30 September 2008

Under Cover of Darkness...

Disgust and revulsion are only a couple terms that come close to describing how I feel about the Emergency Economic Stabilization Act of 2008, also known as the “bail out plan”. This terribly crafted and short-sighted legislation is being rammed down our throats. Thankfully, a good number of democrats and republicans voted against the “bail out plan”. Please thank your representative for voting against it if they happen to have done that. If your representative voted for it, well you know what to do on November 4, 2008 to show your “appreciation” for their stupidity.

The same President Bush that cried out that Iraq was a major threat to the United States came on the radio this morning on my drive to work and claimed the sky is falling. He claims we need to implement immediate measures or we will suffer dire consequences. You really have to question his motivation here. So what if the Dow dropped 777 points in one day (an estimated $1 trillion in paper money – all I hear are crickets chirping); it went back up 485 points the next day. The markets are based on emotion not reality and not a good indicator to base economic policy on.

Most folks in the know look at the London Interbank Offered Rate (LIBOR) to determine how the credit markets fair. The LIBOR is the interest rate at which large international banks are willing to lend each other money on a short-term basis. Many home equity lines of credit, small business loans and student loans also use LIBOR as an index, and this interest rate has been increasing which makes loans more expensive.

I do not believe President Bush. How can you trust Secretary Paulson after what is coming out with regard to the AIG bailout? Speaker Pelosi is utterly clueless. I have no faith that Senator Reid knows what he is doing. They are politicians first and foremost and care more for their own backsides than what is best for America. This is a housing bubble of an estimated $8 trillion of which only $4 to $5 trillion has been lost – meaning more losses to come. We should be very skeptical and extremely suspicious of anyone using the argument that we will make money from this deal. They screwed up and we are supposed to look the other way and pick up the stinking pile of crap they left for us? No thanks.

Dean Baker from the Center for Economic Policy Research was on C-SPAN talking about the failed bail out. He penned a plan that makes more sense than what Bush and company are proposing. There is absolutely no reason to rush into this. Most reasonable economists agree and would rather see a fiscal stimulus such as investing in infrastructure and direct intervention by trying to work with home owners on the edge rather than sending hundreds of billions through the financial institutions. Let the failed financial institutions hang.

Now the Senate is set to vote on their plan (read: push their failed policies) on Wednesday, 1 October 2008. The Senate will call up H.R. 1424: Genetic Information Nondiscrimination Act of 2008, the text of which will be substituted with the economic rescue plan (a Dodd amendment which must have the consent of both the Majority and Minority Leaders).

Other than the bailout, what does their plan include?

  • Raises federal deposit insurance (FDIC) limits to $250,000 from $100,000
  • Adds a set of popular business tax breaks
  • Adds legislation to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax

A little bit of sugar with a whole lot of poison. Please call your senators and send them a message loud and clear that we do not like this plan and would rather see it defeated.

Photo by KCThinker, Butterfly - Omaha Zoo

26 September 2008

The Bail Out to End All Bail Outs?

Soon our elected representatives will vote for an extremely large plan to help the struggling financial markets in the United States. The urgency has been made clear by Treasury Secretary Paulson and President Bush. It is obvious that such a plan is needed in order to make sure that businesses can continue operating as intended. However, there should be sufficient concern with the haste that this plan is being put together. Through this urgency and typical partisan politics a great opportunity to make sure we do this the right way the first time will surely be missed.

The bail out must contain, at a minimum, the following four key items:

1. There should be crystal clear transparency into how this money is used and to what companies this money goes to. This is a gamble with an extraordinary sum of money that our children and grandchildren will be beholden to pay off. We cannot afford to let it be used without knowing how and why and where.

2. There should be no compensation (i.e., golden parachutes) for the executives that have been at the helm of any companies receiving government-funded help. They were the leaders and they should be held accountable for their actions. Through their actions they will also likely cause thousands of Americans to lose their jobs. There should be no reward for landing their companies in the positions they are in.

3. If any profits (highly unlikely) are realized from this venture they should, first and foremost, be used to pay down the national debt, which is almost $10 trillion. No profit should be used to justify more spending or tax cuts or more risky government programs. The only place that profits shall go is to reduce the debt burden on future generations of Americans.

4. The government should enforce the existing rules and regulations or create new ones to prevent this from happening again. The idea that everyone should own on a home is a good one, but we need to make sure that people buying homes can afford them, can prove that they can afford them and understand what they are getting into. This crisis has been largely created as a result of congress men and women letting politics cloud judgment. The full extent of the law should be used to prevent discrimination of race, religion, etc. being used to prevent someone from securing a home loan. However, this notion has been abused to the extent loans are given to people who simply could not afford them.

The bail out will likely happened whether the majority of the American people are pissed off by it or not (it’s torches and pitchforks time people!). In my opinion we are propping up a bubble built with made up money with more made up money. The end result may be far worse than if we had just let the bubble burst to begin with. Something about this whole situation just plain stinks and makes me feel dirty.

I am not sure most Americans understand the gravity of the situation. We are at a key turning point in this country; we may not recover from the fine mess Congress and the President has created. More than the executives of these failing firms, we should blame our elected officials for allowing this to occur in the first place. While playing politics like kids play house they failed to realize what is more important than being a democrat or republican and that is being an American.

Photo by KCThinker, Passage in San Juan, Puerto Rico

25 September 2008

The (un)Likeliest of Consequences

While I was in Haiti recently, I was discussing politics and economic issues with several Haitians at a clinic in Les Cayes. This was early September before the recent calamity in the banking industry took center stage after having a minor billing previously. The signs of the coming economic turmoil were there – it is just plain obvious that when you create a bubble from nothing, back to nothing it must go. It seems that the “smart” people running the show are having a hard problem comprehending this fact.

Back to my real point; I was telling the Haitians that the United States was heading for tough times when really hard choices will need to be made and that I thought that our self-appointed role as world police and shining example to the poor would most likely change for the worse. I explained that we have the current problem but the undercurrents of the larger problems with our entitlement programs are far worse. One of the doctors then asked if the United States could no longer be the world's police force who then would assume our role. He added that he did not think that China or Russia would assume it in our stead.

The question/comment struck me. There are many people in third world countries that look to the United States for many reasons. I am not sure the average American can appreciate the standing we have in the world and how this standing is affected by our actions both politically and economically.

Our own depravity is not only having consequences on Main Street in America but will also have long term consequences for those living in shanty towns throughout the world. The consequences will be felt through fewer charitable contributions to the many non-governmental organizations (NGOs) working in countries like Haiti to less foreign aid from the United States. In countries like Haiti where there is controlled chaos, the consequences of the bubble bursting will be disastrous.

Photo by KCThinker. Women washing clothes in stream, Haiti.

20 September 2008

This November 4 Check “None of the Above”

Now more than ever this country needs a leader that understands the complex and vexing issues that face this country. We have a financial crisis created by our lawmakers and greedy bankers that has bankrupted numerous banks and financial companies. We have a seemingly never ending war against terror. We have an energy crisis. We have a vacuum of leadership. The so-called leaders refuse to address the looming fiscal crisis of Medicare, Medicaid, Social Security and the massive debt piled up as a result of failed government policies. In a campaign where all the talk is about “change” the real thing we need is massive reform.

For me this election is about the economy, the short-term and long-term fiscal stability of the United State, and a diverse and secure energy policy. If we do not get a handle on those things, you can forget about all the rest because there won’t be a United States of America anymore. We will soon likely have a country in Chapter 11 with foreign governments helping us “reform” or the World Bank treating us like Haiti. Our AAA bond rating will be downgraded meaning that we will have to pay a higher interest rate on our debt which will overnight increase the trillions in unfunded liabilities that are not being addressed.

More than ever we need a leader that will care more for this country than for his party. After more than a year of pure political torture (and hundreds of millions of wasted dollars – the economy seems good enough for Obama to raise more than $390 million off the backs of the “working people”), this 4 November 2008 we will finally get to vote for president of the United States of America. Our choices: Barack Obama (D) and John McCain (R). Given these choices I wonder why I should even vote for president. I would be better off with a box “None of the Above” or “Can I please have a real choice?”

Why should I vote for Barack Obama?

The main reason to vote for Obama is that after the last 40 years we need something new. Obama is young, energetic, healthy, dashing, and a decent orator with a teleprompter. He would bring life back into the stale politics of old, white men. Obama had it right when he opposed the start of the war in Iraq.

Why I should not vote for Barack Obama?

His main mantra is bringing change to Washington, D.C. Yet his policies are largely the policies of the democratic party. The only change he will bring is who sits in the White House, and thankfully that was going to occur regardless. I do not agree with the majority of his policies. From biofuels to taxes, he comes across as a naïve upstart. After the last 8 years I want a president that I think is smarter than me. Obama is definitely not smarter than I am. He is first and foremost a politician that can give a good prepared speech.

Here are a few reasons I will not be voting for Barack Obama:

  • He thinks people that make $250,000 are rich. Really? He would increase taxes on the “rich” and cut taxes on the lower middle class at the same time he is proposing billions in new spending. That does not equate to a balanced budget. We simply cannot afford more deficit spending.
  • Like his main rival, his energy policy is too one sided and not diversified. Obama likes biofuels. Any civilization that burns food should be severely punished in my opinion. His policy relies too much on alternatives with no realistic fossil fuel bridge. By the way, we still need oil to make the stuff we use everyday – you know, stuff like plastics, drugs, chemicals, and hundreds of thousands of other everyday items we take for granted.
  • He wanted to sell oil out of the strategic reserve to lower gas prices. I suppose he does not understand what strategic means unless he thinks it means pandering.
  • He believes climate change should and can be fought. The war on climate change brought to by Al Gore. We have seen how effective the war on poverty, the war on drugs, and the war on terror have been (ergo wasted trillions of dollars for very little to show for it).
  • Obama preaches change yet he picks an entrenched career politician, fellow senator Joe Biden, for his vice president. Biden has been in the senate for 36 years. Obama complains that McCain has not made any meaningful changes during his 22 years in congress, yet Obama picks a stale old white man to be his running mate. For all his supposed foreign policy expertise, Biden suggested dividing Iraq up into three countries; that would have had disastrous consequences.
  • Obama thinks that a strong economy will strengthen the dollar and lower gas prices except he wants cap-and-trade for carbon dioxide (higher energy prices) and he is silent on debt, a balanced budget, and unfunded liabilities (strength of the dollar). A strong economy needs a secure financial structure and cheap energy…endless do loop begins.
  • He thinks it is the government’s responsibility to grow the economy. Here he is wrong again - the government is there is provide a stable and responsible platform from which the economy can grow.
  • Obama thinks we should to take to people like Mahmoud Ahmadinejad, President of Iran, who has called for wiping Israel off the map. He naively holds the belief that if only we talked to Iran and engaged them they would not be so belligerent. Looking back at history I see now how effective Chamberlain was in preventing WWII by talking to Hitler.
  • For all his talk about reaching across the aisle, there is very little evidence of it. We need someone that will get past the Karl Rove divisive political game. I do not see Obama rising above typical Washington, D.C. politics despite all his "talk".
  • Then there are all of his personal entanglements with unrepentant domestic terrorists and racist preachers. Given his quick and convenient disassociation with these people that have supposedly formed him as a man one wonders what he really believes in.

I look at the Obama platform and I see BIG GOVERNMENT. I see us moving closer to socialism where we tax the crap out of everyone and “fairly redistribute” wealth; I see this country digging itself deeper and deeper into debt with yet more failed government and more debt that our children and grandchildren should not be on the hook for. The net result of his platform is that the government will take care of us from cradle to grave. That is fine for hazardous waste management but not for the future of this country.

Why should I vote for John McCain?

He is the maverick. He is a straight talker and calls it as he sees it. He is a fighter and a survivor. Instead of giving up in Iraq he supported the surge (it appears to have been the right move, but the jury is still out on that one). He is saying the right things when it comes to both the democrats and republicans being at fault for the financial crisis. He does not want to bail out any more banks and financial companies. Unlike Obama, he has reached across the aisle, working with Kennedy and Lieberman (of course, we can debate the wisdom of the legislation that came from those pairings). On the face of it, his vice-presidential pick of a reform-minded Sarah Pahlin is refreshing (although her negatives are outweighing her positives). Overall, I believe him more than Obama when it comes to bringing reform (change) to government.

Why should I not vote for John McCain?

Here again, after the last 8 years of Bush I want someone smarter than I am. I want someone with good judgment. There is the stigma that he will be beholden to his party and his party is stuck in the backwoods when it comes to social issues. The republicans also have not shown that they can govern for the people and not for big business.

Here are a few reasons I will not be voting for John McCain:

  • McCain is yet another old, white man from the entrenched political establishment. Instead of running a country the guy should be in Florida enjoying retirement. We need a leader that understands the role technology plays in today’s society. I am not sure McCain understands that role. There is also the likelihood that he will die in office during his first term.
  • He has stated that we may need 5 more years of budget deficits. We can no longer afford to NOT have a balanced budget. I am not sure he understands the gravity of the situation we are in.
  • How can we afford his proposed tax cuts? We are already running a deficit and McCain’s proposals would just increase the deficits. The suggestion of tax cuts increasing revenue just does fly especially when our economy is being hit with this mortgage crisis that is sending it into a tailspin. The bailouts only make the situation more tenuous.
  • His vice-presidential pick, Sarah Pahlin, has made statements that worry me. How can I vote for a ticket on which there is a person that would not even allow abortion in the case of rape or incest?
  • Although McCain had an interesting pick for vice president, her inexperience and religious right baggage will ultimately be the downfall of the ticket. I have no interest in having another born-again like Bush in the White House.
  • McCain’s energy policy is lopsided to the policy of drill here, drill now. We need a balanced approach which only Paris Hilton seems to understand.
  • He appears to be a war monger. Just like Obama, he has a naïve approach when it comes to Iran and Islamic fundamentalism. McCain’s policy is at the opposite end of spectrum from Obama’s.

I look at the McCain platform and I see more of the same failed policies of the Bush administration. Our international standing is at all time low and I doubt McCain can help that.

There you have it; all the reasons to simply skip over the presidential part of the ballot on 4 November 2008. Concentrate on the local elections, although to be honest, until we get a true centrist third party what’s the point. The whacked out fringes of the two party system will continue to dictate the worthlessness of the majority of the candidates that we can elect.

19 September 2008

Are you disgusted? I am.

The recent bail outs of financial giants are unconscionable. The government should not be bailing these institutions out of the mess they created. By providing this support the government delays the necessary and painful correction that must occur. All that is being done is propping up a house of cards with used toothpicks. Reckless, short-term policies and the interference with the natural evolution of such things are creating the conditions for a major collapse that will have dire consequences. There is no such thing as an institution that is “too big” to let fail.

Instead of investigating steroids in baseball, maybe our elected officials should be investigating how we got into this mess and measures to prevent it from happening again. Where are the emergency sessions that spotlight the financial mess? Of course such an investigation would also point the finger at them for allowing lax lending practices in the first place for the misnomer of home ownership for everyone regardless if they could really afford it. Such inquiries would also inevitably shed light on the thousands of dollars of political contributions received by politicians from Fannie Mae and Freddie Mac (The Clinton administration's White House Budget Director Franklin Raines ran Fannie Mae and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie Mae and took home $26 million. Big Democrat Jim Johnson, briefly on Obama's VP search committee, has hauled in millions from his Fannie Mae CEO job). They probably know that these skeletons will have disastrous consequences shortly before an election which is why I fear that nothing is being done but putting the proverbial finger in the failing dike. Unfortunately, I, like many other Americans, are tired of the divisive politics that permeates Washington, D.C. We want solutions, not half-measures and more political pandering.

It is time our "leaders" stopped thinking about themselves and their political careers and started thinking about the country and its citizens. They need to stop thinking about themselves as democrats and republicans and instead see themselves as Americans first. Continuing down this road of billion dollar deficits and billion dollar bail outs will be the end of this country. You are probably aware of the testimony of David Walker, former Comptroller General and his forecasts of tens of trillions of dollars of unfunded liabilities. Maybe they should turn Sarbanes-Oxley on the financial books of the United States government. Where is the accountability? Stop pointing fingers at one another and start with constructive governance.

I sure hope they can sleep at night knowing that our children and grandchildren will suffer in debt bondage due to the actions and inactions of selfish politicians and greedy bankers.

Photo by KCThinker. Street side in Les Cayes, Haiti.