplied him. We are in the midst of interesting times. If Israel moves, say hello to World War friends.
In the beginning of the Obama presidency, I wished him the best in my heart. Right now, I don't wish the best, I hope the best.
Raymond Burris, the appointee for Obama's Senate seat vacancy now has questions surrounding him for whether he actually lied under oath. He purportedly never was given money, but was he ever even asked by Blagojevich if he wanted some? It seems like a fair question. In the beginning, I gave Burris the benefit of the doubt because, at least in some ways, he appeared to be an earnest bidder, just trying to take the seat that he was given. He seemed to be weathering the storm he knew was coming from the scrutiny that Blagojevich bestowed on the seat. While I think some people still fake their way onto the House of Representatives, for the Senate you have to have a whole state vote for you, and even a small one, with its differing, opposing counties, is a very hard thing to do. You need a lot of friends, a lot of money and in most instances, some wherewithal of what you are actually doing. For Burris to get in the old boys club, he was surely going to have to go through some hazing, but now I am not quite sure he is up to snuff. I am starting to think someone should have told him that if he was hiding anything, anything at all, he might as well give up the ghost and move on because he was not going to make it through. It does not appear anyone afforded him that message.
Tuesday, February 17, 2009
Market Dives 300 upon Signing of Stimulus
Everyone is quite excited that the stimulus bill that nearly none of the Congressman or Senators read was signed into law today by President Obama. Wall Street was so excited with this happening that it dove 300 points today alone. Meanwhile the mood is absolutely black everywhere I go. No one seems to be having much fun. Work is quiet, the coffee shops are muffled. I hear people talking about how they don't have money to pay their taxes at a bar. I mean I am not so thick that I can't read a vibe, and right now the vibe is ugly. California, for its own failing economy, is one of probably one of the worst places to be and maybe that is why the vibe is so acute and so palpable.
I do not watch TV anymore. I have not for some time, opting to read books and news instead. At this point, I am beginning to wonder if I could actually make it through a happy-go-lucky local newscast without reflexively tying a hangman's knot I figured losing the daily drubbing of moving picture advertisements might do my brain some good. Now I read the Bible, history, and a lot of news. For history I am reading Paul Johnson's A History of the American People. Johnson, I find, is a solid British writer. I am also trying to read at least 20 to 30 news stories a day. This is not easy to do, you might try it sometime. I read from all over and try very hard not to be overly discriminating. I want to hear multiple sides and takes. There are many people I don't agree with these days (maybe I never did). That does not mean I have to shun them. I want to know them in order to know how I want to respond to them.
Alex Jones and Jerome Corsi were on Coast to Coast last night and were talking about the conspiracy theory of the New World Order. I am not there with these guys at this point. I don't buy that all this hell that is breaking loose right now is being done to us by people trying to actively make it happen so that they can drive us into some weird form of slavery. I do however believe that the US has lost much of the principles and values it once had and sold them to the moral relativists. The reality is that nothing is wrong OR right anymore, and everything should be accepted just as long as it does not kill anyone (babies not included). This is what I believe is happening - the slow dripping loss of moral principle.
I do know this, Nancy Pelosi, who is for contraception and abortion but also purports to be a Catholic is going to see the Pope shortly. I would really love to hear that live. So one of the things that we will be talking about shortly is to cover that event. Speaker Pelosi is arguably one of the most powerful people in the country currently and I find her to be nearly rudderless, economically and morally. For today, is a day of an observant break. We must observe, be weary and vigilant. Read more, watch less, and try to smile while doing it, as tough as it may be.
See you tomorrow,
Good Evening - C
I do not watch TV anymore. I have not for some time, opting to read books and news instead. At this point, I am beginning to wonder if I could actually make it through a happy-go-lucky local newscast without reflexively tying a hangman's knot I figured losing the daily drubbing of moving picture advertisements might do my brain some good. Now I read the Bible, history, and a lot of news. For history I am reading Paul Johnson's A History of the American People. Johnson, I find, is a solid British writer. I am also trying to read at least 20 to 30 news stories a day. This is not easy to do, you might try it sometime. I read from all over and try very hard not to be overly discriminating. I want to hear multiple sides and takes. There are many people I don't agree with these days (maybe I never did). That does not mean I have to shun them. I want to know them in order to know how I want to respond to them.
Alex Jones and Jerome Corsi were on Coast to Coast last night and were talking about the conspiracy theory of the New World Order. I am not there with these guys at this point. I don't buy that all this hell that is breaking loose right now is being done to us by people trying to actively make it happen so that they can drive us into some weird form of slavery. I do however believe that the US has lost much of the principles and values it once had and sold them to the moral relativists. The reality is that nothing is wrong OR right anymore, and everything should be accepted just as long as it does not kill anyone (babies not included). This is what I believe is happening - the slow dripping loss of moral principle.
I do know this, Nancy Pelosi, who is for contraception and abortion but also purports to be a Catholic is going to see the Pope shortly. I would really love to hear that live. So one of the things that we will be talking about shortly is to cover that event. Speaker Pelosi is arguably one of the most powerful people in the country currently and I find her to be nearly rudderless, economically and morally. For today, is a day of an observant break. We must observe, be weary and vigilant. Read more, watch less, and try to smile while doing it, as tough as it may be.
See you tomorrow,
Good Evening - C
Monday, February 16, 2009
Judd Gregg To Be or Not to Be an Obama Cabinet Appointee
I am a little disappointed after looking around today for an answer as to why Judd Gregg truly pulled out of a cabinet seat because, Judd Gregg has in many respects dodged fully answering the question at least in the initial interviews that I have seen. I have seen some pretty atrocious op-eds that I am not going to dignify with their "analysis" of the issue. The video below this post from Gregg comes across decently. In it he acts a little sheepish about making the mistake in the first place and leaves enough gray area in it to give him the right plausible deniability quotient. I can not help but think that when you repeat how gracious Obama was in understanding the withdrawal you are really saying "don't beat me up before I get out the door." Understandable, Rahm and Barack know how to rough someone up if they want. You don't have to think too hard, to understand that what happened to Palin was in many ways orchestrated by Barack's spin doctors. But that is politics and I am going to leave the value judgment out in this case. The Judd Gregg issue in my view is one in which, I think that we ought to be reading in between the lines.
We may never get a straight answer from Gregg about why. That is not the worst thing to me because, sometimes secrets need to be kept. But he also may do well to come clean. Was it a laundry list of things he "couldn't do?" Or was it just one big one? Some are speculating it has to do with the Census overhaul that is planned by Obama's office, see the video on Sunday's post (below) to see what I am talking about. But I am only about 45% satisfied with that answer. I think that when he was looking around at what this really meant, he was not just in disagreement, he was feeling absolutely repugnant about what he was going to be doing for an Obama presidency.
Should this worry you? Maybe a little. I think that if you find a guy like Judd Gregg, whom apparently will not be running for another term, dodging the cabinet (after asking for the job) is indicative of something. You have to read signs with a critical eye, and I think that this in combination with the litany of problem appointees is indicative of an administration that is not itself unified. I think that Obama is having trouble reigning certain individuals in (who those are I don't know) and therefore, some of them are marching to their own drumbeat. What does this mean for America? Well, it may be too early to say. If it rights itself with Obama's leadership abilities, we won't even notice it two months from now.
If on the other hand, it is not fixed, it will most likely lead to disaster. Incompetence is not tolerated at 1600 Pennsylvania Ave., and various presidents have ran headlong into that fact. Look, I am not a seer or a doomsayer. At this point, I am just an analyst. I want this whole thing to right itself, because I love America and consider myself a patriot. But I am not happy right now with what is happening, nor am I agreeing with the fixes that are being offered.
In 1998, Japan injected 500 billion into its doddering, failing economy with disastrous results. It is also, as is pointed out in Nobel Prize winning Paul Krugman's book The Return of Depression Economics the return of hyperinflation. Value of money is probably going to go down immeasurably in comparison with today's economy with this second trillion dollar price tagged government growth package. Inflation is a fear. It is a palpable, real fear and one in which, at least in my lifetime I have not ever seen unfold to the extent that it did in Japan, Mexico, Argentina, or a list of other countries. It is one that I hope dearly will not happen. But the events unfolding these very days seem to be pointing towards the fact that it is.
When Senator Gregg decides he does not want to be head of the Commerce Department, I think it is a shrewd personal move. Do you want to be running Commerce as it drops like a stone? I don't. That in my opinion is why his explanation to me is less than satisfying. I sent him an email today and we will see if he responds. In the meantime - I hope you will watch the video below and see what you think. The Flash video did not work for some reason so today it is just the link:
http://www.youtube.com/watch?v=HqalerIxOqE
Thanks for reading -
Please subscribe today!
Good Evening- C
We may never get a straight answer from Gregg about why. That is not the worst thing to me because, sometimes secrets need to be kept. But he also may do well to come clean. Was it a laundry list of things he "couldn't do?" Or was it just one big one? Some are speculating it has to do with the Census overhaul that is planned by Obama's office, see the video on Sunday's post (below) to see what I am talking about. But I am only about 45% satisfied with that answer. I think that when he was looking around at what this really meant, he was not just in disagreement, he was feeling absolutely repugnant about what he was going to be doing for an Obama presidency.
Should this worry you? Maybe a little. I think that if you find a guy like Judd Gregg, whom apparently will not be running for another term, dodging the cabinet (after asking for the job) is indicative of something. You have to read signs with a critical eye, and I think that this in combination with the litany of problem appointees is indicative of an administration that is not itself unified. I think that Obama is having trouble reigning certain individuals in (who those are I don't know) and therefore, some of them are marching to their own drumbeat. What does this mean for America? Well, it may be too early to say. If it rights itself with Obama's leadership abilities, we won't even notice it two months from now.
If on the other hand, it is not fixed, it will most likely lead to disaster. Incompetence is not tolerated at 1600 Pennsylvania Ave., and various presidents have ran headlong into that fact. Look, I am not a seer or a doomsayer. At this point, I am just an analyst. I want this whole thing to right itself, because I love America and consider myself a patriot. But I am not happy right now with what is happening, nor am I agreeing with the fixes that are being offered.
In 1998, Japan injected 500 billion into its doddering, failing economy with disastrous results. It is also, as is pointed out in Nobel Prize winning Paul Krugman's book The Return of Depression Economics the return of hyperinflation. Value of money is probably going to go down immeasurably in comparison with today's economy with this second trillion dollar price tagged government growth package. Inflation is a fear. It is a palpable, real fear and one in which, at least in my lifetime I have not ever seen unfold to the extent that it did in Japan, Mexico, Argentina, or a list of other countries. It is one that I hope dearly will not happen. But the events unfolding these very days seem to be pointing towards the fact that it is.
When Senator Gregg decides he does not want to be head of the Commerce Department, I think it is a shrewd personal move. Do you want to be running Commerce as it drops like a stone? I don't. That in my opinion is why his explanation to me is less than satisfying. I sent him an email today and we will see if he responds. In the meantime - I hope you will watch the video below and see what you think. The Flash video did not work for some reason so today it is just the link:
http://www.youtube.com/watch?v=HqalerIxOqE
Thanks for reading -
Please subscribe today!
Good Evening- C
Sunday, February 15, 2009
Your Money Belongs to the Fire
401(k) plans are being scrutinized like a disorderly child in the principal's office. Similar to the child in the principal's office, nobody knows exactly what is being said, but everyone knows he is in there. Some very smart people think that the 401(k) needs serious reform, with the accent on the word reform. There are two camps of thought, one saying that the 401(k) is the most powerful and responsible way of allowing a business-friendly tax deferral for a certain amount of income every year. The other says that with 64 year olds losing 25-40% of their retirement accounts last year (2008), in reasonably conservative investment allocations, is reason enough to sell 401(k) down the proverbial river.
The question you might ask is why would I even broach the subject of 401(k) at a time of so much bigger issues? Well if you look closer at the 401(k) you will see that it is very much intertwined with the economic crisis and thus, the stimulus bill. If you want to know how important this issue is to our new President you should look no further than his Chief of Staff, Mr. Rahm Emanuel, the cell phone-hogging, grinning Illinois liberal. He felt it very necessary to write a nice pithy op-ed in the Wall Street Journal back in September 2007. You can see this full article at: <http://online.wsj.com/article/SB118964627975525938.html?mod=googlenews_wsj> I believe that he fully intends to make good on his promises therein.
Furthermore, Obama is very likely to agree with the precepts of Emanuel's plan to "universalize" savings. Remember, government is here to cure you of the ills that you can not figure out for yourself (I apologize for the cynicism). Citing high expense ratios of mutual funds, Emanuel argued that government can make it much less expensive by universalizing the savings to all workers.
Later, when the economic crisis was starting to really rear its ugly head, on October 22, 2008 Joseph Hacker, PhD. testified before the House about the apparent peril that the 401(k) plan has and why it is not a sustainable method of retirement savings. http://edlabor.house.gov/testimony/2008-10-22-JacobHacker.pdf
Hacker cites that the risk has been shifted onto individuals' shoulders to a degree that they should not have to sustain. I disagree, wholeheartedly. While making decisions for 401(k) navigation is not easy, it is something that I can do provided with the tools that plans currently offer. I do not subscribe to the paternalistic view that either my government or my company or both, should have to continue to provide for me beyond my working age. I think it is quite doable to save and retain the amount of money to last me through a retirement, albeit with planning and foresight.
Some will point out to me that there are many others who are not as sophisticated and do not understand how to invest. Well, now there is a QDIA, an investment that will, if the person just defers up to the recommended amount most likely, provide a conservative, inflation beating return. There is no brains involved in QDIAs. Just fill out the enrollment form and leave the investment section blank. There needs to be lines in the sand where we say, OK - "I the individual control this." I believe retirement accounts to be ultimately an individually driven, conscious decision to opt-in.
You could always work until you die, if you wanted to. But most don't, most want to retire at some point. I certainly do, although the time I retire is far off. My gains and losses are only on paper at this point. Until I take my first distribution, hopefully around the minimum age of 59-1/2 but if I am like most Americans closer to 65, those gains and losses stay on paper. I must get more conservative as time goes on. Go more fixed, and as I near retirement be all about capital preservation and inflation beating.
The problem I have with the universalization is ethical, or at least value based in that, I must ask the question why Government is going to tell me how to save (or not save) my money? Then they will also tell companies to pay up 1% into these plans. Their reasoning is that because of how expensive it is to set up a 401(k) plan (it really isn't) the Universal Savings Account (USA) will save small companies money. This is hyper-bologna on its face because the tax efficiency to businesses and people are an active stimulus on business small and large. The costs and expenses of running a plan are a percentage of the benefit and not the other way around. I should know, I administer a 401(k) plan currently for a private company. For a good primer please refer to: http://en.wikipedia.org/wiki/401(k)
401(k) was set up originally as a tax break for the wealthy. Very quickly it was found to be a great way of saving for individuals of many economic levels and more importantly, relieved the burden of corporations in having to provide pension plans based on actuarial analysis. Keeping these plans funded for a struggling company was and is very difficult and because of that fact, defined benefit plans (pensions) are progressively a dying breed. Indeed, pension plans can strangle a doddering company.
As you can see we are entering hostile, dangerous and uncharted waters in these times. There is much more to talk about, so I will definitely see you tomorrow... Please see below for a preview of tomorrow's post:
Tomorrow's Discussion - Why Judd Gregg said "no go" to Obama after asking for the job and why the Census could be irreparably Destroyed
The question you might ask is why would I even broach the subject of 401(k) at a time of so much bigger issues? Well if you look closer at the 401(k) you will see that it is very much intertwined with the economic crisis and thus, the stimulus bill. If you want to know how important this issue is to our new President you should look no further than his Chief of Staff, Mr. Rahm Emanuel, the cell phone-hogging, grinning Illinois liberal. He felt it very necessary to write a nice pithy op-ed in the Wall Street Journal back in September 2007. You can see this full article at: <http://online.wsj.com/article/SB118964627975525938.html?mod=googlenews_wsj> I believe that he fully intends to make good on his promises therein.
Furthermore, Obama is very likely to agree with the precepts of Emanuel's plan to "universalize" savings. Remember, government is here to cure you of the ills that you can not figure out for yourself (I apologize for the cynicism). Citing high expense ratios of mutual funds, Emanuel argued that government can make it much less expensive by universalizing the savings to all workers.
Later, when the economic crisis was starting to really rear its ugly head, on October 22, 2008 Joseph Hacker, PhD. testified before the House about the apparent peril that the 401(k) plan has and why it is not a sustainable method of retirement savings. http://edlabor.house.gov/testimony/2008-10-22-JacobHacker.pdf
Hacker cites that the risk has been shifted onto individuals' shoulders to a degree that they should not have to sustain. I disagree, wholeheartedly. While making decisions for 401(k) navigation is not easy, it is something that I can do provided with the tools that plans currently offer. I do not subscribe to the paternalistic view that either my government or my company or both, should have to continue to provide for me beyond my working age. I think it is quite doable to save and retain the amount of money to last me through a retirement, albeit with planning and foresight.
Some will point out to me that there are many others who are not as sophisticated and do not understand how to invest. Well, now there is a QDIA, an investment that will, if the person just defers up to the recommended amount most likely, provide a conservative, inflation beating return. There is no brains involved in QDIAs. Just fill out the enrollment form and leave the investment section blank. There needs to be lines in the sand where we say, OK - "I the individual control this." I believe retirement accounts to be ultimately an individually driven, conscious decision to opt-in.
You could always work until you die, if you wanted to. But most don't, most want to retire at some point. I certainly do, although the time I retire is far off. My gains and losses are only on paper at this point. Until I take my first distribution, hopefully around the minimum age of 59-1/2 but if I am like most Americans closer to 65, those gains and losses stay on paper. I must get more conservative as time goes on. Go more fixed, and as I near retirement be all about capital preservation and inflation beating.
The problem I have with the universalization is ethical, or at least value based in that, I must ask the question why Government is going to tell me how to save (or not save) my money? Then they will also tell companies to pay up 1% into these plans. Their reasoning is that because of how expensive it is to set up a 401(k) plan (it really isn't) the Universal Savings Account (USA) will save small companies money. This is hyper-bologna on its face because the tax efficiency to businesses and people are an active stimulus on business small and large. The costs and expenses of running a plan are a percentage of the benefit and not the other way around. I should know, I administer a 401(k) plan currently for a private company. For a good primer please refer to: http://en.wikipedia.org/wiki/401(k)
401(k) was set up originally as a tax break for the wealthy. Very quickly it was found to be a great way of saving for individuals of many economic levels and more importantly, relieved the burden of corporations in having to provide pension plans based on actuarial analysis. Keeping these plans funded for a struggling company was and is very difficult and because of that fact, defined benefit plans (pensions) are progressively a dying breed. Indeed, pension plans can strangle a doddering company.
As you can see we are entering hostile, dangerous and uncharted waters in these times. There is much more to talk about, so I will definitely see you tomorrow... Please see below for a preview of tomorrow's post:
Tomorrow's Discussion - Why Judd Gregg said "no go" to Obama after asking for the job and why the Census could be irreparably Destroyed
See this video now and subscribe to californiadissent today!!
Saturday, February 14, 2009
Dear Madame, What in the World are You Doing?
In a letter to Nancy Pelosi the CBO recently estimated the total outlay for the stimulus bill and if we look at it we can see just how thick it really is:
"Combining both spending and revenue effects, CBO estimates that enacting the conference agreement for H.R. 1 would increase federal budget deficits by $185 billion over the remaining
months of fiscal year 2009, by $399 billion in 2010, by $134 billion in
2011, and by $787 billion over the 2009-2019 period."
-As quoted on <http://www.cbo.gov/ftpdocs/99xx/doc9989/hr1conference.pdf>
To me. these dollars are a smothering weight for any country to bear. It is offensive because of the insullt it poses to my intelligence. On Wednesday, I outlined the bill's spending with numbers. As you should already know, this bill has been percolating so if the numbers have changed a little bit since then it is to be expected. But more or less, it is going to remain very close to that when it hits Barack's desk next week some time. Remember he has a line item veto, which given his political posture in the first couple of weeks of his presidency, I am not so sure he is too bashful to use right off the bat.
If God wills it, by 2019 I should be mid-career and in the middle of my life and we (you and I)will still be paying for this gargantuan behemoth of an appropriations bill. On the same CBO (Congressional Budget Office) letter referred to above it says that the net impact on the federal deficit is 1.298 trillion dollars. That is trillion with a "T". Reminder - government does not earn money, it taxes or it prints. In this case government is doing a little of both, and selling some bonds in a diffused manner as well.
Frankly, today I don't feel criticism is necessary. You have heard enough to make your own opinion. This thing is about to pass whether you or I like it. I just wanted to point out those specifics listed above because they are poignant and if you are speaking to people you would do well to present those facts.
Have a great day! - C
"Combining both spending and revenue effects, CBO estimates that enacting the conference agreement for H.R. 1 would increase federal budget deficits by $185 billion over the remaining
months of fiscal year 2009, by $399 billion in 2010, by $134 billion in
2011, and by $787 billion over the 2009-2019 period."
-As quoted on <http://www.cbo.gov/ftpdocs/99xx/doc9989/hr1conference.pdf>
To me. these dollars are a smothering weight for any country to bear. It is offensive because of the insullt it poses to my intelligence. On Wednesday, I outlined the bill's spending with numbers. As you should already know, this bill has been percolating so if the numbers have changed a little bit since then it is to be expected. But more or less, it is going to remain very close to that when it hits Barack's desk next week some time. Remember he has a line item veto, which given his political posture in the first couple of weeks of his presidency, I am not so sure he is too bashful to use right off the bat.
If God wills it, by 2019 I should be mid-career and in the middle of my life and we (you and I)will still be paying for this gargantuan behemoth of an appropriations bill. On the same CBO (Congressional Budget Office) letter referred to above it says that the net impact on the federal deficit is 1.298 trillion dollars. That is trillion with a "T". Reminder - government does not earn money, it taxes or it prints. In this case government is doing a little of both, and selling some bonds in a diffused manner as well.
Frankly, today I don't feel criticism is necessary. You have heard enough to make your own opinion. This thing is about to pass whether you or I like it. I just wanted to point out those specifics listed above because they are poignant and if you are speaking to people you would do well to present those facts.
Have a great day! - C
Friday, February 13, 2009
The Pain Realized
Articles are being written at a feverish pace about the plight of the US. But economists are quick to point out that this is not the first time that something above a recession and approaching a crisis has occurred. With the unemployment totals, as cited by this weeks' DOL statistics approaching 8% and new unemployment claims seemingly winding up, with a weekly average loss going from 580k to 607k from January to February. It is staggering, scary big numbers. Those numbers are encroaching everywhere.
So I really want to focus on the human cost for a moment because, when these things, the economy, the mistakes, the corruption, when it hits your household, then you truly understand. I work in human resources, a profession that by its definition is constantly on the frontline of loss and gain in individual lives. How many stories have you heard about a 50-60 year old losing their two decade or three decade old job with a major corporation? It is a somewhat common occurrence these days. As the recession retreats further into crisis level, that feeling that you are insulated starts to disintegrate.
Fear breeds fear. It is spoken of in the lunchrooms at factories and in boardrooms alike. You may think that because you are on the lower end of the scale that the other end feels it to a lesser extent or not at all. But this is not true, and somewhere deep down inside, you know this. No matter who you are you can't always outrun the tide.
But as you read these days, you need to also realize that harshness does come to pass. No country has ever been so resilient and stalwart as these United States. The problems that you are facing though, each of us are truly a part of and can do something about. Now is not the time to sit on the sidelines and wait around for things to get better. I strongly suggest the proactive approach.
We need to be pointing out bad deals set in play by our politicians. We need to get ticked enough to say something when, as Fortune Magazine noted in its February 16th issue, the oversight for TARP was blatantly missing. The last job application you filled out was longer than the one banks had to fill out to get money doled out to them. We ought be angry enough to call a congressman when they decide that what's not good enough for this Stimulus bill is having a tax break for unprofitable companies unless revenues are higher than 5 million. Or how about how they stripped out E-verify, a system that I personally use and set up for my company. It is the one thing that would have absolutely ensured that only people that are legally allowed to work in the US do so.
This is tough stuff to chew. It goes down badly like a piece of gristle with no drink to wash it down. So I really truly hope that that pit in your stomach is starting to burn as much as it does mine.
So I really want to focus on the human cost for a moment because, when these things, the economy, the mistakes, the corruption, when it hits your household, then you truly understand. I work in human resources, a profession that by its definition is constantly on the frontline of loss and gain in individual lives. How many stories have you heard about a 50-60 year old losing their two decade or three decade old job with a major corporation? It is a somewhat common occurrence these days. As the recession retreats further into crisis level, that feeling that you are insulated starts to disintegrate.
Fear breeds fear. It is spoken of in the lunchrooms at factories and in boardrooms alike. You may think that because you are on the lower end of the scale that the other end feels it to a lesser extent or not at all. But this is not true, and somewhere deep down inside, you know this. No matter who you are you can't always outrun the tide.
But as you read these days, you need to also realize that harshness does come to pass. No country has ever been so resilient and stalwart as these United States. The problems that you are facing though, each of us are truly a part of and can do something about. Now is not the time to sit on the sidelines and wait around for things to get better. I strongly suggest the proactive approach.
We need to be pointing out bad deals set in play by our politicians. We need to get ticked enough to say something when, as Fortune Magazine noted in its February 16th issue, the oversight for TARP was blatantly missing. The last job application you filled out was longer than the one banks had to fill out to get money doled out to them. We ought be angry enough to call a congressman when they decide that what's not good enough for this Stimulus bill is having a tax break for unprofitable companies unless revenues are higher than 5 million. Or how about how they stripped out E-verify, a system that I personally use and set up for my company. It is the one thing that would have absolutely ensured that only people that are legally allowed to work in the US do so.
This is tough stuff to chew. It goes down badly like a piece of gristle with no drink to wash it down. So I really truly hope that that pit in your stomach is starting to burn as much as it does mine.
Wednesday, February 11, 2009
Do You Smell what Barack's cooking?
Good evening, welcome to my first post. We are in difficult times right now. Our government is slowly selling our system down the river one log at a time. Lately though they are throwing the bigger logs into the water. We are currently moving headlong into throwing 1.2 trillion dollars, most of which goes directly into the toilet. The 1.2 trillion figure is the estimate of after interest of the 790 billion. Of course, I am talking about Obama's Stimulus plan. So welcome aboard on spaceship insanity.
I am really here to talk about business. I care about business, am a businessman, and make no bones about saying that I want to keep as much manufacturing as possible on these United States. The politics however, I don't seek to deal with. If we are going to talk about business though we have to talk about the legal culture that we currently live in. Precisely, we need to be talking about the laws that can effect business for better or worse.
I know the life that hard work and determination can lead to and that the American dream is not dead in the hearts and minds of many Americans. But while we pine for what we were raised to believe in, that very dream is being pulled out from beneath our feet. Take for instance, the Employee's Free Choice act is now being offered as the solution for raising the worker up. But the specter merely could serve to further impede growth of manufacturing. If you are not familiar with the EFCA I suggest you read up. Maybe create a google alert, because if this bill passes, you and I could very well see our corporate jobs go up in smoke. I will explain this in detail in later posts.
Examine the Fairness Doctrine, the plan to impede free speech by seeking to silence conservative voices. This is loss of freedom, this is the loss of the constitutional right. Do not let it occur. We have an opportunity to speak up but as you read up on this subject and others remember that we have a necessity to call hypocrisy out as we see it. Liberals who call for the Fairness Doctrine are hypocrites. They fail to recognize that they control nearly every piece of major media except for a couple. They want to silence the couple they don't run.
Liberals right now control the rational discourse in the economy, they control academe, upper echelon media, networks, and those that do not foist the opinion of the power elite in these organizations do not last. Look I want this to be a better, less grim reality. My father voted Obama this year. I have not forgave him for this even though my bible tells me I must. We are headed in the wrong direction and I am not happy about it. Are you?
Here is some line items that will be law shortly, I want us to look at these together and decide whether they will stimulate the ,economy and if so, how? (As quoted from Marketwatch.com 1/28/09). Comments in green are mine.
"Here are the chief provisions of the bill:
Tax cuts Less tax more money in everyone's pocket right? 245 Billion on tax breaks, OK so we start off on the right foot. Sort of.
Payroll-tax holiday: $99 billion
Expanded earned-income tax credit: $25 billion
Tuition tax credit: $10 billion
Business expensing tax breaks: $90 billion
Renewable-energy tax credit: $20 billion Really banking on foisting renewables now. Is this going to jumpstart us?
Relief
Expanded unemployment insurance: $42 billion For all those about to lose their jobs. I am not trying to be grim here but the thought is that with the amount of people that stand to lose their jobs currently, we could be facing 10-15% unemployment by end of year 2009.
Health insurance for unemployed: $40 billion I understand this is to be expansion of COBRA rights and may allow those losing jobs to obtain subsidized healthcare for a period of time. This is temporary socialized healthcare in other words.
Expanded food stamps: $20 billion I am not going to be callous and start saying we should cut out the poor.
Housing assistance: $11 billion Obviously, how this is spent is key.
Supplemental Security Income payments: $4 billion
Welfare: $3 billion
Infrastructure In my view, this is where it gets real ugly. Remember as you read - the central question is, does this stimulate economic growth by giving citizens more buying power?
Highways: $30 billion Let's fix some potholes people, our economy is crumbling and our companies are offshoring! 30 Billion, pretty large sum dont you think? Look at the infrastructure type stuff we are doing here - this is absolutely an appropriations bill. Remember what those are from Poli. Sci 101?
School renovation: $20 billion Wrong bill, wrong time.
Health information technology: $17 billion
Transportation projects: $16 billion Really stretches my brain trying to imagine how this is going stimulate growth.
Water projects: $8.4 billion Oh come on! You know what I am going to say.
Military and V.A. construction: $7 billion
Accelerated deployment of broadband: $5.6 billion But Chad, it will be so cool to have broadband everywhere, even my car. Wait, shouldn't business be worried about that?
Help for state and local governments I am in California and trust me, in case you don't know, we are in our own statewide economic panic/crisis so maybe I should refrain. On second thought, nah!!
Medicaid cost sharing: $87 billion Uh yeah, riggggght!
State grants: $79 billion No better way to piss away money than state grants. Save the economy my ass. Look at the price tag one more time on that sucker.
State and local bond tax credit: $42 billion Watch out, the bond market is going to go nuts. They are going to use this junk debt to scrape flies off of the trucks on our brand spanking new interstate system.
Community development: $5 billion Somehow, I am guessing this goes back to sweet home Chicago right Barry?
Rural development: $4 billion
Energy efficiency Ok - come on, someone tell me how this helps dig our economy from losing jobs, come on I am waiting. And look... there is more below! But I am going to leave the energy stuff alone. I think you get the drift now. You smell what Barack is cooking. It is wafting mightily underneath the door of that smoke-filled room.
Federal energy-efficiency projects: $22 billion
Energy-efficiency grants: $18.5 billion
Smart electric grid: $11 billion
Renewable-energy loan guarantees: $8 billion
Human capital
Education programs: $29 billion
Pell grants: $18 billion
Job training: $4.6 billion
Scientific research: $3 billion
Look, Obama wants to payroll a whole army of citizens. Instead of manufacturing now we are just building. He is going to get just that, and guess what, this bill never sunsets. These programs, they live in perpetuity. Welcome to hell folks. You voted him in, now get used to this BS! Republicans, do you want to get voted back in - FIGHT TOOTH AND NAIL.
-See you tomorrow
I am really here to talk about business. I care about business, am a businessman, and make no bones about saying that I want to keep as much manufacturing as possible on these United States. The politics however, I don't seek to deal with. If we are going to talk about business though we have to talk about the legal culture that we currently live in. Precisely, we need to be talking about the laws that can effect business for better or worse.
I know the life that hard work and determination can lead to and that the American dream is not dead in the hearts and minds of many Americans. But while we pine for what we were raised to believe in, that very dream is being pulled out from beneath our feet. Take for instance, the Employee's Free Choice act is now being offered as the solution for raising the worker up. But the specter merely could serve to further impede growth of manufacturing. If you are not familiar with the EFCA I suggest you read up. Maybe create a google alert, because if this bill passes, you and I could very well see our corporate jobs go up in smoke. I will explain this in detail in later posts.
Examine the Fairness Doctrine, the plan to impede free speech by seeking to silence conservative voices. This is loss of freedom, this is the loss of the constitutional right. Do not let it occur. We have an opportunity to speak up but as you read up on this subject and others remember that we have a necessity to call hypocrisy out as we see it. Liberals who call for the Fairness Doctrine are hypocrites. They fail to recognize that they control nearly every piece of major media except for a couple. They want to silence the couple they don't run.
Liberals right now control the rational discourse in the economy, they control academe, upper echelon media, networks, and those that do not foist the opinion of the power elite in these organizations do not last. Look I want this to be a better, less grim reality. My father voted Obama this year. I have not forgave him for this even though my bible tells me I must. We are headed in the wrong direction and I am not happy about it. Are you?
Here is some line items that will be law shortly, I want us to look at these together and decide whether they will stimulate the ,economy and if so, how? (As quoted from Marketwatch.com 1/28/09). Comments in green are mine.
"Here are the chief provisions of the bill:
Tax cuts Less tax more money in everyone's pocket right? 245 Billion on tax breaks, OK so we start off on the right foot. Sort of.
Payroll-tax holiday: $99 billion
Expanded earned-income tax credit: $25 billion
Tuition tax credit: $10 billion
Business expensing tax breaks: $90 billion
Renewable-energy tax credit: $20 billion Really banking on foisting renewables now. Is this going to jumpstart us?
Relief
Expanded unemployment insurance: $42 billion For all those about to lose their jobs. I am not trying to be grim here but the thought is that with the amount of people that stand to lose their jobs currently, we could be facing 10-15% unemployment by end of year 2009.
Health insurance for unemployed: $40 billion I understand this is to be expansion of COBRA rights and may allow those losing jobs to obtain subsidized healthcare for a period of time. This is temporary socialized healthcare in other words.
Expanded food stamps: $20 billion I am not going to be callous and start saying we should cut out the poor.
Housing assistance: $11 billion Obviously, how this is spent is key.
Supplemental Security Income payments: $4 billion
Welfare: $3 billion
Infrastructure In my view, this is where it gets real ugly. Remember as you read - the central question is, does this stimulate economic growth by giving citizens more buying power?
Highways: $30 billion Let's fix some potholes people, our economy is crumbling and our companies are offshoring! 30 Billion, pretty large sum dont you think? Look at the infrastructure type stuff we are doing here - this is absolutely an appropriations bill. Remember what those are from Poli. Sci 101?
School renovation: $20 billion Wrong bill, wrong time.
Health information technology: $17 billion
Transportation projects: $16 billion Really stretches my brain trying to imagine how this is going stimulate growth.
Water projects: $8.4 billion Oh come on! You know what I am going to say.
Military and V.A. construction: $7 billion
Accelerated deployment of broadband: $5.6 billion But Chad, it will be so cool to have broadband everywhere, even my car. Wait, shouldn't business be worried about that?
Help for state and local governments I am in California and trust me, in case you don't know, we are in our own statewide economic panic/crisis so maybe I should refrain. On second thought, nah!!
Medicaid cost sharing: $87 billion Uh yeah, riggggght!
State grants: $79 billion No better way to piss away money than state grants. Save the economy my ass. Look at the price tag one more time on that sucker.
State and local bond tax credit: $42 billion Watch out, the bond market is going to go nuts. They are going to use this junk debt to scrape flies off of the trucks on our brand spanking new interstate system.
Community development: $5 billion Somehow, I am guessing this goes back to sweet home Chicago right Barry?
Rural development: $4 billion
Energy efficiency Ok - come on, someone tell me how this helps dig our economy from losing jobs, come on I am waiting. And look... there is more below! But I am going to leave the energy stuff alone. I think you get the drift now. You smell what Barack is cooking. It is wafting mightily underneath the door of that smoke-filled room.
Federal energy-efficiency projects: $22 billion
Energy-efficiency grants: $18.5 billion
Smart electric grid: $11 billion
Renewable-energy loan guarantees: $8 billion
Human capital
Education programs: $29 billion
Pell grants: $18 billion
Job training: $4.6 billion
Scientific research: $3 billion
Look, Obama wants to payroll a whole army of citizens. Instead of manufacturing now we are just building. He is going to get just that, and guess what, this bill never sunsets. These programs, they live in perpetuity. Welcome to hell folks. You voted him in, now get used to this BS! Republicans, do you want to get voted back in - FIGHT TOOTH AND NAIL.
-See you tomorrow
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