Like most American's, I've been trying to wrap my head around the happenings in the financial markets and the government intervention. At first, I felt that something needed to be done to prevent a complete market crisis; however, now I'm starting to feel otherwise. Since I have this blog, I thought I'd post my thoughts and be done with it. I'm going to try to avoid discussing all the crazy politics that have been going on around this issue, but focus instead on the key issues.
First, I am a capitalist. I have studied the markets, I understand the fundamentals behind the markets, and I believe the markets work best when LEFT ALONE. People will argue that the markets didn't work in this situation. In fact, Iran's President, Mahmoud Ahmadinejad, said, "There are some who believe we can improve the economic situation with the formulas that are prescribed by the West; they must know that capitalist systems are falling apart." However, the reason the markets didn't work in this situation was too much governmental manipulation in the past. Companies come and go - markets go up and down. It's normal. An example is in business with statistical quality control charts. A product is measured as acceptable within a range above and below a certain line. Until it falls out of that range, does intervention need to happen. Government has regularly and repeatedly intervened when data isn't exactly on the line, but not out of range.
Second, I am not comfortable with government operating in a business interest, whether that be an investment bank, or these quasi-business ventures such as Fannie and Freddie. That's what caused the problem in the first place. Everyone knew that the government would ultimately bail them out. Under Paulson's plan, eventually the government might make a lot of money on these purchased assets. However, do you think we'll ever see any of that in reduced taxes? Probably not.
Government accounting is done almost backwards from normal business accounting. They estimate their "revenues" from the various sources (usually mostly tax) and then they calculate their appropriations, or budgets. I believe the government will be subject the same mistakes the financial institutions have made, by GUESSING what they think these assets will generate in future years and spend the money before they generate it, on new programs such as nationalized healthcare, etc... If the money doesn't come in, we're now even worse off...
Third, this may sound bad, but I believe, and have believed for some time, that the economy and government needs a "reset". After the stock market crash of 1929 and the Great Depression, Secretary of the Treasury, Andrew Mellon advised President Hoover that shock treatment would be the best response: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.... That will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people." Hoover rejected this advice and started other programs to end the Depression, all of which failed. The market collapse was inevitable and while the liquidation may have made an immediate negative effect, it may have done what it was intended to do. Ultimately, the Depression was turned around by a combined effort of many things. A war, the New Deal, other programs; however, the people did have a value adjustment. Conservation and rationing were now a reality. Then the people could rebuild.
Now days, with credit card debt, mortgage problems, and the general welfare state we exist in, I believe the country could use a value adjustment.
One final thought. Congress rarely gets things right. Especially this Congress. So, why do we feel that we can trust them to handle this deal correctly in such a short period of time? The Republicans have offered other plans, so at least someone is thinking up there.
Friday, September 26, 2008
Wednesday, September 24, 2008
"Part of what a leader does to instill confidence, is to demonstrate he or she knows what they are talking about..." Joe Biden
Right now, Congressional leaders are working through the details of the banking nightmare. It's so complicated that there is no way Congress will get it right...
Especially when our Congressional leaders are people like Joe Biden.
Watch this clip...pay attention at 0.29 to .49
Did you catch it? He said, when the stock market crashed (which was 1929), Franklin Roosevelt (who wasn't President yet) got on TV (which weren't invented yet) and blah blah...
As quoted by Joe Biden, "Part of what a leader does to instill confidence, is to demonstrate he or she knows what they are talking about..."
Clearly he doesn't.
Especially when our Congressional leaders are people like Joe Biden.
Watch this clip...pay attention at 0.29 to .49
Did you catch it? He said, when the stock market crashed (which was 1929), Franklin Roosevelt (who wasn't President yet) got on TV (which weren't invented yet) and blah blah...
As quoted by Joe Biden, "Part of what a leader does to instill confidence, is to demonstrate he or she knows what they are talking about..."
Clearly he doesn't.
Wednesday, September 17, 2008
"Texas law doesn't make any exceptions..." - Wes Benedict, Libertarian Party Executive Director
I posted something on this earlier in the month, but took it off while I made sure I had accurate information. I find this very interesting. While I believe the rules are the rules, leaving McCain and Obama off the Texas ballot is a benefit for Obama (since McCain will most likely win Texas). In that case, I'm conflicted in my desires...
Here is the story:
AUSTIN - September 16, 2008 - Libertarian presidential candidate Bob Barr, along with the Libertarian Party of Texas (LPT), has filed a lawsuit to have Barack Obama, John McCain, and their running mates removed from the Texas general election ballot. The Republican and Democratic parties failed to certify their nominees by the August 26 deadline. "We notified the press of this missed deadline on August 27," said Wes Benedict, LPT Executive Director. "Unfortunately, Secretary of State spokesman Scott Haywood, on his last day of work, misled the press by telling them that the Republicans and Democrats had already filed the necessary certifications. The misleading statements by the Secretary of State's office, plus their foot-dragging in releasing the documents to us, made us mad."
Here are copies of the actual documents: http://www.bobbarr2008.com/files/dqcertification.pdf and sure enough...they did miss the deadline.
These rules are setup and used relentlessly against third party candidates and now the main two parties seem to be getting around them...
Here is the story:
AUSTIN - September 16, 2008 - Libertarian presidential candidate Bob Barr, along with the Libertarian Party of Texas (LPT), has filed a lawsuit to have Barack Obama, John McCain, and their running mates removed from the Texas general election ballot. The Republican and Democratic parties failed to certify their nominees by the August 26 deadline. "We notified the press of this missed deadline on August 27," said Wes Benedict, LPT Executive Director. "Unfortunately, Secretary of State spokesman Scott Haywood, on his last day of work, misled the press by telling them that the Republicans and Democrats had already filed the necessary certifications. The misleading statements by the Secretary of State's office, plus their foot-dragging in releasing the documents to us, made us mad."
Here are copies of the actual documents: http://www.bobbarr2008.com/files/dqcertification.pdf and sure enough...they did miss the deadline.
These rules are setup and used relentlessly against third party candidates and now the main two parties seem to be getting around them...
Friday, September 12, 2008
Fannie Mae and Freddie Mac - "The Federal Government continues to spend money it does not have." - John Cornyn (R-TX)
The recent collapse of Fannie May and Freddie Mac is a very complicated matter. While there is little disagreement that a "bail-out" was necessary to prevent a run on the banks or other fiscal disorder, the implications of the fall-out are open for discussion.
Yesterday, John Cornyn, Senator from Texas, said the following on the floor:
"I wish to join my colleague from New Hampshire in raising some alarm--not intemperate, not hysterical alarm, but alarm nonetheless--about the recent reports that the Federal deficit has now risen in excess of $400 billion. Of course, what that means is that the Federal Government continues to spend money it does not have, and I think the American people are rightfully concerned that we are on a course of significant fiscal irresponsibility for which a tremendous price is going to be paid by our children and grandchildren.
The Senator from New Hampshire mentioned the fact that here we are in September, and this Congress, under the Democratic control conferred upon them in the last election, has yet to pass a single appropriations bill. I know that in the blame game--which in Washington, DC, is a world-class sport--our colleagues on the other side of the aisle like to point to the President of the United States as the person responsible for the high budget deficit. But the fact is that the President can't appropriate a penny of money. The President does not have that authority under the Constitution of the United States. Only Congress can appropriate money, and Congress is the one that should bear the responsibility for this tremendous state of fiscal neglect and irresponsibility that brings us here today.
...
It is a troubling sign that our deficit has ballooned from $161 billion to more than $400 billion. Yet what do we find out yesterday or the day before but that the Federal Government is now going to have to take over, in essence, Freddie Mac and Fannie Mae. This move could potentially cost taxpayers as much as $200 billion more on top of the $400 billion deficit.
Since the 2006 election, Democrats have been in control. And this year alone, spending has increased by 8.3 percent. Now, I don't know any business, I don't know any family who increased their spending 8.3 percent from last year to this year. Only the Federal Government--which, of course, prints money, which is then added to the deficit and the bill passed on to our children and grandchildren--only the Federal Government could get away with that."
...
I have written a letter to the Attorney General of the United States asking him to conduct a criminal investigation into the activities of the corporate officers and anyone else who may have contributed to the overstatement of assets on the books of Fannie Mae and Freddie Mac and to make sure a thorough criminal investigation is undertaken and that those responsible for violating any of the criminal laws of the United States be held accountable."
Here is a link to his letter if you are interested in reading it -
http://cornyn.senate.gov/public/index.cfm?FuseAction=ForPress.NewsReleases&ContentRecord_id=4d0d8574-802a-23ad-43bf-527b0dff0dbc&Region_id=&Issue_id=
Does anyone remember the savings and loan crisis of the 1980's and 1990's?
Here is another interesting article from the WSJ titled, "Why No Outrage?"
http://online.wsj.com/public/article_print/SB121642367125066615.html
I suggest you contact your representative and have them support a full investigation into the financial collapse of these institutions.
Yesterday, John Cornyn, Senator from Texas, said the following on the floor:
"I wish to join my colleague from New Hampshire in raising some alarm--not intemperate, not hysterical alarm, but alarm nonetheless--about the recent reports that the Federal deficit has now risen in excess of $400 billion. Of course, what that means is that the Federal Government continues to spend money it does not have, and I think the American people are rightfully concerned that we are on a course of significant fiscal irresponsibility for which a tremendous price is going to be paid by our children and grandchildren.
The Senator from New Hampshire mentioned the fact that here we are in September, and this Congress, under the Democratic control conferred upon them in the last election, has yet to pass a single appropriations bill. I know that in the blame game--which in Washington, DC, is a world-class sport--our colleagues on the other side of the aisle like to point to the President of the United States as the person responsible for the high budget deficit. But the fact is that the President can't appropriate a penny of money. The President does not have that authority under the Constitution of the United States. Only Congress can appropriate money, and Congress is the one that should bear the responsibility for this tremendous state of fiscal neglect and irresponsibility that brings us here today.
...
It is a troubling sign that our deficit has ballooned from $161 billion to more than $400 billion. Yet what do we find out yesterday or the day before but that the Federal Government is now going to have to take over, in essence, Freddie Mac and Fannie Mae. This move could potentially cost taxpayers as much as $200 billion more on top of the $400 billion deficit.
Since the 2006 election, Democrats have been in control. And this year alone, spending has increased by 8.3 percent. Now, I don't know any business, I don't know any family who increased their spending 8.3 percent from last year to this year. Only the Federal Government--which, of course, prints money, which is then added to the deficit and the bill passed on to our children and grandchildren--only the Federal Government could get away with that."
...
I have written a letter to the Attorney General of the United States asking him to conduct a criminal investigation into the activities of the corporate officers and anyone else who may have contributed to the overstatement of assets on the books of Fannie Mae and Freddie Mac and to make sure a thorough criminal investigation is undertaken and that those responsible for violating any of the criminal laws of the United States be held accountable."
Here is a link to his letter if you are interested in reading it -
http://cornyn.senate.gov/public/index.cfm?FuseAction=ForPress.NewsReleases&ContentRecord_id=4d0d8574-802a-23ad-43bf-527b0dff0dbc&Region_id=&Issue_id=
Does anyone remember the savings and loan crisis of the 1980's and 1990's?
Here is another interesting article from the WSJ titled, "Why No Outrage?"
http://online.wsj.com/public/article_print/SB121642367125066615.html
I suggest you contact your representative and have them support a full investigation into the financial collapse of these institutions.
Wednesday, September 10, 2008
Jon Stewart - Attacking Media
This is a few years old, but still applies...it's hilarious. Listen to what John Stewart says right at the end after the guy says, "I do think you are more fun on your show.".
Shortly after this episode, Crossfire was cancelled.
Shortly after this episode, Crossfire was cancelled.
“The smarter the journalists are, the better off society is....to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.” - Warren Buffet
"Clearly, this is a do-nothing Congress." Jon Kyl - Senator (R-AZ)
Yesterday, Congress was back in session. They will only be in session for 3 weeks until they are done for the year. I was reading through some of the debates from the Senate, and I saw a wonderful argument from Jon Kyl, Arizona Senator. I'm not posting his entire comments as he gets quite detailed, but he is clearly on the attack of Harry Reid (D-NV), the Majority Leader of the Senate.
Jon Kyl - "...the American people sent us here to get things done, and they are obviously very frustrated with the fact that this has been a do-nothing Congress, a do-nothing Senate. We have not gotten much done. In fact, the problem has been identified by both of the Presidential candidates, Senators McCain and Obama, who have railed about the fact that we need reform in this body because nothing is getting done on behalf of the American people.
The Democrats have been in charge of the Senate and House for the last 2 years. So one wonders why haven't we been able to get things done? For example, to fund the Government for next year, we are supposed to by now have passed 13 appropriations bills to fund all of the departments of the U.S. Government. Not one appropriation bill has been passed and sent to the President. We are going to have to bundle everything up in a giant ball at the end of September and, instead of carefully considering each individual department, we are going to have to adopt a continuing resolution so the Government can continue to operate. That is not the way to do business.
With rare exception, the majority leader in the Senate has been less interested in enabling the Senate to work its will and finding consensus than simply pushing an agenda of the majority in a sort of my-way-or-the-highway kind of approach. This has led to gridlock and, as I said, not much getting done....
...What have been some of the results? Well, in 2007, some very important tax provisions expired. The research and development tax credit, for example, and the ability to fix the alternative minimum tax so it doesn't apply to most taxpayers. We have to pass what is called a tax extender bill to extend these expiring provisions and make sure the AMT doesn't get 23 million to 26 million American families this year. We have not gotten it done so far. Why?...
Clearly, this is a do-nothing Congress. Clearly, our Presidential candidates, both of them, recognize reform is necessary....
The American people want something done. We still have time--even in the short time remaining in this year--to do something about the energy crisis in this country, and that means to get offshore drilling. That has to be at the top of our agenda. Secondly, we have to get the Government funded so it can continue operating next year...
I am hopeful that in the next 3 weeks we will be able to do some things we have not been able to do in the last 6 months. But if we get cooperation from the majority, the minority stands ready to try to work out these issues, to conclude this session on a positive note in a way we can finally say we accomplished something this session for the American people. After all, that is what they sent us here to do."
Jon Kyl - "...the American people sent us here to get things done, and they are obviously very frustrated with the fact that this has been a do-nothing Congress, a do-nothing Senate. We have not gotten much done. In fact, the problem has been identified by both of the Presidential candidates, Senators McCain and Obama, who have railed about the fact that we need reform in this body because nothing is getting done on behalf of the American people.
The Democrats have been in charge of the Senate and House for the last 2 years. So one wonders why haven't we been able to get things done? For example, to fund the Government for next year, we are supposed to by now have passed 13 appropriations bills to fund all of the departments of the U.S. Government. Not one appropriation bill has been passed and sent to the President. We are going to have to bundle everything up in a giant ball at the end of September and, instead of carefully considering each individual department, we are going to have to adopt a continuing resolution so the Government can continue to operate. That is not the way to do business.
With rare exception, the majority leader in the Senate has been less interested in enabling the Senate to work its will and finding consensus than simply pushing an agenda of the majority in a sort of my-way-or-the-highway kind of approach. This has led to gridlock and, as I said, not much getting done....
...What have been some of the results? Well, in 2007, some very important tax provisions expired. The research and development tax credit, for example, and the ability to fix the alternative minimum tax so it doesn't apply to most taxpayers. We have to pass what is called a tax extender bill to extend these expiring provisions and make sure the AMT doesn't get 23 million to 26 million American families this year. We have not gotten it done so far. Why?...
Clearly, this is a do-nothing Congress. Clearly, our Presidential candidates, both of them, recognize reform is necessary....
The American people want something done. We still have time--even in the short time remaining in this year--to do something about the energy crisis in this country, and that means to get offshore drilling. That has to be at the top of our agenda. Secondly, we have to get the Government funded so it can continue operating next year...
I am hopeful that in the next 3 weeks we will be able to do some things we have not been able to do in the last 6 months. But if we get cooperation from the majority, the minority stands ready to try to work out these issues, to conclude this session on a positive note in a way we can finally say we accomplished something this session for the American people. After all, that is what they sent us here to do."
Here is a wonderful clip of Harry Reid...
“The thing is, if you control the Senate meetings, you control the gavel. And the gavel is a very important instrument... an instrument of power. An instrument that establishes the agenda.” - Dan Quayle
“The Senate and the country need Senators of courage who are prepared to make their mark on history by standing with past profiles in courage, and defending not party, not partisanship, but defending principle and democracy itself.” - John Kerry
Tuesday, September 2, 2008
Coins...
Have you ever really thought about coins and bills? There has been some commercials on lately about the new "recyclable" $1 coin. I have some Susan B. Anthony $1 coins, and I have an Eisenhower dollar, and I even remember the failed attempt at the Sacagawea coin, so what is this new coin?
First, I started with the recyclable statement. Yes, they're recyclable: When removed from circulation, they will be melted and the metal will be reused to create new coins. They're also sustainable, with a life expectancy of 25 years. But so are the Susan B. Anthony and Sacagawea. Further research revealed they are considered "better" for the environment than the $1 bill. According to the Federal Reserve, the $1 bill changes hands for only 21 months before it becomes so tattered and dirty that it's removed from circulation and shredded. Most of the old bills end up in landfills.
So the logical question is to stop using the $1 bill and start using the coin, right?
Multiple Government Accountability Office (those awesome Government accountants) studies have concluded that Americans, green-minded or not, won't embrace the $1 coin until we get rid of the $1 bill. "Other countries, such as Australia, Canada, Japan and many European countries, have successfully introduced a similar denomination coin but only by phasing out the note of the same value,'' said a 2002 GAO report.
It really doesn't make a lot of sense unless you think in terms of savings. My conspiracy theory suggests that it's the government's way of getting American's to save money! Reduced money in the market, makes demand increase, making the value of the dollar increase. Simple economics... How much would this impact?
Well...a few years ago they introduced the state quarter program. The US Mint estimated in April 2006 that 140 million collectors had saved the US State Quarters. That's $.25 x 50 x 140 million, or almost 2 billion dollars in savings. Just think what 140 million collectors of 43 (42 presidents, but they are releasing 2 Cleveland coins since he had non-sequential terms) $1 dollar presidential coins would save. To help you with math, it's over 6 billion dollars. It's not a lot in the scheme of the entirement government, but it's something...
Interesting coin websites:
http://www.pennies.org/
http://www.usmint.gov/
http://www.coinfacts.com/
First, I started with the recyclable statement. Yes, they're recyclable: When removed from circulation, they will be melted and the metal will be reused to create new coins. They're also sustainable, with a life expectancy of 25 years. But so are the Susan B. Anthony and Sacagawea. Further research revealed they are considered "better" for the environment than the $1 bill. According to the Federal Reserve, the $1 bill changes hands for only 21 months before it becomes so tattered and dirty that it's removed from circulation and shredded. Most of the old bills end up in landfills.
So the logical question is to stop using the $1 bill and start using the coin, right?
Multiple Government Accountability Office (those awesome Government accountants) studies have concluded that Americans, green-minded or not, won't embrace the $1 coin until we get rid of the $1 bill. "Other countries, such as Australia, Canada, Japan and many European countries, have successfully introduced a similar denomination coin but only by phasing out the note of the same value,'' said a 2002 GAO report.
It really doesn't make a lot of sense unless you think in terms of savings. My conspiracy theory suggests that it's the government's way of getting American's to save money! Reduced money in the market, makes demand increase, making the value of the dollar increase. Simple economics... How much would this impact?
Well...a few years ago they introduced the state quarter program. The US Mint estimated in April 2006 that 140 million collectors had saved the US State Quarters. That's $.25 x 50 x 140 million, or almost 2 billion dollars in savings. Just think what 140 million collectors of 43 (42 presidents, but they are releasing 2 Cleveland coins since he had non-sequential terms) $1 dollar presidential coins would save. To help you with math, it's over 6 billion dollars. It's not a lot in the scheme of the entirement government, but it's something...
Interesting coin websites:
http://www.pennies.org/
http://www.usmint.gov/
http://www.coinfacts.com/
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