Day: December 23, 2008

Oh Caroline, Sweet Caroline

The whole Caroline thing is nothing but tit for tat.  Political pundits are just still pouting about the Palin spanking she took in the media.  Here is a chance for them to return the favor and gain some air time in the doing.

The media, some not all, are doing a covert hatchet job on Kennedy and playing into the hands of the Cuomo cronies.  They are holding Kennedy up to a standard that few could possess.  Needlessly to say, that few Senators when arriving in Washington was an expert on foreign, domestic or fiscal policy, but yet Caroline has got to all that and so much more before she gets a chance to prove herself.

The media keeps plunging into the fact that she has made very few comments herself, yet this is not an election it will be a nomination and the Gov of New York probably does not want it to turn into something more than that–his decision on the next junior senator from the state of New York.

But alas, the media will keep massaging this story for every minute of air time they can get out of it.  They are trying to turn this into something it is not–a major story.

May I Have Another Piece, Please?

Recently I wrote that everyone in financial stress would be looking for a piece of the bailout pie.  Damn looks like I was right yet again!

Some of the nation’s biggest property developers are asking the government for assistance as a record amount of commercial real-estate debt comes due, according to a report in The Wall Street Journal on Monday. The industry is reportedly asking to be included in a new $200 billion loan program initially created by the government to assist the market for student loans, car loans and credit-card debt. The industry is warning that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed for defaults, foreclosures and bankruptcies, owing to some $530 million of commercial mortgages that will be coming due for refinancing in the next three years. They say that this poses another major threat to the global financial system, already severely weakened. In a recent letter to Henry Paulson, signed by a dozen real-estate trade groups, the scenario was described as grim. “Right now, we believe there is insufficient systemic capacity to refinance expiring, performing commercial real-estate loans. For many borrowers, [credit] simply is not available.”

But did not Pres Bush say that we were not going to bailout speculators?  The what would you call a real estate developer?  Land speculation can be traced back to most of the bad economic times in the US and now they want the taxpayer to help them out.

I say tell them to piss off!

To Answer My Own Question

Banks that have their hands out in Washington this year were handing out multimillion-dollar rewards to their executives last year.

The 116 banks that so far have received taxpayer dollars to boost them through the economic crisis gave their top tier of executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007, an Associated Press analysis found.

That amount, spread among the 600 highest paid bank executives, would cover the bailout money given to 53 of the banks that have shared the $188 billion that Washington has doled out in rescue packages so far.

Some banks trimmed their executive compensation in the face of faltering performance that foreshadowed the current economic crisis, but they still granted multimillion-dollar packages. Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

Such bonuses amount to a bribe for executives “to get them to do the jobs for which they are well paid in the first place,” said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services committee.

The AP review comes amid sharp questions about the banks’ commitment to the goals of the Troubled Assets Relief Program, a law designed to buy bad mortgages and other troubled assets. Last month, the Bush administration changed the program’s goals, instructing the Treasury Department to pump tax dollars directly into banks to prevent wide economic collapse.

The program set restrictions on some executive compensation for participating banks, but did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from giving golden parachutes to departing executives and deducting some executive pay for tax purposes. Some banks are forgoing bonuses and restricting other compensation.

I heard a story yesterday that the AP had asked 4 of the major loan recipients to explain where the money is going and all four declined.

Why are the American people being so hard on the workers in the auto industry and allowing the white collar theives to go unchecked?  I is beyond time for the American people to wake up and smell the damn coffee.  They are under attack and they are allowing the government to reward crooks and scammers while punishing the worker.  That is unacceptable and just plain pathetic!

And How Has That Worked Out So Far?

After about the spending of $350 billion to bailout banks and financial instiutions to help stop the slide of the economy into the dark abyss, but how has that worked out so far?

The rate of U.S. home mortgage borrowers defaulting after their loans are modified is rising and may worsen as the economy deteriorates, U.S. banking regulators said on Monday.

After six months, nearly 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent, according to a joint report by the Comptroller of the Currency and the Office of Thrift Supervision. Both are banking regulation agencies within the U.S. Treasury Department. After three months, 19 percent were 60 or more days delinquent or in the process of foreclosure.

According to the government’s data, the number of delinquencies rose across all loan categories, although subprime loans had the highest default rates. At the same time, nine out of 10 mortgages remain current.

To answer my own question, not worth a crap!

Will Obama’s Plan Save The US?

History illustrates how tricky it can be to make public spending work as intended. The many dams Franklin D. Roosevelt’s administration built generated an abundance of electricity, lowering its cost so that families could afford to operate the appliances then becoming available. The construction itself put money into workers’ pockets. But the appliances were too costly for most families during the Depression, and the manufacturers wouldn’t extend credit. For all the money spent by the Roosevelt administration, public investment was failing to jump-start a key private-sector industry.

His administration was inventive, however, and found a way around the problem by subsidizing installment purchases. That was when appliance production finally rose. In time, installment plans evolved into consumer loans and charge cards, and that helped make the American consumer economy the envy of the world.

These symbiotic relationships between the public and private sectors — playing off each other in ways hard to anticipate and hard to channel — became an essential ingredient of American prosperity from World War II until the mid-1970s.

But Mr. Obama is bucking a deep private-sector funk, a bit like what Roosevelt described in his first Inaugural Address as “fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Borrowers and lenders have pulled back. Business investment has plummeted. So has consumer spending. “A psychology of bad times is becoming the mindset of the public,” says Andrew Kohut, director of the Pew Research Center, a survey operation.

Whatever the obstacles, Mr. Obama’s plan would mean giving up the view — widely held since the 1970s by economists, policy makers and business executives — that the private sector, by itself, is the key source of prosperity and full employment, and government spending is inefficient.

With all his attempts to rescue the country from financial ruin could be a beast in the making.  In essence a trap that once sprung could never be closed again.

Is It Bush’s Fault?

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown”with roots in the housing sector he so ardently championed.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

There are those who blame everybody remotely connected to the government for the meltdown, especially Barney Franks.  Some of the blame is deserved but the crux of the blame should fall on the person at the wheel when it all came to call.