“The United States must increase its national saving rate. Although we should deploy, as best we can, tools to increase private saving, the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.”
The quote came from Fed Chairman Ben Bernanke while giving a speech at the Conference on Asia and the Global Financial Crisis on October 19, hosted by the Federal Reserve of San Francisco. Bernanke also stated, “We were smug”, referring to the years of feckless lending practices when the U.S. economy was bubbling over with easy money from cash-rich countries. I imagine the statement was said rather smugly.
It’s a mystery as to how Bernanke expects consumer saving rates to increase given the lack of jobs and a questionable revival of pre-recession wages for the still-employed considering their sizable pay cuts and reduced hours.
Personal savings of disposable personal income was 3% in August, down from 4% in July and significantly lower than the peak rate of 6.9% in May. Fueled by income tax refunds and stimulus package disbursements, critics at the time suggested consumers were slighting the system by saving rather than spending the money to get the economy moving.
Whatever savings people have managed to accumulate will soon be spent to pay winter heating bills, higher gas prices, medical bills, credit card debt, etc., and quickly consumed during the holiday season to give families a temporary, but desperately needed, good-time feeling.
The sole means by which large numbers of consumers will have the ability to add to their savings is through working. The only way the President could possibly deliver on a promise to create or save 3.5 million jobs by the end of 2010 will be by out-of-focus hocus-pocus employment figures. Obama is not a magician.
Much of the blame to shame goes to Henry Paulson, Ben Bernanke and Timothy Geithner. These overlords of taxpayer moneys squandered their opportunities to leverage the recipients of TARP funds to allocate the handouts where they were intended. Rather than renegotiate home mortgages, banks deliberately refused to accept their part in correcting the fallout from the their historic lax lending practices, which led to millions of residential and commercial toxic loans and a near global collapse of financial markets.
Rather than use relief funds as intended, banks have hoarded the bailouts, denying credit lending to American consumers and restricting lending to small businesses to invest in future growth to create jobs. Wall Street is doing one heck of good job of staying on track for self-propelled titanic gains, assured that Bernanke and Geithner will not allow banking markets to sink, as they had infused banks with the $700B Troubled Asset Relief Program. America is essentially frozen in a void of economic stagnation.
Instead, investment bankers are on another unhealthy round of risky bets that have catapulted the DJIA to over 10,000 points from a low of 6,470 in March as they care more about their own interests than propelling economic growth. The Oganisation for Economic Co-operation and Development leading indicators don’t jibe with the worldwide numbers of unemployed, homeless and destitute citizens.
Thus far this year, banks are so comfortable with the status quo that they have supplied lobbyists with over $220M in a concerted effort to thwart meaningful financial reform.
Be rest assured, our economic whizzers, Ben Bernanke and Timothy Geithner, are on the same scripted page of advising world financial markets that the United States has targeted American consumer savings as a strategy to offset the imbalance of global trading.
"Everyone is going to have to come to terms with the fact that we are going to save more in the United States," Geithner chimed during an interview on October 6 with German weekly newspaper Die Zeit. In other words, don’t count on American consumption to fuel worldwide economic recovery.
“China will carry out the exchange rate regime reform and the United States will increase saving rates so as to promote balanced and strong growth and prosperity in the two nations," read a fact sheet released after the China-U.S.A. Strategic Economic Dialogue held in Beijing where the ‘special representative’ of President George W. Bush was then-Treasury Secretary Henry Paulson, That goes way back to December 15, 2006.
Of lesser importance and with a great amount of vanity, on June 2, 2009, prior to addressing graduates of his alma mater, Harriton High School in Rosemont, PA, Economic Advisor Larry Summers said, “…a higher savings rate can still go with a rising standard of living as long as income is growing.”
C’mon, Larry, you must realize that it’ll be quite some time before “income is growing”. The only things growing are the undeserved Wall Street bonuses and the egos of you and your fellow economists.
Sunday, October 25, 2009
Saturday, October 17, 2009
Deadly October
Common denominators of this column are two vacations taken two years apart and two deaths, each of which were of major global impact. Although years apart, both were murders that happened in the month of October.
In the fall of 2006, while my sister Sue and brother-in-law Mike were vacationing in Florida, I joined them at his family’s getaway home in a well-maintained retirement community of manufactured homes in Bradenton.
I found myself trudging along the sidewalks at the Centre Shops of Longboat Key as Sue looked for bargains, with Mike dutifully in tow, while I lagged outside on park benches people-watching. I had no business with merchants whose wares went above my financial comfort zone of Wal-Mart, or even upscale merchandise at Penney’s.
One store that caught my interest was a craft shop that sold original creations of art rather than mass-market productions. Still, not much tempted me to pull out the plastic until I came upon, of all things imaginable, a rock.
Now, I already had a small collection of rocks. A well-rounded specimen of basalt rock, smooth from the pounding waves along the shore of Lake Superior. The white granite rock pilfered from Yosemite National Forest is a favored possession. A lava rock from the Hawaiian island of Kauai is most unique. (The one taken from the Big Island was shipped back when, after four months of really, really bad luck, I realized the curse that is said to befall anyone who takes a lava rock off the island of Hawaii was indeed true.)
So, before leaving Long Boat Key, a 60-pound, 60-dollar rock engraved with the word “Image” was purchased on October 7, one day prior to the murder of John Lennon on October 8, 1980, and two days shy of his 40th birthday, October 9. Perhaps a coincidence but, nonetheless, this faithful admirer cherishes the chiseled piece of stone that pays tribute to the genius of a man who brought momentous change in music.
A year ago this month, I was vacationing in Rapid City, South Dakota. After a most glorious week of unseasonably warm 80-degree temperatures, with day after day and hours upon hours spent experiencing nearly every possible natural wonder of the region – Mt. Rushmore; Jewel Cave; Needles Highway in Custer State Park with free-roaming buffalo, donkeys, prairie dogs and other native creatures; Mammoth Site; Sylvan Lake; waterfalls accented by the colorful fall leaves – I paid a modest forty dollars for a good chunk of petrified log, pound per pound a much better deal than souvenir T-shirts.
One of my last jaunts was at the base of Devil’s Tower just across the border into Wyoming. It was October 10, a day of a seemingly timeless walking around the base of another natural wonder of time’s making among acres of skyward-reaching pine trees.
These awesome sights brought to me visions of a terribly awful act of torture that began during the early morning hours of October 7, 1998, when a victim of a hate crime was left in a coma from fractures to the back of the head and in front of the right ear. Repeatedly pistol-whipped by Aaron McKinney, and witnessed by, but supposedly not involved in the actual beating, Russell Henderson and he each received two life sentences for the murder of 21-year old Matthew Sheppard, a gay student in Laramie, Wyoming.
During the trial, the girlfriends of McKinney and Henderson both testified that the two had planned to rob a gay man in advance. At the Fireside Lounge on the University of Wyoming campus, Sheppard proved to be an easy target as he was easily convinced the two were sympathetic to gay rights and offered him a ride home.
Instead, he was robbed of his wallet containing $20, plus his shoes, and left to die tied to a wooden split-rail fence, bleeding in near freezing temperatures. A cyclist happened by 18 hours later and the horrors of the previous night were soon exposed to the world. Matthew Shepard passed away on October 12, 1998.
For nearly a decade, attempts have been made to bring into law The Matthew Shepard Act to “Expand the law to authorize the Department of Justice to investigate and prosecute certain bias-motivated crimes based on the victim's actual or perceived sexual orientation, gender, gender identity, or disability. Current law only includes race, color, religion or national origin.”
On October 8, 2009, the House of Representatives passed the Matthew Shepard Hate Crimes Prevention Act by a vote of 281-146. It’s now up to the Senate to vote before the legislation becomes the law.
No, there’s no funereal stone that commemorates the hate crime of that cold night in October eleven yours ago, but chiseled in my mind are scenes that “I can’t imagine”.
In the fall of 2006, while my sister Sue and brother-in-law Mike were vacationing in Florida, I joined them at his family’s getaway home in a well-maintained retirement community of manufactured homes in Bradenton.
I found myself trudging along the sidewalks at the Centre Shops of Longboat Key as Sue looked for bargains, with Mike dutifully in tow, while I lagged outside on park benches people-watching. I had no business with merchants whose wares went above my financial comfort zone of Wal-Mart, or even upscale merchandise at Penney’s.
One store that caught my interest was a craft shop that sold original creations of art rather than mass-market productions. Still, not much tempted me to pull out the plastic until I came upon, of all things imaginable, a rock.
Now, I already had a small collection of rocks. A well-rounded specimen of basalt rock, smooth from the pounding waves along the shore of Lake Superior. The white granite rock pilfered from Yosemite National Forest is a favored possession. A lava rock from the Hawaiian island of Kauai is most unique. (The one taken from the Big Island was shipped back when, after four months of really, really bad luck, I realized the curse that is said to befall anyone who takes a lava rock off the island of Hawaii was indeed true.)
So, before leaving Long Boat Key, a 60-pound, 60-dollar rock engraved with the word “Image” was purchased on October 7, one day prior to the murder of John Lennon on October 8, 1980, and two days shy of his 40th birthday, October 9. Perhaps a coincidence but, nonetheless, this faithful admirer cherishes the chiseled piece of stone that pays tribute to the genius of a man who brought momentous change in music.
A year ago this month, I was vacationing in Rapid City, South Dakota. After a most glorious week of unseasonably warm 80-degree temperatures, with day after day and hours upon hours spent experiencing nearly every possible natural wonder of the region – Mt. Rushmore; Jewel Cave; Needles Highway in Custer State Park with free-roaming buffalo, donkeys, prairie dogs and other native creatures; Mammoth Site; Sylvan Lake; waterfalls accented by the colorful fall leaves – I paid a modest forty dollars for a good chunk of petrified log, pound per pound a much better deal than souvenir T-shirts.
One of my last jaunts was at the base of Devil’s Tower just across the border into Wyoming. It was October 10, a day of a seemingly timeless walking around the base of another natural wonder of time’s making among acres of skyward-reaching pine trees.
These awesome sights brought to me visions of a terribly awful act of torture that began during the early morning hours of October 7, 1998, when a victim of a hate crime was left in a coma from fractures to the back of the head and in front of the right ear. Repeatedly pistol-whipped by Aaron McKinney, and witnessed by, but supposedly not involved in the actual beating, Russell Henderson and he each received two life sentences for the murder of 21-year old Matthew Sheppard, a gay student in Laramie, Wyoming.
During the trial, the girlfriends of McKinney and Henderson both testified that the two had planned to rob a gay man in advance. At the Fireside Lounge on the University of Wyoming campus, Sheppard proved to be an easy target as he was easily convinced the two were sympathetic to gay rights and offered him a ride home.
Instead, he was robbed of his wallet containing $20, plus his shoes, and left to die tied to a wooden split-rail fence, bleeding in near freezing temperatures. A cyclist happened by 18 hours later and the horrors of the previous night were soon exposed to the world. Matthew Shepard passed away on October 12, 1998.
For nearly a decade, attempts have been made to bring into law The Matthew Shepard Act to “Expand the law to authorize the Department of Justice to investigate and prosecute certain bias-motivated crimes based on the victim's actual or perceived sexual orientation, gender, gender identity, or disability. Current law only includes race, color, religion or national origin.”
On October 8, 2009, the House of Representatives passed the Matthew Shepard Hate Crimes Prevention Act by a vote of 281-146. It’s now up to the Senate to vote before the legislation becomes the law.
No, there’s no funereal stone that commemorates the hate crime of that cold night in October eleven yours ago, but chiseled in my mind are scenes that “I can’t imagine”.
Thursday, October 8, 2009
The Migration of Health Care Reform
Is the Obama Administration serious about universal healthcare reform? Yes. At this point, any old Democrat health plan will do.
Will healthcare reform include coverage for illegal immigrants? Contrary to the infamous two-word wisecrack blurted out by a now well-known rightwing racist Senator from South Carolina, the answer is, “No way, Jose.”
If Congress worms its way to pass legislation on healthcare reform within the next few weeks, why would it not become effective until 2013? The obvious answer is that it will be less of a political issue in the 2010-midterm elections. But there appears to be a scheme a-brewing to provide coverage to not only a fair number of currently uninsured 45 million Americans but also to a few extra million immigrants.
On October 2 The New York Times printed an article on actions being implemented by the U.S. States Citizenship and Immigration Services (CIS) that will reshape the social (unrest?) and cultural (shock?) makeup of America, resulting in an unprecedented change in political arenas, perhaps resulting in an eventual emergence of viable third party candidates. It may also become the defining moment that brings to fruition President Obama’s willful intent of “fundamentally transforming the United States of America.” In the meantime, demographics may give Democrats the upper hand, especially among Hispanics.
The Times’ article reported that CIS is taking the first steps to accommodate an anticipated stampede of illegal immigrants seeking visas in response to President Obama’s stated intention to propose to Congress legislation toward comprehensive immigration reform. As quoted by CIS director Alejandro Mayorkas, “We are under way to prepare for that.”
It’s a given fact there are well over 10 million illegal immigrants in the U.S., of which approximately 6 million are said to typically seek legal status each year. Since the CIS anticipates millions of immigrants will apply for legal status within a matter of weeks if immigration legislation passes Congress next year, the agency is on an immediate hiring spree to play catch-up with a current backlog of pending paperwork. More jobs, bigger government.
Some lawmakers have already expressed concern that, as CIS becomes overwhelmed with large volumes of applications, haste will result in poorly processed paperwork and lax review of background checks will create a national security crisis.
Regardless of what may come from immigration reform, Homeland Security Secretary Janet Napolitano this past week revealed a strategy that will overhaul the way immigration violators are held in detention centers. With over 60% of detainees classified as non-criminals, Napolitano said an initiative is under way “to make immigration detention more cohesive, accountable and relevant to the entire spectrum of detainees we are dealing with.”
Which means, in the coming weeks Napolitano will submit to Congress plans to renovate vacant hotels and nursing homes, and convert residential houses to provide less restrictive oversight of low-risk violators of immigration laws, primarily women and children. By doing so, savings are expected to lower the cost from $100 per day to about $14 per day for each detainee.
It’s believed the new policy will greatly reduce the annual cost of $2.4 billion currently spent on approximately 380,000 immigrants, of which many were arrested during the past two years when ICE agents followed a practice of raiding neighborhoods, factories and other workplaces known to employ immigrants, thus terrorizing people and traumatizing children.
Rather than targeting employees, current practice puts businesses on legal notice to verify the legal status of immigrants.
The perfect example is the 1,800 employees of American Apparel in Los Angeles who were terminated in early September by the company as a result of Immigration and Customs Enforcement (ICE) agents identifying discrepancies and mismatches in employment records when compared to immigration records of the Social Security Administration. That is to say, they were proven to be illegal immigrants.
The action came as a result of a 17-month investigation by ICE that began with the Bush Administration. LA Times journalist Tim Rutten called the action a “callous” turn of events under President Obama. It doesn’t seem to phase otherwise law-abiding, intelligent people that hiring and, at times, harboring illegal immigrants with subsidized housing are lawless un-American activities.
With the government displaying a change in sentiment toward the humanitarian aspects of non-violent immigrants, legal or not, new laws of this land will bring about change that we’ll all have to live with.
Provisions are now in the works to address detainee concerns about the lack of proper treatment for medical and mental health conditions. The fact that seriously ill detainees have died while in custody cannot be ignored. Therefore, they will have healthcare before uninsured Americans.
So, will President Obama’s healthcare reform include coverage for illegal immigrants? “No way, Jose.” By the time it’s implemented in 2013, many of those illegal immigrants will have become naturalized citizens.
Will healthcare reform include coverage for illegal immigrants? Contrary to the infamous two-word wisecrack blurted out by a now well-known rightwing racist Senator from South Carolina, the answer is, “No way, Jose.”
If Congress worms its way to pass legislation on healthcare reform within the next few weeks, why would it not become effective until 2013? The obvious answer is that it will be less of a political issue in the 2010-midterm elections. But there appears to be a scheme a-brewing to provide coverage to not only a fair number of currently uninsured 45 million Americans but also to a few extra million immigrants.
On October 2 The New York Times printed an article on actions being implemented by the U.S. States Citizenship and Immigration Services (CIS) that will reshape the social (unrest?) and cultural (shock?) makeup of America, resulting in an unprecedented change in political arenas, perhaps resulting in an eventual emergence of viable third party candidates. It may also become the defining moment that brings to fruition President Obama’s willful intent of “fundamentally transforming the United States of America.” In the meantime, demographics may give Democrats the upper hand, especially among Hispanics.
The Times’ article reported that CIS is taking the first steps to accommodate an anticipated stampede of illegal immigrants seeking visas in response to President Obama’s stated intention to propose to Congress legislation toward comprehensive immigration reform. As quoted by CIS director Alejandro Mayorkas, “We are under way to prepare for that.”
It’s a given fact there are well over 10 million illegal immigrants in the U.S., of which approximately 6 million are said to typically seek legal status each year. Since the CIS anticipates millions of immigrants will apply for legal status within a matter of weeks if immigration legislation passes Congress next year, the agency is on an immediate hiring spree to play catch-up with a current backlog of pending paperwork. More jobs, bigger government.
Some lawmakers have already expressed concern that, as CIS becomes overwhelmed with large volumes of applications, haste will result in poorly processed paperwork and lax review of background checks will create a national security crisis.
Regardless of what may come from immigration reform, Homeland Security Secretary Janet Napolitano this past week revealed a strategy that will overhaul the way immigration violators are held in detention centers. With over 60% of detainees classified as non-criminals, Napolitano said an initiative is under way “to make immigration detention more cohesive, accountable and relevant to the entire spectrum of detainees we are dealing with.”
Which means, in the coming weeks Napolitano will submit to Congress plans to renovate vacant hotels and nursing homes, and convert residential houses to provide less restrictive oversight of low-risk violators of immigration laws, primarily women and children. By doing so, savings are expected to lower the cost from $100 per day to about $14 per day for each detainee.
It’s believed the new policy will greatly reduce the annual cost of $2.4 billion currently spent on approximately 380,000 immigrants, of which many were arrested during the past two years when ICE agents followed a practice of raiding neighborhoods, factories and other workplaces known to employ immigrants, thus terrorizing people and traumatizing children.
Rather than targeting employees, current practice puts businesses on legal notice to verify the legal status of immigrants.
The perfect example is the 1,800 employees of American Apparel in Los Angeles who were terminated in early September by the company as a result of Immigration and Customs Enforcement (ICE) agents identifying discrepancies and mismatches in employment records when compared to immigration records of the Social Security Administration. That is to say, they were proven to be illegal immigrants.
The action came as a result of a 17-month investigation by ICE that began with the Bush Administration. LA Times journalist Tim Rutten called the action a “callous” turn of events under President Obama. It doesn’t seem to phase otherwise law-abiding, intelligent people that hiring and, at times, harboring illegal immigrants with subsidized housing are lawless un-American activities.
With the government displaying a change in sentiment toward the humanitarian aspects of non-violent immigrants, legal or not, new laws of this land will bring about change that we’ll all have to live with.
Provisions are now in the works to address detainee concerns about the lack of proper treatment for medical and mental health conditions. The fact that seriously ill detainees have died while in custody cannot be ignored. Therefore, they will have healthcare before uninsured Americans.
So, will President Obama’s healthcare reform include coverage for illegal immigrants? “No way, Jose.” By the time it’s implemented in 2013, many of those illegal immigrants will have become naturalized citizens.
Friday, October 2, 2009
Banking Executives vs Football Players
“Why is it we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs and NFL football players?”
On September 14, President Obama posed the question as he addressed Wall Street from Federal Hall on the anniversary of the collapse of Lehman Brothers. Obama also stated that "we will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses." He continued, “And, of course, to embrace serious financial reform, not fight it."
The President had already set up a game plan months before. I should note that, although he wisely commented about excessive executive compensation during his campaign, Obama’s messages were all about “regulation”.
With little fanfare, Kenneth Feinberg, appointed by the Treasury Department in June and dubbed “pay czar” with the official title of Special Master, the same post he was given to distribute aid to victims after 9/11, has remained a behind-the-scenes administrator, which indicates he’s little more than an Obama implant to promote oversight of financial institutions by means of some regulatory scheme rather than by putting ceilings on executive compensation.
On September 25, Feinberg stated that, when he releases a report next month on the executive compensations of bail-out companies, “ We don’t want specific names next to dollars.” And that, "Avoiding excessive risk means different things to different people in different situations." The wording indicates a degree of coaching from Treasury Secreaty Timothy Geithner who, in turn, may have been teleprompted by Team Obama.
Unlike German Chancellor Angela Merkel and French President Nicolas Sarkoz, both of whom prefer strict governance over banking bonuses, The Administration seems to be treading lightly toward a resolution with Wall Street egos and their troves of lobbyists to relegate satisfactory action to Congress.
Obama’s apparent disdain of Simi Valley entrepreneurs who provide innovation and evolutionary advancements in e-commerce technologies is misplaced as displayed by the Forbes list of the top 10 CEOs and their levels of compensation.
Although Oracle CEO Lawrence Ellison tops the list in compensation ($556M), petroleum CEOs of Occidental ($222M), Hess ($154M), Ultra Petroleum ($116M), and EOG Resources ($90M) round up the top remaining five companies that handsomely reward their CEOs with fortunes. Of course, the President dare not rile the money-mongering emissaries of greenhouse gases.
Nor should Obama attempt to tackle the salaries of football players.
In 2008, Ben Roethlisberger of the NFL Pittsburgh Steelers made $27M. Of other sports figures, Kevin Garnett of the NBA Boston Celtics was paid $27M; Alex Rodriguez of the MLB New York Yankees received $33M; in the NHL Dany Heatley of the Ottawa Senators earned $10M. Not too shabby by any measure of success.
Which takes me back to the interests of Wall Street. When the dot-com bubble burst at the turn of the century, an estimated $7-trillion were lost to investors, primarily in tech stocks. When Wall Street got burned, it was quick to regain its fortunes in the housing market.
In 2005, Yale economist Robert Shiller said, “Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors.”
Over these past two years, it’s estimated that U.S. households have lost $7-trillion in home equity, $2-trillion in retirement funds, and $8-trillion in the stock market. But to this day Wall Street shows no shame.
Lawrence White, a professor at New York University's Stern School of Business, said Wall Street believes its pay is justified and that, “The big Wall Street view is 'Hey, we work hard, we achieve a lot, and we deserve what we get paid.” Recent articles and Op-Ed columns in The New York Times shows that many Lehman Brothers ex-employees are remorseful of only one thing: the loss of the jobs that had brought them such riches they may never see again.
According to Challenger, Gray & Christmas, an outplacement company, only slightly more than 300,000 jobs were lost in the finance industry since the beginning of 2008, as compared to all the other 7.4M jobs lost since the beginning of the recession.
It should be no surprise that, according to an Ipsos Public Affairs survey conducted September 11-14 of 1,000 adults, 60% of Americans are angry about excessive compensation to investment executives.
President Obama should leave Simi Valley alone, let sports fans judge the worth of football players and address the concerns that Americans have about the fortunes that Wall Street executives have reaped at the expense of present day and future taxpayers.
On September 14, President Obama posed the question as he addressed Wall Street from Federal Hall on the anniversary of the collapse of Lehman Brothers. Obama also stated that "we will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses." He continued, “And, of course, to embrace serious financial reform, not fight it."
The President had already set up a game plan months before. I should note that, although he wisely commented about excessive executive compensation during his campaign, Obama’s messages were all about “regulation”.
With little fanfare, Kenneth Feinberg, appointed by the Treasury Department in June and dubbed “pay czar” with the official title of Special Master, the same post he was given to distribute aid to victims after 9/11, has remained a behind-the-scenes administrator, which indicates he’s little more than an Obama implant to promote oversight of financial institutions by means of some regulatory scheme rather than by putting ceilings on executive compensation.
On September 25, Feinberg stated that, when he releases a report next month on the executive compensations of bail-out companies, “ We don’t want specific names next to dollars.” And that, "Avoiding excessive risk means different things to different people in different situations." The wording indicates a degree of coaching from Treasury Secreaty Timothy Geithner who, in turn, may have been teleprompted by Team Obama.
Unlike German Chancellor Angela Merkel and French President Nicolas Sarkoz, both of whom prefer strict governance over banking bonuses, The Administration seems to be treading lightly toward a resolution with Wall Street egos and their troves of lobbyists to relegate satisfactory action to Congress.
Obama’s apparent disdain of Simi Valley entrepreneurs who provide innovation and evolutionary advancements in e-commerce technologies is misplaced as displayed by the Forbes list of the top 10 CEOs and their levels of compensation.
Although Oracle CEO Lawrence Ellison tops the list in compensation ($556M), petroleum CEOs of Occidental ($222M), Hess ($154M), Ultra Petroleum ($116M), and EOG Resources ($90M) round up the top remaining five companies that handsomely reward their CEOs with fortunes. Of course, the President dare not rile the money-mongering emissaries of greenhouse gases.
Nor should Obama attempt to tackle the salaries of football players.
In 2008, Ben Roethlisberger of the NFL Pittsburgh Steelers made $27M. Of other sports figures, Kevin Garnett of the NBA Boston Celtics was paid $27M; Alex Rodriguez of the MLB New York Yankees received $33M; in the NHL Dany Heatley of the Ottawa Senators earned $10M. Not too shabby by any measure of success.
Which takes me back to the interests of Wall Street. When the dot-com bubble burst at the turn of the century, an estimated $7-trillion were lost to investors, primarily in tech stocks. When Wall Street got burned, it was quick to regain its fortunes in the housing market.
In 2005, Yale economist Robert Shiller said, “Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors.”
Over these past two years, it’s estimated that U.S. households have lost $7-trillion in home equity, $2-trillion in retirement funds, and $8-trillion in the stock market. But to this day Wall Street shows no shame.
Lawrence White, a professor at New York University's Stern School of Business, said Wall Street believes its pay is justified and that, “The big Wall Street view is 'Hey, we work hard, we achieve a lot, and we deserve what we get paid.” Recent articles and Op-Ed columns in The New York Times shows that many Lehman Brothers ex-employees are remorseful of only one thing: the loss of the jobs that had brought them such riches they may never see again.
According to Challenger, Gray & Christmas, an outplacement company, only slightly more than 300,000 jobs were lost in the finance industry since the beginning of 2008, as compared to all the other 7.4M jobs lost since the beginning of the recession.
It should be no surprise that, according to an Ipsos Public Affairs survey conducted September 11-14 of 1,000 adults, 60% of Americans are angry about excessive compensation to investment executives.
President Obama should leave Simi Valley alone, let sports fans judge the worth of football players and address the concerns that Americans have about the fortunes that Wall Street executives have reaped at the expense of present day and future taxpayers.
Monday, September 28, 2009
And the survey says...
There are such a myriad of purveyors of surveys and opinion polls (Gallop, Harris, Nielsen, Roper, Pew Research) that it’s difficult to know if one provides a better pulse of consumer, constituent or citizen attitudes than others. Another source of gathering people’s viewpoints are conducted by colleges and universities, of which the University of Michigan Institute for Social Research has a 60-year history of being “one of the largest and oldest academic survey and social research organizations in the world”.
Then there are polls that are less than scientific on social websites, including MySpace, Facebook and Sodahead. Some of these surveys are well intentioned and thought provoking while others are nothing other than childish inquiries on such topics as the Jonas Brothers, Britney Spears and other teenybopper interests.
Others website networks give people and businesses an opportunity to design and post online surveys to suit their specific needs, some of which are free, such as polldaddy, micropoll, twiigs, proprofs, and surveypopups.
There are industry-specific questionnaires – medical, education, employee satisfaction, customer satisfaction, student opinions, plus surveys that measure how the electorate views the performance of international, national, state and county governments.
The wording and placement of survey questions can produce different results. Survey results can be slighted with the intent to direct questions that may result in respondents to give answers that serve their cause. To avoid this tactic, it’s necessary to consider two important factors in validating the worthiness of a survey – demographics and methodology.
Demographics include household income, gender, education, race, age and marital status, all of which are basic considerations. Understandably, political opinion polls require party affiliation. The more information given by a targeted segment of the population, the results hold a greater level of accuracy than if the cross-section of respondents has its limitations.
Methodology identifies how the poll was administered. For instance, the accuracy of a random sampling of 1,000 respondents is typically +/- 3% while a larger sampling of 10,000 reduces the margin to a 1% error rate, which also takes into consideration that some participants may not be entirely honest in that they try to second guess mainstream opinions.
To make the sampling as random as possible, surveys conducted by large pollsters may take a computer-generated list of, say 50,000, active home telephone nationwide numbers. From there, a computer may then be programmed to randomly select perhaps 1,000 residential numbers. A random selection of exchanges and digits takes the process one step further.
Another measure to be taken into consideration: generally speaking there’s a 95% accuracy rate of the +/- accuracy rate! Figure that one out!
‘No opinion/Prefer not to answer’ on a multiple-choice question restricts information for analysis of information, yet they’re appropriate for answers concerning household income, race and religious affiliation. It’s like saying, “It’s none of your business.” But without providing age and sex, results of many surveys invalidate the intended focus of the subject at hand.
Strongly agree, somewhat agree, agree, slightly disagree, disagree, strongly disagree. Take your pick. This format provides a more specific opinion than all other question-answer polls. It may also be more affective in giving respondents an easier task of making a choice if they should have a borderline opinion on a given subject. It helps to avoid the guesswork out of the actual mood of the respondent. Depending on the question, I appreciate the option to ‘strongly’ disagree rather than be restricted to ‘disagree’.
Some opinion polls are sought on a regular basis, say weekly and called a “tracking poll”, when there is deemed a frequent change of attitude, such as health care legislation, the economy, foreign policy, abortion or, coming soon to everyone’s contention, the debate on immigration reform, which is sure to be another round of partisan alignment.
A bandwagon effect occurs when the poll prompts voters to back the candidate shown to be winning in the poll, which may have been the case during the 2008 Presidential primaries, which not to meant to put in doubt the popularity of Obama.
In the 2008 General Election, Barack Obama garnered 52.9% of the vote, which happens to be extremely close to the 52% overall national approval ratings in July and August, so it should be of little surprise that, after the 100-day honeymoon, it should level off from the 60% in February when he was given the benefit of the doubt for his anticipated efforts to tackle the leftover debris from the Bush years, and the 61% approval rate in May, which may have been largely influenced by taxpayer rebates.
My favorite surveys are those sought from businesses that are requested for marketing purposes. Wal-Mart’s an excellent example where I could actually win $1,000 of in-store purchases. The odds aren’t likely to be any better than those for the Lottery.
For relaxation I watch Family Feud. Whether be the original host Richard Dawson or followers Ray Combs, Richard Carr or today’s John O’Hurley some are repetitive whereby I tend to coach them on the answers. It’s obvious some have watched previous broadcasts as they sweep the answers toward victory.
Although unscientific, the results on questions can be very telling of people’s attitudes. There a few ‘Fast money round’ responses asked of “one hundred people” that were very surprising.
The #1 answer as to what age people start to lose their memory: 50 years old! I beg to question the validity on that one. The #1 answer to “On a scale of 1 to 10, how satisfied are you with your job?” was “5” – not surprising by any means.
The one that got shocked me a bit was “On a scale of 1-10, how prepared is the USA for a crisis?” I would have given it a “7” but the #1 answer was “5”! from a hundred people more astute to reality than myself.
Then there are polls that are less than scientific on social websites, including MySpace, Facebook and Sodahead. Some of these surveys are well intentioned and thought provoking while others are nothing other than childish inquiries on such topics as the Jonas Brothers, Britney Spears and other teenybopper interests.
Others website networks give people and businesses an opportunity to design and post online surveys to suit their specific needs, some of which are free, such as polldaddy, micropoll, twiigs, proprofs, and surveypopups.
There are industry-specific questionnaires – medical, education, employee satisfaction, customer satisfaction, student opinions, plus surveys that measure how the electorate views the performance of international, national, state and county governments.
The wording and placement of survey questions can produce different results. Survey results can be slighted with the intent to direct questions that may result in respondents to give answers that serve their cause. To avoid this tactic, it’s necessary to consider two important factors in validating the worthiness of a survey – demographics and methodology.
Demographics include household income, gender, education, race, age and marital status, all of which are basic considerations. Understandably, political opinion polls require party affiliation. The more information given by a targeted segment of the population, the results hold a greater level of accuracy than if the cross-section of respondents has its limitations.
Methodology identifies how the poll was administered. For instance, the accuracy of a random sampling of 1,000 respondents is typically +/- 3% while a larger sampling of 10,000 reduces the margin to a 1% error rate, which also takes into consideration that some participants may not be entirely honest in that they try to second guess mainstream opinions.
To make the sampling as random as possible, surveys conducted by large pollsters may take a computer-generated list of, say 50,000, active home telephone nationwide numbers. From there, a computer may then be programmed to randomly select perhaps 1,000 residential numbers. A random selection of exchanges and digits takes the process one step further.
Another measure to be taken into consideration: generally speaking there’s a 95% accuracy rate of the +/- accuracy rate! Figure that one out!
‘No opinion/Prefer not to answer’ on a multiple-choice question restricts information for analysis of information, yet they’re appropriate for answers concerning household income, race and religious affiliation. It’s like saying, “It’s none of your business.” But without providing age and sex, results of many surveys invalidate the intended focus of the subject at hand.
Strongly agree, somewhat agree, agree, slightly disagree, disagree, strongly disagree. Take your pick. This format provides a more specific opinion than all other question-answer polls. It may also be more affective in giving respondents an easier task of making a choice if they should have a borderline opinion on a given subject. It helps to avoid the guesswork out of the actual mood of the respondent. Depending on the question, I appreciate the option to ‘strongly’ disagree rather than be restricted to ‘disagree’.
Some opinion polls are sought on a regular basis, say weekly and called a “tracking poll”, when there is deemed a frequent change of attitude, such as health care legislation, the economy, foreign policy, abortion or, coming soon to everyone’s contention, the debate on immigration reform, which is sure to be another round of partisan alignment.
A bandwagon effect occurs when the poll prompts voters to back the candidate shown to be winning in the poll, which may have been the case during the 2008 Presidential primaries, which not to meant to put in doubt the popularity of Obama.
In the 2008 General Election, Barack Obama garnered 52.9% of the vote, which happens to be extremely close to the 52% overall national approval ratings in July and August, so it should be of little surprise that, after the 100-day honeymoon, it should level off from the 60% in February when he was given the benefit of the doubt for his anticipated efforts to tackle the leftover debris from the Bush years, and the 61% approval rate in May, which may have been largely influenced by taxpayer rebates.
My favorite surveys are those sought from businesses that are requested for marketing purposes. Wal-Mart’s an excellent example where I could actually win $1,000 of in-store purchases. The odds aren’t likely to be any better than those for the Lottery.
For relaxation I watch Family Feud. Whether be the original host Richard Dawson or followers Ray Combs, Richard Carr or today’s John O’Hurley some are repetitive whereby I tend to coach them on the answers. It’s obvious some have watched previous broadcasts as they sweep the answers toward victory.
Although unscientific, the results on questions can be very telling of people’s attitudes. There a few ‘Fast money round’ responses asked of “one hundred people” that were very surprising.
The #1 answer as to what age people start to lose their memory: 50 years old! I beg to question the validity on that one. The #1 answer to “On a scale of 1 to 10, how satisfied are you with your job?” was “5” – not surprising by any means.
The one that got shocked me a bit was “On a scale of 1-10, how prepared is the USA for a crisis?” I would have given it a “7” but the #1 answer was “5”! from a hundred people more astute to reality than myself.
Thursday, September 17, 2009
Move and the Economy Moves Too
As part of the American Recovery and Reinvestment Act of 2009, between January 1 and November 30, 2009, qualified first-time home buyers are eligible for tax credits of 10% of the home’s purchase price, with an $8,000 limit, through the filing of an income tax return.
According to the Treasury Department, through August approximately 314,000 buyers had bought into the program at an estimated $154-million in credits. The National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) anticipate final figures will show over 1.5 millions homes sold, at a total cost of about $15 billion. The NAR estimates that only 350,000 homes, or 23%, will be directly attributed to the program incentives, claiming others would have made the purchase regardless.
With time running out, on June 12, Senator Johnny Isakson (R-Georgia) introduced legislation to not only extend the tax credits but up the ante to $15,000 to any homebuyer, plus eliminate income caps of $75,000 for individuals/$150,000 for couples. It has bipartisan support, including Senators Chris Dodd (D-CT), Joe Lieberman (ID-CT) and Senator Bob Corker (R-Tennessee).
From the words of Sen. Isakson, “In the mid-1970’s when America faced a similar housing crisis following a period of easy credit and loose underwriting that flooded the market with new construction and a three-year supply of vacant homes, Congress responded by passing a $2,000 ($8,000 in 2009 dollars) tax credit for anyone purchasing a new home for their principal residence. The results from that tax credit were clear and swift as home values stabilized, housing inventory dropped and the market recovered.”
The projected cost, adding to national debt, would be $50 to $100 billion. It’s a relatively small price to pay considering the hundreds of billion of dollars that were chucked out to stave off the failings of large scale banking institutions. The little guy deserves a good slice of the stimulus pie. Unlike the big, bad banks, consumers would be less likely to hoard their moneys.
I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.
As reported by the U.S. Census Bureau, there were 18.7 million unsold homes in the U.S. at the end of the second quarter, a slight increase from the 18.6 million homes a year earlier. Representing a full 14% of the total 130.8 million homes in the U.S., at the current sales rate it would take 9.4 months to sell those homes and get them off the market.
With Alt-A and Option ARM mortgages due to balloon over the next three years, this recession is set to inch ever closer to something worse than a recession. It’s too late to cushion the blowout from these toxic loans that, at over $2.75-trillion, are more than double the mess caused from sub-prime loans.
Steps must be taken to keep people in their homes and move others into vacant homes. Going forward, lax lending practices must be avoided through strong regulatory oversight. The slight of information from applicants must be tamped by prohibiting further use of an automated loan process that avoided the review of income and assets.
Since the glut of unsold homes puts in doubt a surge of new-home construction anytime in the foreseeable future, incentives would give realtors, our masters of property investments, something to cheer about in the meantime, snuggly sandwiched between buyers and sellers and giving everyone that warm, fuzzy feeling of home sweet home.
Hopefully a temporary setback to a growing population, America has largely lost its means of being a mobile society. People are stuck in the humdrums of doing too much of nothing, driven to levels of complacency that may have long-lasting affects on its place in the cutting edges of the new world order.
There are plenty of positive prospects for the redistribution of the population and the limited wealth that some have managed to cling on to. Many realize they must downsize, thus having extra cash that will bolster local businesses as they make the best of their home investments with remodeling, upgrades and purchases of new home furnishings.
A number of little sparks across the nation would light a brighter future for small and mid-size businesses; a stimulating lifeline toward a prosperous tomorrow – job creation. As people begin to once again earn wages, the momentum will help grow the economy sooner than any other government program imaginable.
A move from one region to another necessitates a wardrobe change; southerners going north will need seasonal apparel, northerners heading south would shed layers of winter cloths for shorts, swim suits, year-round tank tops, sandals, beach towels and suntan lotions as they lounge beneath their hammocks and large beach umbrellas.
What would this hold for Florida? Between the springs of 2008 and 2009 the state population declined by 58,294 – no doubt, bad news. But, as some leave, others would see this as an opportunity to head south, especially retirees who have tired weeks upon weeks of cold and freezing temperatures under gloomy, overcast skies.
According to a report issued by a 2008 CDC report, in 2005 the life expectancy for those over the age of 65 suggests retirees could spend another 18 years (16 male, 19 female) in the Sunshine State making new friends in the vast number of retirement communities.
The best of all bets is that first-time home buyers who already have the funds for a down payment will finally own a piece of the American dream and take hundreds of thousands of unoccupied homes off the housing market. To affectively move large numbers of people into new homes, giving incentives to all prospective homebuyers, new and existing alike, is a necessity. As a compromise new homebuyers could be offered the full $15,000 incentive package while existing homeowners given the offering of $8,000.
I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.
According to the Treasury Department, through August approximately 314,000 buyers had bought into the program at an estimated $154-million in credits. The National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) anticipate final figures will show over 1.5 millions homes sold, at a total cost of about $15 billion. The NAR estimates that only 350,000 homes, or 23%, will be directly attributed to the program incentives, claiming others would have made the purchase regardless.
With time running out, on June 12, Senator Johnny Isakson (R-Georgia) introduced legislation to not only extend the tax credits but up the ante to $15,000 to any homebuyer, plus eliminate income caps of $75,000 for individuals/$150,000 for couples. It has bipartisan support, including Senators Chris Dodd (D-CT), Joe Lieberman (ID-CT) and Senator Bob Corker (R-Tennessee).
From the words of Sen. Isakson, “In the mid-1970’s when America faced a similar housing crisis following a period of easy credit and loose underwriting that flooded the market with new construction and a three-year supply of vacant homes, Congress responded by passing a $2,000 ($8,000 in 2009 dollars) tax credit for anyone purchasing a new home for their principal residence. The results from that tax credit were clear and swift as home values stabilized, housing inventory dropped and the market recovered.”
The projected cost, adding to national debt, would be $50 to $100 billion. It’s a relatively small price to pay considering the hundreds of billion of dollars that were chucked out to stave off the failings of large scale banking institutions. The little guy deserves a good slice of the stimulus pie. Unlike the big, bad banks, consumers would be less likely to hoard their moneys.
I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.
As reported by the U.S. Census Bureau, there were 18.7 million unsold homes in the U.S. at the end of the second quarter, a slight increase from the 18.6 million homes a year earlier. Representing a full 14% of the total 130.8 million homes in the U.S., at the current sales rate it would take 9.4 months to sell those homes and get them off the market.
With Alt-A and Option ARM mortgages due to balloon over the next three years, this recession is set to inch ever closer to something worse than a recession. It’s too late to cushion the blowout from these toxic loans that, at over $2.75-trillion, are more than double the mess caused from sub-prime loans.
Steps must be taken to keep people in their homes and move others into vacant homes. Going forward, lax lending practices must be avoided through strong regulatory oversight. The slight of information from applicants must be tamped by prohibiting further use of an automated loan process that avoided the review of income and assets.
Since the glut of unsold homes puts in doubt a surge of new-home construction anytime in the foreseeable future, incentives would give realtors, our masters of property investments, something to cheer about in the meantime, snuggly sandwiched between buyers and sellers and giving everyone that warm, fuzzy feeling of home sweet home.
Hopefully a temporary setback to a growing population, America has largely lost its means of being a mobile society. People are stuck in the humdrums of doing too much of nothing, driven to levels of complacency that may have long-lasting affects on its place in the cutting edges of the new world order.
There are plenty of positive prospects for the redistribution of the population and the limited wealth that some have managed to cling on to. Many realize they must downsize, thus having extra cash that will bolster local businesses as they make the best of their home investments with remodeling, upgrades and purchases of new home furnishings.
A number of little sparks across the nation would light a brighter future for small and mid-size businesses; a stimulating lifeline toward a prosperous tomorrow – job creation. As people begin to once again earn wages, the momentum will help grow the economy sooner than any other government program imaginable.
A move from one region to another necessitates a wardrobe change; southerners going north will need seasonal apparel, northerners heading south would shed layers of winter cloths for shorts, swim suits, year-round tank tops, sandals, beach towels and suntan lotions as they lounge beneath their hammocks and large beach umbrellas.
What would this hold for Florida? Between the springs of 2008 and 2009 the state population declined by 58,294 – no doubt, bad news. But, as some leave, others would see this as an opportunity to head south, especially retirees who have tired weeks upon weeks of cold and freezing temperatures under gloomy, overcast skies.
According to a report issued by a 2008 CDC report, in 2005 the life expectancy for those over the age of 65 suggests retirees could spend another 18 years (16 male, 19 female) in the Sunshine State making new friends in the vast number of retirement communities.
The best of all bets is that first-time home buyers who already have the funds for a down payment will finally own a piece of the American dream and take hundreds of thousands of unoccupied homes off the housing market. To affectively move large numbers of people into new homes, giving incentives to all prospective homebuyers, new and existing alike, is a necessity. As a compromise new homebuyers could be offered the full $15,000 incentive package while existing homeowners given the offering of $8,000.
I’m all for it. This could be the deciding factor in following through on an anticipated move to where there are “42,145 square miles of scenic beauty” in the Smoky Mountains. Think of me as a future right-wing, gun-totin’ Second Amendment Patriot of The Volunteer State. Seriously.
Monday, September 14, 2009
Bankrupties: The Worst Is Yet To Come
Sub-prime mortgage defaults and bankruptcies have peaked. But in all likelihood our twisted economy still has a long way to go before the recession fully unwinds and slightly happier days are here again.
The next big economic smack-down will be from millions of Alternate-A and Option ARM loans. Dubbed “toxic” mortgages, they portend to be justly named. We’re talking a whole lot more bankruptcies.
Alt-A mortgages are offered to borrowers who pose less risk than sub-prime loans but don’t qualify for an A-paper, or "prime" loan, which requires a FICO credit score greater than 680, verifiable income and, among other criteria, a debt-to-income ratio less than 35%.
Just as a large number of subprime mortgages (40%) were approved through an automated loan process whereby the customary review and documentation of assets and income bred applicant falsification of information and lender fraud, so too went these toxic mortgages.
With a low, introductory interest rate, many buyers were enticed (coerced?) to purchase homes beyond their means. When the introductory rate ends, monthly payments balloon by 50% or more.
The amount of outstanding Alt-A mortgages is over $2-trillion. Add another $750-billion in Option ARM loans that will reset between now and 2013. Keep in mind that sub-prime loans totaled approximately $1.3-trillion. We’re set up for double the trouble.
Now, close your eyes, take the deepest of breaths, and hold it for forty (the number of months until the majority of toxic mortgages have defaulted) seconds. Red-faced and woozy, you’ll be floored. However long it takes before you can stand up straight – no grabbing a-hold of something for stability – that’s a pretty good estimate of how many years before the economy has begun to get back on its feet. Let’s say five minutes/five years.
Option ARM loans give the borrower the flexibility of a repayment schedule that starts with a “teaser” interest rate as low as 1%. The worst of all options are interest-only payments. Intended as an investment vehicle for people whose income can vary (commission jobs or those with regular bonuses), the borrower has the “option” to pay down the principal of the loan. Otherwise, the loan balance increases, resulting in negative amortization. You end up owing more on the house than the value. The value has already plummeted due to the number of foreclosures over the past two years.
Although there’s an Annual Payment Change cap of 7.5%, on the fifth year a built-in recalculation can increase the monthly payment well over 100%. Option ARM loans were popular with property investors when home values were expected to follow an upward climb.
Fitch Ratings, a global agency that analyzes credit markets in more than 80 countries, estimates 80% of all Option ARM holders make the minimum monthly payment. With more than 55% of these borrowers owing more than the value of their properties, with payments about to go sky high, expect many to simply walk away from their investments.
More alarming than what I imagined, in response to my July 1st column “Setting aside common sense for feel-good consumerism”, reader Alex Charles e-mailed what had first appeared to give me a scolding for suggesting everybody who took out a home loan during the boom years made foolish decisions.
Instead, Alex told a frightening tale of what is happening to responsible mortgage holders. Alex has 30 years in Information Technology with Project Management Certification (BA degree plus 4,500 hours experience required – two years). With a FICO score of 820+, he relocated from the north and took out a fixed-rate conventional loan in 2000, never having been late on mortgage and other credit obligations.
That was before he became unemployed on September 17 – a year ago (his job vanished somewhere off-shore). He remains unemployed, over three months behind on mortgage payments and amazed “that Governor Crist has not made any regular press appearances to even ‘sugar coat’ the dire situation of unemployment and small businesses tanking”.
What could possibly be more devastating than an ever-growing number of Americans losing their homes through bankruptcy?
A National Association for the Self-Employed (NASE) survey shows that 3.7-million small businesses (10 employees and less) have toxic mortgages that will come due in the next three years, of which more than a third are already delinquent by one to three months.
With the looming number of small business bankruptcies, the ranks of the unemployed will multiply. Owners don’t qualify for unemployment benefits. Workers have limited benefits that are but a fraction of their previous earnings. With few prospects of rejoining the workforce anytime soon, even at lower pay, their savings become depleted as has already happened to millions of Americans. More bankruptcies.
The toxicity of home and small business ARMs will lead to more bank closings, more foreclosures, more taxpayer funding of bailouts to keep big banks – still too many for the good of taxpayers – from failing.
Of the 8,195 banks and savings associations FDIC insured, 414 were on the “problem list” at the end of June, up from 305 in March and approaching the record 434 institutions in June 1994
Instead, hundreds of small and medium-size banks will fail. Sheila Bair, chairwoman of the FDIC, acknowledges the “looming problem” of commercial real estate loans that saw a doubling of defaults from 2Q of 2008 (1.18%) to 2Q of 2009 (2.88%) with a projected rate of 4.1% by year-end then level off at about 5% through 2012 before a modest decline to 4.5% in 2013.
Bair is hopeful (fingers crossed?) the FDIC will be able to avoid opening an interest-accruing line of credit with the Treasury Department, which has pre-approved a $500-billion loan. The FDIC receives no federal tax dollars – insured financial institutions fund its operations. But, one way or another, don’t taxpayers always gets stuck with the bill?
Taxpayer Alex says, “We certainly don't want a hand-out, just a chance to earn a decent paycheck with health insurance.” Washington is working on it. Or is it?
The next big economic smack-down will be from millions of Alternate-A and Option ARM loans. Dubbed “toxic” mortgages, they portend to be justly named. We’re talking a whole lot more bankruptcies.
Alt-A mortgages are offered to borrowers who pose less risk than sub-prime loans but don’t qualify for an A-paper, or "prime" loan, which requires a FICO credit score greater than 680, verifiable income and, among other criteria, a debt-to-income ratio less than 35%.
Just as a large number of subprime mortgages (40%) were approved through an automated loan process whereby the customary review and documentation of assets and income bred applicant falsification of information and lender fraud, so too went these toxic mortgages.
With a low, introductory interest rate, many buyers were enticed (coerced?) to purchase homes beyond their means. When the introductory rate ends, monthly payments balloon by 50% or more.
The amount of outstanding Alt-A mortgages is over $2-trillion. Add another $750-billion in Option ARM loans that will reset between now and 2013. Keep in mind that sub-prime loans totaled approximately $1.3-trillion. We’re set up for double the trouble.
Now, close your eyes, take the deepest of breaths, and hold it for forty (the number of months until the majority of toxic mortgages have defaulted) seconds. Red-faced and woozy, you’ll be floored. However long it takes before you can stand up straight – no grabbing a-hold of something for stability – that’s a pretty good estimate of how many years before the economy has begun to get back on its feet. Let’s say five minutes/five years.
Option ARM loans give the borrower the flexibility of a repayment schedule that starts with a “teaser” interest rate as low as 1%. The worst of all options are interest-only payments. Intended as an investment vehicle for people whose income can vary (commission jobs or those with regular bonuses), the borrower has the “option” to pay down the principal of the loan. Otherwise, the loan balance increases, resulting in negative amortization. You end up owing more on the house than the value. The value has already plummeted due to the number of foreclosures over the past two years.
Although there’s an Annual Payment Change cap of 7.5%, on the fifth year a built-in recalculation can increase the monthly payment well over 100%. Option ARM loans were popular with property investors when home values were expected to follow an upward climb.
Fitch Ratings, a global agency that analyzes credit markets in more than 80 countries, estimates 80% of all Option ARM holders make the minimum monthly payment. With more than 55% of these borrowers owing more than the value of their properties, with payments about to go sky high, expect many to simply walk away from their investments.
More alarming than what I imagined, in response to my July 1st column “Setting aside common sense for feel-good consumerism”, reader Alex Charles e-mailed what had first appeared to give me a scolding for suggesting everybody who took out a home loan during the boom years made foolish decisions.
Instead, Alex told a frightening tale of what is happening to responsible mortgage holders. Alex has 30 years in Information Technology with Project Management Certification (BA degree plus 4,500 hours experience required – two years). With a FICO score of 820+, he relocated from the north and took out a fixed-rate conventional loan in 2000, never having been late on mortgage and other credit obligations.
That was before he became unemployed on September 17 – a year ago (his job vanished somewhere off-shore). He remains unemployed, over three months behind on mortgage payments and amazed “that Governor Crist has not made any regular press appearances to even ‘sugar coat’ the dire situation of unemployment and small businesses tanking”.
What could possibly be more devastating than an ever-growing number of Americans losing their homes through bankruptcy?
A National Association for the Self-Employed (NASE) survey shows that 3.7-million small businesses (10 employees and less) have toxic mortgages that will come due in the next three years, of which more than a third are already delinquent by one to three months.
With the looming number of small business bankruptcies, the ranks of the unemployed will multiply. Owners don’t qualify for unemployment benefits. Workers have limited benefits that are but a fraction of their previous earnings. With few prospects of rejoining the workforce anytime soon, even at lower pay, their savings become depleted as has already happened to millions of Americans. More bankruptcies.
The toxicity of home and small business ARMs will lead to more bank closings, more foreclosures, more taxpayer funding of bailouts to keep big banks – still too many for the good of taxpayers – from failing.
Of the 8,195 banks and savings associations FDIC insured, 414 were on the “problem list” at the end of June, up from 305 in March and approaching the record 434 institutions in June 1994
Instead, hundreds of small and medium-size banks will fail. Sheila Bair, chairwoman of the FDIC, acknowledges the “looming problem” of commercial real estate loans that saw a doubling of defaults from 2Q of 2008 (1.18%) to 2Q of 2009 (2.88%) with a projected rate of 4.1% by year-end then level off at about 5% through 2012 before a modest decline to 4.5% in 2013.
Bair is hopeful (fingers crossed?) the FDIC will be able to avoid opening an interest-accruing line of credit with the Treasury Department, which has pre-approved a $500-billion loan. The FDIC receives no federal tax dollars – insured financial institutions fund its operations. But, one way or another, don’t taxpayers always gets stuck with the bill?
Taxpayer Alex says, “We certainly don't want a hand-out, just a chance to earn a decent paycheck with health insurance.” Washington is working on it. Or is it?
Monday, September 7, 2009
Blue Blazes! Southern California Is Burning!
Blue blazes, Southern California is on fire! It burns my heart to think that thousands of acres of forests are going up in cinders. It’s spread from covering an area of 20,00 to nearly 150,000 acres of wilderness since August 29.
Historical data shows, since 1966, the majority of the top 20 fires in California were caused by lightning (7), humans (5), and power lines (3). The most devastating was the Cedar Fire in San Diego County in October 2003 when 273,246 acres were burned. To date, the current fires rank 11 on the list.
While the Cedar Fire took 15 lives, the greatest toll was in the 1991 Oakland Hills Firestorm, also called the Tunnel Fire, in Northern California when 1,600 acres burned, claiming 25 lives, 2,843 homes and 443 apartments.
Of the recently named fires, the Morris, Cottonwood Hemet and Palos Verdes Peninsular blazes have been contained. The ongoing Station Fire, approaching LA, has destroyed over 53 homes and taken the lives of two people, both firefighters.
As the Station Fire rages ever closer toward the northern suburbs of LA, it’s of personal concern. From 1982-1989 I lived in Santa Monica on the poor side of Wilshire Boulevard in a rent-controlled apartment on 16th Street. A mile-long path of sidewalks led to the beaches on Santa Monica Bay, including the entertaining characters along the Venice Beach boardwalk. Standing on my tip-toes on the balcony, on a clear day I might see a tiny patch of blue water but, unless the Santa Ana winds swept through the area, a huge brown ball of smog hung over the water.
The smog was bad throughout the LA basin. This, the high cost of living, traffic congestion and the occasional earthquake would eventually find me commandeering a U-Haul along the full length of I-10 from the Pacific to the Atlantic.
But while I lived in Southern California my times with nature overwhelmed my senses beyond what I could have imagined. Although travel time to escape the negatives of living in LA proper was in excess of an hour, the rewards were many.
One of the locations I frequently visited was Griffith Park, the location of the Mount Wilson Observatory. It was one of the must-see-and-do experiences to share with out-of-state visitors. The towering pine trees provided a solid canopy of shade while the aroma, mixed with clean, fresh air soothed the mind and cleared the nasal passages.
It brings back vivid memories of walking along an open path of solid rock and hardened earth in a rather steep incline from the parking area. Friends couldn’t resist the temptation to make souvenirs of the huge pinecones that, along with a bed of needles, blanketed the entire area.
More often than not, a day at Vasquez Rocks County Park got preferential consideration. The rock formations were awesome. Created over millions of years from earthquakes along the San Andreas Fault, they’re easily recognizable in dozens of past and present TV shows, commercials and movies. A no-frills park, it was a paradise for hikers of any experience. You could stroll along a well-traveled path or take a hefty trek to the cave where Tiburcio Vasquez and his band of bandits were holed up in the wild west days of the mid-1800s. A backpack with water and fruit made for the healthiest of all other recreation options. You could actually get lost.
So many other memories. On Avenues I, J and K, in the Antelope Valley, the rolling hills actually came alive with the breathtaking poppy fields. From miles away, the faint tinge of color became an eventual blaze of orange. You had to watch your step, though – don’t step on the coiled rattlers. A zoom lens kept me a safe distance from one such sidewinder. Still, when it sprang up, my heart raced faster than my footsteps!
Fires are also raging through Tujunga Canyon where the Malibu Creek State Park shows a rusted Jeep and mess tent from the set of the MASH TV show. An interesting tidbit but the main attractions were the web of hiking trails.
As fires continue to engulf the Angeles National Forest in the San Gabriel Mountains north of LA, it saddens me to realize so many thousands of acres of wilderness are being destroyed. Homes can be rebuilt. Nature has a way of bringing vegetation back to life. Sadly, the loss of wildlife can’t be avoided.
Human lives can’t be resurrected. It is no less a tragedy when people die in a wildfire than it is for those who succumb to the devastation caused by a hurricane. Few lives have been lost in the fires surrounding Los Angeles. People heeded the calls to evacuate. So should we if the forces of nature threaten the lives of we Floridians.
Historical data shows, since 1966, the majority of the top 20 fires in California were caused by lightning (7), humans (5), and power lines (3). The most devastating was the Cedar Fire in San Diego County in October 2003 when 273,246 acres were burned. To date, the current fires rank 11 on the list.
While the Cedar Fire took 15 lives, the greatest toll was in the 1991 Oakland Hills Firestorm, also called the Tunnel Fire, in Northern California when 1,600 acres burned, claiming 25 lives, 2,843 homes and 443 apartments.
Of the recently named fires, the Morris, Cottonwood Hemet and Palos Verdes Peninsular blazes have been contained. The ongoing Station Fire, approaching LA, has destroyed over 53 homes and taken the lives of two people, both firefighters.
As the Station Fire rages ever closer toward the northern suburbs of LA, it’s of personal concern. From 1982-1989 I lived in Santa Monica on the poor side of Wilshire Boulevard in a rent-controlled apartment on 16th Street. A mile-long path of sidewalks led to the beaches on Santa Monica Bay, including the entertaining characters along the Venice Beach boardwalk. Standing on my tip-toes on the balcony, on a clear day I might see a tiny patch of blue water but, unless the Santa Ana winds swept through the area, a huge brown ball of smog hung over the water.
The smog was bad throughout the LA basin. This, the high cost of living, traffic congestion and the occasional earthquake would eventually find me commandeering a U-Haul along the full length of I-10 from the Pacific to the Atlantic.
But while I lived in Southern California my times with nature overwhelmed my senses beyond what I could have imagined. Although travel time to escape the negatives of living in LA proper was in excess of an hour, the rewards were many.
One of the locations I frequently visited was Griffith Park, the location of the Mount Wilson Observatory. It was one of the must-see-and-do experiences to share with out-of-state visitors. The towering pine trees provided a solid canopy of shade while the aroma, mixed with clean, fresh air soothed the mind and cleared the nasal passages.
It brings back vivid memories of walking along an open path of solid rock and hardened earth in a rather steep incline from the parking area. Friends couldn’t resist the temptation to make souvenirs of the huge pinecones that, along with a bed of needles, blanketed the entire area.
More often than not, a day at Vasquez Rocks County Park got preferential consideration. The rock formations were awesome. Created over millions of years from earthquakes along the San Andreas Fault, they’re easily recognizable in dozens of past and present TV shows, commercials and movies. A no-frills park, it was a paradise for hikers of any experience. You could stroll along a well-traveled path or take a hefty trek to the cave where Tiburcio Vasquez and his band of bandits were holed up in the wild west days of the mid-1800s. A backpack with water and fruit made for the healthiest of all other recreation options. You could actually get lost.
So many other memories. On Avenues I, J and K, in the Antelope Valley, the rolling hills actually came alive with the breathtaking poppy fields. From miles away, the faint tinge of color became an eventual blaze of orange. You had to watch your step, though – don’t step on the coiled rattlers. A zoom lens kept me a safe distance from one such sidewinder. Still, when it sprang up, my heart raced faster than my footsteps!
Fires are also raging through Tujunga Canyon where the Malibu Creek State Park shows a rusted Jeep and mess tent from the set of the MASH TV show. An interesting tidbit but the main attractions were the web of hiking trails.
As fires continue to engulf the Angeles National Forest in the San Gabriel Mountains north of LA, it saddens me to realize so many thousands of acres of wilderness are being destroyed. Homes can be rebuilt. Nature has a way of bringing vegetation back to life. Sadly, the loss of wildlife can’t be avoided.
Human lives can’t be resurrected. It is no less a tragedy when people die in a wildfire than it is for those who succumb to the devastation caused by a hurricane. Few lives have been lost in the fires surrounding Los Angeles. People heeded the calls to evacuate. So should we if the forces of nature threaten the lives of we Floridians.
Sunday, August 30, 2009
A Stroll Down Wall Street
As if we’re allowed to believe otherwise, Wall Street’s continued surge is all but sure to continue to rise toward a closing bell figure of 10,000. And there are plenty of examples of news to keep those faint of pocketbook from being fearful of losing their skivvies after their pre-recession wealth has already been stripped of their greenbacks.
The second quarter 1% decline in the Gross Domestic Profit was better than expected by one-half a percent point, a vast improvement over data released by the Commerce Department for the previous two quarters that showed declines of 6.4% January-March and 5.4% October-December 2008.
Looking ahead, an anticipated 2% increase in GDP for the period July-September is based on the assumed affects from the $787B stimulus plan and the Cash for Clunkers program. If this fails to materialize, expect to hear the words “market correction” as financial news commentators continue to grin in front of the camera to no one’s joy but for their own paychecks.
A hopeful sign for economic recovery was the announcement that only 247,000 jobs were lost in July, the smallest figure in nearly a year. It could have been worse and may still spike higher on the chart of the unemployed, but the outlook on the Street is a view of a clear road ahead to a higher Dow Jones Industrial Average. Consumer spending declined a mere 1.2% during the same period. Not too dismal, huh?
A positive light in employment figures show that state and local governments have added 110,000 jobs since the recession began, along with their above free market salaries and overly generous benefits. But Jon Shure, deputy director of states’ fiscal policies of the Center on Budget and Policy Priorities, is realistic in saying, “Crunch time is still to come for the states.” What a killjoy!
In May, the savings rate among Americans reached the highest level since 1993 at 6.9%, keeping nearly $770B from circulating through the economy, the highest rate since 1959 when statistics were first gathered. Not only that, in April borrowers slowed down their buying power with a 16.5% decline in credit card purchases, or 16.5B on $1 trillion of total debt. This is no way to spur an economy that thrives on ever-increasing consumer debt.
According to international lender ING Direct, European Union members have cut back on using plastic money by 10-20% while 46% Americans say they have refrained from adding to credit card debt. Meanwhile, with high unemployment, foreclosure figures, tight credit and reduced consumer spending….
The Conference Board, an independent research group, released information last week that the Consumer Confidence Index (CCI) rose from 47.4 in July to 54.1 in August, quite a bit better than the expected 47.9 that had been forecast. Still, the index is well below 90, the minimum level indicative of a healthy economy. There’s a lot of boom to go before the economy is deemed revived.
As a reference, the significance of historical data of the CCI, it stood at 109.4 (August 1996); 82.2 (October 2001, after 9-11); 110.3 (January 2007).
The Expectations Index, taken from the same sampling of 5,000 households and measures a 6-month view on economic conditions, rose from 63.4 in July to 73.5 in August.
On the flipside of consumer view of economic recovery, the Reuters/University of Michigan Consumer Sentiment Survey, also taken of 5,000 participants, decreased from 66.00 to 63.2 from July to August although economists surveyed had expected an increase to 69 so, although the news isn’t good, it’s not as bad as feared, so it’s actually good news. Right?
The benchmark for the Confidence Survey is 1985; the Reuters/UM Sentiment Survey is referenced to 1966 with both having a base figure of 100.
As if to confuse matters, a third sampling of 1,000 participants conducted by telephone, the ABC News Consumer Comfort Survey reflected a rating of –45 (yes, that’s a negative sign on a scale of –100 to +100). Putting this in perspective, the 23-year average is –12. Only 8% rated the economy in a positive light, maintaining a single-digit trend for 43 of the past 46 weeks. By all measures, not very comforting.
And let’s not ignore the 77% decline of funds held by the FDIC from $45.2B a year ago. The current $10.4B balance would be considerably, and alarmingly, less but for the $9.1B in higher deposit fees garnered from banks in the first quarter. Not to worry, your banking account balances are still covered up to $250,000. The FDIC can draw on its no-limit credit line with the Treasury Department as it did in 1993.
Sales of new one-family homes increased 9.6% in July (plus or minus 13.4%) over June figures but 13.4% below July 2008 figures (plus or 12.9%). The plus or minus figures leave a don’t add up to anything but confusion and doubtful significance.
On a truly positive note, August figures show an increase of 4.9% for durable goods over July, and upward swing for three out of the past four months.
Who’s to say our economic future is anything other than what is portrayed by the wooly bullies on Wall Street? Anybody?
The second quarter 1% decline in the Gross Domestic Profit was better than expected by one-half a percent point, a vast improvement over data released by the Commerce Department for the previous two quarters that showed declines of 6.4% January-March and 5.4% October-December 2008.
Looking ahead, an anticipated 2% increase in GDP for the period July-September is based on the assumed affects from the $787B stimulus plan and the Cash for Clunkers program. If this fails to materialize, expect to hear the words “market correction” as financial news commentators continue to grin in front of the camera to no one’s joy but for their own paychecks.
A hopeful sign for economic recovery was the announcement that only 247,000 jobs were lost in July, the smallest figure in nearly a year. It could have been worse and may still spike higher on the chart of the unemployed, but the outlook on the Street is a view of a clear road ahead to a higher Dow Jones Industrial Average. Consumer spending declined a mere 1.2% during the same period. Not too dismal, huh?
A positive light in employment figures show that state and local governments have added 110,000 jobs since the recession began, along with their above free market salaries and overly generous benefits. But Jon Shure, deputy director of states’ fiscal policies of the Center on Budget and Policy Priorities, is realistic in saying, “Crunch time is still to come for the states.” What a killjoy!
In May, the savings rate among Americans reached the highest level since 1993 at 6.9%, keeping nearly $770B from circulating through the economy, the highest rate since 1959 when statistics were first gathered. Not only that, in April borrowers slowed down their buying power with a 16.5% decline in credit card purchases, or 16.5B on $1 trillion of total debt. This is no way to spur an economy that thrives on ever-increasing consumer debt.
According to international lender ING Direct, European Union members have cut back on using plastic money by 10-20% while 46% Americans say they have refrained from adding to credit card debt. Meanwhile, with high unemployment, foreclosure figures, tight credit and reduced consumer spending….
The Conference Board, an independent research group, released information last week that the Consumer Confidence Index (CCI) rose from 47.4 in July to 54.1 in August, quite a bit better than the expected 47.9 that had been forecast. Still, the index is well below 90, the minimum level indicative of a healthy economy. There’s a lot of boom to go before the economy is deemed revived.
As a reference, the significance of historical data of the CCI, it stood at 109.4 (August 1996); 82.2 (October 2001, after 9-11); 110.3 (January 2007).
The Expectations Index, taken from the same sampling of 5,000 households and measures a 6-month view on economic conditions, rose from 63.4 in July to 73.5 in August.
On the flipside of consumer view of economic recovery, the Reuters/University of Michigan Consumer Sentiment Survey, also taken of 5,000 participants, decreased from 66.00 to 63.2 from July to August although economists surveyed had expected an increase to 69 so, although the news isn’t good, it’s not as bad as feared, so it’s actually good news. Right?
The benchmark for the Confidence Survey is 1985; the Reuters/UM Sentiment Survey is referenced to 1966 with both having a base figure of 100.
As if to confuse matters, a third sampling of 1,000 participants conducted by telephone, the ABC News Consumer Comfort Survey reflected a rating of –45 (yes, that’s a negative sign on a scale of –100 to +100). Putting this in perspective, the 23-year average is –12. Only 8% rated the economy in a positive light, maintaining a single-digit trend for 43 of the past 46 weeks. By all measures, not very comforting.
And let’s not ignore the 77% decline of funds held by the FDIC from $45.2B a year ago. The current $10.4B balance would be considerably, and alarmingly, less but for the $9.1B in higher deposit fees garnered from banks in the first quarter. Not to worry, your banking account balances are still covered up to $250,000. The FDIC can draw on its no-limit credit line with the Treasury Department as it did in 1993.
Sales of new one-family homes increased 9.6% in July (plus or minus 13.4%) over June figures but 13.4% below July 2008 figures (plus or 12.9%). The plus or minus figures leave a don’t add up to anything but confusion and doubtful significance.
On a truly positive note, August figures show an increase of 4.9% for durable goods over July, and upward swing for three out of the past four months.
Who’s to say our economic future is anything other than what is portrayed by the wooly bullies on Wall Street? Anybody?
UBS, IRS and Swiss Cheese
Goody! Goody! Relishing in other peoples’ misfortune might seem a little devilish but with the unfolding battle between the U.S. Justice Department and Swiss bank UBS there’s a childish delight in me that wants the wealthy Americans who have gotten away with fraud and tax evasion for decades may get their just deserves.
The chapters that have taken place to identify those sly dogs of greed began in earnest in February when UBS agreed to pay the IRS $780M to avoid criminal charges for making it possible for a select class of Americans to avoid paying taxes on nearly $20B they have tucked away in offshore accounts. The initial 285 names provided by UBS were just the tip of the fraud claims as the U.S. sought to have nearly 52,000 Americans names divulged.
While negotiations were being held between UBS and the Justice Department, the Swiss government had been steadfast in swearing allegiance to hidden account holders, stating they wouldn’t allow the bank to hand over the names because Swiss secrecy laws specifically prohibits client disclosure. Since then, talks have been held to avoid the U.S. from filing suit against the Swiss government and taking the matter to court.
Earlier this year Jeffrey P. Chernick, owner of a New York-based company that represents toy manufacturers in China and Hong Kong, pleaded guilty to a charge of filing a fraudulent tax return in 2007 by concealing more than $8M in reportable income.
John McCarthy, who set up a manufacturing business in Hong Kong in 2003, funneled $1M in Swiss accounts. Both men face up to five years in prison, a $250,000 fine, back taxes, interest and penalties.
The Justice Dept. is clients the opportunity to “turn themselves in” by a Sept. 23 deadline to lessen the criminal charges against them. Penalties will be reduced to a maximum of 20% of their value while those who don’t disclose their assets by the deadline could face penalties of up to 50% of their average account balances held over the past three years. Fines are expected to be in the range of $4B.
The drama that befell Mr. Chernick unfolded when transactions were traced to a former UBS manager who had set up accounts with NZB, a smaller private bank in Zurich, with the belief that by doing so would subject clients to less scrutiny by the IRS. There was a tinge of espionage going on with many of the transactions done with bank officials traveling to the U.S. as tourists rather than consultants.
A Swiss lawyer and a director at NZB, who had worked as a private banker for UBS until 2002, have been indicted for conspiring to defraud the IRS. This will prove to be just the beginning of a long process to prosecute participants of the financial institutions that have taken part in tax evasion not only in the U.S. but many of the 27-country European Union. Italy and Germany have also initiated an amnesty program while the EU has negotiated a 35% tax rate to bank accounts in Swiss Banks.
In an agreement announced this past week, UBS will turn over to the Swiss Federal Tax Administration the names of 4,450 U.S. major accounts suspected of holding undeclared assets, giving the clients an opportunity to appeal to the Swiss courts before their names are released to the IRS, a process that may take years before full disclosure is realized.
The Organization for Economic Co-operation and Development website lists 38 ‘Jurisdictions Committed to Improving Transparency and Establishing Effective Exchange of Information in Tax Matters’. As of August 14 there are no longer any countries on the ‘Uncooperative List” although Costa Rica, Malaysia, the Philippines and Uruguay were recently removed from the list but have yet to pass legislation to achieve that status.
So, according to the OECD, there are longer any tax havens but the International Monetary Fund, Tax Research Org and the U.S. Stop Tax Havens Abuse Act have their own lists as does the Tax Justice Network and taxresearch.org, all of which are in dispute with the OECD claim. In 2005, estimates of offshore tax havens held $11.5 trillion in funds globally. Hit by the worldwide recession, the figure is now approximately $7 trillion socked away.
Still, smaller Swiss banks have been brash in an attempt to assure foreign clients that new strategies are being developed to keep their accounts hidden from future scrutiny. As thousands of account holders are moving huge amounts of funds out of Swiss banks and seeking legal representation from tax consultants.
As the IRS focuses on identifying tax evaders through a program called the Offshore Identification Unit, the names may not be well known but my spiteful joys will nonetheless be forthcoming.
The chapters that have taken place to identify those sly dogs of greed began in earnest in February when UBS agreed to pay the IRS $780M to avoid criminal charges for making it possible for a select class of Americans to avoid paying taxes on nearly $20B they have tucked away in offshore accounts. The initial 285 names provided by UBS were just the tip of the fraud claims as the U.S. sought to have nearly 52,000 Americans names divulged.
While negotiations were being held between UBS and the Justice Department, the Swiss government had been steadfast in swearing allegiance to hidden account holders, stating they wouldn’t allow the bank to hand over the names because Swiss secrecy laws specifically prohibits client disclosure. Since then, talks have been held to avoid the U.S. from filing suit against the Swiss government and taking the matter to court.
Earlier this year Jeffrey P. Chernick, owner of a New York-based company that represents toy manufacturers in China and Hong Kong, pleaded guilty to a charge of filing a fraudulent tax return in 2007 by concealing more than $8M in reportable income.
John McCarthy, who set up a manufacturing business in Hong Kong in 2003, funneled $1M in Swiss accounts. Both men face up to five years in prison, a $250,000 fine, back taxes, interest and penalties.
The Justice Dept. is clients the opportunity to “turn themselves in” by a Sept. 23 deadline to lessen the criminal charges against them. Penalties will be reduced to a maximum of 20% of their value while those who don’t disclose their assets by the deadline could face penalties of up to 50% of their average account balances held over the past three years. Fines are expected to be in the range of $4B.
The drama that befell Mr. Chernick unfolded when transactions were traced to a former UBS manager who had set up accounts with NZB, a smaller private bank in Zurich, with the belief that by doing so would subject clients to less scrutiny by the IRS. There was a tinge of espionage going on with many of the transactions done with bank officials traveling to the U.S. as tourists rather than consultants.
A Swiss lawyer and a director at NZB, who had worked as a private banker for UBS until 2002, have been indicted for conspiring to defraud the IRS. This will prove to be just the beginning of a long process to prosecute participants of the financial institutions that have taken part in tax evasion not only in the U.S. but many of the 27-country European Union. Italy and Germany have also initiated an amnesty program while the EU has negotiated a 35% tax rate to bank accounts in Swiss Banks.
In an agreement announced this past week, UBS will turn over to the Swiss Federal Tax Administration the names of 4,450 U.S. major accounts suspected of holding undeclared assets, giving the clients an opportunity to appeal to the Swiss courts before their names are released to the IRS, a process that may take years before full disclosure is realized.
The Organization for Economic Co-operation and Development website lists 38 ‘Jurisdictions Committed to Improving Transparency and Establishing Effective Exchange of Information in Tax Matters’. As of August 14 there are no longer any countries on the ‘Uncooperative List” although Costa Rica, Malaysia, the Philippines and Uruguay were recently removed from the list but have yet to pass legislation to achieve that status.
So, according to the OECD, there are longer any tax havens but the International Monetary Fund, Tax Research Org and the U.S. Stop Tax Havens Abuse Act have their own lists as does the Tax Justice Network and taxresearch.org, all of which are in dispute with the OECD claim. In 2005, estimates of offshore tax havens held $11.5 trillion in funds globally. Hit by the worldwide recession, the figure is now approximately $7 trillion socked away.
Still, smaller Swiss banks have been brash in an attempt to assure foreign clients that new strategies are being developed to keep their accounts hidden from future scrutiny. As thousands of account holders are moving huge amounts of funds out of Swiss banks and seeking legal representation from tax consultants.
As the IRS focuses on identifying tax evaders through a program called the Offshore Identification Unit, the names may not be well known but my spiteful joys will nonetheless be forthcoming.
A Quote on Health Care Please
The mean and vicious dialogue from those with insurance coverage is so intense that you have to question the compassion of their religious convictions, if there is any. Their perceived selfishness in promoting health care benefits for the uninsured lead me to also question if those with defined benefits have a concern even for friends and relatives without coverage.
What of a parent not yet eligible for Medicare or a grandchild, an adult son or daughter faced with insurmountable expenses? Do those with coverage have the disposition, “Good luck, but you’re on your own.”? Seeking ER care as a last resort may be a final, fatal course of action. Seeking medical attention from a general practitioner requires ‘Full Payment Due At Time of Service”.
Not everyone is fortunate to work for, or retire from, a large corporation that provides company-subsidized health benefits. Unions have successfully fought long and hard for such coverage but people working for small businesses don’t qualify for group rate ‘discounts’.
Although having taken early retirement from the Bell System with a pension that puts me near poverty level, the most important benefit is medical coverage. With modest deductibles and payment of 90% toward doctor and hospital visits, there are still recommended treatments that are ignored because of unknown expenses. I feel fine. Still, I see a family physician occasionally to keep cholesterol and blood pressure levels in check. (When medications brought the levels within normal range, I suggested the medications might not be needed any longer. My ignorance was kindly acknowledged.)
Before a mechanic performs work on a car, the customer is given an estimate and any additional expenses must be authorized by the owner. When dental work needs to be done the costs are reviewed with the patient and provided with a printed predetermination of patient responsibility. A consultation may result in alternative options such as having a tooth removed because the root canal is cost prohibitive.
Generally, quotes on medical procedures aren’t provided unless requested, especially in an emergency room.
A friend was recently involved in an automobile accident. Although not seriously hurt, after four days when neck and back pains developed the family physician sent him to the Brooksville Regional Hospital ER. The charges incurred were in excess of $15K. The automobile medical coverage was $10K. The Coordination of Benefits form submitted to Medicare may pick up the remainder.
It would have been unwise to ignore symptoms that could have proven to be a lifetime problem, but all of the x-rays and scans proved negative. Had the full charges been disclosed he may have opted out of scans of the pelvis and abdomen or declined the Comprehensive Metabolic Panel because he experienced no discomfort whatsoever in these areas.
Those tests alone accounted for over $5,000 in charges. Two x-ray views of the hip came at an additional cost of over $500. The $353.87 fee for the cervical collar is questionable – it was only used momentarily because it caused extreme pain. Perhaps another patient will be charged the same fee for the use of the very same device? I stayed with my friend through the whole ordeal and listened to vague explanations of what tests were being administered but no mention of the whys. It cost $862 just to enter the ER Department.
You have to question if having insurance determines the extent and number of tests that are performed, not for the benefit of the patient but for the monetary gains of the facility.
Of course, the patient is supposed to have faith that a healthcare facility and its doctors and technicians will perform the tests necessary to treat the indicated ailments. In this case, some of the tests were definitely frivolous.
My friend’s experience has greatly affected my view toward seeking emergency room services. Unless totally incapacitated, they won’t like me very much with my mindful concern of both body and pocketbook. The medical profession has the responsibility to promote procedures for the betterment of the patient’s health but it’s also the patient’s right of self-determination to weigh the benefits of any treatment. Without symptoms, what’s the point?
I seldom question the capabilities of doctors and other trained professionals in the medical field, but in the future they may have a hard sell to peddle procedural wherewithal. I doubt a Tony Robbins motivational seminar will help their cause.
Cost containment for the patient’s pocketbook is another important consideration in the healthcare debate. Or is this something else to get nasty about? Oh, yeah, it’s the sharing of healthcare benefits with the uninsured that makes the headlines. That attitude is enough to make some people angry.
What of a parent not yet eligible for Medicare or a grandchild, an adult son or daughter faced with insurmountable expenses? Do those with coverage have the disposition, “Good luck, but you’re on your own.”? Seeking ER care as a last resort may be a final, fatal course of action. Seeking medical attention from a general practitioner requires ‘Full Payment Due At Time of Service”.
Not everyone is fortunate to work for, or retire from, a large corporation that provides company-subsidized health benefits. Unions have successfully fought long and hard for such coverage but people working for small businesses don’t qualify for group rate ‘discounts’.
Although having taken early retirement from the Bell System with a pension that puts me near poverty level, the most important benefit is medical coverage. With modest deductibles and payment of 90% toward doctor and hospital visits, there are still recommended treatments that are ignored because of unknown expenses. I feel fine. Still, I see a family physician occasionally to keep cholesterol and blood pressure levels in check. (When medications brought the levels within normal range, I suggested the medications might not be needed any longer. My ignorance was kindly acknowledged.)
Before a mechanic performs work on a car, the customer is given an estimate and any additional expenses must be authorized by the owner. When dental work needs to be done the costs are reviewed with the patient and provided with a printed predetermination of patient responsibility. A consultation may result in alternative options such as having a tooth removed because the root canal is cost prohibitive.
Generally, quotes on medical procedures aren’t provided unless requested, especially in an emergency room.
A friend was recently involved in an automobile accident. Although not seriously hurt, after four days when neck and back pains developed the family physician sent him to the Brooksville Regional Hospital ER. The charges incurred were in excess of $15K. The automobile medical coverage was $10K. The Coordination of Benefits form submitted to Medicare may pick up the remainder.
It would have been unwise to ignore symptoms that could have proven to be a lifetime problem, but all of the x-rays and scans proved negative. Had the full charges been disclosed he may have opted out of scans of the pelvis and abdomen or declined the Comprehensive Metabolic Panel because he experienced no discomfort whatsoever in these areas.
Those tests alone accounted for over $5,000 in charges. Two x-ray views of the hip came at an additional cost of over $500. The $353.87 fee for the cervical collar is questionable – it was only used momentarily because it caused extreme pain. Perhaps another patient will be charged the same fee for the use of the very same device? I stayed with my friend through the whole ordeal and listened to vague explanations of what tests were being administered but no mention of the whys. It cost $862 just to enter the ER Department.
You have to question if having insurance determines the extent and number of tests that are performed, not for the benefit of the patient but for the monetary gains of the facility.
Of course, the patient is supposed to have faith that a healthcare facility and its doctors and technicians will perform the tests necessary to treat the indicated ailments. In this case, some of the tests were definitely frivolous.
My friend’s experience has greatly affected my view toward seeking emergency room services. Unless totally incapacitated, they won’t like me very much with my mindful concern of both body and pocketbook. The medical profession has the responsibility to promote procedures for the betterment of the patient’s health but it’s also the patient’s right of self-determination to weigh the benefits of any treatment. Without symptoms, what’s the point?
I seldom question the capabilities of doctors and other trained professionals in the medical field, but in the future they may have a hard sell to peddle procedural wherewithal. I doubt a Tony Robbins motivational seminar will help their cause.
Cost containment for the patient’s pocketbook is another important consideration in the healthcare debate. Or is this something else to get nasty about? Oh, yeah, it’s the sharing of healthcare benefits with the uninsured that makes the headlines. That attitude is enough to make some people angry.
Health Care Deformity
Back off, you bugaboos! Take a break. Take in a great big breath. Not only is this a proven method of relaxation but it also provides a good dose of oxygen for a healthier brain, thus a positive prognosis for the all too contentious debate on healthcare reform.
All of the knee-jerk reactions on the debate of providing medical coverage to the uninsured have gotten everybody’s panties in a bunch. The hate factor among all the interested groups won’t resolve the issue to anyone’s satisfaction, except possibly President Obama and a number of die-hard Democrats. Currently, there is no dialogue that will provide a cure-all for what ails uninsured Americans.
For years, the high cost of providing health insurance through employer-based coverage has made American business at a frightful disadvantage for competitive product pricing in the broadening realm of globalization.
Corporate medical contributions to employee benefits come to an annual expense of about $15,000 – for government employees the un-taxed benefits are even more obtuse at $19,000. These costs continue to be a prominent reason for the outsourcing of jobs to foreign lands. We’ve painted the survival of American enterprise into a corner, but there are steps that can be taken to correct this poor state of affairs.
Before providing “universal” coverage, the cost factors of health care must be addressed.
Three years ago Massachusetts enacted the most comprehensive subsidized insurance fee-for-service public offering and cut the rate of uninsured residents from 8% to 2.6%, the lowest in the country. Although an addition 428,000 people were given affordable coverage, it has resulted in an insurmountable budget crisis. The state is on the hook for an additional $595,000 than it was in 2006, a 42% increase.
Enacting universal coverage in Maine in 2005 resulted in a 74% increase in premiums, pricing many of the uninsured out of the market and dropping coverage. The uninsured rate is 10%, the same level as before legislation was passed.
Neither Maine nor Massachusetts bothered to address a means to implement cost-cutting measures of medical pricing. For decades, private insurance companies have maintained what could easily be considered price fixing since in-state health options are generally restricted to two or three major providers.
This lack of competition defies the intent of the free market system. The self-interest of insurance companies, service providers and drug companies is too impressionable on elected officials. The inherent power of lobbyist groups set up by former legislators are too influential on the course of action of Congress. They know the ropes. They have the contacts. The have access to funds for campaign contributions. And they have too tight a grip on the health of Americans.
Rather than accuse Obama of promoting a death forum for the elderly, the feeble and the less-than-productive members of society, put the blame on insurance companies for limiting and denying medical procedures that would otherwise enhance the lives of the unfortunate.
Pharmaceutical companies are major culprits in themselves. When the Medicare Drug Plan was enacted in January 2006, they raked in an additional $8B in profits in the first six months alone. The industry has promised an $80B sacrifice over a ten-year period as a buy-in to healthcare reform, a minor contribution toward the health of the country considering their huge profit margins.
The U.S. has the most profitable pharmaceutical business in the world with revenues of $315B in 2007. As a comparison, the illegal drug industry has profits of approximately $300B in revenue per year, globally speaking.
What could be considered an unethical tactic of pharmaceutical companies is the “pay-for-delay” scheme that keeps generic drugs off the market by providing attractive monetary incentives to maintain an extended monopoly over less expensive drug manufacturers. The FTC estimates Americans are cheated out of about $3.5B per year. Then there’s the practice of putting “name brand” generic versions on the market for drugs whose patents have expired, affectively making it unprofitable for true generic companies to offer competitive pricing for an additional six months
Pharmaceutical companies and insurance companies are keeping Red Bull Republicans and Blue Dog Democrats at bay, caged in dollar signs of influence.
It’s understandable that Americans are leery of healthcare reform. Obama claims his efforts will be deficit neutral. Even if an attainable goal, through higher premiums, increased deductibles and restricted coverage, a redistribution of health wealth will help some but will come at a great cost to the currently insured. Town Hall Brawls are not the answer.
Containing costs in all aspects of providing ‘universal medical coverage’ must be addressed before continued debate gets out of hand and people’s health conditions deteriorate. Is this an orchestrated script by insurers and providers to further increase profits? Depending on whether or not you have health insurance, you can bet your life or death on it.
All of the knee-jerk reactions on the debate of providing medical coverage to the uninsured have gotten everybody’s panties in a bunch. The hate factor among all the interested groups won’t resolve the issue to anyone’s satisfaction, except possibly President Obama and a number of die-hard Democrats. Currently, there is no dialogue that will provide a cure-all for what ails uninsured Americans.
For years, the high cost of providing health insurance through employer-based coverage has made American business at a frightful disadvantage for competitive product pricing in the broadening realm of globalization.
Corporate medical contributions to employee benefits come to an annual expense of about $15,000 – for government employees the un-taxed benefits are even more obtuse at $19,000. These costs continue to be a prominent reason for the outsourcing of jobs to foreign lands. We’ve painted the survival of American enterprise into a corner, but there are steps that can be taken to correct this poor state of affairs.
Before providing “universal” coverage, the cost factors of health care must be addressed.
Three years ago Massachusetts enacted the most comprehensive subsidized insurance fee-for-service public offering and cut the rate of uninsured residents from 8% to 2.6%, the lowest in the country. Although an addition 428,000 people were given affordable coverage, it has resulted in an insurmountable budget crisis. The state is on the hook for an additional $595,000 than it was in 2006, a 42% increase.
Enacting universal coverage in Maine in 2005 resulted in a 74% increase in premiums, pricing many of the uninsured out of the market and dropping coverage. The uninsured rate is 10%, the same level as before legislation was passed.
Neither Maine nor Massachusetts bothered to address a means to implement cost-cutting measures of medical pricing. For decades, private insurance companies have maintained what could easily be considered price fixing since in-state health options are generally restricted to two or three major providers.
This lack of competition defies the intent of the free market system. The self-interest of insurance companies, service providers and drug companies is too impressionable on elected officials. The inherent power of lobbyist groups set up by former legislators are too influential on the course of action of Congress. They know the ropes. They have the contacts. The have access to funds for campaign contributions. And they have too tight a grip on the health of Americans.
Rather than accuse Obama of promoting a death forum for the elderly, the feeble and the less-than-productive members of society, put the blame on insurance companies for limiting and denying medical procedures that would otherwise enhance the lives of the unfortunate.
Pharmaceutical companies are major culprits in themselves. When the Medicare Drug Plan was enacted in January 2006, they raked in an additional $8B in profits in the first six months alone. The industry has promised an $80B sacrifice over a ten-year period as a buy-in to healthcare reform, a minor contribution toward the health of the country considering their huge profit margins.
The U.S. has the most profitable pharmaceutical business in the world with revenues of $315B in 2007. As a comparison, the illegal drug industry has profits of approximately $300B in revenue per year, globally speaking.
What could be considered an unethical tactic of pharmaceutical companies is the “pay-for-delay” scheme that keeps generic drugs off the market by providing attractive monetary incentives to maintain an extended monopoly over less expensive drug manufacturers. The FTC estimates Americans are cheated out of about $3.5B per year. Then there’s the practice of putting “name brand” generic versions on the market for drugs whose patents have expired, affectively making it unprofitable for true generic companies to offer competitive pricing for an additional six months
Pharmaceutical companies and insurance companies are keeping Red Bull Republicans and Blue Dog Democrats at bay, caged in dollar signs of influence.
It’s understandable that Americans are leery of healthcare reform. Obama claims his efforts will be deficit neutral. Even if an attainable goal, through higher premiums, increased deductibles and restricted coverage, a redistribution of health wealth will help some but will come at a great cost to the currently insured. Town Hall Brawls are not the answer.
Containing costs in all aspects of providing ‘universal medical coverage’ must be addressed before continued debate gets out of hand and people’s health conditions deteriorate. Is this an orchestrated script by insurers and providers to further increase profits? Depending on whether or not you have health insurance, you can bet your life or death on it.
Ben Barnanke, A Has Been?
Politics aside, or not, Ben Barnanke, Chairman of the Federal Reserve, is on a campaign trail to reassure investors that his monetary policies of the past, present and future have and will continue to guide us out of the recession. His messages aren’t meant to save the economy, but to save his job when his four-year term comes up for re-selection in January.
He’s faced Congress to substantiate, or defend, his worthiness. His words have appeared on editorial pages in newspapers across the nation. He’s done TV interviews on ‘60 Minutes’ and ‘The News Hour with Jim Lehrer’.
During his confirmation hearings in 2006, Bernanke espoused his views on economic theory and policy, stressing the importance of communication and transparency. But he also said the final say on government debt and deficits lie with the President and Congress.
Having written numerous books and articles, he frequently focused on limiting inflation to no more than 2% over any given two-year period. For now, there appears little concern. As a matter of fact, many economists feel the risk of deflation is more worrisome. Deflation occurs when consumers hold off buying big-ticket items with the belief that during an economic downturn prices will continue to fall. The result is lower demand so job losses increase, employers then curtail investments because demand is low resulting in higher unemployment, foreclosures and bankruptcies.
Synopsis: no spending = no demand = no need to increase supply = fewer jobs, and so forth. The spiral ends when inflation appears.
Other economists are fearful that actions taken to fight deflation in the long term will result in runaway inflation. This would be the beast that puts the economy at risk for many years to come. A couple of indicators suggest we’re on our way. In January the 30-year fixed mortgage rate climbed from 4.96% to 5.12% within a week’s time. It stabilized in May just below 5.0% but it as of July 29 it stood at 5.56% per Bankrate’s weekly survey. This is a vast improvement from 6.77% a year ago, bringing down monthly payments by $158 on a $200,000 mortgage, but it may turn out to be short-term relief.
The Fed is printing more and more stimulus money, which means increased government borrowing, resulting in an ever-growing portion of tax dollars being paid toward interest. This could mean more printing of money and an increase in debt. Another stimulus package would exacerbate the situation.
Since Sept. 2007 the Fed interest rate has been cut nine times from 5.25% to near zero in Dec 2008, significantly adding to the prospects of deflation. There’s nowhere to go but up, which will certainly bring down the stock market.
To worsen matters, this past week China, which holds an estimated $1.5 trillion in Treasury securities, sought a guarantee that the U.S. will cut its debt. Timothy Geithner gave his assurance that, as economic recovery strengthens, debt reduction will follow. As consumer confidence continues to wane, the prospects are anything but positive.
Alan Greenspan, whose actions are said to have been a large contributor to the current recession, admitted he “made a mistake” in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholder investments as had been expected. He said that he and other economists are in “a state of shocked disbelief”… “that regulation in the banking industry led to meltdown of U.S. credit markets”.
Greenspan was supportive of sub-prime lending practices that led to the housing bubble. He was also at the helm of the Fed when the dot-com bubble burst.
And yet he says the Fed was blameless for the housing bubble that began in 2006. It’s a little hard to accept since he was Chairman for 18 years, going back to his appointment in 1988 by President Reagan up until the appointment of Bernanke in 2006, at which time the President Bush said, “Ben Bernanke is the right man to build on the record Alan Greenspan has established." This should have rung a few bells that the economy would continue to sputter, falter and come to a near standstill.
Where does that leave Bernanke? With President Obama’s tendency to recycle past Democrat influences, odds are that he’ll appoint Director of the National Economic Council Larry Summers. This is the same guy that, as Treasury Secretary during the Clinton administration, had supported the 1999 Gramm-Leach-Bliley Act. This bill repealed the 1933 Glass-Steagal Act, which had taken actions to correct the conflicts of interest and fraud in banking institutions that had allowed them to own other financial companies. See where we are now? There’s plenty of blame from every which way you choose.
There’s an excellent possibility that Barnanke’s campaign scheme to keep his job as Fed Chairman will be for naught. Ben may become a has-been.
He’s faced Congress to substantiate, or defend, his worthiness. His words have appeared on editorial pages in newspapers across the nation. He’s done TV interviews on ‘60 Minutes’ and ‘The News Hour with Jim Lehrer’.
During his confirmation hearings in 2006, Bernanke espoused his views on economic theory and policy, stressing the importance of communication and transparency. But he also said the final say on government debt and deficits lie with the President and Congress.
Having written numerous books and articles, he frequently focused on limiting inflation to no more than 2% over any given two-year period. For now, there appears little concern. As a matter of fact, many economists feel the risk of deflation is more worrisome. Deflation occurs when consumers hold off buying big-ticket items with the belief that during an economic downturn prices will continue to fall. The result is lower demand so job losses increase, employers then curtail investments because demand is low resulting in higher unemployment, foreclosures and bankruptcies.
Synopsis: no spending = no demand = no need to increase supply = fewer jobs, and so forth. The spiral ends when inflation appears.
Other economists are fearful that actions taken to fight deflation in the long term will result in runaway inflation. This would be the beast that puts the economy at risk for many years to come. A couple of indicators suggest we’re on our way. In January the 30-year fixed mortgage rate climbed from 4.96% to 5.12% within a week’s time. It stabilized in May just below 5.0% but it as of July 29 it stood at 5.56% per Bankrate’s weekly survey. This is a vast improvement from 6.77% a year ago, bringing down monthly payments by $158 on a $200,000 mortgage, but it may turn out to be short-term relief.
The Fed is printing more and more stimulus money, which means increased government borrowing, resulting in an ever-growing portion of tax dollars being paid toward interest. This could mean more printing of money and an increase in debt. Another stimulus package would exacerbate the situation.
Since Sept. 2007 the Fed interest rate has been cut nine times from 5.25% to near zero in Dec 2008, significantly adding to the prospects of deflation. There’s nowhere to go but up, which will certainly bring down the stock market.
To worsen matters, this past week China, which holds an estimated $1.5 trillion in Treasury securities, sought a guarantee that the U.S. will cut its debt. Timothy Geithner gave his assurance that, as economic recovery strengthens, debt reduction will follow. As consumer confidence continues to wane, the prospects are anything but positive.
Alan Greenspan, whose actions are said to have been a large contributor to the current recession, admitted he “made a mistake” in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholder investments as had been expected. He said that he and other economists are in “a state of shocked disbelief”… “that regulation in the banking industry led to meltdown of U.S. credit markets”.
Greenspan was supportive of sub-prime lending practices that led to the housing bubble. He was also at the helm of the Fed when the dot-com bubble burst.
And yet he says the Fed was blameless for the housing bubble that began in 2006. It’s a little hard to accept since he was Chairman for 18 years, going back to his appointment in 1988 by President Reagan up until the appointment of Bernanke in 2006, at which time the President Bush said, “Ben Bernanke is the right man to build on the record Alan Greenspan has established." This should have rung a few bells that the economy would continue to sputter, falter and come to a near standstill.
Where does that leave Bernanke? With President Obama’s tendency to recycle past Democrat influences, odds are that he’ll appoint Director of the National Economic Council Larry Summers. This is the same guy that, as Treasury Secretary during the Clinton administration, had supported the 1999 Gramm-Leach-Bliley Act. This bill repealed the 1933 Glass-Steagal Act, which had taken actions to correct the conflicts of interest and fraud in banking institutions that had allowed them to own other financial companies. See where we are now? There’s plenty of blame from every which way you choose.
There’s an excellent possibility that Barnanke’s campaign scheme to keep his job as Fed Chairman will be for naught. Ben may become a has-been.
Making A Heroic Correction
In response to last Sunday’s ‘Where have all the heroes gone?’ there were a fair number of email and on-line reader comments that were as valid as the stamp of a Notary Public. I gladly accept criticism for not everyone has the same views as myself. In this instance, my errors warrant a recant as others deserve recognition for their exceptional critiques.
As delivered by email from Mr. Vlasto, a point of inaccuracy in the ‘heroes’ column claimed President Dwight Eisenhower had received the Congressional Medal of Honor. In actuality General Eisenhower had refused the Medal as he felt it should be reserved for servicemen and women for bravery and valor. As if his wartime contributions were anything but!
Of the other comments, a most deserving on-line remark from ‘stopthespending’ put into question my reference to the ineffectiveness of the troop surge under the command of General David Patraeus. The writer emphasized the General’s worthy attributes that make him “a hero and deserves a Medal of Honor he secured Iraq and is a great man”. The writer made me pause again with a final statement, “I could name many more but why should I you only disagree.” I bow my head, partly in shame but also in respectful appreciation for the sacrifices and loss of lives of so many soldiers who have been steadfast in honoring the American Flag so that we may all live safe and free from harm in a world too dangerous for us soft-shoed citizens to truly comprehend.
Two other emails were unexpected with each providing a phone number as an offering for a moment of discussion.
The first was in agreement America’s working men and women are, or should be recognized as, the real heroes who can bring America around from these days of near economic ruin. The gentleman posed the question, “I wonder what the government is doing to set them up for success?” He answered, “Not much.”
He also made a correction that he “did not take on Dave Patraeus.” I immediately checked it out through my fairly trusted search mechanism, Google, and realized I had indeed made a grievous error that made me the goof. He, and the other 20 Generals I identified in the column, had actually chastised then-Secretary of Defense Donald Rumsfeld and the failed strategy of the Bush Administration in Iraq.
When I called the gentleman I was taken aback that he answered simply, “John Batiste.” I couldn’t possibly address him but with the respectful title of “General Batiste, this is Ron Rae…” with a reference to the column on heroes. When I expressed regret on my reference to General Patraeus, he kindly brushed it off.
From there the exchange of words were conversational. As a civilian and President of Klein Steel, Inc., he has seen a major turnaround in business since the first of the year. I made mention of a 30 second spot he had made on behalf of VoteVets with the theme that “Mr. President, you did not listen”. It was because of the Commander-in-Chief’s policies that led General Batiste, and others, to protest with early retirement.
The General no longer associates himself with VoteVets, which ‘Aims to put Iraq and Afghanistan veterans in Congress who are critical of the execution of the war in Iraq’, because it has become too centered on politics. Mr. Batiste, I mean General Batiste, is not a political pundit in the slightest.
The other email was from Retired Major General Paul D. Eaton who was justifiably critical of my “misrepresenting” his views and strongly suggested that “not critiquing” him further should be my only action. Not only was there a reference to the aforementioned error in regards to comments about General Patraeus, but General Eaton also informed me that he has been objectionable of Chairman of the Joint Chiefs of Staff General Peter Pace for having said that “this country is exceptionally well served “ by Donald Rumsfeld. Vice Chairman General Richard B. Meyers was also criticized for what I might say has been a misbegotten game of ‘follow the leader’. I needn’t say more out of respect for what was truly an unforgivable misrepresentation of General Eaton.
I stand corrected as I stand in salute for the sacrifices of each and every American hero who has defended these great United States of America from not only branded enemies of the past but also today’s enemies wear no uniform but have a uniform goal of terrorizing those with opposing ideologies, including innocent civilian bystanders.
As delivered by email from Mr. Vlasto, a point of inaccuracy in the ‘heroes’ column claimed President Dwight Eisenhower had received the Congressional Medal of Honor. In actuality General Eisenhower had refused the Medal as he felt it should be reserved for servicemen and women for bravery and valor. As if his wartime contributions were anything but!
Of the other comments, a most deserving on-line remark from ‘stopthespending’ put into question my reference to the ineffectiveness of the troop surge under the command of General David Patraeus. The writer emphasized the General’s worthy attributes that make him “a hero and deserves a Medal of Honor he secured Iraq and is a great man”. The writer made me pause again with a final statement, “I could name many more but why should I you only disagree.” I bow my head, partly in shame but also in respectful appreciation for the sacrifices and loss of lives of so many soldiers who have been steadfast in honoring the American Flag so that we may all live safe and free from harm in a world too dangerous for us soft-shoed citizens to truly comprehend.
Two other emails were unexpected with each providing a phone number as an offering for a moment of discussion.
The first was in agreement America’s working men and women are, or should be recognized as, the real heroes who can bring America around from these days of near economic ruin. The gentleman posed the question, “I wonder what the government is doing to set them up for success?” He answered, “Not much.”
He also made a correction that he “did not take on Dave Patraeus.” I immediately checked it out through my fairly trusted search mechanism, Google, and realized I had indeed made a grievous error that made me the goof. He, and the other 20 Generals I identified in the column, had actually chastised then-Secretary of Defense Donald Rumsfeld and the failed strategy of the Bush Administration in Iraq.
When I called the gentleman I was taken aback that he answered simply, “John Batiste.” I couldn’t possibly address him but with the respectful title of “General Batiste, this is Ron Rae…” with a reference to the column on heroes. When I expressed regret on my reference to General Patraeus, he kindly brushed it off.
From there the exchange of words were conversational. As a civilian and President of Klein Steel, Inc., he has seen a major turnaround in business since the first of the year. I made mention of a 30 second spot he had made on behalf of VoteVets with the theme that “Mr. President, you did not listen”. It was because of the Commander-in-Chief’s policies that led General Batiste, and others, to protest with early retirement.
The General no longer associates himself with VoteVets, which ‘Aims to put Iraq and Afghanistan veterans in Congress who are critical of the execution of the war in Iraq’, because it has become too centered on politics. Mr. Batiste, I mean General Batiste, is not a political pundit in the slightest.
The other email was from Retired Major General Paul D. Eaton who was justifiably critical of my “misrepresenting” his views and strongly suggested that “not critiquing” him further should be my only action. Not only was there a reference to the aforementioned error in regards to comments about General Patraeus, but General Eaton also informed me that he has been objectionable of Chairman of the Joint Chiefs of Staff General Peter Pace for having said that “this country is exceptionally well served “ by Donald Rumsfeld. Vice Chairman General Richard B. Meyers was also criticized for what I might say has been a misbegotten game of ‘follow the leader’. I needn’t say more out of respect for what was truly an unforgivable misrepresentation of General Eaton.
I stand corrected as I stand in salute for the sacrifices of each and every American hero who has defended these great United States of America from not only branded enemies of the past but also today’s enemies wear no uniform but have a uniform goal of terrorizing those with opposing ideologies, including innocent civilian bystanders.
Where Have All The Heroes Gone?
Where are today’s heroes? Are there any? Who might they be?
In this month of July we honor the independence of our nation for the contributions of our Founding Fathers, without whom there would be no heroes of these United States of America. Let us all remember to give thanks to the vast number of heroes of the Revolutionary War for we are a free country unto ourselves that goes beyond the 4th of July.
John Hancock, president of the Continental Congress, commissioned George Washington as Commander in Chief of the United States Colonies, the only president to be voted unanimously to lead the country. A true hero by all measures in American history.
Paul Revere one April 18, 1775, accompanied by William Dawes and Dr. Samuel Prescott, who rode through the night from Boston to Lexington with a two-lantern signal advising John Hancock and Samuel Adams the approach of British soldiers and, by his own account, cried out as he entered towns along the 16-mile route, “The regulars are coming out!”
The Congressional Medal of Honor is bestowed upon military personnel who distinguish themselves for “…conspicuously by gallantry and intrepidity at the risk of his life above and beyond the call of duty while engaged in an action against an enemy…”
President Lincoln established the Navy Medal of Honor Dec 21, 1861. The Army Medal of Honor followed on July 12, 1862. The first recipient of the medal was presented to Pvt. Jacob Parrot and five other members of Andrew’s Raiders in 1863 for disrupting the advance of the Confederate Army by rail from Atlanta to Chattanooga. A total of nineteen medals were issued for this act of gallantry, although their capture resulted in the failure of the intended result.
There are three medals each for the Army, the Air Force and the Navy/Marines/Coast guard. The self-descriptive word “Valor” appears on both the medals issued by the Army and Air Force.
Per the Congressional Medal of Honor Society, there have been a total of 3447 Medal of Honor recipients. Eighty-seven were African Americans. The first and only female to be awarded for her contributions is Dr. Mary Walker for her medical services during the Civil War. Her medal was revoked in 1917 due to a revision by Congress to award those involved in “actual combat with the enemy”. Refusing to return it, she wore it until her death. President Carter reinstated the medal in 1977.
The most recent recipient is Pvt. 1st Class Ross A. McGinnis on June 5, 2008, for having sacrificed his life by throwing himself on a live grenade, thus saving the lives of at least four other soldiers in combat in Iraq.
Five-star Generals include General Douglas MacArthur and Dwight Eisenhower; four-star Generals include Ulysses S. Grant and Alexander Grift. Other Generals include James Doolittle and Theodore Roosevelt Jr.
Who are our top-ranked military heroes today? None have yet, nor may they ever, receive the Medal of Honor.
Four-star General David Patraeus was affectively criticized in the fall of 2007 when over 20 Generals, including John Batiste, Gregory Newbold, Paul D. Eaton, John Riggs, Wesley Clark and Wayne Downing, spoke out about his handling of the conflict in Iraq.
Patraeus was inappropriately likened to a traitor in 2007 for a progress report supportive of success for the troop surge in Iraq under the guidance of the Bush Administration. In October 2008, four-star General Patraeus was chosen Commander of the U.S. Central Command, overseeing military operations throughout the Middle East region, including hotspots Afghanistan, Iran and Pakistan. Patraeus’ record may become a campaign issue if rumors materialize that he will seek the Republican nomination in the 2012 presidential election. By any definition of the term, will he be remembered as a hero?
Although not of military rank, the heroic actions of the civilians on that day of infamy, September 11, 2001, deserve more recognition than an on-site memorial at Ground Zero. If nothing else, Congressional Gold Medals would be appropriate.
The Congressional Gold Medal is the highest civilian award as an appreciation for distinguished achievements of achievement to individuals, institutions or events. To date, there are 149 acknowledged contributors including George Washington, the Dalai Lama, Rosa Parks, John Wayne, Bob Hope, Irving Berlin, Robert Frost, Winston Churchill, the American Red Cross, the entire 650 U.S. 1980 Summer Olympic Teams (650), Pope John Paul II, Charles Shultz, Thomas Edison, and on and on…
I ponder again, Who are today’s heroes?
Neither President Obama or Democrats nor Republicans. Ben Barnanke, Chairman of the Federal Reserve? Treasury Secretary Timothy Geithner? Or his predecessor Henry Paulson? The defense of their actions in Congressional hearings supports the impression they are heroes unto themselves.
It appears that Goldman Sachs, with a never before seen quarterly profit of $3.4B and JP Morgan with $2.7B in earnings, may be perceived as champions of Wall Street, which is also having a heck of a lot of hay days in recent weeks. Investor profiteers and those with propped-up bonuses are the ones who are able to increase the overall savings rate among Americans. It ain’t you or me. There golden eggs are again leaving the rest of us with cracked shells and empty nest eggs.
In this month of July we honor the independence of our nation for the contributions of our Founding Fathers, without whom there would be no heroes of these United States of America. Let us all remember to give thanks to the vast number of heroes of the Revolutionary War for we are a free country unto ourselves that goes beyond the 4th of July.
John Hancock, president of the Continental Congress, commissioned George Washington as Commander in Chief of the United States Colonies, the only president to be voted unanimously to lead the country. A true hero by all measures in American history.
Paul Revere one April 18, 1775, accompanied by William Dawes and Dr. Samuel Prescott, who rode through the night from Boston to Lexington with a two-lantern signal advising John Hancock and Samuel Adams the approach of British soldiers and, by his own account, cried out as he entered towns along the 16-mile route, “The regulars are coming out!”
The Congressional Medal of Honor is bestowed upon military personnel who distinguish themselves for “…conspicuously by gallantry and intrepidity at the risk of his life above and beyond the call of duty while engaged in an action against an enemy…”
President Lincoln established the Navy Medal of Honor Dec 21, 1861. The Army Medal of Honor followed on July 12, 1862. The first recipient of the medal was presented to Pvt. Jacob Parrot and five other members of Andrew’s Raiders in 1863 for disrupting the advance of the Confederate Army by rail from Atlanta to Chattanooga. A total of nineteen medals were issued for this act of gallantry, although their capture resulted in the failure of the intended result.
There are three medals each for the Army, the Air Force and the Navy/Marines/Coast guard. The self-descriptive word “Valor” appears on both the medals issued by the Army and Air Force.
Per the Congressional Medal of Honor Society, there have been a total of 3447 Medal of Honor recipients. Eighty-seven were African Americans. The first and only female to be awarded for her contributions is Dr. Mary Walker for her medical services during the Civil War. Her medal was revoked in 1917 due to a revision by Congress to award those involved in “actual combat with the enemy”. Refusing to return it, she wore it until her death. President Carter reinstated the medal in 1977.
The most recent recipient is Pvt. 1st Class Ross A. McGinnis on June 5, 2008, for having sacrificed his life by throwing himself on a live grenade, thus saving the lives of at least four other soldiers in combat in Iraq.
Five-star Generals include General Douglas MacArthur and Dwight Eisenhower; four-star Generals include Ulysses S. Grant and Alexander Grift. Other Generals include James Doolittle and Theodore Roosevelt Jr.
Who are our top-ranked military heroes today? None have yet, nor may they ever, receive the Medal of Honor.
Four-star General David Patraeus was affectively criticized in the fall of 2007 when over 20 Generals, including John Batiste, Gregory Newbold, Paul D. Eaton, John Riggs, Wesley Clark and Wayne Downing, spoke out about his handling of the conflict in Iraq.
Patraeus was inappropriately likened to a traitor in 2007 for a progress report supportive of success for the troop surge in Iraq under the guidance of the Bush Administration. In October 2008, four-star General Patraeus was chosen Commander of the U.S. Central Command, overseeing military operations throughout the Middle East region, including hotspots Afghanistan, Iran and Pakistan. Patraeus’ record may become a campaign issue if rumors materialize that he will seek the Republican nomination in the 2012 presidential election. By any definition of the term, will he be remembered as a hero?
Although not of military rank, the heroic actions of the civilians on that day of infamy, September 11, 2001, deserve more recognition than an on-site memorial at Ground Zero. If nothing else, Congressional Gold Medals would be appropriate.
The Congressional Gold Medal is the highest civilian award as an appreciation for distinguished achievements of achievement to individuals, institutions or events. To date, there are 149 acknowledged contributors including George Washington, the Dalai Lama, Rosa Parks, John Wayne, Bob Hope, Irving Berlin, Robert Frost, Winston Churchill, the American Red Cross, the entire 650 U.S. 1980 Summer Olympic Teams (650), Pope John Paul II, Charles Shultz, Thomas Edison, and on and on…
I ponder again, Who are today’s heroes?
Neither President Obama or Democrats nor Republicans. Ben Barnanke, Chairman of the Federal Reserve? Treasury Secretary Timothy Geithner? Or his predecessor Henry Paulson? The defense of their actions in Congressional hearings supports the impression they are heroes unto themselves.
It appears that Goldman Sachs, with a never before seen quarterly profit of $3.4B and JP Morgan with $2.7B in earnings, may be perceived as champions of Wall Street, which is also having a heck of a lot of hay days in recent weeks. Investor profiteers and those with propped-up bonuses are the ones who are able to increase the overall savings rate among Americans. It ain’t you or me. There golden eggs are again leaving the rest of us with cracked shells and empty nest eggs.
Conservative? Liberal? Who, Me?
Reader comments on this column have labeled me ‘conservative’ and ‘liberal’ but the most accurate claim might be ‘stupid’. One overly sensitive reader vowed never to waste another morning reading this dribble, disgruntled with my audacity to kindly request that the forwarding of multiple emails be discontinued because they were too frequent and the conservative views too easily predictable.
And yet, I’m never dissuaded from submitting another piece of literary babble on whatever topic flashes before my farsighted pie-eyed vision.
Let me assure you, not all of the submitted columns find their way to Hernando Today’s Voices page. There are times my ranting is justifiably trashed for they contain senseless, inconsiderate and/or a less than knowledgeable bunch of words. On a really bad day, nasty is a fitting description.
So, I wish to reinforce reader conclusions that I am indeed a flim-flam apolitical bumpkin.
Let me get Barney Frank out of the way. Did someone say, “Please!”? During the bizarre exchange between Bill O’Reilly and Sen. Frank, when the Senator was picking his fingernails, O’Reilly’s fears that universal healthcare reform would lead the nation into bankruptcy were not unexpectedly simply dismissed by Frank.
During a previous confrontation between the two, Frank denied the fact that prior to the collapse of Fannie Mae and Freddie Mac he had said the two home mortgage lending giants were “fundamentally sound” “not in danger of going under” and future investment prospects were “… going forward – very good”. This was prefaced with Frankism hindsight that Fannie and Freddie were “not the best investment these days – going back”. Today, potential cost to taxpayers is $400B in bailout funds.
If guilty of anything, South Carolina Governor Mark Sanford is justly criticized for refusing $700B in federal stimulus funds unless they could have been used to pay down state debt. When denied, the same fate followed his request to pay down $577M in school bonds. Subsequently, a unanimous state Supreme Court ruling forced him to accept the funds, saving over 7,000 teaching positions, 700 prison guard jobs and stopping the early release of 3,400 prisoners. Upset, he did a disappearing act.
Sanford’s habit of trysting the nights away to satisfy carnal cravings is a personal matter. Besides, since when is there a separation of politics and morals? Ask Bill Clinton, John Edwards, Mark Foley, Gary Hart, Eliot Spitzer and Strom Thurmond. Think too of Larry Craig’s leg. They sing in harmony, “If you can’t be with the one you love, Love the one you’re with.”
A not-so-interesting topic on the Internet are discussions that claim President Obama is the ‘anti-Christ’ with a key reference to the Chicago Republican campaign headquarters Zip Code 60606. Based on the prophesies of Nostradamus, previous interpretations have made the same claim of George W. Bush, Hillary Clinton, Rush Lambaugh, Vladmir Putin and Bin Laden. It’s all piddle prattle.
I gave up on psychic predictions forty years ago when, as foreseen in the ‘30s by the Sleeping Prophet Edgar Cayce, the Great California Earthquake failed to happen in 1969 just as Atlantis didn’t pop up out of the Atlantic Ocean in the vicinity of the Bimini Islands.
Should I now be concerned that the world as we know will end on 12-21-2012? I’ll have to ignore the predictably horrible movie ‘2012’ to be released on Friday the 13th in November.
NASA has actually stated there will be a magnetic polar shift in 2012 – of the sun, as happened in 2001. Not so scary when you read the official NASA website. Of course, you can’t trust the government. We never landed on the moon!
Of entertainers, Michael Jackson’s tragic end was unfortunate but with all the TV coverage, I hadn’t watched a single program that honored the troubled child-man until I happened upon the mainly staged memorial tribute when 11-year-old Paris Jackson gave the sweetest tear-filled farewell to her daddy.
I’ll listen to Michael’s music throughout my life but I haven’t been enticed to follow the prescribed tendency of others to overkill playing his music catalogue. The tunes of the King of Pop will endure time as surely as those of Elvis, The King.
Speaking of music, I had a conversation with a young lady at Discover Card handling a balance transfer to a lower than 14% interest rate to cover a $5K charge to replace the engine in my 14-year old truck. After listening to music-on-hold, I forewarned her that I was about to fill her ear with my personal choice of music – a clip of the techno-dance song ‘And She Said’ by Lucas Prata. She laughed with appreciation and said, “I needed that!” She wasn’t aware there’s a good 30-year difference in our ages. She didn’t know it, but it was the Rae way to make it a nicer day.
And yet, I’m never dissuaded from submitting another piece of literary babble on whatever topic flashes before my farsighted pie-eyed vision.
Let me assure you, not all of the submitted columns find their way to Hernando Today’s Voices page. There are times my ranting is justifiably trashed for they contain senseless, inconsiderate and/or a less than knowledgeable bunch of words. On a really bad day, nasty is a fitting description.
So, I wish to reinforce reader conclusions that I am indeed a flim-flam apolitical bumpkin.
Let me get Barney Frank out of the way. Did someone say, “Please!”? During the bizarre exchange between Bill O’Reilly and Sen. Frank, when the Senator was picking his fingernails, O’Reilly’s fears that universal healthcare reform would lead the nation into bankruptcy were not unexpectedly simply dismissed by Frank.
During a previous confrontation between the two, Frank denied the fact that prior to the collapse of Fannie Mae and Freddie Mac he had said the two home mortgage lending giants were “fundamentally sound” “not in danger of going under” and future investment prospects were “… going forward – very good”. This was prefaced with Frankism hindsight that Fannie and Freddie were “not the best investment these days – going back”. Today, potential cost to taxpayers is $400B in bailout funds.
If guilty of anything, South Carolina Governor Mark Sanford is justly criticized for refusing $700B in federal stimulus funds unless they could have been used to pay down state debt. When denied, the same fate followed his request to pay down $577M in school bonds. Subsequently, a unanimous state Supreme Court ruling forced him to accept the funds, saving over 7,000 teaching positions, 700 prison guard jobs and stopping the early release of 3,400 prisoners. Upset, he did a disappearing act.
Sanford’s habit of trysting the nights away to satisfy carnal cravings is a personal matter. Besides, since when is there a separation of politics and morals? Ask Bill Clinton, John Edwards, Mark Foley, Gary Hart, Eliot Spitzer and Strom Thurmond. Think too of Larry Craig’s leg. They sing in harmony, “If you can’t be with the one you love, Love the one you’re with.”
A not-so-interesting topic on the Internet are discussions that claim President Obama is the ‘anti-Christ’ with a key reference to the Chicago Republican campaign headquarters Zip Code 60606. Based on the prophesies of Nostradamus, previous interpretations have made the same claim of George W. Bush, Hillary Clinton, Rush Lambaugh, Vladmir Putin and Bin Laden. It’s all piddle prattle.
I gave up on psychic predictions forty years ago when, as foreseen in the ‘30s by the Sleeping Prophet Edgar Cayce, the Great California Earthquake failed to happen in 1969 just as Atlantis didn’t pop up out of the Atlantic Ocean in the vicinity of the Bimini Islands.
Should I now be concerned that the world as we know will end on 12-21-2012? I’ll have to ignore the predictably horrible movie ‘2012’ to be released on Friday the 13th in November.
NASA has actually stated there will be a magnetic polar shift in 2012 – of the sun, as happened in 2001. Not so scary when you read the official NASA website. Of course, you can’t trust the government. We never landed on the moon!
Of entertainers, Michael Jackson’s tragic end was unfortunate but with all the TV coverage, I hadn’t watched a single program that honored the troubled child-man until I happened upon the mainly staged memorial tribute when 11-year-old Paris Jackson gave the sweetest tear-filled farewell to her daddy.
I’ll listen to Michael’s music throughout my life but I haven’t been enticed to follow the prescribed tendency of others to overkill playing his music catalogue. The tunes of the King of Pop will endure time as surely as those of Elvis, The King.
Speaking of music, I had a conversation with a young lady at Discover Card handling a balance transfer to a lower than 14% interest rate to cover a $5K charge to replace the engine in my 14-year old truck. After listening to music-on-hold, I forewarned her that I was about to fill her ear with my personal choice of music – a clip of the techno-dance song ‘And She Said’ by Lucas Prata. She laughed with appreciation and said, “I needed that!” She wasn’t aware there’s a good 30-year difference in our ages. She didn’t know it, but it was the Rae way to make it a nicer day.
Budgeting I.O.U.s
In a recent edition of The Economist there appeared a picture of a woman holding a protest sign that read ‘A Fair and Balanced Budget Does Not Mean Cut, Cut, Cut’. If placed in front of a mirror, the word ‘austerity’ would have reflected a more realistic view of the dire state of affairs of the worsening economy.
From the presumable designer sunglasses, dangling gold earrings and a golden necklace hanging pretty around the neck, the woman appeared to be a well to do resident who doesn’t seem to grasp the frightening circumstances that face California’s economy, necessitating years of spending cuts.
With her mouth wide open as if ready for dental work, in all likelihood she was spewing hot air with a possible risk that her complexion may turn to as deep a purple hew as that of the blouse she was wearing. In protest, she could continue her stance all day long without taking a breath but it wouldn’t do any good.
California, with an astounding $26B budget deficit that grows by about $25M every day, has had to resort to issuing IOUs, an undisciplined action that will continue through September. This includes moneys due for services provided by private sector businesses plus income tax refunds due to the state’s residents.
This is no way to run a business, but there’s no business like government business and it’s no business I know of that can run up such astronomical sums of debt and continue to function – which it can’t. Just like the foolish consumer who looks in his or her wallet and sees a shortage of cash, the state has for too long resorted to increase its debt on a credit line beyond its incoming revenues.
Entrepreneurs need cash to keep their businesses afloat at a time when their very existence is already in jeopardy from the deeply troubled recession. Right on down the line, from owner to employee, these providers of services to the state government rely on a steady income to cover loan agreements, make mortgage payments, satisfy credit card debt and sustain the basic necessities for their families – namely food and electricity.
A marginal increase in bankruptcies, foreclosures and credit card default rates can be expected between now and when the IOUs are satisfied. California is out on a shaky limb but when the bow breaks Washington has said it won’t be there to catch the fall.
This past week, large banking institutions, lead by Bank of America, announced they would no longer cash the vouchers by the end of July, if not immediately. The primary reason for the policy shift is the fear that Sacramento may yet default on the payment of the registered warrants when they’re set to mature in October.
To limit the fraud potential to recipients of the IOUs needing immediate cash from third-party speculators, including offers over the Internet, the SEC stepped in to require traders be registered dealers.
California residents demonstrated how they’re fed up when they voted down measures that would have increased or extended tax hikes approved in February for another two years beyond 2011. Of the six measures on the ballot, only one passed – preventing lawmakers and public officials from receiving pay raises when the state is running a deficit.
In addition to an earlier announcement that 2000 workers would lose their jobs, another 4600 may join the ranks of the unemployed in September. Budget negotiations may also see a 5% pay cut to many state workers and furloughs of up to three days per month, which would result in a 14% loss of wages.
California is the prime example of the worsening economy and the piling up of debt, but nearly every state in the union is faced with similar budget deficits. According to the National Conference of State Legislatures, states currently have an accumulative $121B of debt, next year about $166B and a forecast of up to $180B in 2011.
The Center on Budget and Policy Priorities identifies 48 states facing budget shortfalls in 2010. Montana and North Dakota are the exceptions. Twenty-five states have increased taxes; another twelve may follow suit. No! No! No! This is exactly what deepened the severity of the Great Depression!
California debt will represent about 58% of its 2010 budget. Of the 50 states, at 22.6% of its budget, Florida isn’t expected to fair as badly as ten other states. Reduced funds for healthcare, local governments and a wide variety of services provided by states will require years of unfairly balanced budgets. And that means cut, cut, cut.
May Floridians not be California bound.
From the presumable designer sunglasses, dangling gold earrings and a golden necklace hanging pretty around the neck, the woman appeared to be a well to do resident who doesn’t seem to grasp the frightening circumstances that face California’s economy, necessitating years of spending cuts.
With her mouth wide open as if ready for dental work, in all likelihood she was spewing hot air with a possible risk that her complexion may turn to as deep a purple hew as that of the blouse she was wearing. In protest, she could continue her stance all day long without taking a breath but it wouldn’t do any good.
California, with an astounding $26B budget deficit that grows by about $25M every day, has had to resort to issuing IOUs, an undisciplined action that will continue through September. This includes moneys due for services provided by private sector businesses plus income tax refunds due to the state’s residents.
This is no way to run a business, but there’s no business like government business and it’s no business I know of that can run up such astronomical sums of debt and continue to function – which it can’t. Just like the foolish consumer who looks in his or her wallet and sees a shortage of cash, the state has for too long resorted to increase its debt on a credit line beyond its incoming revenues.
Entrepreneurs need cash to keep their businesses afloat at a time when their very existence is already in jeopardy from the deeply troubled recession. Right on down the line, from owner to employee, these providers of services to the state government rely on a steady income to cover loan agreements, make mortgage payments, satisfy credit card debt and sustain the basic necessities for their families – namely food and electricity.
A marginal increase in bankruptcies, foreclosures and credit card default rates can be expected between now and when the IOUs are satisfied. California is out on a shaky limb but when the bow breaks Washington has said it won’t be there to catch the fall.
This past week, large banking institutions, lead by Bank of America, announced they would no longer cash the vouchers by the end of July, if not immediately. The primary reason for the policy shift is the fear that Sacramento may yet default on the payment of the registered warrants when they’re set to mature in October.
To limit the fraud potential to recipients of the IOUs needing immediate cash from third-party speculators, including offers over the Internet, the SEC stepped in to require traders be registered dealers.
California residents demonstrated how they’re fed up when they voted down measures that would have increased or extended tax hikes approved in February for another two years beyond 2011. Of the six measures on the ballot, only one passed – preventing lawmakers and public officials from receiving pay raises when the state is running a deficit.
In addition to an earlier announcement that 2000 workers would lose their jobs, another 4600 may join the ranks of the unemployed in September. Budget negotiations may also see a 5% pay cut to many state workers and furloughs of up to three days per month, which would result in a 14% loss of wages.
California is the prime example of the worsening economy and the piling up of debt, but nearly every state in the union is faced with similar budget deficits. According to the National Conference of State Legislatures, states currently have an accumulative $121B of debt, next year about $166B and a forecast of up to $180B in 2011.
The Center on Budget and Policy Priorities identifies 48 states facing budget shortfalls in 2010. Montana and North Dakota are the exceptions. Twenty-five states have increased taxes; another twelve may follow suit. No! No! No! This is exactly what deepened the severity of the Great Depression!
California debt will represent about 58% of its 2010 budget. Of the 50 states, at 22.6% of its budget, Florida isn’t expected to fair as badly as ten other states. Reduced funds for healthcare, local governments and a wide variety of services provided by states will require years of unfairly balanced budgets. And that means cut, cut, cut.
May Floridians not be California bound.
Thursday, July 9, 2009
Sarah Palin, the GOP & Me
Less than a year ago, August 29, Republican presidential nominee Senator John McCain chose her as his vice-presidential running mate. You know to whom I refer.
Unfortunate or not, but most likely viewed as inconsequential to many Americans, Sarah Louise Palin made the controversial decision to abandon her elected post as Governor of Alaska. Considering her apparent interest in seeking higher political office at some point in the future, it’s a rather shocking action that mistakenly warrants extensive dialogue, news analysis and talk show blithering.
Actually, the short but oh-so-swell exchange between Fox News host Bill O’Reilly and Karl Rove was priceless in that, although they disagreed on the political ramifications of Palin’s resignation, Bill was very respectful and “unargumentative” of their conflicting views. If a Democrat had spoken Rove’s words, the verbal exchange would have been entirely different – you know, the attitude and over-speak tantrum that Bill reverts to with premeditated animosity.
While O’Reilly appeared optimistic that Palin’s course of action might eventually lead to a Palin bid to head the Republican ticket for president in 2012, Rove was decidedly at odds of her having the support of influential party leaders.
Palin’s actions, or rather inactions, leading up to the annual fundraising event for the National Republican Congressional and Senatorial Committees in Washington in early June did much damage to her standing among other Republicans.
Back in March, she was given an invitation to headline the political event but, gosh darn it, she couldn’t give a timely RSVP and, wouldn’t ya know it, by the time she decided she had the time to attend, the alternate keynote speaker, Newt Gingrich, who’s another 2012 presidential hopeful, wouldn’t have it. As a matter of fact when she made a less than grand entrance on the night of the event, in fear she’d upstage the older dude, she and hubby Todd were seen but Sarah wasn’t heard.
Well, that’s quite enough about Sarah. I wish! I foresee me flickin’ the remote fast and furious for the next couple of years searching for anything – commercials, cartoons, game shows, even reality shows – anything to limit the length and frequency of times of seeing that face pop up before my eyes with those senseless words crackling in my ears.
I do admit that I’m rather relieved that doctors were able to remedy the winkin’ and blinkin’ malady she experienced during campaign season last year. It may have been dry eye syndrome but I suspect it was a case of Marcus Gunn Phenomenon, whereby the movement of the upper eyelid moves in a rapid rising motion each time the jaw moves, which is not to be confused as an act of coordination. Anyway, medical wonders never cease to amaze me.
Actually, Hockey Mom Palin needs a time-out and take a seat in the penalty box for being at odds with mainstream conservatism. Her no “politics as usual” doesn’t ring true. For one thing, she and other Republicans continue to question, disregard and spew green house gases over scientific conclusions that global warming and climate change are in fact of grave concern for the health of the planet, thus and an immediate and progressive danger to all living things on land and in the sea and air.
The ignorance that belies the findings of the Mineral Management Service, the U.S. Geological Survey and the U.S. Fish & Wildlife Service is belligerent of views of countries around the world. An American Association for the Advancement of Science study released in 2005 reported that carbon dioxide levels were 27% higher than at any time in the past 650,000 years.
The findings were taken from the analysis of air bubbles trapped in an East Antarctica area monitored by the European Project for Ice Coring (EPIC).
I sincerely commend Exxon Mobil CEO Rex Tillerson for softening the company’s stance on climate change and carbon emissions. But his January announcement in support of a carbon tax to be a fairer option than the cap-and-trade system came only after a shareholder revolt at last year’s annual meeting, led by none other than the Rockefeller family.
Republicans as a whole must change their tone on nearly every political front. They have no leader. Certainly not Palin. The retreads of Gingrich and Dean, and the inflexible views of Cheney don’t cut it either. Ron Paul would have my solid support if he were given the opportunity to head the Republican Presidential ticket in 2012 but the Party isn’t likely to stand behind his Libertarian views. Besides, by Election Day he’ll be 77 years old, 5 years beyond McCain’s 72 years in 2008.
Charlie Crist, the lamest rubber ducky governor in the nation, isn’t any better than the rest with his recent cop-outs to the people of Florida as self-interest groups saddled him up for a ride to Washington in next year’s Senatorial race. He had to make up with Party leaders for supporting Obama’s stimulus package. The same goes for Colin Powell for abandoning McCain in last year’s Presidential election.
In the economic climate of everybody porking handouts from Obama’s stimulus dollars, regional political interests won’t enhance any particular politician. Especially Palin whom, after family and friends, will continue to put Alaska’s interests above all else.
Party leaders must have scripted Louisiana Governor Bobby Jindal’s GOP response to Obama’s State of the Union Address in February. I say this because just two days prior, on Meet the Press, Jindal’s interview with David Gregory was very impressive with assured, coherent statements, a veritable smooth talker and quite a 360-degree turnaround from his delivery two days later.
Disastrous. That’s the Republican Party right now. I pray, but not with religious fury, that the Party can realign themselves with the American people. It’s important not only to me but for the whole of the United States.
Unfortunate or not, but most likely viewed as inconsequential to many Americans, Sarah Louise Palin made the controversial decision to abandon her elected post as Governor of Alaska. Considering her apparent interest in seeking higher political office at some point in the future, it’s a rather shocking action that mistakenly warrants extensive dialogue, news analysis and talk show blithering.
Actually, the short but oh-so-swell exchange between Fox News host Bill O’Reilly and Karl Rove was priceless in that, although they disagreed on the political ramifications of Palin’s resignation, Bill was very respectful and “unargumentative” of their conflicting views. If a Democrat had spoken Rove’s words, the verbal exchange would have been entirely different – you know, the attitude and over-speak tantrum that Bill reverts to with premeditated animosity.
While O’Reilly appeared optimistic that Palin’s course of action might eventually lead to a Palin bid to head the Republican ticket for president in 2012, Rove was decidedly at odds of her having the support of influential party leaders.
Palin’s actions, or rather inactions, leading up to the annual fundraising event for the National Republican Congressional and Senatorial Committees in Washington in early June did much damage to her standing among other Republicans.
Back in March, she was given an invitation to headline the political event but, gosh darn it, she couldn’t give a timely RSVP and, wouldn’t ya know it, by the time she decided she had the time to attend, the alternate keynote speaker, Newt Gingrich, who’s another 2012 presidential hopeful, wouldn’t have it. As a matter of fact when she made a less than grand entrance on the night of the event, in fear she’d upstage the older dude, she and hubby Todd were seen but Sarah wasn’t heard.
Well, that’s quite enough about Sarah. I wish! I foresee me flickin’ the remote fast and furious for the next couple of years searching for anything – commercials, cartoons, game shows, even reality shows – anything to limit the length and frequency of times of seeing that face pop up before my eyes with those senseless words crackling in my ears.
I do admit that I’m rather relieved that doctors were able to remedy the winkin’ and blinkin’ malady she experienced during campaign season last year. It may have been dry eye syndrome but I suspect it was a case of Marcus Gunn Phenomenon, whereby the movement of the upper eyelid moves in a rapid rising motion each time the jaw moves, which is not to be confused as an act of coordination. Anyway, medical wonders never cease to amaze me.
Actually, Hockey Mom Palin needs a time-out and take a seat in the penalty box for being at odds with mainstream conservatism. Her no “politics as usual” doesn’t ring true. For one thing, she and other Republicans continue to question, disregard and spew green house gases over scientific conclusions that global warming and climate change are in fact of grave concern for the health of the planet, thus and an immediate and progressive danger to all living things on land and in the sea and air.
The ignorance that belies the findings of the Mineral Management Service, the U.S. Geological Survey and the U.S. Fish & Wildlife Service is belligerent of views of countries around the world. An American Association for the Advancement of Science study released in 2005 reported that carbon dioxide levels were 27% higher than at any time in the past 650,000 years.
The findings were taken from the analysis of air bubbles trapped in an East Antarctica area monitored by the European Project for Ice Coring (EPIC).
I sincerely commend Exxon Mobil CEO Rex Tillerson for softening the company’s stance on climate change and carbon emissions. But his January announcement in support of a carbon tax to be a fairer option than the cap-and-trade system came only after a shareholder revolt at last year’s annual meeting, led by none other than the Rockefeller family.
Republicans as a whole must change their tone on nearly every political front. They have no leader. Certainly not Palin. The retreads of Gingrich and Dean, and the inflexible views of Cheney don’t cut it either. Ron Paul would have my solid support if he were given the opportunity to head the Republican Presidential ticket in 2012 but the Party isn’t likely to stand behind his Libertarian views. Besides, by Election Day he’ll be 77 years old, 5 years beyond McCain’s 72 years in 2008.
Charlie Crist, the lamest rubber ducky governor in the nation, isn’t any better than the rest with his recent cop-outs to the people of Florida as self-interest groups saddled him up for a ride to Washington in next year’s Senatorial race. He had to make up with Party leaders for supporting Obama’s stimulus package. The same goes for Colin Powell for abandoning McCain in last year’s Presidential election.
In the economic climate of everybody porking handouts from Obama’s stimulus dollars, regional political interests won’t enhance any particular politician. Especially Palin whom, after family and friends, will continue to put Alaska’s interests above all else.
Party leaders must have scripted Louisiana Governor Bobby Jindal’s GOP response to Obama’s State of the Union Address in February. I say this because just two days prior, on Meet the Press, Jindal’s interview with David Gregory was very impressive with assured, coherent statements, a veritable smooth talker and quite a 360-degree turnaround from his delivery two days later.
Disastrous. That’s the Republican Party right now. I pray, but not with religious fury, that the Party can realign themselves with the American people. It’s important not only to me but for the whole of the United States.
Obama, Sally and Stimulus Attitudes
Sally Rae has an attitude. In but the fewest of words there was a flare of disgust and a tinge of anger about the overindulgence homeowners had exercised during the sublime years of sub-prime loans and second-mortgage frenzies.
Although typically calm, cool and in control, Sally’s uncomely attitude was spurred by the Making Homes Affordable Plan. She grumbled for a moment but, quicker than Obama can swat a fly on the back of his hand, her demeanor returned to the sweet, charming little lady she is.
The Home Affordable Refinance Program targets 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac to lower their monthly payments. The Home Affordable Modification Program aims to keep an additional 3 to 4 million Americans from facing foreclosure.
The $75B allocated to the programs intends to lower interests rates to as low as 2% and/or give loan extensions up to 40 years – anything to bring the payment below 31% of pretax income, thus stemming the flow of bankruptcies and short-sales – but only applicable to owner-occupied, primary residences, not speculators or house-flippers, for up to $729,750 in unpaid balances. How sweet it is! For some, not all.
Sally has a problem with her tax dollars being given to irresponsible people who, with just a bit of common sense should have known the bottom-line monthly payment shown on the closing papers was unaffordable with their given incomes. An oversized house is nice to live in but when there’s a family to consider you not only have to plan for retirement but also consider college costs for the kids and, accept it or not, emergencies.
You can only blame lending practices so far because, in the end, it’s the person who signed the loan papers who are just as much at fault. Irresponsible indeed, dear sister, but I can top your angst with lenders who were too eager to give unsecured loans in the form of credit cards with little oversight of the individual’s ability of repayment.
A recent article in The NY Times related a cardholder who had been contacted by a lender that offered a 20% write-off on a $5,486 balance to which he declined but whose counter-offer of 50% was immediately accepted. An elderly gentleman who owed $112,00 on four credit cards, through a third-party settlement company that charged him a 12% fee, was able to reduce the balance to 35% of the outstanding balance, thus whittling down to 47% the outstanding balances.
In neither case was there a hint of them having to relinquish any of their assets. They had their cake and ate it too, and the rest of us are left with the crap that came out in the end – paying for the tasty morsels of their consumerism in the form of credit card companies jacking up interest rates much too quickly and all to often, even to those who continue to make on-time payments.
Obama’s Congress passed the Credit Card Act in May but the rule on 45 days advance notice of major changes won’t take affect until September and the majority of the new rules don’t apply until February next year. Consumers are of little concern compared to the demands of the corps or corporations.
The actions people took to enhance their immediate lifestyles were shameful. Whether by means of uncontrolled credit card usage or double-mortgage abuse, they set aside common sense for the good-time feeling of keeping up with other consumers who went on swanky spending sprees.
They beset themselves on the most difficult of futures with purchases of joyful trinkets like big screen TVs and monstrous vehicles that lose value the moment they’re taken off the showroom floor. Phantasmagoric vacations too, I’m sure.
There’s also the woman whose arrogance came out in full bloom when she bragged about the home equity loan she took, knowing the additional payment couldn’t be met. She pocketed the money. Despicably American.
The ones deserving of compassion, which doesn’t help them one bit, are those who became indebted due to health costs. I could make a wager and be fairly certain that, minus their conditions, their homes would still be secure investments, their stomachs less empty, their electric bills paid and they’d in be in much better off than the ones who pillaged their financial security for earthly pleasures.
Perhaps against Sally’s recommendation but in reader interest, particularly those faced with foreclosure, I suggest you visit www.financialsecurity.gov for information and www.makinghomeaffordable.gov to start the process that could ease your weary mind from the fears of losing your home. The entitlement was given by Obama. As far as other debt, call the number on the back of your credit card(s) and cry, “Fools!” You and them but the rest of us most of all.
Although typically calm, cool and in control, Sally’s uncomely attitude was spurred by the Making Homes Affordable Plan. She grumbled for a moment but, quicker than Obama can swat a fly on the back of his hand, her demeanor returned to the sweet, charming little lady she is.
The Home Affordable Refinance Program targets 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac to lower their monthly payments. The Home Affordable Modification Program aims to keep an additional 3 to 4 million Americans from facing foreclosure.
The $75B allocated to the programs intends to lower interests rates to as low as 2% and/or give loan extensions up to 40 years – anything to bring the payment below 31% of pretax income, thus stemming the flow of bankruptcies and short-sales – but only applicable to owner-occupied, primary residences, not speculators or house-flippers, for up to $729,750 in unpaid balances. How sweet it is! For some, not all.
Sally has a problem with her tax dollars being given to irresponsible people who, with just a bit of common sense should have known the bottom-line monthly payment shown on the closing papers was unaffordable with their given incomes. An oversized house is nice to live in but when there’s a family to consider you not only have to plan for retirement but also consider college costs for the kids and, accept it or not, emergencies.
You can only blame lending practices so far because, in the end, it’s the person who signed the loan papers who are just as much at fault. Irresponsible indeed, dear sister, but I can top your angst with lenders who were too eager to give unsecured loans in the form of credit cards with little oversight of the individual’s ability of repayment.
A recent article in The NY Times related a cardholder who had been contacted by a lender that offered a 20% write-off on a $5,486 balance to which he declined but whose counter-offer of 50% was immediately accepted. An elderly gentleman who owed $112,00 on four credit cards, through a third-party settlement company that charged him a 12% fee, was able to reduce the balance to 35% of the outstanding balance, thus whittling down to 47% the outstanding balances.
In neither case was there a hint of them having to relinquish any of their assets. They had their cake and ate it too, and the rest of us are left with the crap that came out in the end – paying for the tasty morsels of their consumerism in the form of credit card companies jacking up interest rates much too quickly and all to often, even to those who continue to make on-time payments.
Obama’s Congress passed the Credit Card Act in May but the rule on 45 days advance notice of major changes won’t take affect until September and the majority of the new rules don’t apply until February next year. Consumers are of little concern compared to the demands of the corps or corporations.
The actions people took to enhance their immediate lifestyles were shameful. Whether by means of uncontrolled credit card usage or double-mortgage abuse, they set aside common sense for the good-time feeling of keeping up with other consumers who went on swanky spending sprees.
They beset themselves on the most difficult of futures with purchases of joyful trinkets like big screen TVs and monstrous vehicles that lose value the moment they’re taken off the showroom floor. Phantasmagoric vacations too, I’m sure.
There’s also the woman whose arrogance came out in full bloom when she bragged about the home equity loan she took, knowing the additional payment couldn’t be met. She pocketed the money. Despicably American.
The ones deserving of compassion, which doesn’t help them one bit, are those who became indebted due to health costs. I could make a wager and be fairly certain that, minus their conditions, their homes would still be secure investments, their stomachs less empty, their electric bills paid and they’d in be in much better off than the ones who pillaged their financial security for earthly pleasures.
Perhaps against Sally’s recommendation but in reader interest, particularly those faced with foreclosure, I suggest you visit www.financialsecurity.gov for information and www.makinghomeaffordable.gov to start the process that could ease your weary mind from the fears of losing your home. The entitlement was given by Obama. As far as other debt, call the number on the back of your credit card(s) and cry, “Fools!” You and them but the rest of us most of all.
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