Tuesday, March 31, 2009
I have seen this story before, but from coaching for 15 years and watching from the sidelines, it is a story that kids, and primarily parents need to read. Many parents need to understand the meaning of sports, and what it is they are teaching their kids by their actions from the sidelines. Most if not all of their kids are not going to college on a scholarship, will not be playing in college at all (other than intramurals), are not going pro, and are playing for competition and fun. Learning to compete is a critical lesson, but learning that the outcome is a live and die proposition is not.
Western Oregon University's girls' softball team was playing a critical game against Central Washington University. The game had playoff implications. Sara Tuchilsky, an unheralded senior player for Western Oregon stepped up to the plate in a 0-0 game with two runners on base and hit a home run over the center-field fence. Her coaches and teammates could not believe it; Sara had never hit a home run in her entire high school and college career. What a moment! Her first home run ever and it put her team in front 3-0 in this pivotal game.
Sara began to run the bases with pride but realized that in her excitement she had missed touching first base. So she turned to start back to first. While twisting, her knee somehow gave way and she collapsed in agony. She crawled back to first but could do no more. The first-base coach told her that, according to the rules, if anyone on the team tried to help her, she would be called out.
The umpires gathered and explained that Sara could be taken out of the game and a pinch runner called in to replace her, but the home run would have to count as a single and the pinch runner would go to first base where Sara was crumpled on the ground in pain. Western Oregon coach Pam Knox didn't know what to do. "She was going to kill me if we sub and take the home run away. But at the same time I was concerned for her."
Mallory couldn't believe that Sara was going to be robbed of this home run.
Central Washington's first baseman, Mallory Holtman, was horrified by what she saw happening right before her eyes. She couldn't believe that Sara was going to be robbed of this home run. She approached the umpire and asked about an idea. While Sara's own teammates could not help her, could her opponents assist her in any way? The umpires explained that there was no rule against Mallory helping.
Keep in mind that this three-run home run at that point in the game was a deciding factor in keeping Mallory's team out of the playoffs. They had to win that game. This did not stop Mallory from carrying out her plan. As stunned spectators rose to their feet to watch, Mallory and Central Washington's shortstop, Liz Wallace, put their arms under Sara's legs, Sara put her arms around their shoulders, and they carried Sara around the base paths, stopping to let her touch each base with her good leg.
"The only thing I remember," Sara explained, "is that Mallory asked me which leg was the one that hurt. I told her it was my right leg and she said, `OK, we're going to drop you down gently and you need to touch it with your left leg,' and I said 'OK, thank you very much.' She said, `You deserve it, you hit it over the fence,' and we all kind of just laughed."
Mallory and Liz explained after the game that they weren't thinking about the playoff spot, and didn't consider the gesture something others wouldn't do. "We just wanted to help her," said Liz.
As the trio reached home plate, the entire Western Oregon team was in tears.
Central Washington coach Gary Frederick, a 14-year coaching veteran, called the act of sportsmanship "unbelievable." Sara's homerun led to Western Oregon's 4-2 victory and Central Washington was, in fact, eliminated from playoff contention as a result.
After the game Mallory remarked, "In the end, it is not about winning and losing so much. It was about this girl. She hit it over the fence and was in pain, and she deserved a home run."
"Appearing on "Fox News Sunday," Gates said North Korea "probably will" fire the missile, prompting the host of the show to ask, "And there's nothing we can do about it?"
"No," Gates answered, according to an account of the interview on foxnews.com. "I would say we're not prepared to do anything about it."
Last week, Navy Adm. Timothy Keating, commander of U.S. forces in the Pacific, said in an interview with ABC News that the U.S. military was "fully prepared" to shoot down the missile, if ordered to do so. But Gates said Sunday such a response was unlikely.
"I think if we had an aberrant missile, one that was headed for Hawaii, that looked like it was headed for Hawaii or something like that, we might consider it," Gates said. "But I don't think we have any plans to do anything like that at this point." (MarketWatch)
Hmmmm. Has Hawaii heard about this? I would hope if a missile was headed for New York, the Pentagon would do more than just think about shooting it down. Is Hawaii expendable, or does this exchange indicate the state of our foreign policy?
Are we operating under benign neglect? Through policy by omission as opposed to commission?
Where, I ask again, is Secretary of State Clinton through all of this. Is she waiting at the United Nations to be ready to put in our complaint to the Security Council when North Korea test fires this missile? Is she personally observing the dismantling of our missile defense in Eastern Europe so that we can then rely on the Russians to take care of the nuclear threat in Iran?
It seems as if our foreign policy is going to be to react when God forbid something happens. I personally don't think that is a foreign policy. It is the old hope and pray. The Obama administration seems to want to go to the polar opposite point of the Bush administration in terms of foreign policy. They don't even want to say anything that may appear to be combative for fear of sounding less than diplomatic.
That stance has gotten us to the point of an imminent missile test firing and the planned trial of two journalists accused violating the North Korean border. As I have said the Obama administration is being tested, and so far the grade is not an A.
Maybe we can hurry up and get a quick U.N. Resolution.
Monday, March 30, 2009
In the better late than never department, an executive that helped put his company in the position that it finds itself in today has to step down in order for that firm, GM, to receive more bailout money. Chief Executive Rick Wagoner is stepping down at the request of the Obama administration. President Obama, fresh from his appearance on Leno and ESPN as well as countless other face time opportunities will be back on tomorrow discussing his plans for the automobile industry.
The NCAA Rulebook Is Long (between 439 and 508 pages depending on who you ask), The Rules Are Simple. Or Are They?
College coaches report to many bosses including the AD, alumni, boosters as well as the NCAA. The first 3 on the list want you to win, win often and to what it takes to achieve that result (while bending the rules as far as they can go without breaking, and if they break to do so without getting caught), while the 4th wants you to try and win within a rules structure that attempts to level the playing field for all schools. The NCAA has not accomplished that yet.
Some of the rules fall into a shade of grey, while others are fairly straight forward. Some can be manipulated and loopholes found, while others are just a matter of counting phone, email and text message contacts made to a potential recruit during a given time frame. Some of the ways around the limitations of the recruiting process are special camps for top recruits, or maybe an AAU coach coincidentally ending up at the same school that ends up with a coveted player.
Rules were made to be broken is a saying that is at least as old as I am, but in the case of the alleged violations by UConn, it all seems fairly cut and dried. Jim Calhoun is trying to hide behind the fact the the rulebook is a long document. In the parlance of coaching, what is a more important book to know inside and out.
It is a somewhat convoluted story involving a recruit (Nate Miles) coaches (Jim Calhoun) , assistant coaches (Tom Moore), agents (Josh Nochimson – Former UConn student manager turned professional sports agent), phone calls and text messages.
..."The University of Connecticut violated NCAA rules in the recruitment of former guard Nate Miles, a six-month investigation by Yahoo! Sports has found.
Miles was provided with lodging, transportation, restaurant meals and representation by Josh Nochimson – a professional sports agent and former UConn student manager – between 2006 and 2008, according to multiple sources. As a representative of UConn’s athletic interests, Nochimson was prohibited by NCAA rules from having contact with Miles and from providing him with anything of value.
A UConn assistant coach said he made Nochimson aware of the Huskies’ recruitment of Miles. Later, the assistant coach said he knew that Nochimson and Miles had talked.
The relationship and UConn’s knowledge of the situation are potential major NCAA violations. The findings are part of Yahoo! Sports’ ongoing look into the changing role of agents and their impact on college basketball. Agents aren’t just recruiting players from college programs, they are recruiting players for them, according to an NCAA official.
The UConn basketball staff was in constant contact with Nochimson during a nearly two-year period up to and after Miles’ recruitment. Five different UConn coaches traded at least 1,565 phone and text communications with Nochimson, including 16 from head coach Jim Calhoun. Yahoo! Sports obtained the records through the Freedom of Information Act. The documents were requested in October and received two weeks ago. Many of UConn’s communications with Nochimson were clustered with calls and texts to Miles or his inner circle."...(Rivals.com)
One thing is certain, the head coach either knew what was going on or should have known, and standing behind the length of the rulebook is crap. This has the potential to cost UConn plenty.
Many programs bend the rules and some break them, and it is usually a source other than the NCAA that figures it out, much like the way that the ratings agencies on Wall Street are usually the last to know.
The bottom line is that cheating is rampant, and college sports is merely a metaphor for what goes on in the rest of society. Whether or not UConn goes on probation really does not have an impact on the world outside of the alumni and Storrs.
If some semblance of morality does not find its way back into the fabric of the humanity, then the decline is destined to continue.
Friday, March 27, 2009
Two gator's were sitting at the side of the swamp near Washington, DC.
The smaller one turned to the bigger one and said, "I can't understand how you kin be so much bigger n me. We're the same age, we was the same size as kids I just don't get it.
"Well," said the big gator, "What you been eatin'?"
"Politicians, same as you," replied the small gator.
"Hmm. Well, where do y'all catch em?"
"Down to the side of the swamp near the parkin lot by the Capitol."
"Same here. Hmm. How do you catch 'em?"
"Well, I crawls up under one of them Lexus and wait fer one to unlockthe car door. Then I jump out, grab 'em on the leg, shake the shit out of 'em, and eat 'em!"
"Ah!" says the big alligator, "I think I see your problem. You ain't gettin' any real nourishment. See, by the time you get done shakin' the shit out of a Politician, there ain't nothin' left but an asshole and a briefcase."
Maybe a little early in the day and on a program watched by kids. Right or wrong?
North Korean Planned Rocket Launch
As discussed yesterday, North Korea is moving ahead with it's plans to launch what they say is merely a rocket designed to put a satellite into orbit. The suspicion is that this will serve as a test for a rocket that would be used to power a long-range missile that would be capable of reaching Alaska. There is also speculation that the launch may actually be used to test the Taepodong-2 missile (the picture below is only a dramatization). To keep the world in suspense the top of the rocket is reported to be covered.
This clearly represents a test of the resolve of the Obama administration in terms of response to the potential provocation, and it appears that we will move on down the rhetoric road which will utilize the U.N. as our mouthpiece. The White House said that any launch would be a violation of a U.N. ban and result in serious consequences. Secretary of State Clinton warned that a violation could keep the talks on hold that would supply North Korea with aid for decommissioning it's nuclear capability. Does the leadership of North Korea care that much about aid that might be of help to the average citizen? I don't know about that.
"We intend to raise this violation of the Security Council resolution, if it goes forward, in the U.N.," Clinton said Wednesday in Mexico City. "This provocative action in violation of the U.N. mandate will not go unnoticed, and there will be consequences." (Townhall.com)
I am sure this threat does not have Pyongyang quaking in its boots. This is a rock and a hard place moment for the Obama administration, and the rest of the world will be watching!
Thursday, March 26, 2009
Why do you think George is looking so sad? Could it be something along the lines of a call out of some nations for a uniform global reserve currency other than the dollar?
Now there is no real immediate risk to the dollar in it's current roll, and the calls out of countries like Russia and China are more of a warning than an actual expectation that a new currency could take the dollars place.
While these countries were making those comments, EU Commissioner Joaquin Almuniathe was making the statement that he didn't see any need for "major structural changes in the role the dollar plays today as a major reserve currency".
The problem lies in the fact that China is the largest creditor of the United States and we rely heavily on them to buy our bonds that will help us to fund our deficit, keep interest rates low and help us to get out of recession. Earlier in the month Chinese Premier Wen Jiabao made statements to the effect that China was worried about their holdings of U.S. government debt, and that the United States had to do whatever it took to remain creditworthy.
These are strong statements indeed, and are a shot across our bow from our largest financier. I don't think that anyone would make statements like this lightly, and to me it represents a sharp commentary that needs to be heeded!
North Korea Update
WASHINGTON -North Korea is loading a Taepodong rocket on its east coast launch pad in anticipation of the launch of a communications satellite early next month, U.S. officials say. U.S. counterproliferation and intelligence officials have confirmed Japanese news reports of the expected launch between April 4 and 8.
Wednesday, March 25, 2009
WASHINGTON, D.C. – House Republican Whip Eric Cantor (R-VA) today issued the following statement as the House Budget Committee prepared to markup the Administration’s budget proposal:
“Last night, the President took to primetime to continue a public relations campaign for a budget plan that even members of his own party have concluded is far outside the mainstream. Republicans understand that families are anxious about their jobs, worried about their healthcare, and concerned about their savings. The President knows that Republicans will have a budget plan that will be considered by the House, one that will set clear priorities, and focus directly on growing the economy and reducing healthcare costs.
“We believe that the Administration’s budget lacks a clear focus, avoids making the tough choices America needs, and fails to prioritize the real problems facing this economy, working families, and small businesses. In his first budget submission, the President will amass more debt than the previous forty-three Presidents combined, leaving our children with the bill. Second, this budget will increase taxes on the small businesses that employ one in four American workers. Hard working Americans know that that is the wrong approach, and Republicans are focused on empowering small business owners to create jobs. Third, every day families across America are setting priorities and making the tough choices in their family budgets, yet the President doesn't in his, spending so much that even members of his own party are concerned.
“Finally, I am profoundly disappointed by the President’s continued failure to recognize the needs and value of charitable organizations. During difficult economic times, charities provide vital support mechanisms for families in need of help, and this budget is a direct assault on the financial resources they require.”
During the course of the Bush administration the main stream media was all over the war in Iraq, documenting on a daily basis the violence and the tragic deaths of our soldiers, soldiers from other countries and civilians. These stories would be front page and would very often be the lead story on the nightly news
As the surge took effect and the violence precipitously dropped, the media somehow became silent and did not give it any of the coverage that it deserved. If reported it would be typically relegated to a page deep in a newspaper and deeper into a broadcast. That is to be expected as good Bush administration news would not be good news for the left in general, and definitely not during an election cycle.
The subject of the war and the bringing home of the troops or their redeployment was actively discussed during the presidential elections, but not really discussed much since the inauguration. As always the economic situation is the front page lead these days, but exactly where do we stand in Iraq and Afghanistan? Monday, bombings killed 34 people northeast of Baghdad, the third series of bombings this month. What are our plans going forward in this still very dangerous region?
Speaking of the Middle East, what is the status of the Obama plan to end our missile defense initiative in Eastern Europe in order to bring Russia into the mix of getting Iran to end it's nuclear ambitions? The Iran that we will sit down with us at a negotiation table and make all kinds of promises which we will ostensibly take at face value (by the way, where has Secretary Clinton been?).
For a look into what is currently going on in Iran, a Wall Street Journal editorial from Tuesday showcases Iranian treatment of political writers and thinkers, as well as providing comments made by the Iranian leadership as to it's thoughts concerning the U.S. and our new administration. All very instructive:
"Barack Obama extended the olive branch to Iran's leaders last Friday in a videotaped message praising a "great civilization" for "accomplishments" that "have earned the respect of the United States and the world." The death of Iranian blogger Omid-Reza Mirsayafi in Tehran's Evin prison two days earlier was, presumably, not among the accomplishments the president had in mind.
Mr. Obama's solicitous message, timed to the Persian New Year's celebration of Nowruz, met a blunt response from the Islamic Republic's supreme leader, Ali Khamenei: "He insulted the Islamic Republic of Iran from the first day," he said. "If you are right that change has come, where is that change?" To this, soi-disant Iran experts and latter-day Walter Durantys explain that it is merely Mr. Khamenei's opening gambit in what promises to be a glorious new chapter in Iranian-U.S. relations.
Maybe the experts never got the message about no meaning no. And maybe Mr. Obama forgot that the late Ayatollah Khomeini tried to ban Nowruz, a pre-Islamic tradition, and that both Mr. Khamenei and President Mahmoud Ahmadinejad have sought to curtail and Islamicize the holiday against widespread resistance. But never mind: The most telling indicator of what we can expect from Mr. Obama's overture is Mirsayafi's death, a fitting emblem of everything the Islamic Revolution stands for on its 30th anniversary.
What was a blogger doing in prison in the first place? Ask 26-year-old Kianoosh Sanjari, another Iranian blogger and Evin prison alumnus who fled the country in 2007and is now in the U.S. seeking asylum..."
Congressman Brad Sherman (D-California)
I happened to be watching the Larry Kudlow Show on CNBC and heard Congressman Sherman speaking on compensation reform and thought I had been beamed back to Russia in the mid-60's.
Tuesday, March 24, 2009
The Newest Geithner Plan Is Revealed, And So Far The Reviews Have Been Mixed But The Stock Market Applauds Loudly!
The stock market as well as some of the savviest and smartest investors have so far received the details of the new Public/Private plan designed to remove toxic assets from bank balance sheets and loosen credit with qualified optimism.
One of the major questions for potential players is how these assets are going to be priced, and one of the major fears remains that the congress would move in to penalize those firms that participate and potentially make "oversized" profits. In their rush to take the populist and politically expedient position of taxing the AIG bonuses, Congress may have created the unintended consequence of scaring the crap out of potential private investors.
I am taking this opportunity to give a short summary of the plan from the WashingtonPost.com, and an assessment of the plan from Bill Gross of PIMCO. It is their intention to participate (PIMCO has some axe to grind in it's desire to be one of the firms chosen to help administer the plan. That said, Bill Gross is one of the savvier minds in the investment world).
The proof is in the pudding and I will reserve judgement. Hopefully, unlike some of the past Geithner non-starters, this one will.
The New Treasury Plan Summarized
(WashingtonPost.com)"The "Public Private Investment Plan" detailed this morning, a long-awaited but risky piece of the government's financial stabilization strategy, will pour government money into private investment funds as a way to move loans from the balance sheets of banks to those of long-term investors.
Under the plan, the government and private investors will invest together to buy up between $500 billion and $1 trillion worth of real estate-related loans and securities from banks. The government will use up to $100 billion from the Troubled Assets Relief Program, matched by private funds, to capitalize the purchases.
The hope is that instead of hoarding cash in case those assets continue to lose value, banks will resume lending money once the toxic assets are off their books...
...With the government financial support, private investors could end up putting down only about 7 percent of the price of an asset, with the rest contributed by the government and by private lenders who receive government guarantees.
The government and private investors would share in any profits from their joint investments, and the government would not have to come up with cash to cover loan guarantees unless an asset loses enough value that the initial private investment is wiped out..."
What Does Bill Gross of PIMCO Think?
NEW YORK (Reuters) - Bill Gross, the manager of the world's largest bond fund, gave the Obama administration's financial stability effort a much-needed endorsement on Monday, saying Pimco will participate in the public-private plan.
"This is perhaps the first win/win/win policy to be put on the table and it should be welcomed enthusiastically," the co-chief investment officer of Pimco told Reuters.
"We intend to participate and do our part to serve clients as well as promote economic recovery," he added.
The U.S. Treasury Department on Monday rolled out detailed plans for persuading private investors to help rid banks of up to $1 trillion in toxic assets that are seen as a roadblock to economic recovery.
Generous government financing will underpin the so-called Public-Private Investment Program, which Treasury will kick off with $75-$100 billion that comes from its existing $700-billion bailout fund approved by Congress last fall.
"From PIMCO's perspective, we are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer," Gross said.
Monday, March 23, 2009
What Is The "Political Risk Premium" For Doing Business?
Populism is a discourse which claims to support "the people" versus "the elites". Populism may comprise an ideology urging social and political system changes and/or a rhetorical style deployed by members of political or social movements. Generally, populism invokes an idea of democracy as being solely the expression of the people's will.
Political Expediency: Many politicians make decisions based not necessarily upon what is the best thing to do, nor upon their own ethics and morals, but upon what is best for their own political gain. A politician is dependent upon his or her good standing with voters, as well as an ability to "fit in" with the party political structure. Since a person's time in politics sometimes is short, it is only natural that they do everything possible to continue their career.
I use these words and political commentators use these words, but how many have actually seen a definition. When you read them it really shines a light on how it is that our government runs, and why it is that it is so dysfunctional. When we look at the goings on in Washington over the last week or so as it concerns the political uproar over the bonuses being paid to executives at AIG, there are really no other words to describe it.
The AIG bonus situation is an issue to be hashed out by lawyers that specialize in contract law. Can bonuses contractually agreed to be rescinded out of hand in a situation where a company is still a going concern, albeit one that took TARP money. Maybe, and I certainly hope so. But the fact remains that these are not items to be taken lightly. In order to negate the validity of a contract, there needs to be some basis in law, and not done simply because it makes good theater for the people back home.
If and when we get to the point as a country where contracts can be overturned at the whim of a populist position taken by a politician with the power to do it, then who in their right minds would have the faith and confidence to enter into a contract? Where does capitalism go from there?
To recap: Are these bonuses being paid to many of the same people that helped get the country into the situation that it finds itself in repugnant, disgusting, immoral? Yes they are, but the fact remains that we are a country of contracts and laws, and if these contracts are able to be rendered invalid simply because the masses find them to be incredibly wrong and the politicians find a cause that is both populist AND politically expedient, then we as a capitalist society are going down a slippery slope.
What other contracts don't we like? Mortgages? Car Leases? Student Loans? Contracts signed with another business? If the moral outrage was strong enough and the politicians saw the opportunity to glom onto the cause, could we just have them rendered null and void?
These same politicians exhibiting their moral outrage also have a lot of explaining to do. Barney Frank, Chris Dodd, Tim Geithner and their bands of merry men and woman are not blameless in all of this, not by a longshot. They do however, have the unmitigated audacity to get up on the bully pulpit, waste the taxpayers time and money running hearings to do publicly what could be done privately, and engage in the populist rhetoric when they should be in another hearing room sitting at the table answering their own set of questions about how and why we are now where we are.
All of that said, let our employees in Washington get back to curing the cancer that is running through the body of the country, and stop trying to clear up the acne that is on its face. All in the name of populism and political expediency!
Friday, March 20, 2009
The mortgage that I speak of is the apparent sweetheart deal he got from Countrywide on two mortgages that saved him about $75,000, and the insurance refers to the uproar over the bonuses paid AIG executives courtesy of a loophole left in the stimulus bill which prohibited "future" bonuses to firms receiving TARP money while retaining those that had already been contracted for. Dodd is the Chairman of the Senate Banking Committee.
Being A Politician Means You Can Say What You Want, Not Mean What You Say, Give A Convoluted Explanation and Face No Ramifications!
Not to be used as an indictment, but simply more negative P.R. for an incumbent running for re-election in 2010, "the watchdog group Center for Responsive Politics reported Dodd -- a senator since 1981 in a state heavily dependent on the insurance industry -- received more than $223,000 in campaign donations from AIG workers between 2003 and 2008." (CNBC)
CNN, no great adversary of the Democrat Party, had this interview with Senator Dodd about his apparent flip flop on the details of the loophole in the bill:
This all comes at a time when the popularity of Dodd appears to be dropping if you believe in the polls:
"A 51 percent majority of Connecticut voters said they “definitely” or “probably” won’t be voting for him, with only 42 percent saying they’d likely support him.
A 56 percent majority of Connecticut voters said they were less likely to vote for him because of the mortgage controversy. Fifty-four percent of respondents said they were not satisfied with Dodd's explanation of allegations that he received preferential mortgage treatment." (Politico)
Not that the Republicans are strong in Connecticut (far from it), but this is vulnerability not typically seen.
Thursday, March 19, 2009
Away from the nonsense taking place on Capital Hill, the FOMC took bold action to try and get credit flowing in the system:
"The FOMC said it would buy up to $300 billion in longer-term Treasurys over the next six months. And it said it would boost its purchases of mortgage-backed securities and agency debt, all in a bid to get credit flowing through the economy again." (MarketWatch)
Ed Liddy of AIG To Enter The Lions Den
Oh the outrage by the Congress. As if they have no complicity in any of this. Money has been given, then given and then given again. Should questions have been asked by someone in the government prior to that bailout money being paid? Should contract law be tossed out of the window?
The media as well as Congress is turning this bonus issue into the main event when it should be a sideshow! If there are ways in which to legally break these contracts then it should be done, but the circus taking place serves only one constituency and that would be the egomaniacs and publicity seeking missiles that are out politicians.
Wouldn't there be a better use of entire days of their time than this? Maybe we should have day long testimony on the pork that each one of these representatives has included in bills, with an accounting of exactly who has been helped by the expenditure.
In a scene that has been played out before with the heads of the car companies and Wall Street firms, AIG head Ed Liddy will have faced the grilling from the P.R. seeking congressmen and women on the House Financial Services Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises.
Some of the questions may have been thoughtful and intelligent, but more than likely they will be preceded self serving, self righteous speeches that will have only a hint of a question yet to be asked. The questions will be more of an accusation than one that is actually looking for an answer. All designed to show their constituents back home how no-nonsense they are.
This is my prognostication at 6:30 Wednesday morning. Let's see if maybe I am wrong and the hearing is actually rational with an attempt to be substantive. No questions about private jets, etc. I doubt it, but who knows. Showtime, 1:30 PM EST.
Some employees have offered to return all of the bonus money and Liddy is asking the rest to return half of it.
Wednesday, March 18, 2009
Like any restaurant will do, our leaders in Washington will find some populist cause that they believe will appeal to the people on Main Street, and focus on it ad nauseum, almost as a smoke screen designed to take our minds off of the real crisis at hand.
Cause Célèbre: Bonuses paid to the executives at AIG
- Is it wrong that the very employees that created the products that helped to sink the firm are now being rewarded with large bonuses? Absolutely.
- Are there contracts in place that mandate that they be paid? Yes.
- Are there possibly laws that can be used to challenge these bonuses? Yes.
- Is the amount of the bonus pool a relative drop in the bucket compared to the amount of money that has been thrown into the black hole that is AIG. Yes.
- And now for the final and most important question: Is Washington incredibly opportunistic, hypocritical and bombastic? Oh Yeah!!!
No surprise there, but every time it happens and Chuck Schumer races to the cameras it is enough to drive you wild. Or at least me.
Was I the only one that thought that Barney Frank should take his own advice when he said:
"House Financial Services Committee Chairman Barney Frank, D-Mass., also was angered by the AIG payouts, according to news reports. Appearing on NBC’s “Today” show, he said the payments amounted to “rewarding incompetence.”
“These people may have a right to their bonuses,” Mr. Frank reportedly said. “They don’t have a right to their jobs forever.” (Investment News)
How about the clip below that has Senator Grassley calling for executive suicide.
With all of the politicians calling for executive heads, is it possible that they are in some way sharing in blame? These are excerpts from an article that would seem to suggest they are, although their indignation is always saved for others.
...In fact, it was a law approved by Congress in 2000 that allowed companies to place tens of trillions of dollars of these risky credit default swap bets...
...But strong opposition to the proposal from then-Fed Chairman Alan Greenspan and senior Clinton administration officials sank the idea. On Dec. 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act, which further eased restrictions on derivatives like credit default swaps...
...“For at least 150 years, these sorts of gambling contracts were unenforceable if they weren’t traded on an exchange,” said Stout, the UCLA professor. “We eliminated 150 years of insurance regulation and derivatives regulation all in the name of rocket science and financial engineering..." (MSNBC)
Finally, what did Tim Geithner know and when did he know it?
Tuesday, March 17, 2009
All Hail The King
Now for full disclosure I listen to Rush, enjoy the show, agree with some but not all of the things that he says, and certainly do not consider him to be the leader of the Republican Party, titular or otherwise. The masses that don't listen to him dislike or even hate him out of hand, primarily because they are led to that conclusion by the main stream media, not to mention the many politicians leaning left.
"Obama, Begala, and Carville vs. Rush (National review Online)
How curious: Free-thinking commentators Paul Begala and James Carville have each set their sights on Rush Limbaugh in recent days. Begala shamefully called Rush a "corpulent drug addict" during a Situation Room segment on Friday, and today Carville appeared on American Morning to tout his new column attacking Rush and mocking the GOP for being beholden to a radio talk show host.
Coincidentally, these media analysts just happened to pick up on the exact same meme President Obama conspicuously initiated late last month, when he scolded Republicans for Rush's undue influence over the party.
Boy, these on-message talking points are so well-coordinated, it's almost as if Begala, Carville, and oh, I don't know, the President's Chief of Staff hold daily conference calls, or something."
Thanks to commentators like James Carville and Paul Begala, Rush has become a marketing tool of the left that have somehow anointed him as the spiritual and philosophical leader of the Republican Party, picking perhaps the most radioactive public figure that they possibly could to try and turn into the face of the Republican Party. They have made him the basis of Democrat talking points, with the typical American Democrat and particularly liberal Democrat buying in hook, line and sinker.
Now anyone that listens to talk radio with anything close to something resembling an open mind, would certainly not agree with all of what anyone has to say. They would also not disagree with everything. You take from it what you will, and that will form the basis for constructive debate. Not the case with what appears to be a laser guided marketing campaign that must have started at the upper echelon of the Democrat Party. It is designed to tear the Republican product down.
Using my humble blog as a small sample of the anecdotal evidence of the Rush obsession, the comments that I get both here and primarily in the discussion groups that I copy it to are all Rush, all the time. Let's look at some examples:
- i guess that's why this blog keeps getting shorter...(your saying the same s..t)are you becoming the next rush limbaugh? it seems so...you are all about hype and sensationalism...
- i assume you are miriam limbaugh..correct?..
- i find my comments similar to the minority leader of the gop..rush limbaugh
- ...The only people putting politics ahead of country nowadays, ARE right-wing Republicans and their Leader, Rush Limbaugh...
- ...I understand. I listen to your leader, Boss Rush. The GOP wants Obama to fail. After all, if his policies end up showing some progress over the long haul, what will happen to the party that got us here?...
- ...heavens to Michael Milkin, say it aint so! Really, there was never a need to form the SEC, pass '33, '34 & '40 Acts or Sarbanes-Oxley because, you know, we can trust Corporate America to be honest, ethical and hire all those people who are out of work right now. Just ask Rush! ...
- ...It seems the only people who believe the Obama is God thing are those ranting that he should have the God-like powers to change in 45 days, what has been screwed in 8 years. OK sure. I guess that's what those who wear the Rush is God goggles call anyone who hopes he succeeds. nice. ...
- ...well said Douglas. What ARE the poor neo-cons and Rush Disciples going to do if things stabilize and even show modest improvement under Obama? Who will they blame for all their failed policies and archaic ideologies then?...
Long Live The King: The Democrats Say So
Monday, March 16, 2009
All through this banking crisis, the key for most experts is the fact that the flow of money has basically stopped to those that need it most for the economy to stabilize and have the potential to move back in a positive direction. The very source of funding for the businesses that are the core of jobs, the loans that fund college educations and the purchase of cars and homes and the consumer confidence that gives people the feeling that it is okay to spend money.
In yet another governmental acronym, PPIF (Public Private Investment Funds) will be established for the purpose of bidding on the assets that are on the books of the nation banks, and develop a true a market price through the competitive bidding. This will hypothetically move assets off of the books of banks and allow them to get back into the business that they were created to be in. Borrowing money at low rates through savings accounts and earning the spread on the loans that they make to consumers for homes, cars and students. As we speak the only borrowers with any potential to borrow are those at the very top of the safety scale. These are not necessarily the ones that need the cash flow the most. All of this this comes amid debate on the mark to market rules and the time it is taking to implement TALF (Term Asset Securities Loan Facility).
An announcement on the details could come this week, but as we have come to expect from this administration it might be the week after. When it is finally released, the details will hopefully be clearly presented, well thought out and have the potential to work.
G-20 Meets In The U.K
The G-20 met this weekend with promises to do whatever it takes to keep the economy of the world working. Rhetoric or reality? Stay tuned.
Protests In Pakistan Coming To A Head
As discussed last week, protests and demonstrations continued over the weekend, with the opposition leader Sharif ignoring the house arrest that was imposed and continued to lead his followers towards Islamabad and a rally in front of the Parliment. The police in Lahore allowed his prosession to go. All of this is extremely disquieting in this country with nuclear weapons, and at least for me, not one in which we are not totally certain as to who is in charge.
For the next few weeks the NCAA Tournament will help the masses become just a little distracted with what is going on in the economy, Washington and the world. Not forget, but maybe have it off the mind for a few hours a day. In this age of fat cat professional athletes who whine and cry about the state of their lives, wallets and team situations, is there anything more refreshing and exiting than watching the passion, pride and effort that goes on in college sports? Student athletes from schools as diverse as Binghamton and Cornell get to live the dream. As they say thousands of college athletes are going pro in something other than sports. This tournament is truly the opportunity for a once in a lifetime experience!
Saturday, March 14, 2009
I remember Joe Biden telling us that early on in the administration a situation was going to arise on the foreign affairs front that would test the toughness and resolve of our new President. Beyond the borders of Pakistan, we now apparently have a test coming out of North Korea as well. It was discussed a few days ago in Tensions Are Running High On The Korean Peninsula that this region is a dangerous and potential flash point. These tests are not graded on a curve but have the potential to be pass/fail.
North Korea "Satellite" Launch Scheduled For Early April!
We now have Japan threatening to shoot down any object that is coming towards its territory, and South Korea saying that any launch would be in violation of U.N. Security Council Resolution 1718. North Korea maintains that the launch which is scheduled for between April 4th and 8th is for a communications satellite and that they have the right to do it. The United States, Japan and South Korea maintain that the rocket that is used in a satellite launch is the same that is used in its missile, the Taepodong-2. This rocket has the ability to go as as far as Alaska.
Although the last time North Korea tested the Taepodong-2 it was essentially a dud, practice will eventually make perfect and the United States and her allies need to determine how best to deal with the situation.
"Japan Airlines Corp said that because of the launch warning, the airline would alter flight paths between April 4 and 8 on routes to London, Paris, Frankfurt, Amsterdam, Rome, Milan and Moscow, as well as Honolulu and Kona in Hawaii.
All Nippon Airways Co said that during the same period it would be altering flight paths on routes between Tokyo and London, Paris, Frankfurt.
North Korea on Friday again stopped crossings of South Korean personnel into a jointly run factory park on its side of the armed border, four days after cutting off military communication and temporarily suspending border crossings for a day, the Unification Ministry in Seoul said.
More than 200 South Koreans who are at the Kaesong Industrial Park remain stranded at the plant just north of the border, once hailed as a model in reconciliation." (Reuters)
The question from the other day remains. What is the United States position on this going to be? Where is Secretary of State Clinton on this? Are we going to leave our safety concerns to the U.N. as the North Koreans threaten to violate yet another anemic resolution from this anemic organization?
Let us know please.
Friday, March 13, 2009
We have all heard the lawyer jokes that poke fun at a profession whose job it is to at times take a situation that is not a problem and turn it into a problem. But the picture of lawyers in Pakistan protesting the arrest of political leaders and other lawyers is no joke. This is just one of the protests that is going on around the country against the new government. This new leadership is drawing comparisons to the old government led by General Musharraf.
This new administration that is led by Asif Ali Zardari (widower of Benazir Bhutto who was assassinated in 2007) has seen an increase in the insurgency of the Taliban and Al Qaeda in addition to a struggling economy. He is also viewed has having inherited the position and not having earned it, with former Prime Minister Nawaz Sharif being more popular with the masses.
Zardari has instituted two week bans on gatherings of more than 4 people which is being ignored around the country. Marches are being held that are supposed to meet in Islamabad on Monday. The army has said that it wants to stay of the politics of the country, but if the trouble persists they could very well step in.
All of this unrest going on in a country that has nuclear capabilities and those close to the trigger who could very well have leanings that are not in the best interests of the United States or the world. What is our response to all of this?
I have not heard anything specific from the Secretary if State or the President. Richard Holbrooke, our envoy to Pakistan and Afghanistan "expressed concern about the political turmoil, and Washington is conducting a "major policy review" that "is expected to extend more aid to the Zardari government to help it counter the insurgency that is increasingly destabilizing the nuclear-armed nation."
While our leaders are concerned with the economy, implementing a new system of healthcare and with lowering taxes on all but the wealthiest 5% of Americans, perhaps, just perhaps, if this stress in Pakistan is not adequately addressed the need for these other "fixes" could be moot.
The three day rally in stocks continued with a strong move up in the financials in the face of the downgrade of GE from AAA, and the debate on how to revise the mark to market valuing of assets rolls on in Washington.
Must See T.V.?
I woke up this morning and thought that I was back to the future as there was television coverage of a car moving at normal speeds obviously heading somewhere important. Was it the president or a foreign dignitary? No, it was Bernie Madoff, leaving his house going to court to plead and probably never be seen on the outside again.
I suppose there are people out there fascinated by this car trip downtown, but it is just a sideshow to much bigger issues: The money and lives of real people, the performance of the SEC in its oversight in the past and how it it will perform in the future.
It was an apology in the courtroom that has been heard in courtrooms around the country and around the world for hundreds of years. In any speech given by a convicted criminal, the only words that need be added to most each and every one to make it the truth is "I got caught". This would usually come after the gratuitous apology for the pain brought to the victim or the victims family. I am very sorry (I got caught). Or, as in the case of Bernie Madoff, "I am deeply sorry and ashamed," (I got caught).
If the markets hadn't plunged and the economy gone into a tailspin and the Ponzi scheme had gone on and on, would he be sorry then? Was he sorry he started the whole thing 25 years ago? Human nature says that the words that come out of your mouth can somehow make your actions okay. You see that simply by observing children. That by saying some words you mitigate the pain that you have created and heal the wounds.
Bernie Madoff will be in jail the rest of his life which at the age of 70 is probably not that many years. The pain and disruption that he has created in lives around the world is incalculable and will not simply go away. Lives have been altered forever, and by pleading guilty to all charges he is obviously trying to take the fall for all of the others that had to be involved. Justice says that these people have to pay as well. As the saying goes, there is no free lunch.
Thursday, March 12, 2009
I don't watch the Jon Stewart Show although I hear he is a very funny guy. On March 6 I wrote a piece, Beware The Misleading Nature of 24 Hour Business News commenting on the caveat emptor approach that viewers and investors need to take.
"Now on these shows the guests are presented as true experienced and capable market professionals, and as such are viewed by viewers with the impression that they may actually know what they are talking about. They are typically also almost always bullish. They will tell you about the HISTORIC, ONCE IN A LIFETIME OPPORTUNITY that this crushing sell-off is presenting. Many of these are the same analysts and prognosticators that said with 99% certainty that the lows set in the chart above in November 2008 would hold and that at that point the market represented a great buying opportunity."
On March 5, unbeknownst to me (or else I would have used it), Jon Stewart did a scathing 8 minute bit on CNBC and how they are basically what we all should know them to be, shills for the market (to only go up) and for the advertisers on the network. Most importantly, neither the hosts or guests are really any smarter than you or I when it comes to where the markets or individual stocks are going. They are momentum driven, reactive and staters of the obvious disguised by flashy words.
A perfect example of the cheerleading happened yesterday morning on the day after a 379 point rise in the Dow, with the accompanying speculation as to whether the one day move in the markets represented the end of the bear and beginning of the bull. Now as a former trader it would be absolutely normal after a huge move up to expect a pullback, at least at the open. The anchors were on the verge of tears when the futures were actually up but tepid.
None of us are smart enough to know whether we will have a leg up from here. You would expect one after the long and sharp move down, but the one sure thing is that there is no sure thing. and that the only locks are on doors. And that the dartboard approach to the market would be just as effective as listening to one of the shills.
Enjoy the clip:
The Jon Stewart Show
Wednesday, March 11, 2009
I hate to have to keep bringing up the inadequacies of Tim Geithner, but because he is in charge of a little thing like saving the economy and banking system of the free world, I feel like I have to. In a dinner Monday night with House Democrats, it appears that he was able to tell them everything that he has been able to tell us about the plan to fix the banking system and the financial system: Not much. Some of the comments that were allegedly made by the guests are equally instructive as to the mentality of our legislators.
To their credit however, in their never ending goal of self-sacrifice for the benefit of the taxpayer and in an effort to save money for our cash strapped society, dinner was held at a restaurant providing good food at a good price.
"Treasury Secretary Timothy Geithner tells House Democrats that White House efforts to fix the nation's economy are working -- but he's also urging them to be patient.
Geithner met with Democrats in a closed session Monday night, where one lawmaker urged the administration to "Hurry, whatever you're doing, please hurry."
Members interviewed after the meeting say it reflected the political challenge they faced -- explaining the policies of a president of their party to a public angry over bank bailouts and an unending recession.
House Democratic Leader Steny Hoyer of Maryland compared the current economic situation to a crippled ship, noting that "The boat is not taking on more water, but you haven't yet pumped it out."(KVEWTV.com)
As you can see from the 3rd paragraph the focus is still on the political ramifications of the medicine, rather than the critical nature of the medicine itself. Wrong focus because they will be answering far tougher questions if this crisis is not resolved.
Nice stock market rally on Tuesday led by comments out of Citigroups Pandit. There were also comments made by Barney Frank regarding the re-institution of the uptick rule for shorting stocks.
Tuesday, March 10, 2009
We know that we are negotiating with Russia using our missile defense as the bait for it's help in convincing Iran to end it's nuclear ambitions. Good luck with that one. What are our plans for another situation that is always on the front burner: North Korea.
There is no hypothetical here in terms of nukes or instability. Threats of war are commonplace from the North, and are typically considered to merely be the bluster of an unstable leader. Can we count on that? They are planning on test firing a missile capable of carrying warheads, threatening war if any attempts are made to intercept the missile, threatening to cutoff the hotline between the North and the South and saying that commercial aircraft could be at risk with a tone more sinister than their typical tone.
What exactly are our plans when it comes to dealing with this part of the world. When Kim Jong-il dies, what will the new leadership look like? Take a look at the picture above. The tensions run about as high as tensions can possibly run. It is as clear as the look on the soldiers face. It would not take much of a mistake one way or the other for this situation to escalate out of control.
Madam Secretary of State, what exactly are we doing to protect both the United States and our allies in this situation? Mr. President, from some of the statements that you have made it sounds as if your plan is for deep cuts in defense spending. Is that the right move at the right time? (Whitehouse Press Office) Or is it meant simply to placate the left wing of the Democrat Party?
Long a left of center program that takes great pleasure in skits mocking the Republican Party and all of it's players, the fact that SNL has turned their attention to Tim Geithner would seem to suggest that he has in fact reached new lows of futility.
When he was originally nominated for the post and since, I have suggested that perhaps he was not the man for the job, and definitely not the man in the job. From various sources I received criticism for Would You Hire This Man To Do Your Taxes? , Geithner Talks and Markets Yawn and Tim Geithner Speaks among others.
Given the uncertain and weak state of the economy and ever changing bailout plans combined with the NO Vote being cast by the stock markets, how long will Tim Geithner remain in his job?
Monday, March 9, 2009
According to the latest Democrat talking points, the new leader of the Republican Party and the Conservatives is Rush Limbaugh. This serves the Democrats well in these times of Obama administration economic as well as personnel trouble because the mere mention of the name Limbaugh galvanizes the left wing and shifts focus away from the real problems now at hand.
It's Not Just Rush
Now while Rush is not the head of the party or movement, what we may have found is the new rising star in the form of an eighth grader from Georgia who made a big splash in a 3 minute speech at the CPAC Conference, and following that on various radio and television talk shows. As the clip below shows he has strong opinions as well as the presence and presentation that gives an indication of a long potential run in the political public limelight.
Although the stock market has gone straight down since inauguration day, President Obama has taken a page from Wall Street when he declared that if you have a long term investment horizon, now is a good time to buy stocks.
“What you’re now seeing is, profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long term perspective on it,” he said." (CBS News) Huh?
Now I can appreciate the sentiment and hope for the sake of all Americans that he is right, but what exactly is he saying there? In addition to his position as Commander in Chief and architect of the budget, health care, etc, is this a position that he should be taking?
If I remember correctly, during the campaign he ran on the fact that the United States was fortunate that none of the Social Security Trust Fund was allowed to be invested in the markets as McCain supposedly had wanted it to be. (FactCheck.org) He is prognosticating that now is a good time for this investment during one of the worst bear markets of all time?
Flippant statements about investing at a time when the markets could very well face another leg down is probably not in the job description of President. "Profit and earnings ratios are potentially at a point where if you have a log term perspective they could be a good deal"?
If we pick that statement apart, what exactly does it mean? Like many of the statement that come out of the White House, those are empty words that tell us absolutely nothing, but as a quick sound bite listened to by the less than stock market savvy, sound almost like a tacit endorsement to get in and buy.
I know the arguments that will be voiced. Is it so bad that he is being positive? Shouldn't a President try and pump up the people at a time when many are down? Didn't you say a week ago that he is too negative? Absolutely, but this is a statement that is hollow, that many who are less than sophisticated when it comes to the markets and their money may accept as gospel.
Maybe it is a good time to buy and maybe it isn't, but certainly not based on recent performance, with earnings estimates on the S&P dropping like a stone and P/E multiples compressing. There will eventually be a bottom as there has to be, but his guess is as good as mine as to when that will be.
Off the cuff statements like this, made simply for effect, similar to those the President made which have cost Las Vegas plenty in lost convention dollars, need to be made more carefully.
Having control of the bully pulpit comes with some responsibility.
Friday, March 6, 2009
Citigroup, that mammoth banking institution and the original financial supermarket has joined the ranks of AIG, Fannie Mae and Freddie Mac with a stock trading under $1.00. Are we in the Twilight Zone?
At 8:30 this morning, possibly before you read this, the employment report will have been released with the expectation for a loss of 600,000 jobs.
What Do You Do When You Need To Fill Up Air Time All Day Every Day?
Watching business news every day I see an endless parade of the "experts" from both the buy and sell side of the market giving their opinions and prognostications on where the market is going.
They are expert at telling you where the market has been, why it has been weak and what the problem areas have been. Now anyone can do the backwards looking, but no one can really do the forward looking forecasting with any degree of confidence because nobody has any real idea. Or as the saying goes they wouldn't be on T.V., but on an island somewhere sipping pina colladas on the beach.
Now on these shows the guests are presented as true experienced and capable market professionals, and as such are viewed by viewers with the impression that they may actually know what they are talking about. They are typically also almost always bullish. They will tell you about the HISTORIC, ONCE IN A LIFETIME OPPORTUNITY that this crushing sell-off is presenting. Many of these are the same analysts and prognosticators that said with 99% certainty that the lows set in the chart above in November 2008 would hold and that at that point the market represented a great buying opportunity.
I think what would be instructive is having the hosts of the shows go back through the bear market that we are in, and tell us the point where these guests thought that the market was a sell and NOT a great buying opportunity. Or the time and price they first started recommneding a stock. If they did this there would be few guests left to appear due to lack of credibility.
Take a look at the chart above, and consider the fact that if the earnings expectations on the S&P 500 keeps coming down and that if you put a true bear market multiple on those earnings, that the market may still have plenty of room to the downside.
The greatest quotes made are how far down stocks have come down from the highs, and simply due to that makes them a great buy. Have they said that all along this drop? How relative to next years projected earnings and with a multiple of X applied to those earnings, they are giving them away. Well, I guess the question would be just how reliable are next years earnings expectations provided by analysts that are right less than weathermen.
Looking at the chart above, we had a one day move up on Wednesday which actually faded into the close. This came after how many days down. What was the commentary? Is this the beginning of the next move up, the end of the bear market or at least a quick and severe bear market rally that could take us up 20-30%?
Beware the shills and prognosticators (particularly sell side) that have never met a market they didn't like. Why? Because their jobs depend on people buying, and if not buying at the very least not selling. They will always make a strong and compelling argument, but buyer beware and buyer be very cautious.
Thursday, March 5, 2009
This was a response in another outlet to the posts from a few days ago, Rantings of a Radical Right Winger and Where Is Our Treasury Secretary. The writer purports to be a former Republican who I imagine was disillusioned by the Bush years. It is consistent with other comments from Obama supporters claiming that he is a change agent who shows great leadership qualities. The other common thread is that he has only been in office x number of days. Gotta give him a chance they say.
Let's remember that throughout history there have been those with great leadership qualities, looking to create change who were great orators who brought the world to its knees.
CommentI don't consider the question "where's our treasury secretary?" to be indicative that someone is a radical right-winger. I remember we used to play a game called "Where's Waldo, I mean Bush?" when the current crisis was building and then hit us all hard. That game was almost as much fun as "What kind of wacko thing will McCain do next?" or "What will Sarah say to make us laugh?" I think it would relevant to point out that the vast majority of Americans don't even know who the Secretary Treasury is. Fewer still are going to be as impacted by something said by Geitner. Did Paulson suddenly inspire confidence? Obviously not. Whereas Bush seemed to be in hiding and pushing subordinates out to deal with the heat, Obama shows leadership qualities. Whether or not you agree with his ideas, the world no longer thinks we have an idiot at the helm, no one thinks Biden really runs things behind the scens (can you say Cheney?) and Obama's making it clear, he's going to do everything he can to clean up the mess he's inherited. The only people putting politics ahead of country nowadays, ARE right-wing Republicans and their Leader, Rush Limbaugh. Hopefully, when Obama has actually been in office more than two months, the Republicans will quit trying to blame him in advance, for things they HOPE will go wrong with our great country, so they can further their partisan interests. This post brought to you by a former Republcian ;-)
Obama shows leadership qualities and a great gift for gab. If you look at the markets both here and around the world, however, which are really the only impartial arbiters that we have, his plans for the economy and for the banking system are getting a rousing thumbs down.
A leader knows when to recognize this and adjust. I think that the people that voted purly for the rhetoric of change are now questioning whether the new president is truly a capitalist, or is he the far left senator that he was portrayed as who is driving the economy into the toilet.
There was no honeymoon bounce in the markets and in fact since inauguration day we have gone straight down. While we may be here because of the policies of the last 8+ years, if the world had actual confidence in Obama's abilities to get us out of this there would be a relief rally and not a scared sh-tless decline. Forgetting about anyone else, there will come a time when the masses will look at the markets and their tax bills and their portfolios and come to realize that they may have made a mistake.
Norman Mattoon Thomas (November 20, 1884 - December 19, 1968) was a leading American socialist, pacifist, and six-time presidential candidate for the Socialist Party of America . He was ordained as a Presbyterian minister in 1911.
As a candidate for President of the U. S. Norman Thomas said, in a 1944 epoch speech:"The American people will never knowingly adopt socialism. But, under the name of "liberalism", they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened."
He went on to say: "I no longer need to run as a Presidential Candidate for the Socialist Party. The Democratic Party has adopted our platform."
An Example Of Small Business Stimulus?
As one example of the cost to the very small business that the stimulus bill is supposed to be helping, a new subsidy is requiring business owners to cover 65% of the cost of COBRA for fired workers. Businesses that are struggling for their very survival, trying to cut costs so that the trimming of employees may be kept to a minimum, are now being handed additional costs that will require them to either lay off more workers or possibly go out of business all together. In it's attempt to be all things to the lower and middle class, is the Obama administration really thinking its' plans all the way through? (USAToday)
Populist speech making, such as scaring business off from going to Las Vegas for conventions, is not helping already devastated economy's. Being a popular president and maintaining poll numbers will go only so far. What goes up will come down.
Wednesday, March 4, 2009
Below are the announced guidelines. (CNBC)
Eligibility and Verification:
—Loans originated on or before January 1, 2009.
—First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
—All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
—Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.
—Incentives to lenders and servicers to modify at risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.
—Modifications can start from now until December 31, 2012; loans can be modified only once under the program.
Loan Modification Terms and Procedures:
—Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.
—Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPV test will compare the net present value of cash flows with modification and without modification. If the test is positive - meaning that the net present value of expected cash flow is greater in the modification scenario - the servicer must modify absent fraud or a contract prohibition.
—Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.
—Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).
—The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
—The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner's association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.
—Servicers must enter into the program agreements with Treasury's financial agent on or before December 31, 2009.
Payments to Servicers, Lenders, and Responsible Borrowers:
—The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.
—Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus "pay for success" fees on still-performing loans of $1,000 per year.
—Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.
—The program will provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.
—The program will include incentives for extinguishing second liens on loans modified under this program.
—No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasury's financial agent.
—Similar incentives will be paid for Hope for Homeowner refinances.
Transparency and Accountability:
—Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.
—Servicers will be required to collect, maintain and transmit records for verification and compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.
—Freddie Mac will audit compliance. GSE lenders and servicers already have much of the borrower's information on file, so documentation requirements are not likely to be burdensome.
In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.
To help borrowers determine if they are eligible, the government has put answers to common questions and assessment tools on the Web site http://www.financialstability.gov/
Taking the media back burner to the the economic nuclear winter that we are currently in, is the state of our foreign defense policy and our missile defense initiative plans in Eastern Europe. This is coupled with our desire, as well as the desire of most of the civilized world, to stop Iran from developing nuclear weapons of it's own.
President Barack Obama sent a secret letter to Russian President Dmitri Medvedev weeks ago suggesting that we would halt development of the United States’ missile defense program in Eastern Europe if Russia helped resolve the threat posed by Iran’s nuclear program.
“If through strong diplomacy with Russia and our other partners we can reduce or eliminate that threat, it obviously shapes the way at which we look at missile defense,” Under Secretary of State William J. Burns said about the Iranian threat in an interview with the Russian news agency Interfax while in Moscow last month delivering Mr. Obama’s letter." (New York Times)
A couple of problems with this line of thinking:
- Iran has strongly resisted international efforts to pressure it to abide by its legal commitments under the Nuclear Non-Proliferation Treaty and halt its suspect nuclear activities. Iran’s President, Mahmoud Ahmadinejad, defiantly proclaimed in 2007 that “Iran has obtained the technology to produce nuclear fuel, and Iran’s move is like a train…". While that was in '07, where is the evidence to show that the Iranian position has changed.
- Russia has cooperated with Tehran on a range of issues and has often resisted Washington's tough stance toward Iran, which insists that its nuclear program is aimed at developing only cheap energy, not weapons. (Washington Post)
Improving relations with Russia (as well as with all allies around the world) is critical. To give up the store for negotiations that would merely be a charade would be nothing less than stupid for loss of a better word. The Obama administration needs to wise up quickly and come to the realization that this world is a dangerous and tricky place. Words, no matter how well they are put together, do not translate into proper action. Repairing foreign relations where they have been damaged is a good and necessary goal, but not at the expense of the security of the United States and her allies.
Look not at the polls President Obama because the polls can be fickle. Look instead at reality. The real reality and not the reality of campaign rhetoric!