Thursday, December 4, 2008
The studies revealed that the recession started in December of 2007 and was reflected in the stock market dive of September 2008; some instant market. The market is reactive, with darn slow reflexes, not proactive.
The mythology also suggests that the current mortgage crisis has core causes that are everywhere, except in ‘the market.’ The current crisis is centered on mortgage manipulation, same as (only worse than) the financial crisis of the 1980s: lots of cheap and easy credit made available while regulators napped.
Both financial catastrophes were created by ‘the markets’ insistence on demonstrated short term profit gains, and business growth (the Wall Street Two Step). Mortgages are very long term investments (15 and 30 years primarily) that introduce large quantities of money into ‘the market’ with each individual transaction; especially as ‘affordable’ housing is discouraged. ‘The market’ created a variety of kinds of “mortgaged backed” ‘investment instruments’ to attempt to pretend short term profits while allowing continued, unrestrained growth.
The Resolution Trust Corporation (RTC) cleaned up the mess of the 1980s without addressing, actually complete avoidance of, the aforementioned underlying causes. Now the US Treasury Secretary is attempting to prop up ‘the market’ with hundreds of billions of taxpayer dollars without increased regulation, and without establishing responsibility, of ‘the market’ players that are involved in the recurring financial crises.
Those who deny history feel free to repeat it.
Sunday, November 16, 2008
In the 1970s the price of gas was going up, and the American consumer needed to get a car from Japan for fuel efficiency. They discovered that the imported cars didn't start to fall apart after the 3 year or 60,000 mile barriers that KO'd cars from the 'big three (GM, Ford and Chrysler).' This was the first indication that there was a systemic problem at the 'big three.'
The market, and government, had their first opportunity to restructure GM via the bankruptcy system in 1989/90, and didn't; about five years after the taxpayers had underwritten the restructuring of Chrysler.
Here we are again facing the fact that GM, Chrysler and Ford, like Wall Street, can't find their own backsides with both hands; even while sitting on those very same hands.
Yes, it will be painful to allow GM, Chrysler or Ford to fail, but throwing money at these companies has not been successful, let alone painless.
Friday, November 7, 2008
Pause, to catch a breath, then go back and (figure out?) follow the paper trail.
These investment instruments were created (by geeks hired specifically for that purpose) and sold, with an arbitrary initial debt rating of AAA, to generate immediate cash from long term investments: mortgages. They were very successful, so the call went out for more. The next generation was also very successful, so the market decayed into the irrational exuberance that accompanies any trend, that is successful long enough, on Wall Street.
Time needs to be taken to find all that paper and determine what’s still AAA, what’s junk and what’s somewhere in between. This is not being done because once the paper trail is straightened out it will be obvious that Wall Street caused its own problem.
The market has never accepted any responsibility for failure, and is of no mind to start now.
Tuesday, October 14, 2008
So, here we are, again, bailing out the culprits with a concerted effort to avoid the root causes of the problem.
The difference this time is that people's wallets have been affected too often by the detrimental nonsense that is 'trickle down;' leave the richest folks with the least responsibility for, and no oversight for their activity in, the environment that allowed them to earn such wealth in the first place.
There's an election, early voting starts in the next few days, this year and the winds of change are in the air!
Thursday, October 9, 2008
Texas has very few (grandfathered) municipal telecommunications networks, because they are illegal. This must change because telecommuting, distance learning and official/legal/emergency communication will play a large part in the future of Texas. The rural nature of the vast majority of the state of Texas means that there will never be sufficient customer base to provide a profitable return on investment (ROI) for private telecommunications companies; the government must provide this service.
Sunshine and wind are something that are well known to almost every Texan, but the best places for mass harvesting of said attributes are in rural areas. There is no private company that will take on the investment needed to provide the large, intelligent, power distribution network that could bring this power from where it is generated to where it is needed; a constant, huge drain on profit.
There is no private company that will invest in the roads needed to interconnect Texas, because profitable toll rates are more than most are willing to pay; the Camino Columbia Toll Road is an example.
There is no private company willing to invest in rail connections across Texas or within the metropolitan areas, because (once again) common carriage is incapable, at an affordable cost to the user, of generating sufficient profitability.
You've noticed a pattern by now: that common carriage infrastructure (especially in a huge, largely rural, state; like Texas) is not something in which a privately or publicly held company, most interested in generating a profit, will invest. The municipal, county, state and federal governments must do this investing or it will not get done properly, if at all.
Thursday, October 2, 2008
The RTC cleaned up bad debt accrued by the Savings and Loan Industry (home loan providers), at a cost of $375 - $500 billion (in taxpayer’s money), while it was forbidden from investigating (or turning over to investigating agencies) any evidence of criminal activity.
Similarly, this bill fails to recognize that the ‘mortgage backed’ derivatives (somehow buying into mortgages without buying mortgages) were a steaming pile of fecal matter from their inception, and actually asking taxpayers to buy huge quantities of them instead. I think not.
It does not give the bankruptcy court system the authority (it should always have had) to restructure debt secured by one’s home or property.
This bill does not include an updated version of the Glass-Steagull Act, which includes the regulating of Hedge Funds and Private Equity.
The new bill is a larger, debt inducing, dysfunctional thing that requires rejection; just like the first bad bailout bill.
Tuesday, September 23, 2008
Yes, to a bankruptcy court’s ability to restructure debt secured by one’s home or property.
Property’s owner: keeps their property, if they are deemed fiscally qualified to pay the restructured loan.
Mortgage Holder: makes some money, less than they’d preferred, on the note.
Investors in risky ‘mortgaged-backed’ paper: get what modest return, or lack thereof, that one should expect from a risky investment.
Simple, straightforward and it costs the taxpayer, who wasn’t previously involved in any way shape or form, very little.
Wednesday, September 17, 2008
Remember that the RTC was created to use taxpayer money to fix problems created by the folks charged with home loans, the Savings and Loan (S&L) industry players. The charter of the RTC specified that the agency would not investigate, nor would it turn over to investigating agencies of the government, any evidence that a crime might have been committed in the razing of the S&L businesses.
A little over two decades have past and here, again, we are dealing with huge economic woes caused by players in the home loan businesses and Wall Street’s money (paper with monetary value; we’re told) manipulators. Once again taxpayers are being called upon to bail out the players, without consequences for said players!!!
I think not!
Home loans can, in a single transaction, put large quantities of money on Wall Street’s field of play, and that money is then toyed with; while lobbyists for the players successfully request the government regulators turn a blind eye.
A better solution to this problem is to let the Bankruptcy Court system restructure the debt that is secured by one’s own home; currently they are not legally able to do so. This is necessary because the loans that are the largest percentage of the failures have always been called sub prime; for known, good reasons. Another kind of loan that is prone to failure is the Adjustable Rate Mortgage (ARM), because it’s sold to less qualified borrowers at rates that will ultimately be most profitable to the lender; most burdensome to the customer.
These money manipulating players need serious regulation and accountability, because they have repeatedly proven their ability to throw prudence to the wind in pursuit of profit; then call for the taxpayers to save them from themselves (without consequence, of course).
How long will it take voters to realize that they are the customers (borrowers) being abused by this process? The voters must inform their legislators that this situation needs to be controlled, once and for all, or they’ll be replaced by those who will.
Monday, September 8, 2008
The GOP campaign has already begun to issue statements to the effect of, “the Democratic majority in the US Congress is responsible for all that is wrong with the
If you believe that, have I got a bridge for you!
The Democratic majority in the US Congress decided to put its foot in its collective mouth and promise that, starting in January of 2007, things would be different. If their brains had engaged before their mouths, they would have noted that they did not have a veto proof majority in either the House or Senate. Also, the super-majority parliamentary rule (used by both parties when they found themselves as a slight minority) in the Senate could, and did, stop all the Democrat’s initiatives before they ever would reach the President’s desk.
For those reasons the Republican party’s defective government (the W admin. plus a Republican majority in the House and Senate) from January 2001 till December 2006 is responsible for the financial crisis (that started as a problem with subprime mortgages), the incredibly huge federal budget deficit, the consistently large monthly trade deficit, the incomplete effort in Afghanistan, the wrong war in Iraq, the stagnant middle class income, the disparity in wealth twixt the rich and the middle class, mass job exportation, etc…
If Republicans are not willing to own the consequences of their actions, perhaps they should not have caused them.
How outsourcing tasks to contractors saves anyone any money, even as the contracting company makes a substantial profit:
First, do the outsourced task poorly.
Second, move the work to a country where the prevailing wage is substantially lower than in the
Third, the aforementioned other country need have weaker (or selectively enforced) environment, health and safety laws.
That’s all it takes. How do the executives that make these outsourcing decisions sleep at night?
Friday, August 1, 2008
Democracy is a constant debate, amongst all citizens, about how to apply the rule of law most fairly, across the widest possible majority of the entire population, to create a stable, capably strong and prosperous society. This is a difficult task anywhere one tries, but it’s especially important that we do it for our ever-evolving society in these
A few items that, when properly considered, might spark said noisy discussion…
First: those who are complaining that the Democrats are blocking access to drilling, for oil and gas, on the Outer Continental Shelf (OCS) should remember that the restrictions began in 1981, and involved only the California coast; enacted by, former CA governor, President Ronald Reagan. The protection was extended to the entire Pacific, Atlantic and eastern coast of the Gulf of Mexico (
Between January of 2001 and December of 2006 President George W. Bush could have rescinded the OCS protection, with the support of the Republican majority in both legislative branches of the federal government; didn’t seem so important while Jeb Bush was governor of
Second: the US Supreme Court recently proved that a majority has not consulted a dictionary. There’s no singular noun or pronoun in the entire 2nd amendment of the US Constitution. The plural noun, “people,” is modified by a phrase concerning the continued functioning of, “a well regulated Militia, being necessary to the security of a
Third: as a former, moderate Republican, I remember when debates were passionate and fiscal responsibility was paramount.
In the 1970s a movement of pseudo-conservatives took over the Republican party. Discussion was silenced and, “sound like us, shut-up or leave,” became the party line. I left, but I didn’t go away.
Government was bad mouthed, even as it was being hugely expanded. Fiscal responsibility was cast out. Prophesy of bad government was being fulfilled by pseudo-cons, in the guise of Republicans, who were governing badly.
I am officially aligned with the Democratic party these days, but would love to reach across the aisle and find the true, moderate Republicans to begin the process of cleaning up the enormous mess the pseudo-cons have made of our great country, these
Tuesday, June 24, 2008
Year after year gas prices have spiked higher each summer driving season, and this year is no exception. The oil and gas industry says it doesn’t have the refinery capacity to change from producing winter to summer oil based products quickly enough. In the 1990s they sold a large chunk of the refinery capacity to independent operators; reduced their own capacity. Meantime, they optimized production at their remaining refineries to more than 90% utilization; great for profits, bad for flexibility or damaged (tornado, hurricane, industrial accident, etc…) capacity offsets (e.g., the BP refinery accidental explosion and fire here in TX).
So, can we get some help from auto manufacturers in conservation (autos consume the majority of oil based products in the
GM also displayed the Volt, a plug-in, full series hybrid car (moved by electric motor only, using an internal combustion engine to crank the generator exclusively), but said batteries to make the car feasible weren’t commercially available. However, the folks at General Dynamics Land Systems had already field demonstrated a four ton Humvee replacement that was a full series hybrid truck (getting 250% better mileage than the Hummer).
I hear the cry to, “let the markets work,” but the markets have discovered that profitable is more fun than responsible activity. We were on this road in the 1970s and are here again (see other posts), because we’ve demonstrated an ability to forget the past. To quote Bill Engvall, “Here’s your sign!”
Monday, June 16, 2008
We return to the past once again, 1972 this time, to relive that well-marketed, short-term supply problem that drove prices at the gas/diesel pump sky high, this time in the form of developing world economic demand straining the producers ability to supply enough fuel.
The oil and gas industry once again states that the solution is to let them drill for crude oil wherever and whenever they want.
That answer is as wrong this time as it was the last time. What brought the price of hydrocarbon based fuels down, by 1985, was conservation. The problem rears its ugly head again, because after the price of a gallon of gas/diesel went way down, due to sub $10 per barrel crude oil, all the conservation measures were quickly thrown away; replaced by pseudo-conservation methodologies.
Enter the Corporate Average Fuel Economy (CAFE) standards that would hold the line on fuel consumption without price controls (that had failed earlier in the crisis).
The first problem that arose was the cheap price of fuel; concerned citizens subdued themselves when they paid less at the pump. Those still concerned about overt consumption were labeled tree-huggers, whiners, nut-cases, etc…
The second problem with CAFE was the light truck exemption, deemed necessary for the folks who needed a truck on the job. Except that CAFE was met by eliminating large family sedans and station wagons, that were replaced by Sport Utility Vehicles (SUVs) and mini vans; family vehicles covered by the light truck exemption (allows these new types of vehicles to remain beyond the reach of CAFE).
Those of us who thought the price of gas/diesel should remain higher, by means of increased state and federal taxes on consumption thereof, were scoffed at generally. The tax revenue generated could have been used to operate, update and maintain state and federal road and ground transport infrastructure that was being worn out, by heavy usage, at a much faster rate than it was being serviced.
Well, we’re at it again! Supplies seem to be meeting demand; no station closures or waiting lines yet. Still, the price per gallon of fuel is exceeding $4 at the pump; excuses roll out as profits roll in to oil and gas industry coffers.
Once again the hydrocarbon providing companies are demanding that they be able to go wherever they want and to do as they please, without pesky taxes or regulatory oversight.
Of course, there are those of us saying (after, “I told you!”) that conservation and alternatives need be applied first. Then, maybe open some access to previously protected places to the hydrocarbon producers: taxes and regulatory environment fully operational at every site and company involved in petrochemical associated industries.
A great education can give our children the building blocks they need to become confident and the incentive to create the basis for the ‘next big thing’ that will drive the world’s economy; from right here in Texas.
The extraordinary expansion of the world’s economy, upon which many a Texan has thrived, has been driven by advances in the Industrial Revolution and the beginning of the Information Age. The most recent century of developments in both economic drivers originated here in the
There is a need to build a foundation that will allow leadership in economic growth (the next big thing) to be drawn primarily from right here in the
Here are some ideas to ponder for investing in education in
*Three trimesters per school year; two or three weeks break between trimesters and a week break in the middle.
* Pre-K through 12th grade would normally take 14 years, but could be accelerated to as few as 12 years or increased to as many as 16 years, as needed.
* Technical/Vocational secondary school alternatives.
* GED programs could be made available at high school and community college campuses, as needed.
* Multi-media teleconferencing could make classes available statewide, so that every school need not provide every class curriculum for itself.
* Multi-media teleconferencing could also provide study assistance for students, during and after school hours, statewide.
* Electronic texts could make the best books available statewide, easier and less expensive than providing multiple hardcopies at each and every campus.
These are just a few of the ideas I have for making schools in Texas better and more affordable, so that folks will come to know that they can find the best educated workforce and brain-trust right here in Texas.
Wednesday, May 7, 2008
The Texas state government can not release the control of a state-wide property tax until it has a sufficient and dependable revenue stream of its own. Creating said revenue will require new and revamped taxation, that political third rail to the perpetual office holder.Our Texas state government has created an enormous funding problem by trying to pretend that we can, "have everything and a tax reduction." Since the legislature absolutely refuses to broach the subject of new, different or increased taxation it must constantly shuffle around existing revenue or reduce state funding. Another method that the governor and legislators have tried is selling the state to private, for profit, contracting companies. Contracting state services to industry has failed each time it has been tried, but the effort continues unabated because the state doesn't have the funds to do what it has promised to Texas residents.
No matter the source of a good or service, you must decide if you need it, order it, and then arrange payment. Contrary to the Reaganesque, "government as the problem," perspective sometimes the best value provider of a good or service is a government entity.
Primarily the state must educate its youth, because education is the foundation upon which our great economy is built! But, our state legislators have consistently reduced state funding at all levels, pre-k through post graduate, such that a good public education is not necessarily available, or affordable, for a majority of Texans.
Some revenue was supposed to go to targeted agencies (e.g., hunting and fishing licenses for state parks, and the lottery would be for education expenses only), but these specifics never made it into the final edition of the requisite legislation. The legislators of Texas refused to tie their own hands, so they quietly reneged on promises made to the citizens of Texas.
How does one attempt to guarantee that, when all is said and done, what was said is done?
This is another of the things that our legislators, professional politicians, will not do for Texans. It will require that the majority of the voters do their Constitutional, obligatory duty and vote; force the issue!
Friday, April 4, 2008
The question that most executives need to ask themselves is, “when I replace a skilled worker making, on average $50,000 per year, with 10 much more modestly skilled factory workers making less than $2,000 per year… Who will buy my product?”
It has been the policy of the executives of most of the companies in the
In study after study, published in business journals, it has been documented that in the long run (longer than 3 months) the most efficient solution is ‘best value.’ That is the highly automated factory with a few highly skilled (read: well paid) workers generates the most efficient, highest possible quality output of goods. But this is risky (read as: more costly) because if, in that first three month period, ‘best value’ is not well managed and executed it will take longer to reflect the inherent operating efficiency; management speak for lower bonuses.
Another least cost management favorite is the imported, skilled worker. Why is this bad? Because, the least cost management practice brings these workers in to provide skilled labor who don’t expect to make as much as the prevailing wage. Instead of hiring good, local talent and training them for the job, least cost management brings in skilled foreign workers that are already experienced, and pays them less. Saves money in that critical three month window; better bonuses.
Yes, least cost management saves you money in that critical quarterly window, so be a good team player and don’t risk thinking about ‘best value,’ because if my bonus is negatively effected your long term employment…
Oh, just be a good team member!
Thursday, April 3, 2008
The W administration is proposing to shuffle the regulatory deck in response to the implosion of the subprime mortgage market. Of course, if regulation is the problem the solution would be to restructure the highly conflicted management of the agencies that are supposed to monitor Wall Street activity. The current regulatory agencies have senior executive ranks that are chock full of Wall Street professionals whose post-bureaucrat employment would be adversely effected were he or she to be too, or at all, strict as a regulator.
Of course tighter monitoring of more open financial reporting of all the chicanery on Wall Street would be desirable, because the depth of most recessions can be attributed to the irrational exuberance that Wall Street has always demonstrated during economic up cycles. But the most effective solution to this, and the historic Savings and Loan collapse of 1986, would be to grant authority to the bankruptcy courts to restructure the debt secured by one’s home.
The Wall Street alchemists scream most loudly at the latter suggested regulatory move, because it would interfere directly with their efforts to try to turn arcane paper into currency. This is, of course, the best reason to do it.
Thursday, March 27, 2008
In the latest chapter of the Republican fiction of, “everything and a tax break,” TX Senate Finance Committee Chairman, Steve Ogden proposes the next generation of fund shuffling.
After years of moving funds that were created for targeted causes (e.g. hunting and fishing license fees, fuel taxes and lottery revenue, etc…) to all the other under funded state programs, the Senator wants TxDOT to sell bonds for necessary infrastructure operation, maintenance and expansion. This method requires taxpayers to eventually pay both the original amount and the accrued interest. If that’s not enough, then let’s borrow from the Employees Retirement System, Teachers Retirement System, Permanent School Fund and Permanent University Fund (funds that already exist) to build more toll roads. If the toll roads don’t earn sufficient sums to pay back enough money, in a timely fashion, for the dedicated fund’s own expenses to be paid, Oops.
The alternative is to admit that the task is under funded and raise the long dormant fuel taxes, and then use the funds for the infrastructure tasks that are needed; some are already overdue.
Sunday, March 2, 2008
Excerpts reprinted without permission from RICE News and Media Relations, 02/14/2008:
Wednesday, February 27, 2008
In the continuing saga of the super-secret administration, the Republican National Committee (RNC) has refused to recover, from archive tapes, the public business done at the White House via ‘private’ e-mail services; provided by the RNC. The US House Oversight and Government Reform Committee were told that the e-mails, that had been programmed to be automatically deleted after 30 days, would not be recovered from the archives and turned over to the House committee as requested.
Once again the constitutionally mandated oversight of the Executive Branch of the federal government, by the legislative and judicial branches thereof, has been flouted by the current administration. The system of checks and balances established in the US Constitution was designed to prevent the temptation to abuse power from coming to fruition, and the W administration has shown that it is determined that that restraint will not apply to them.
Previously in the super-secret administration:
- Undermine the authority of the Foreign Intelligence Surveillance Act (FISA) secret court’s ability to determine if surveillance is warranted.
- Refute Congressional and Judicial (causing lawsuits to be thrown out) oversight by refusing to allow access to White House personnel or documents.
- Pseudo-private e-mail accounts to do the public’s business, avoiding government provided e-mail accounts, which have been claimed repeatedly to be immune to judicial or congressional access.
- Reclassifying as secret, documents that had been publicly accessible via the National Archives; for decades, in some instances.
- Classifying, as secret, record numbers of current working documents created, or in use, at the White House.
- Attempt to close EPA libraries and classify, as secret, publicly funded EPA research documents.
This is just what comes to mind immediately, and is sufficient to warrant the US House of Representatives to investigate as grounds for impeachment of both elected officials in the White House: President and Vice President.
Friday, February 1, 2008
In an earlier posting about the economy I compared the current sub-prime mortgage fiasco to the S&L disappearing act of 1986, because both problems were related to home loans gone bad. Why do home loans go bad? Because some of the loans are structured to sucker folks, who might not ordinarily qualify for such a loan, into a deal that will imminently be most profitable for the lender. I recently learned that, once in such an arrangement, the homeowner has no recourse if a lender is not willing to re-finance to more affordable (read: less profitable) terms. Bankruptcy allows the court to restructure a wide variety of kinds of secured debt, but not debt secured by a home (even if it is a person's primary residence).
The Emergency Home Ownership and Mortgage Equity Protection Act being considered by Congress would allow the court to change the terms and conditions of debt secured by the debtor's home. This Act would allow the Bankruptcy Court temporary power to deal with this type of secured debt, but I would suggest that this type of authority be granted to said courts permanently. If this had been the case since the 1980's both the S&L fiasco and this sub-prime mortgage driven, economic recession might have been averted.
The aforementioned, pending Act of Congress would be real assistance to those in need, and it would not cost the US Treasury any money. The current plan, to return tax money to citizens, adds substantially to the federal government's enormous debt while getting money into the hands of people who don't need it. Even if all the refunded monies were spent immediately it wouldn't help the economy. More important, the cash would be no help at all to those with the most urgent need.
Monday, January 28, 2008
In the last, Texas, state legislative session the Trans Texas Corridor (TTC) was put on hold, but no other method was made available for funding new road construction, or operating and maintaining existing infrastructure. So, the Perry appointees at TxDOT HQ whine that there's no money for them to do their job; a corner they willfully backed into.
There has been an experiment in a private toll road in south
TX is now the second most populous state in the nation and is burdened with a burgeoning flow of NAFTA related traffic. This has put a tremendous, and increasing, burden on the ground transportation infrastructure of our state in the last decade, while inflation has upped the cost of building, operating and maintaining said facilities. Yet our fuel taxes have stagnated for well more than 10 years. Our state legislature wants us to believe that the only adequate solution is to turn our road and train routes over to private, campaign contributing, companies.
We've had one proof of the concept that common carriage transportation is not going to be sufficiently profitable for private companies, but if more proof is needed it should be on a project much smaller than the TTC. In the meantime let's take care of the current needs by raising the state and federal fuel taxes, as the federal government’s commission has wisely suggested.
Friday, January 25, 2008
Health care issues won't be solved by elected officials at the state or federal level till the voters realize that there are simple decisions to be made. Do you want good health care? Did you know that it can be done better, for all, cheaper than what we, as a nation, are paying now? Do you, as voters, have what it takes to hang in there long enough to fight moneyed interests with lots of profits to loose?
There are three approaches to medical care: prevention, cure and treatment. The best for the patient is prevention; not getting sick. The second best is to be cured; quickest possible complete recovery. The third best is extended treatment of a medical problem; when prevention and cure aren't an option.
The problem is that the most profitable approach to medicine is treatment. If one wants the most efficient and effective medical care you must go head-to-head with industries that have developed around, and profited greatly, from treatment exclusively.This is not a difficult decision to make, because study after study has determined that citizens of the USA spend the most for their health care and get the least return on that investment (when compared to the health care of any of the other first world, and many developing, countries).
The answer is single payer health care. This is not to be confused with single provider medicine, because it is no such thing. This is not an answer that needs to come from state or federal legislatures, because it needs to come from voters fighting (determined to get to the best health care for their families) against persistent, well vested interests with serious profit margins to loose.
Thursday, January 24, 2008
1. Jobs trickling to
2. $60 Billion every month in trade deficit!
3. $9 Trillion federal deficit ($30,000 for every man, woman and child in the
4. 47 Million Uninsured citizens in the
5. Sub-prime debt problems creating an economic recession!
The Reagan Administration began a program of tax relief for the wealthy, and as you can see it’s had enormous effect on the economy. Faced with the aforementioned inconvenient details the W Administration has, as usual, chosen denial and continued the policy misnamed “Trickle Down.”
It’s well past time for a change;
Wednesday, January 23, 2008
The economic situation of 2008 might remind a person of the collapse of the savings and loan industry in 1986.
It seems that an entire branch of the financial services industry had huge portfolios of investments that were collapsing and leaving them with unmanageable debt. The market had been left on its own by the Reagan administration and the result was a really huge economic disaster that was left to the taxpayers to resolve.
Of course 1986 was an election year for all of the US House of Representatives and one third of the US Senate, so no mention was made of the impending disaster (except for one, and only one, time that Rep. Henry Gonzalez let the secret slip). The year of delay allowed what was estimated to be a $50 billion problem to fester till it was to take $500 billion to resolve.
The Resolution Trust Corporation (RTC), a temporary division of our federal government, was created to find the nonperforming (defaulted) assets, and bill cleaning up the mess to the taxpayers. Then find the remaining, performing assets and create portfolios to be given to surviving financial institutions. The Savings and Loan industry disappeared. In addition to the S&L vanishing act, local ownership of every multi-branch bank in
Another part of the RTC's charter was that they were NOT to investigate, or turn over to investigating agencies, any evidence of suspected criminal activity.
Today we find ourselves in the midst of an economic crisis brought on largely by excessive numbers of nonperforming, sub-prime, home loans. It should be remembered that the S&L industry was a home loan providing, financial services industry.
Once again the market is mired in trouble of its own making and the cry has gone out for Uncle Sam to, "save us." The Federal Reserve has cut interest rates so that the market can borrow its way out of the credit problem, it created, as cheaply as possible. Oh, while you’re at it, reduce taxes on the very folks and corporations that were at the helm of the businesses that had aggressively marketed the loans that they knew to be sub-prime; NOT!
It's time to ask the voters to stand, once again, against well vested interests that repeatedly pay for lawmakers and laws that allow them to work behind closed doors, then seek government bail-outs when the market realizes its in serious trouble (of its own creation); without admitting any guilt.
The federal government, Congress and the White House, are stumbling over each other in a race to provide economic stimulus packages. Stop! The economy cycles up and down; always has. Now we’re in a down cycle, made worse because financial services businesses were allowed to market too much credit to too many barely qualified borrowers, at exorbitant rates, hence the ‘sub-prime’ moniker. The Federal Reserve has already lowered interest rates. If one wants to be helpful, make sure that affordable refinancing is getting to the folks who need it.
Tuesday, January 22, 2008
Quotes from History:
"Those who would give up an essential liberty for temporary security deserve neither liberty nor security." (Ben Franklin)"It would be a dangerous delusion were a confidence in the men of our choice to silence our fears for the safety of our rights... Confidence is everywhere the parent of despotism. Free government is founded in jealousy, and not in confidence. It is jealousy and not confidence which prescribes limited constitutions, to bind down those whom we are obliged to trust with power... Our Constitution has accordingly fixed the limits to which, and no further, our confidence may go... In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution." (Thomas Jefferson from the Draft