GOP Governors want stimulus funds

January 31, 2009

How interesting the “party of principle” can’t seem to get on the same page.

The GOP governors largely want the stimulus funds while Congressional House GOP members have rejected it unanimously.

What is Rush Limbaugh going to say now?  Are you as confused as the Republican party is?

Democrat Dave

House GOP should walk the talk–refuse bailout funds

January 30, 2009

This week, the House GOP unanimously rejected the Obama-led bailout initiative to bolster the sagging economy.  Why?

The GOP claims to the be a “party of principle” against deficits, government bailouts, etc.  The GOP believes that trickle-down economics is the only way to go and feels the answer is simply more tax cuts.

If the House Republicans are truly a party of principle, John Boehner, Eric Cantor and the House GOP leadership should immediately announce that the House Republicans will refuse to accept any bailout funds coming into their districts.  Stephen Colbert suggested they do on his show last evening, a brilliant idea don’t you think?

By rejecting bailout funds, the House Republicans send a strong message of principle not only to Barack Obama and the Democrats but also to their constituents.  Think of the strong message that would send!  Why, even Rush Limbaugh would be delighted with this principled response, don’t you think?

Do they have the guts to do it?  Of course not.  They really aren’t that principled. What do you think?

Democrat Dave

Republicans looking to jumpstart the economy

January 26, 2009

After driving the economy into the ditch, do the Republicans really think they offer the leadership and insights to “jumpstart the economy?”  What a ludicrous thought!

Thankfully, the GOP lost the last election cycle.  Can you imagine if McCain and the GOP were in charge now?

The standard GOP refrain is to simply “lower personal income taxes” not to spend money on a stimulus package.

Excuse me, but, how does “lowering personal income taxes” help the person who doesn’t have a job?  How dumb does the GOP think we all are out here anyway?

The stimulus package is a lifeline to create meaningful jobs to bridge us from where we are to where we need to be.

I, for one, am not looking for any additional GOP “leadership” about how to fix the economy anymore than I’d be looking for Captain Hazelwood–the Captain of the Exxon-Valdez–to offer suggestions about how to maneuver an oil tanker through Alaskan waters.

Every day of delay further puts our economy at risk.  Under GOP “leadership”–George Bush and Henry Paulson–we’ve already sunk about $700 billion in bailouts to Wall Street and I’ve yet to understand how we are better off.  Can anybody explain this to me?

As far as I’m concerned, the GOP needs to shut the f__k up on matters of economic policy and let the Barack Obama lead the way.  If the GOP continues to look like obstructionists, things will only get worse for them in the 2010 election cycle.

Barack Obama correctly pointed out that “he won” the election.  We need change.  GOP–get out of the way.  Try to become part of the solution rather than remaining part of the problem.

What do you think?  Democrat Dave

20 days and counting–no more Bush-Cheney

December 31, 2008

I can’t wait until Noon on January 20th, 2009, when Bush and Cheney head off to retirement.  I won’t miss that smirk.

I’ve had a quiet few weeks and have not posted much since the election.  I needed to take a break, sit back and observe the political world while I attended to some business matters.

If you’re like me, you probably wish the Bush-Cheney team had stepped aside back before Thanksgiving, yielding to the Obama-Biden team.   While there is still the vacuum of leadership from Bush, he’s apparently been busy looking for ways to erode environmental and labor protections.

What am I excited about?

  • The incoming Obama-Biden team replacing Bush-Cheney
  • Our troops get a new Commander in Chief
  • The new cabinet is getting praise from Republicans  and Democrats alike
  • Colin Powell’s candor just before the election
  • A really smart, capable guy is going to be President in 20 days
  • The Iraqi government has expressed the intent to get our troops out just as Barack Obama had suggested for months
  • That the McCain-Palin ticket didn’t prevail in the last election
  • Al Franken becoming a U.S. Senator for the state of Minnesota

What irritates me?

  • Bush and Cheney will likely get away with war crimes
  • That the Bush administration was able to undermine our Constitution, our economy, our environment, our regulatory processes, our standing in the world, and will face no consequences
  • There’s no accountability for Paulson and Bernake
  • I don’t know if any of the $350 billion Paulson has spent is yielding or will yield economic benefits–can anyone explain this to me?
  • That Paulson and Bernake made a case for the urgent need to buy up “toxic mortgage debt” to get the economy moving and then bought none
  • Why we’re focused on what little bailout money the U.S. auto industry is receiving ($17 billion) yet we aren’t keeping our eyes on the Wall Street bailout which continues to move along under “cover of darkness”
  • AIG’s bailout money has quietly increased from $80 billion to over $125 billion–how come?
  • How the SEC–after being tipped off about a scam Bernie Madoff was perpetrating on investors–looked the other way and how this negligence has a price tag of $50 billion.  Madoff is spending his days/nights in his luxurious New York apartment while his victims spend their days living with untold anguish.
  • The arrogance of Bush, Cheney, Ted Stevens, Norm Coleman and Blagojevich

What do you think?

Happy New Year!!    Democrat Dave

Bailout the U.S. auto industry–ludicrous statements from leadership

November 17, 2008

The U.S. automotive industry is about to fall off a steep cliff.  They are asking for bailout money.  Yet, here’s the posturing taking place:

  • The United Autoworker’s Union (UAW) is saying they will make no concessions as the problem is with the economy, not with anything related to the UAW.  Right!
  • Rick Wagoner, the Chairman of GM, says he isn’t willing to take money if there are any conditions associated with the receipt of bailout funds.  Sure!

Earth to auto industry–earth to auto industry:

  • The UAW will make significant concessions.  If they don’t, they’ll force the auto makers into bankruptcy which will eliminate all union contracts immediately.  How would they like that?
  • The management of these companies will accept conditions–they can’t risk “standing on principle” and letting their companies go down the tubes.

No one is happy about the idea of bailing out the U.S. auto makers.  If it weren’t for the larger impact on the economy, it probably would be a reasonable idea to let them die.  They’ve adopted the wrong strategy and are horribly positioned for the current economic climate.

The incoming Democratic President and the Democratic Congress are going to have to “do this right.”  We can’t simply throw good money after bad.

And, finally, the auto industry management and UAW are going to need to come to terms with the notion that they lack little bargaining power at this juncture.  Fundamental change has to occur and occur as a condition of bailout funding.

What do you think?  Democrat Dave

$700 billion bailout–how are we doing?

November 12, 2008

The bailout isn’t going well from my perspective.  Paulson is making stuff up as he goes which is pretty much what he told Congress he wanted to do just prior to the legislation passed granting him authority to spend the first $350 billion of the $700 billion bailout. 

Henry Paulson has a lot of control and no real accountability for how this money is allocated.  If he’s right, then we–the taxpayers–might benefit.  If he’s wrong, oh well–it sucks to be us.

Back when this “program” was sold to Congress, a big portion of the plan was to buy up “toxic assets”–mortgages that had gone bad and created a liquidity crisis of historic proportions. 

Today, Paulson announced that he’s decided to go in a different direction and not buy the toxic mortgage assets.  Huh?  This was at the root of the crisis just a few weeks ago.  Now, it’s no big deal?  What’s wrong with this picture?

The markets are in a turmoil over Paulson’s sudden change in direction.  Buying the “toxic assets” was the core rationale for the bailout.  This latest Paulson decision seems to be nuts.  Wall Street agrees.  Main Street has to be asking if Paulson really knows what he is doing. Or, is Paulson like the Wizard of Oz–the guy behind the curtain making adjustments that may not matter?

AIG, the insurance giant, was to be the beneficiary of an $80 billion bailout.  [Note: This $80 billion is NOT part of the $700 billion bailout.]  This week, AIG needs another $40 billion.  Really?  Are we sure?  Of course not.  It should be noted that the former president of AIG, Hank Greenberg, stated that he could have saved the company with $20 billion.  He didn’t get the chance.

The auto industry is falling off a cliff.  They’d like an additional $25 billion over the already committed $25 billion.  And, what does this do?  Give them cash which they will blow through like a cocaine addict blows through cash.  We can’t bail them out unless there are systemic changes to correct the auto industry business models that simply no longer serve them or the consumer.  You can’t keep throwing good money after bad.

One of my consulting colleagues up in New England tells the lobster fishermen are loosing their butts this year as the current market price is $3.50 a pound, less per pound than I’m paying for hamburger to add my dog’s food out West.  Yikes!   My colleague claims they may be looking for a bailout. Why not?  Will a billion do it?

What do you think?  Democrat Dave

Bailout anger and frustration

September 30, 2008

There is profound anger on what the main stream media (MSM) is calling Main Street as well there should be about this bailout package.

If we don’t face the current realities, Main Street may end up hurting itself more Main Street can presently imagine.

As I’ve written before, Bush, Paulson and Bernake have done a dreadful job explaining how this bailout plan works. I’ve looked and looked for a cogent explanation of how this works and can find little. Here’s how we got in this mess.

  • Homebuyers who ordinarily would be unable to qualify to buy a home were offered mortgages that were “too good to be true,” e.g., no money down, 100% financing, “stated income” which meant no income verification, pay about half the house payment you ordinarily would for 3 years, etc.  [We can argue until the cows come home about “who’s at fault” but, it’s not going to solve the problem. We’ve hit a wall and we have to deal with it. Let’s just say the mortgage industry found a way to move more homes through creative lending.]
  • This loan situation drove the demand for homes higher and higher, both in terms of demand for homes and market valuations.
  • The homebuyers who bought these loans were told that in 3 years they would be able to refinance the house under the same extraordinary deal they enjoyed as “home values do nothing but go up.”  [This is key.  If home values go down–as they have–the home can’t be refinanced.  People can’t afford the new payment that effectively doubles their monthly payment so they have to walk away leading to foreclosures.]
  • Wall Street began buying and selling these mortgages to each other at a profit.  Selling the paper worked well when there was confidence that the paper valuation equaled or exceeded the actual valuation of the homes behind the paper.
  • What happens when the home value drops below the value of the mortgage?  Not good.
  • What happens when you can’t be sure that the appraised value of the house is even close to the value of the mortgage behind it?  Very bad.
  • What happens when people can’t qualify for loans to buy homes?   Yikes!
  • Now, the mortgage paper that’s been traded is of questionable value and has been moving that way for nearly 3 years.  Yet, Wall Street didn’t pause to reflect on this reality–it was “full stream ahead.”  Today, it’s not hard to find homes worth 10, 20, 30, 40, 50 percent less or even more than the value of the mortgage paper.  That piece of paper is no longer an asset–it can’t be converted to cash.  So, the mortgage is actually a liability–it can’t be used to borrow against or sold (unless you want to sell it at a loss).
  • So, Wall Street now has more of these “crappy” loans than you can shake a stick at and no buyers–well, no buyer that is until the Federal Government comes along and offers to buy the loans that no one wants to create cash where there’s a complete vacuum.   That’s what the bailout is about–buying crappy mortgages no one wants to provide a cash infusion to our economy.

Thus, the mechanism to generate cash that once existed to fuel the economy is severely restricted and is now affecting all areas of the economy.  If people stop buying or severely cut back buying homes, furniture, autos, groceries, etc., all the jobs attached to those industries suffer.   Those industries are supported by workers from Main Street.  The success of these companies impacts our investments, 401K’s, retirements, pensions, etc.

Money is the oxygen of our economy. Right now, our economy is strangling.   Without oxygen, the economy is put into a precarious state.

So, we know why this happened and what the implications are.  There is plenty of blame to pass around.  That’s not helpful.  We have a crisis and we need to come together to address this crisis.

Main Street should be angry. 

But, Main Street has to understand that failure to act by supporting some form of bailout package is going to hurt everyone and everything.  Main Street can’t get even with Wall Street without hurting Main Street.  We are all interconnected.

So, get angry and insist that reforms are put in place to make sure this doesn’t happen again.  Just be sure you don’t cut your nose off despite your face. 

What about all the alternatives?  I’ve given that a lot of thought and determined that, sadly, we need fast action.  Just about everything that we might do takes longer than we can probably tolerate at this point.

What should you do?  Call your Congressional representative and tell them that you’re angry we are in this situation, you want reforms put in place after this crisis passes, but you understand that something needs to be done and be done quickly.  Tell them to negotiate a bailout package and make it happen soon.  That, sadly, is our only choice.  I don’t know how big a package they need, but, something has to be done.

What do you think?  Democrat Dave