The Heights of Drama

The drama of the news of the last few days has been astounding. Is there a reason to watch anything else? No other dramas, scripted or unscripted, have been quite so compelling as the news. It is like the whole country has become completely unhinged. The flagrant disregard for truth has turned everything into a side show. George Bush and his administration had such disdain for the truth that it has permeated the very fabric of our beings; John McCain has taken it one step further by branding the media as fabrication-mongers when he and his campaign have completely disassociated themselves from any truth-telling whatsoever.

Somehow, the American people are supposed to parse all of this “newspeak” for the truth, the desire for which has spawned a myriad of fact-checking organizations each with their own non-partisan claim to truth. The pieces may fall where they may for the time being but, at the end of the “real” day, which will occur sometime between election day and inauguration day, the pieces are really going to fall and the outcome of this bloodbath of lies will be upon us all. All I know for the moment is that there is no logical reality, no objectivity, and no meaningful discussion of the facts; it is all spin all the time glorified by stunts. Into this climate we will choose a President, fortify our economy, and chart a 21^st century course to prosperity?

When loyalty causes one to champion stupidity; and integrity is only as good as what you said the previous day; and comedy is reality is comedy without irony and Wall street soars on irrationality; the shovels are calling each other spades. When Gwen Ifill falls down the stairs, breaking her ankle while apparently carrying documents for the most contentious Vice Presidential debates in the history of American politics…oh, she did and if anything else could possibly go wrong and it will, we only have to look forward to one of those falling pieces clunking us in the head with a big dose of reality; then and only then can we renew our faith in America.

What a Difference a Weekend Makes...

Much clarity has been given to certain situations though many more waters have been muddied...

The Bailout Fails: In a vote of 228 Nay vs. 205 Yea, the House of Representatives failed to pass the $700 billion bailout package with a resounding 2 to 1 nay on the part of the Republicans. Thank you Republicans. There, I said it. I am happy this bill did not pass because I did not know all of the details and I think it was too large a sum to make such a hasty decision.

I understand that this is really about Commercial Paper and not bailing out Wall Street but then don't put forth a bill with little explanation granting vast powers to Treasury Secretary Hank Paulson, who is from Wall Street and has private interests (mainly Goldman Sachs) to protect. There are many other methods, all equally valid, that would assist in returning liquidity to the Credit markets. This is about confidence in lending; banks and others are all undermined by their own lapsed judgment in lending. The Federal Reserve is doing all it can by dropping additional hundreds of billions into the global markets but still the Commercial paper market remains frozen. If banks don't lend to each other then small businesses and individual borrowers suffer the most. It is possible that the Fed is overextending itself, more to follow on this I am sure.

The rest of it is that the markets do need to correct; we accept correction in every other market except this one? In any case, a bailout package should, at its core, provide relief to struggling home owners; there has to be a provision to allow borrowers to re-negotiate their loans with a fixed interest rate between 6.5% to 7% and a longer loan term of 40-50 years. The point is the loan amount remains the same but the payments become more affordable and when the markets return to health these borrowers will be able to refinance to a shorter term loan or better interest rate. This way the prudent people who did choose affordable loans do not feel punished for being prudent.

Dow drops 777.68 - A Day That Will Live in Infamy: The Dow suffered one of the worse days in history dropping nearly 500 points the instant the House vote was closed; it was already hovering around $280 points down pre-vote. We watched it in real time; most of my coworkers checked in on the CNN Money site which crashed momentarily; MarketWatch, my preferred choice, stood firm though refreshed at an agonizingly slow pace. All hell instantly broke loose; political spin, partisanship blaming; John McCain claiming credit for bringing together the bailout package then having to sidestep himself when it failed damningly by his own party. Ouch. Also John McCain appeared with Gov. Sarah Palin in a joint interview to save her from remarks she made about Pakistan that he criticized Obama for saying in the debate. Double Ouch.

Saturday Night Live Palin Skit Dead On: Yet another Sarah Palin skit was unveiled on Saturday night this weekend with a send-up of Gov. Palin's interview with Katie Couric. All it required was Tina Fey, who does a very convincing comic caricature of Palin, essentially espousing verbatim Palin's exact phrases from the interview. Hilarious but sad; Palin is living the Peter Principle. Enough said.

Last But Not Least: This is the most engrossing reality show on record as we watch our economy and politics explode, the Republican party implode and the Democratic party standing to bear the brunt of this economic disaster if Obama is elected. He will be blamed if the devastating outcomes of this debacle persist over the next 4 years and of course, it will be doubly damning because he is 1/2 a black man. Sad but true. At the end of the day, politics and fear aside, we all have to give ourselves a financial housekeeping. Plan for the worst and you will survive. The net effect of all of this is that decrease in consumer spending will kill our GDP splintering all industries and the credit card market will be next in line to send up its wave of bad debt. It does not look pretty out there. What were the economic terms that we had before "market correction?" Depression, recession, inflation? Think about McCain & Palin leading us through these times...try not to cringe while doing so.

A Few Words About the Presidential Debate

Going into the debate, there were certain inalienable truths. McCain is much better on foreign policy but not on the economy. Obama had much greater strength on the economy but not on foreign policy. In addition, he also had to show America that he was truly Presidential and hold his own alongside John McCain.

McCain was not able to fully convince us that his economic policy was sound; in fact after the charade of going to Washington to save the taxpayer from a debt worse than fate, he did nothing in this debate to comfort them. Obama showed a good grasp of foreign policy but more importantly he appeared confident and completely Presidential. For those not sure about voting for the black man, he sure gave them much to re-consider. Score this debate in favor of Obama.

Who Would Want to Lead This Country?

How is it that Sen. John McCain, a rich old white man from Arizona can command the same poll results as Sen. Barack Obama who is clearly promising us a different America? John McCain can be the same as George Bush and practically unoriginal but Barack Obama has to be the most extraordinary black man to even have a chance to be President.

How do Americans let the Republican party convince them that Barack Obama is elitist because he worked hard to attain the education that we routinely tell Americans will pave their way for a brighter future? Yet, John McCain, the son and grandson of Admirals who benefited from his military connections and his wife’s wealth, were it not for being a POW, gets a free pass from being labeled “privileged.”

After today’s antics with John McCain’s rush to Washington to be the hero of the proposed bailout plan, then watching the plan unravel under stress of a protest plan submitted by conservative house Republicans and the injection of Presidential politics – Barack Obama was compelled to be present - then not saying much but staking his appearance at tomorrow’s Presidential debate on an outcome coupled with Sarah Palin’s utterly unintelligible answers in her interview with Katie Couric, an interview where many of the questions were similar to those previously asked by Charlie Gibson, and she still did not have any good answers for, which clearly shows that she should not have been sequestered and should have been given the opportunity to practice and now appears to be undermined by a lack of confidence, and you have the recipe for campaign disaster. Thank goodness the campaign is run by Karl Rove acolytes; what will they pull out of their hat tomorrow?

On another note, with Washington Mutual (WAMU) seized by the FDIC this evening becoming the worst bank failure in U.S. history, underscores the urgency of some sort of bailout plan. Deciding on what avenue to take now seems to be the bane of Congress and the American people, none of us having the breadth of knowledge and understanding of complex financial instruments and how this all functions in today’s global economy, except Congress is supposed to go on recess tomorrow so they can all run home and campaign making a push for a decision tomorrow guaranteed to yield nothing less than disaster.

While the rest of the world is laughing at America, they are because if I didn’t witness this in real life, I would think that I was watching a movie; a satirical circus pageantry envelopes the most powerful country in the world while it attempts to choose the next leader of the free world and heal the economic calamities befalling it. An educated black man arises to save the people from ruin because the maniacal white man, who comes complete with the charming, but disarming, sidekick hailed as mavericks as they unleash their diabolical plan for world domination, finally and suddenly implode leaving trail of Republican destruction behind them.

Sadly, this is not a movie, this is the great meltdown of 2008. If you choose McCain-Pailn, you deserve your own stupidity and the boat you rode in on it or you choose Obama-Biden, who though better suited for the job, will face the greatest odds challenging a Presidency in the history of the nation with little margin for error. Good luck with that.

Bailout or Else: The GOP Politics of Fear in Full Swing Yet Again

Having now presided over the biggest economic collapse in recent history, George W. Bush and friends are out to convince the American people that the best and only solution is to hand over $700,000,000,000 to the Treasury Secretary to bail out Wall Street and that it should be done expeditiously and with as minimal oversight as possible. This Administration has perfected the Karl Rove politics of fear methods so completely and, unfortunately, so successfully that they have no qualms rolling it out whenever they need to force the hand of the American people.

Right now we are witnessing almost to the letter the same playbook used to rush us into war 6 years ago. Tonight the President spoke on television right before Congress is to go on break, like he did 6 years ago, giving us the old “act now or doom will befall you” speech. These same tactics were employed during Bush’s re-election campaign and are now being employed in more extreme fashion in John McCain’s campaign. So far, they have been successful at these methods even though the outcome has always been disastrous for the American people.

Though the Congress is trying more diligently this time around to mitigate the damage of hasty decision-making; this plan seems destined to come to fruition in some form albeit with greater restrictions. Why isn’t anyone else coming up with an alternative solution? Why is this expensive bailout the only way to bring order to the markets? While the GOP continues with their lies, fear and deceit, the American people are once again swept up into a situation where they are taken for a ride and this time around instead of fearing the GOP; they fear the intelligent black man who actually does want to help them.

You Want $700,000,000,000 for What?

So, let us get this straight. Spreading risk infinitely by bundling packages of mortgages then slicing those up and selling as securities is fine when the market keeps going up; the reverse is true when markets crash and this spread of risk gets multiplied 10 fold because no one knows how widespread it is or what percentage of those bundles is truly bad debt. This falls into the realm of perception; good mortgages and bad mortgages were packaged together, what percentage of any slice of these securities is more good than bad; more bad than good? Nobody knows but everyone is afraid that these securities are worth less than they think.

When the value of real estate kept escalating, this type of securitized debt was a goldmine. Everybody made money and all was right with the world. The greater the risk, the higher the reward. Greed will make you forget the rules of the game; you start chasing the money-maker like a gambler caught up in the belief that if you bet more, you will win more. Soon you find yourself over-leveraged, your investors/backers get scared and call your debt but you don't have the capital to back it all. Las Vegas or Wall Street? Bear Stearns, Merrill Lynch, Lehman Brothers and others forgot the rules and ended up overexposed when mortgages started defaulting and the value of housing started to tumble. Investors got spooked and any perceived value in these bundles plummeted. To make matters worse, these securities were insured by insurers such as AIG giving us a house of cards situation. Ever tried to insure a bad asset? It is like having a pre-existing condition when you shop for health insurance.

How is the average American supposed to understand this? How are they supposed to understand that despite the greed, the big bonuses and rewards, we still have to bailout these be-ast-turds? Why? Perception. There is a complete lack of confidence in the financial markets. It is possible that some of these assets are worth more than we think, after all most of these mortgages are still backed by a real asset; brick and mortar construction. Real estate may lose value but rarely is anything worth zero. Perception is 9/10ths just like possession.

Who knows how this will all shake out. All I know is that for the average American to understand these complex credit instruments and to make a choice about anything based on this knowledge is impossible when the experts don't know what to make of it all. Treasury Secretary Henry Paulson spent 30+ years on Wall Street and he is running to the government for an emergency loan of an unprecedented $700,000,000,000. What the hey? We are all supposed to figure this out by Friday? Good luck with that, taxpayer. Whatever the outcome, we will be fleeced!

Bailouts 'R Us

The Federal Government is now the money store. Financial companies get in line, they’re practically giving it away, even foreign banks will get a piece of the bailout pie. Small business people, we need to unite! When do we get our bailout? I would like the Federal Government to forgive the SBA loan used to purchase a franchise that, due to a series of unfortunate events, failed leaving us with mountains of debt. We accepted our lessons, licked our wounds and moved on pledging to pay down that debt while resigning ourselves to the enormous damper on our lifestyle for many years to come. We did not make any money or recognize any return on this investment; we took our knocks, plotted a new course of action and pressed on.

I know that our failure will not bring down world markets but it brought down ours. We were not greedy, we didn't overextend ourselves, we were not reckless and we worked very very hard. Sometimes things just don't work out but thankfully our prudent decision-making and prior savings allowed us to weather the financial setbacks that befell us. From our standpoint, the Wall Street bailouts, mortgage bailouts and other free passes are difficult to swallow. Besides struggling to pay for our own debt, we now have to pay for others. We know many small business-people; all are carrying a huge debt-load and struggling to make ends meet day-to-day. Where is their break? Where was ours?

America should forgive the SBA loans of small businesses that failed, are currently failing or are drowning in debt; this would help a lot and go a long way to helping another vital sector of the economy get back on their feet. So airlines, car companies, and others get in line…behind us.