Randalls Opinions.com

March 26, 2009

Health insurance companies are starting to see the “light”

Filed under: health insurance costs, healthcare, politics, state insurance laws — Tags: , , , — @ 9:27 pm

There’s an article on the internet news from the AP regarding major insurers willing to make some concessions that they have long resisted. This is great news, but certainly not an altruistic one. They are simply recognizing the writing on the wall.

Here’s the link:  http://news.yahoo.com/s/ap/20090324/ap_on_he_me/insurers_sick_people

Of course, they’re still standing firm (so far) on having different rates based upon which state you live in, which is of course like money in the bank.  If I move my family from one state to another, the same policy, from the same company, can be double the cost, or more, because every state has different insurance regulations.  It’s an absurd idea that you can start fixing the problems without first fixing the regulation from state law, to federal law.  Unfortunately, most state elected officials are either in the insurance business, or lawyers, and they can’t seem to work in the best interests of the Americans that elected them to office.  There’s absolutely no reason for a major insurance company to charge more for the same very same policy, to the same people, at almost twice the price if you change your state of residence.  Start with federal regulation solving that single problem, and you’ll have made tremendous progress.  Include in that legislation that changes in policy pricing can only be done based upon reliable information that the increase is warranted, and allow increases only by “policy group” as a whole.  In other words, if it’s a small business policy, for businesses with less than 50 people, then every business with that type policy would have to be changed, not the policy for a particular small business.  This is already required in many states.  The idea that they’ll somehow survive the uproar and be able to hold onto that is just another nail in the company’s collective coffins.  Amazingly, they’re digging their own graves and building their own coffins.  So what should be incremental change that could immediately allow people to keep the insurance they already have when they change locations at a rate they can afford, the insurance companies will further erode the possibilities that they can remain part of the solution.  Everybody should have health insurance available to them, not necessarily for free, but at least available at a reasonable cost.

President Obama and Congress could almost instantly solve a major part of the health care problem, by using FEDERAL LAW to mandate insurance costs must be kept the same by insurance companies that operate in multiple states, but despite his impassioned rhetoric, they seem unwilling to bite the hands that feed their campaign contributions tremendous sums of money every year.  A complete revamp of the system will take years, and trillions of dollars.  Start small, and fix the easiest problems.  Do not allow additional fees for pre-existing conditions, or even, as Texas does, allow a 67% increase if you have high blood pressure.  Do not allow them to charge different rates for the same coverage in different states.  Make sure every person that can afford insurance is able to continue it, at a reasonable price if they can pay the premiums, regardless of where they move in order to find work.  These aren’t difficult problems, except for the campaign contributions problem.

It’s time we had a President and a Congress that cared more about their constituents than they do about their campaign  ”war chests”.  Good luck on that one.  No, President Obama needs to call the CEO’s of all of the companies to a large room, and have a closed door meeting with them.  He needs to tell them only one thing.  Either they’re going to be part of a comprehensive overhaul of their policies, policed by Federal Law, or they’re going to continue to be part of the problem, and they’ll be locked out of the healthcare reform.  Government health care would be a disaster, but at this point, it would be pretty difficult to make it worse than it is with all the “for-profit” companies trying every possible method to keep insurance available only the healthy, and only at a very steep price.  Unless they change, they should have no seat at the table, period.

So now’s their opportunity.  Change and continue to exist and make money, or become extinct.  Trust me, possible extinction is an extremely strong motivator to “help” change happen.  Get “big pharma” in the next room, and let the President explain, in terms everyone can understand, that the ludicrous profits on prescription drugs is a major problem and it won’t be allowed to continue.

There are so many relatively easy fixes, they are just going to take some courage to insist that these changes start taking place, not in 2010 or 2011 like the s0-called credit card reform, but now.  President Obama is correct, we are spending far too much for health care.  We have emergency rooms clogged by people with relatively minor health issues that should be dealt with at a normal health clinic.  So setup 24 hour minor clinics that operate under the same rules as the ER, nobody can be turned away because they lack insurance.  Triage them immediately as they enter and determine whether it’s an ER case or a minor clinic case.  Sure, it would cost money to build and staff these clinics, but surely it would be less expensive than treating them in the ER, probably the most expensive department in the hospital to care for sick patients.

March 19, 2009

Geithner, Bernanke, Bair and President Obama, the “Clueless in Chief”.

Filed under: Barack Obama, Detroit, Government, Our Beloved Congress, The President, The housing crisis, credit crisis, economic crisis, mortgage crisis, politics, stimulus — Tags: , , , , , , , , , , , , , , , , , , — @ 9:42 am

You know, just when I think President Obama’s administration, and Congress have completely  lost their collective minds, they do something that surprises me. As a confirmed cynic, it’s not easy to surprise me, but Wednesday’s announcement did.

For you and I, “check kiting” is illegal. Apparently it’s kind of like President Nixon said, “If the President does it, it’s not illegal”. With the expansion of the Executive Branch, I guess that “cover” has been passed around. Everybody in the government has been drinking the same “Kool-Aid”.

Here’s the definition I found at www.webgeek.com on check kiting;

“Check kiting is a form of fraud involving the sloshing of theoretical funds between two bank checking accounts. A check written to the criminal from one bank is deposited, and more importantly credited, to an account at a second bank. Because that second bank now shows a positive balance, the criminal can withdraw enough money to deposit back into the first bank before the check bounces for lack of funds”.

What did the government do? They decided that the government would buy its own Treasury Department’s securities, “treasuries” (the securities that are being sold to fund our massive deficit spending plan). You got it, check kiting minus the checks. We’ll just take money we don’t have now, to buy securities from ourselves, that offer to pay us money we will only be able to come up with later, by, you guessed it, selling more treasury bills, I guess to ourselves.  So we’re printing money now (read: future inflation) at one government agency to buy increasingly more risky securities from another government agency, and this is supposed to create money.  You and I know better.  If we move our $1 bills, assuming we have any, from our left pocket to our right pocket, we still only have what we started with.  What our government is doing is simply pretending to move money from one pocket to the other, money that doesn’t exist in the first place.  This is even worse than the credit derivatives that have gotten us to this sad point in our economy.  It doesn’t have a chance to succeed, because essentially, it doesn’t do anything at all except move money we don’t have, between government agencies.  And this is the change President Obama promised?  Transparency?  How about fraud.

If we are concerned that the sheer stupidity of our government is causing other countries to look at our situation as being a little too risky, no problem, we’ll just buy our own garbage from ourselves.

As I’ve said several times before, it’s all financial “sleight of hand”, just tomfoolery. And how do you think other countries will react when we start buying our own crap? They’ll probably wise up and start dumping what they’ve already bought from us, because they know our government’s lost its mind.

I asked my wife, an accountant a couple of things. One, how do corporations get permission from the government to have “off the books” liabilities, and second, how can you buy from yourself?

As I suspect many others, I watched Mr. Liddy, CEO of AIG (who was asked to take the job, for no money, no stock, no bonus) to help our coountry solve a problem.  If it had been me, I’d have simply given the “finger” to the Congressional committee, and told them to “shove the job …….”, and left.  He’s under no contract or obligation.  His testimony at the Congressional hearing showed his determination, not to enrich himself, but to try to fix a giant hole in the corporate world that our government has been trying to fill with our tax dollars, and doing it badly. I came away with a great deal of respect for him, and sincerely believe that he’s doing the best he can with what is surely the worst hand of cards since the Great Depression.  I’m sorry, but I simply have to admire someone who’s willing to come out of retirement and take the abuse to try to solve a problem who’s root cause was the same Congress who is now berating him savagely.  He answered honestly, and cared for the security of his people.  Congress allowed the bonuses, NOT Mr. Liddy.  (See Senator Dodd, “liar in chief” of the Banking Committee).

Congress was livid, because he’s trying to clean up the mess that THEY caused by lack of oversight and regulation of derivatives in the first place. If you’re confused, see paragraph 5 above. That should make it clear. Do I agree with all of his decisions? Of course not. But here’s the problem. A long time ago, in fact a very long time ago, I spent a lot of time trying to figure out how to not make any more mistakes in business. So nothing ever got done. I was stuck in “neutral”. If an executive or business owner doesn’t make some mistakes, it can only be because he’s not doing anything at all.  When’s the last time you went through a year, and managed not to make a single mistake?  Mr. Liddy’s been on the job 7 months.

Should derivatives even exist? No. We need regulation, right now. AIG-FP, as best I can figure out, should be allowed to fail. AIG has a number of “divisions”, and the “financial products” division is just one of them. It made money by selling derivatives, and thereby transferring risk to itself, without carrying reserves to cover that acquired risk. In contrast, the AIG insurance division, is heavily regulated, and is required to hold reserves to cover their potential liabilities. This is not a difficult concept. Get rid of the “Financial Products”. Let them go bankrupt. Pass a law, tomorrow, that makes derivatives completely illegal. They’re financial “scams” perpetrated on you and I, by people who should know better.

Oh yeah, and President Obama, get rid of Geithner. He’s part of the problem, and he’s become a liability. He lied on his taxes, and now he’s lying to you, and more importantly, he’s lying to us. Tim, the President has “complete confidence in you”, that’s “Washington-speak” for “get your resume spiffed up, you’re going to need it”. Time is running out Mr. President. It’s not the economy that should be your worst nightmare, it’s us taxpayers getting tired of our government that seems to be completely clueless and out of control.

PS: Senator Dodd, you lied on CNN on Tuesday, and tried to “fix it” by telling us sort of the truth, on Wednesday. The AIG bonuses were possible because of the language of the amendment in the stimulus bill, which you said on Tuesday that you had nothing to do with. On Wednesday, once the Treasury made it public that actually you did have something to do with the “language” in the bill that you had disowned on Tuesday, you made a “surprise” visit on CNN to acknowledge that yes, you really did make these bonuses possible. Way to go Senator Dodd. As the #1 recipient of AIG largesse in campaign contributions, I’m sure that never affected your judgment. The taxpayer’s memory is getting longer, and the time to the next election in 2010 is getting shorter.

First, for all you left wing liberals, I don’t blame Obama.  I blame Congress, both Democrats and Republicans.  What I do blame the President for is that he appears to be completely inept, has surrounded himself, that is the ones that he can get appointed who have actually paid their taxes, etc., and can’t seem to keep his eye on the ball.  Our current economy, in a word, sucks.  But that’s no excuse for spending so much money that long-term, the economy will be, well, “suckier”, for a long, long time.  More government is NOT the solution.  Cut the government by 10% accros the board, and the defense department by 25%.  Their waste alone, if allowed to remain in the economy instead of being spent by the government could do more than all of your programs put together.

Mr. Liddy, I was impressed.  Stand your ground, and if anything, get on TV and explain to us, the taxpayers that are keeping AIG-FP alive, what the problems were, what they are now, and what’s being done to fix them.  Don’t sugar coat it, because you can’t afford to.  And, importantly at least to me, explain how AIG is still liable for the $1.6 TRILLION dollars in derivatives and that we won’t be paying any more “margin calls” without collecting the collateral as well.  Our government may believe we’re ignorant peasants, but we’re not.

May the farce be with you.

March 18, 2009

The U.S. Federal Government declares that “Reality” is herewith suspended indefinitely

Filed under: Barack Obama, CDO, CDS, Detroit, Ford, GM, Government, Our Beloved Congress, SIV, The President, The housing crisis, credit crisis, economic crisis, mortgage crisis, politics, retirement, stimulus — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 10:47 am

Note:  In order to save our country, President Obama and Tim Geithner declare reality “invalid”.

It’s their only logical move at this point.  Up to this point, everything Washington has done has failed, badly.  Reality keeps getting in the way of politics, and as you know, a politician isn’t about to let reality affect their “judgement”.  We’ll cover Washington’s collective “judgement” in a future post.  So, in order to implement their new plans for economic prosperity, President Obama and the Democrats, (along with the Republicans) are forced to declare that Washington will be the final arbiter of what is real and what is not.  Of course, that presents it’s own set of unique issues, i.e., “is the emperor really wearing any new clothes at all”, and will everybody go along with this? 

As for me, I don’t think so.  I’m not in a home of my own right now.  I wish I could be, but can’t afford it, so I’m paying more in rent than a decent home would cost.  Government saved all the banks, who aren’t lending money to the “average” guy like me.  That’s okay, I probably wouldn’t be buying right now anyway.  Washington’s desperately trying to build an artificial “floor” under housing prices so that some of you out there can continue to maintain the illusion of wealth.  It won’t work, but hey, Washington, as I’ve mentioned, is going to declare reality invalid, so that we’re not troubled by the facts (as they are slowly provided to us) anymore.   Housing prices won’t stabilize until the economy does, not the other way around, despite their best “judgement”, which based on what they’ve done so far, isn’t so great.

Psychology is the problem.  Right now, most of us don’t “feel good” about the economy.  Generally, we base it upon the facts as they affect us individually, but also there’s some psychology in there.  If we don’t feel good about Washington today, we won’t miraculously wake up tomorrow and have to review all of the previous facts before we decide it’s not better by virtue of time having passed overnight.  We’ll want to see some reasonable, valid changes before we go from the “Not Good”, to the “Good” or “Great” on the old economy meter.  Washingon has passed on regulating the banking industry and Wall Street, and is now trying to spruce up the image, instead of the reality.  Sorry, but I’m a little wiser, and a lot older.  I’ll require something more substantial.

I’m really sorry about all the foreclosures, but it’s not my problem, and quite frankly, your failures don’t, as far as I’m concerned, add up to “my problem”.  I’m sorry you bought more than you could afford.  I’m sorry you took out home equity lines because of the “fake” wealth that the rising prices seemed to indicate.  Unfortunately, it’s a house, not a stock or bond.  You’re supposed to live in it, not treat it as a high-risk security.  But, even if you decide it is a high risk security, please remember, there’s no profit until it’s sold.  If you own “shares” in your house, and the price doubles, it’s nothing but vapor until it’s sold and you convert paper gains into actual, real, cash gains.  I realize that in the current economic climate, this is less than desirable, but, hey, life’s a bitch sometimes.

America, wake up, we’re being “handled”.  President Obama, Congress, Geithner, Bernanke, Bair, they’re only giving us a little bit of truthful information at any given moment.  We do not yet, and will probably never know the true amount of money that we’re going to have to pay out to “save” us.  The idea that if Washington spends all our money, we’re going to somehow be “better off” is just absurd.  But I think right about now, “absurd” is a pretty good definition for this entire debacle.

President Obama and Tim Geithner’s “new math”, or, How our new “pretend economy” is going to be better than a real economy

Filed under: Barack Obama, CDO, CDS, Chrysler, Detroit, Ford, GM, Government, SIV, The President, The housing crisis, credit crisis, economic crisis, mortgage crisis, politics — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 10:35 am

Before the ink was dry on the so called $787 stimulus package, which as we all know already is nothing but the “hogzilla” of all pork bills, they’ve already cooked up at least $2 trillion to further support the banks and $275 billion for various other things, like trying to reduce foreclosures. Uh, point of order, guys. Shouldn’t both of those be in the form of legislation, instead of just unilateral decision making by the two of you? Well, let’s not quibble about the “little things”. Uncle Hank, Ben Bernanke and Sheila Bair spent untold trillions with apparently nothing more than their signatures.

I’ve read with great interest how President Obama and his “team” is going to solve the foreclosure problem by saving the banks, their investors, shareholders, the affected homeowners, and the “government” is going to take care of all of this.  This is where I get “bogged down”.  I’m not sure they are aware that there is no “government” money, just taxpayer money.  There’s no such thing as a solution where everybody “wins”.  Somebody is going to lose, and lose big, and once again, it looks like as taxpayers, we’re “it”.

Moral Hazard?  We dumped that idea  long time, and trillions of dollars ago.  The only way to stop foreclosures is by essentially “rewarding” far too many people who made irresponsible decisions, by buying too much home, a multitude of mistakes.  Sure there are a lot of predatory loans, but I have an answer for that.  READ!  When I bought a house in 2000, I actually read every page of the document before I signed it.  If you can’t read, get an attorney.  If you can neither read nor afford an attorney, then while you probably don’t deserve what’s happened to you, it’s your problem and your responsibility.  Get over it.  It has nothing whatsoever to do with me or my hard earned money.

Anyway, Here we are talking about “nationalizing banks”.  We’ve already done that, except for the “semantics”.  We own the bulk of the banks that we’ve invested in, except our government wasn’t smart enough to make sure we took the next step, yet, to secure our loans to these Wall Street (and other) idiots with their real property, assets, everything, so we don’t lose, and lose big.  Sure, the investors and shareholders are going to lose everything if we nationalize the banks, but then, that’s the way it should be.  They made the money in the good times, supported irresponsible management decisions for the sake of profit, now the uh, “stuff” has hit the fan.  Sorry.   You lose. 

Our President says he wants to rebuild our confidence in the system.  Good luck man.  We have no confidence, because essentially, other than the Treasury, FDIC and Federal Reserve handing out billions to “stabilize banks”, we don’t have a system.  Stocks are tanking because if, and it’s a big if, Washington actually does a thorough “stress test” on the financial institutions, they’re going to find that other than taxpayer dollars, a number of them are insolvent.  We can’t have that.  It will further erode confidence.  Tim, if you’re going to try to “test” the banks, please be so kind as to make sure they’ve fully reported, under threat of criminal prosecution all of the “junk” that they have been, and still are, keeping “off the books”.  Sure, that’s going to make them look a lot worse, but hey, it’s about time Americans were told the absolute truth about these corporate raiders of the tax dollars we work so hard to earn.

President Obama, I’m sorry, but you just can’t buy confidence.  Spending trillions to try to “jolt” the economy with all the job creation ideas, costing hundreds of billions of dollars, is absolutely useless.  First of all, just like I’ve seen in Texas, a lot of those projects that are supposed to be “shovel ready”, and create jobs, have two common threads among them.  First, the number of jobs that are supposed to be created are “pie in the sky” figures that are simply ludicrous, and as in the case of our town here, those projects are already on-going.  They’re just trying to send the invoices to Washington instead of paying for the projects ourselves, which were already started a year or more ago.  These aren’t new projects, or new jobs.  We just want you to pay for the current projects, the jobs have already been created, and the net effect on the economy as a whole is a big ZERO.

Here’s my suggestion.   Let the foreclosures continue.  Force the banks and Detroit automakers to repay the loans, right now.  Foreclosures are the “banks” problem.  Failing to secure federal loans will force the banks to recognize that their very existence depends upon them renegotiating the loans and keeping families in their homes.  That’s the downside to the profits they’ve made granting those mortgages.  If they can’t, or won’t, their balance sheets, sans taxpayer dollars, will go “negative” big time, and they’ll shut their doors.  Entirely acceptable.  The idea that somehow, Washington is going to buy up all these “toxic debts” and everything will be okay is to deny reality.  Somebody is going to get burned, badly, and with your plans, it’s the taxpayers.

Start modifying loans, with the taxpayers picking up the tab and what you’re going to have is a deluge of otherwise capable taxpayers who will simply decide not to pay their mortgages as they currently are written, and why not?  Credit scores are meaningless in this current mess.  When there are a sufficient number of houses on the market, and the banks aren’t being bailed out with taxpayer dollars, they’ll either find a way to start working with customers to buy those homes, or the banks will fail.  That’s the way the system works.  Get out of the way.  You’re not helping.

March 11, 2009

March 2008 (updated) Staff Report from New York Federal Reserve Bank is Enlightening

Filed under: Barack Obama, CDO, CDS, Detroit, Ford, GM, Government, Our Beloved Congress, SIV, The President, The housing crisis, credit crisis, economic crisis, mortgage crisis, politics, stimulus — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 3:39 pm

I’m sure like many of you, I’d never heard of Credit Default Swaps and derivatives before they brought our economy to it’s knees, and quite frankly, I still can’t understand how they were, and still are, allowed to exist, but that’s policy, well not actually policy, it’s a money and politics question.  Wall Street and banks, insurance companies, all manner of firms got the laws restricting these types of “wagers and bets” removed from our laws.  It appears that we couldn’t remember the Great Depression, and the laws which were put into place to “make sure it couldn’t happen again”.  Sound familiar?  Washington has removed the laws prohibiting such stupidity, and guess what?  It’s happened again, only much worse.  So NOW Washington says they need to regulate?  They already had, decades ago, but Congress removed the prohibitions.  For the life of me, I haven’t been able to figure out how all of this made any sense.

A 2007 report that was updated in March 2008, from the Federal Reserve Bank of New York (home of our new Treasury head), I believe, tells you and I all we need to know.  This is a direct quote:  “Like these earlier innovations, a key property of credit derivatives is that they separate the origination of credit, the funding of credit, and the holding and management of credit risk”.  (emphasis mine)  These derivatives are a “product” of J.P. Morgan in the 1990’s with only two purposes.  Increase profits without increasing risk.  They knew, and many have known since then, (i.e. Warren Buffet 2003/2004 called them “financial weapons of mass distruction) that in the end, if everything went bad, the taxpayers would pick up the tab, no problem.

Analyze this for a minute.  What does it really mean?  Here is they key, as far as I am concerned.  “A key property of credit derivatives is that they separate the origination of credit……and the holding and management of credit risk”. (emphasis mine)

Credit derivatives don’t reduce the risk for you and I, the taxpayer, they increase our risk as has been more than adequately proven.   BUT they only do so by removing that most important connection between the “origination of credit” (granting the loan) and “the holding and management of credit risk” (the CONSEQUENCES of the improper granting, or “origination” of risk) from those irresponsible banks, Wall Street firms, mortgage firms, ad nauseum, that are the basis of our current economic swoon.  In other words, they could loan money to people who they knew couldn’t pay it back except under the most generous of financial circumstances, and they wouldn’t lose.  It has been, and still is a “no lose” situation for all those companies, such as AIG that sold derivatives, especially credit default swaps, and WE’RE paying the tab for their irresponsibility.  We’ve spent almost $200 billion dollars on AIG and guess what, they’re still underwater.  These derivatives are insurance, and they should be treated as such.  You know, the old limit the risk, keep adequate reserves to pay for failure.  We’ve been paying off the “margin calls” on the credit default swaps they guaranteed to other companies. in many cases, to companies that didn’t even own the underlying asset to begin with.   They had no “skin” in the game, and we’re still paying out billions.  Incredible!

President Obama thinks we have an economy in trouble.  We don’t.  We have a government that’s in trouble.  Washington deliberately decided to allow these risky, and still unknown quantities of these incredibly risky derivatives to be bought and sold, but Congress had to pass laws some time ago, rescinding previous laws which prohibited these highly risky products, in order to do so, which were put in place after the Great Depression.  (If you don’t remember history, you’re destined to repeat it.  HELLOOO!)  Wall Street, AIG, Citibank, they are only part of the problem, a problem that was created by our Congress.  In 2010, every single Senator and Representative up for re-electioin (all Representatives, 1/3 of the Senate) should be voted out of office, no exceptions.  Oh yeah, and the “stress test” that’s being applied to the big banks?  Don’t pay any attention to it.  It’s BOGUS.  Citi, AIG, Wachovia, BofA, every one of them will be undergoing “stress tests” without having to first give the government the “real” information about how much liabilities they are keeping “off the books” in these derivatives. The financial statements being stressed are like “liar loans”, they’re only going to see what the company wants Washington to see.

If you have trouble with this, look at it this way.  Say you’re hocked to your eyeballs in debt to credit cards, whatever.  You want to buy a new car, and you go in and tell them, “Don’t check my credit, I don’t owe anybody anything, I’m keeping it all  “off the books”.  The very idea makes me angry.  How is a publicly traded firm allowed NOT to tell us the truth, especially now that it’s OUR money that’s keeping them in business.   Call your Congressman/woman and ask them?  Tell them to please reply in writing and forward it to me.  I can guarantee that you’ll get some nonsense and very little truth.  There’s too much campaign money involved.

For instance.  The current idea floating in Washington is to have a “bad bank” that takes over all the toxic assets that were created by the morons at the banks and on Wall Street.  This will free them up to start operating again, still without any regulation on the very derivatives that caused this mess, so they can start making money again (for themselves).  Citibank was profitable in Jan and Feb 2009?  Not unless they’ve repaid the Treasury, (you and me), every dime they’ve received, and I can assure you that hasn’t happened.  If you or I borrow a dollar, that’s a “liability” on our “balance sheets” and is deducted from any income before we can declare a profit.  Apparently we’ve given Citi directly somewhere between $50-$100 billion, guaranteed their bad debt up to $300 billion and they made a profit?  It’s financial tomfoolery.  Sleight of hand.

Put your money in FDIC insured accounts, in different banks, never more than the “old” maximum that was $100,000.  The current maximum is going to go back down shortly to the “old” maximum.  Invest in America?  Sorry, I think I’ll invest in my own family.  At least I can break even with them.  Oh, and call or write the White House and tell President Obama that “Nanny Pelosi” and Harry Reid and their cohorts shouldn’t be using military jets, (”Nanny likes the latest generation of Gulfstreams, the G-V’s) to travel.  Cost is no issue if you don’t have to pay for it.  If commercial is good enough for you and me, it’s good enough for the people we’re paying in Washington.

March 9, 2009

Of course, we have to save the detroit automakers. NOT!

Filed under: Chrysler, Detroit, Ford, GM, Government, Our Beloved Congress, The President, The housing crisis, UAW, Unions, credit crisis, economic crisis, mortgage crisis, politics, retirement, stimulus — Tags: , , , , , , , , , , , , , , , , , , , , , , — @ 3:30 pm

You just have to love Washington’s solution to every economic problem caused by irresponsible companies, and in the case of Detroit, the UAW.

I know it’s difficult, but you can’t save car companies that can’t sell cars. It’s impossible. Sure, your heart, or our wallet is in the right place, but bottom line, it doesn’t matter how much money Washington spends, we’re not buying cars, so it’s a hole we’re dumping money in.

Of course, the government is going to buy hundreds of thousands of new cars, even though they are unable to keep track of the vehicles we’ve already paid for, but what the heck, nobody knows inefficiency like Washington.

I mean “Nanny Pelosi”, and I assume Harry Reid and numerous other “important” congressmen have limos, drivers, and publicy supplied and paid for private jets for their own use. As a Russian comic said, “What a country?”.

So what’s the realistic alternative? Let Detroit and the UAW figure it out, or go bankrupt. The UAW members can go on government unemployment, and they’ll either work out something to go back to work, build cars with responsible work rules and wages, or Detroit can go away. We’re building more “foreign” American cars anyway, cars Americans want to buy, and drive. We’re trying to save the dynosaur. Will it be unpleasant? Sure. But here’s a clue. It’s going to be unpleasant anyway, my way will just cost a whole lot less money.

If GM or Chrysler goes Chapter 11, the billions we’ve already given them are “unsecured creditors”, lowest on the list for repayment, money the bankruptcy judge can just “forgive”. If we make them go bankrupt, and either straighten up or stay “failed”, the incentive will be much greater for all involved to get together and solve the problems. Right now, you and I, and our hard-earned tax dollars are the answer. Just keep doing nothing and sucking up billions every month to stay in business, unable to do what they do for a living, build and sell cars. It’s absolutely disgraceful. Will there be fallouts of bankruptcy? Sure, but look around. We’re already seeing the fallout, because they can’t sell cars now.

They’re done, stick a fork in them and let ‘em die. They’re inefficient, produce inferior products, and we’re not buying them, so they’re done. Building cars is their job. If they can’t build and sell cars, right now, then no matter how much money we spend, it’s all for nought.

All you overpaid UAW workers who’ve extorted terms from GM and the other Detroit automakers, and thought what you got was actually deserved, “HELLO”, Karma knocking. Suck it up, or make your companies profitable, at current levels of car sales, otherwise, bankruptcy and see you in the unemployment line.

Washington, I hate to tell you, but our Government is NOT the economy. We are. We are in control, not you. Give it a rest, huh. We can’t afford your help anymore. It just costs too much.

And the Treasury and the President told us the money was going to stabilize OUR banks. They lied

Filed under: Barack Obama, CDO, CDS, Government, Our Beloved Congress, SIV, The President, credit crisis, economic crisis, mortgage crisis, politics, stimulus — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 2:22 pm

Well, I’m not a Democrat, but quite frankly, I don’t think much of the Republicans either. I believe we’ve developed an “aristocratic society” of life-long politicians, who don’t know, don’t care, and can’t make the right decision, even if it were to hit them in their collective heads. That’s too bad.

Some time ago, I started reading about CDS (credit default swaps), SIV (special investment vehicles) and CDO’s, yet another, completely unregulated derivative thats part of Warren Buffet’s description of these as ”weapons of financial mass destruction”.   They were, and because of Washington, they still are.  My concern was, once I tried to figure them out (I’m not sure I have yet), I wondered who the hell came up with them and what they were supposed to do in the long run. Short term, they made profit, which wasn’t invested, it was spent on lavish bonuses and company jets. They still are. Even though they have had catastrophic results for U.S. taxpayers, they’re still out there, still unregulated, and still being bought and sold by the same banks we’re continuing to bail out. Here’s the problem.  They were insurance to cover potential losses, but weren’t regulated at all, still aren’t, and probably won’t be.  If they called them what they really are, insurance, the companies like AIG and CITI and the others would actually have to deal with regulations AND most importantly, they’d have to put aside adequate reserves to cover their potential losses.  Instead, you and I are covering their losses.

We were told there would be transparency. There won’t be, for one reason. If we actually find out how our hard-earned tax dollars are being blown, there would be demonstrations in the streets. There should be.

We’ve already spent more than $50 billion bailing out, not AIG, but AIG’s counter-parties on these ludicrous derivatives called credit default swaps. AIG is no stronger, we didn’t recover the collateral, it was a “margin call” that required additional collateral from AIG (our money) since the “value” of the credit default swaps had dropped. So, in essence, we’ve done zero for our economy, but “made whole”, at least so far on the potential losses to these other “counter-parties”. Here’s the “rub”. The companies that AIG sold this “insurance” to, don’t have to actually own the item being insured. And apparently, Washington isn’t requiring that payouts only go to those who actually own the underlying asset. Seems silly, doesn’t it. Unfortunately, from where I stand, “silly” goes up to about $5. When you’re talking about hundreds of billions, more likely trillions of dollars, and companies like AIG, Bank of America, Citigroup, have yet to actually tell us how much liability they are carrying “off the books” in these derivatives, we’re absolutely and totally screwed as taxpayers.

There will never be any transparency because the truth is so damn scary that Washington knows there could be dire results.  So instead of fixing the banks first, getting rid of these ludicrous derivatives entirely, negating any that are collateralizing something the counter-party doesn’t even own, and making them illegal and invalid, it’s just going to get worse.  Have you noticed that we haven’t heard any recent figures on the current “deficit”, much less the national debt.  Look back in the news articles.  Our deficit was over a trillion BEFORE the very first stimulus package from “Bush the Worst”.  My uneducated guess is that we’re probably in the $2-$3 trillion dollar range for this year, and much more next year.  Our national debt is going up so fast, I’m not sure they can even figure out what the number is, but once we actually find out, we’ll be extremely angry.  Right now, we’re just being “managed”, trying to deflect our attention to other things, healthcare, stem cell research, so that we don’t spend too much time really figuring out what’s going on.

Is it a conspiracy?  Nah.  It’s just Washington politics.  Citi, BofA, any number of large banks are no longer solvent.  They weren’t before this got started.  But, since all of these liabilities were allowed to be kept hidden and out of their financial statements, the government has ignored their dangers in the past, and is determined that they continue to ignore the danger these derivatives pose to our long-term economic stability.  Whatever you do, don’t take my word for any of this.  Look through the news sites.  There are “snippets” here and there that are slowly allowing bits of the truth to come out about where our money’s gone, and is continuing to go.

February 9, 2009

Ah yes, the insurance companies are going to be in “rip off” heaven because of the economic crisis

Filed under: Barack Obama, Detroit, Government, Our Beloved Congress, The President, auto insurance, credit crisis, economic crisis, healthcare, homeowner insurance, politics — Tags: , , , , , , , , , , , , , , , , , , , , , , — @ 8:17 pm

For those of you that don’t know, insurance companies, with the help of our elected officials, are allowed to raise our rates, not based upon our actual driving record, or loss record, but because of our credit scores, which, for many people, are declining through no fault of their own, because of our horrible economy.

With credit scores for many Americans going down, it means an automatic rate increase, even if you’re a safe driver, or you have never had a claim on your homeowner’s policy.   Somewhere along the road, the insurance companies quoted dubious studies showing people with lower credit scores were in more accidents or had more claims. Personally, I’l like to see those studies, and see who funded them. I have a good idea already.  Anyway, our illustrious (and clueless) elected officials, many of them lawyers and insurance agents, thought this was a good idea.

When you get your new insurance policy, look it over carefully.  There will be some “fine print” that tells you your rates may have been increased based upon your credit score not being at whatever level the insurance companies think it should be, which is probably set at unrealistic level that few,  if any people can meet. 

Call, or better yet, write your elected officials at the state and federal level and complain, loudly.  Your credit score going down has absolutely nothing to do with any increased “risk” to the insurance companies.  It’s just another hidden “tax” on the average American.  It’s time to stop it in its tracks.  Remember that the rates that get “approved” by your state and federal government agencies, are not going to be the rates you’re actually paying, if your credit score drops.  Even if you have done nothing wrong, if the credit card companies reduce your available credit, your past payments being on time won’t keep your credit score from dropping.  The percentage of available credit that you have “used up” will increase because of the policy of the credit card company reducing your available credit, instead of anything negative on your part.

January 31, 2009

Rushing toward the road to ruin

Filed under: Barack Obama, Detroit, Government, Our Beloved Congress, The President, The housing crisis, Unions, credit crisis, economic crisis, healthcare, mortgage crisis, politics, retirement — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 11:40 pm

Well, Washington being Washington, and the States being the States, everybody is either handing out, or standing in line for all the “free money”. Of course, it’s not free, and it’s going to cause more problems than it solves, but it seems Washington is more concerned about doing something, than doing something right.

I watched CNN’s Money Summit or whatever it was called, and if there’s one thing that I took from it, it’s that there’s a consensus.  Everything’s broken.  Everybody seems to have a different idea about what to fix, whether it’s housing, manufacturing, protecting and supporting American companies (which of course hurts American trade, and therefore American companies), nobody, including our beloved President wants to face up to the “bottom line” truth.

It’s confidence.  Average Americans have no confidence in the government, the banks, Wall Street, you name them, we don’t trust them.  Of course, we have good reason not to trust them.  We’re told Social Security will go broke, yet Washington has “borrowed” billions from the Social Security savings account over the past years, to fund other pork projects.  We have a deficit that’s going to hit $2 trillion dollars, a national debt that we can’t even get an honest figure on, so what’s to trust?  Madoff had nothing on Washington.  At least he was using money that was coming in.  Washington’s spending money that they can only hope will be available.  Talk about a ponzi scheme.

We don’t need to bail out banks.  We don’t need to stop foreclosures.  We don’t need to provide money to the states.  We need to get our financial house in order, and that starts with reducing spending.  In good times, every government agency increased their spending, believing, just like homeowners that thought the value of their houses would only go up, that there would be ever increasing amounts of money to fund nonsensical projects.  The government unions wanted more money, they got it.  Now start cutting jobs, lots of government jobs.  The idea that in a rotten economy, the only sector adding jobs is the government is ludicrous.  If we’re going to spend money, spend it to temporarilty, and that’s the key, temporarily help Americans who have lost their jobs. 

We’re going to lose more jobs no matter what Washington does.  Let companies fail.  It’s cheaper to pay for unemployment benefits than to try to keep companies like Citi in business.  The Republicans are correct, no more money, period.  But of course, that’s wishful thinking.  The very idea that we can spend untold amounts of money “now” to help the economy, and then pay it back later is nothing but smoke and mirrors.  If it was true, and actually worked that way, we’d have paid off our national debt long ago.  No, whatever stimulus money is passed, and it will be passed by Congress, is just a few more nails in our national “coffin”.  We aren’t willing to step up to the plate and take a chance on striking out.  We’re insisting on home runs.  If we don’t hit a home run, we’ll simply re-define whatever we do hit as a home run.  We’re acting like we’ve lost money on the slots in Vegas, and if we spend just a little more money, we’ll win it all back.  It just doesn’t work that way.

The economy is in the toilet.  That’s a given.  But until you and I believe that it’s going to get better, we’re not going to spend, and the economy isn’t going to improve.  As we watch Washington hand out money as if there’s a never ending supply, well that just erodes our confidence even more.  Washington doesn’t understand, that deep down, we “get it”.  Just as we can’t personally spend our way to financial health, neither can our government.  While  Washington’s handing out money on one hand, it’s increasing taxes and “fees” with the other hand, kind of Washington’s version of “slight of hand”.  We can’t spend out way out of a problem that’s the result of spending.  There are always consequences.  Let the companies who were irresponsible fail.  Sure, we’re all going to take a hit on our 401k plans, but I’ve got bad news for you, look at your last statement.  We’re already taking a hit.

Wall Street is nothing more than “vapor”.  It’s a ponzi scheme based solely upon our confidence in the companies we purchase stock in.  There’s little to be had, so Washington wants to buy some.  The most troubling aspect of all of these stimulus plans is that in reality, they are simply making the problem worse.  They aren’t helping.  They’re the problem.  I’m sorry if a lot of CEO’s behaved like drunks on a binge.  There’s always consequences for bad behavior, jsut as there should be. Consequences can be postponed, but they can’t be avoided.  Washington wants to remove all consequences, but even that has consequences, and it’s not going to be pretty.  The States are crying to be bailed from the inevitable result of their own spending excesses.  From Washington to the lowliest towns, we’re all looking futher up the “food chain” to be rescued from ourselves.  President Obama and the Democrats will try to keep reality at bay, but, at some point, the cost will simply become more than we can possibly afford, and reality will come knocking.  Put away the checkbook, it’s not helping.

Just because we’d like to put “Humpty Dumpty” back together again doesn’t mean we can, or should.  Consequences are important.  The bigger issue is that everything we do has consequences, even all the “help” Washington’s providing. The more money they spend, the worse the consequences will be.  Sure, I’d like to be bailed out right now so my life would be a little better.  However, given the choice, I’d prefer that my children’s lives were a little better, and I dealt with the problems now, instead of pretending we can avoid them and postponing them so that my children and grand-children have to deal with our irresponsible behavior.  We’re spoiled children who don’t want to have to clean up our act.  Somebody’s going to have to pick up the “tab”.  Let’s act like adults and take that responsibility on ourselves, right now.

January 28, 2009

The Treasury wants to “nationalize” the banks? What do you call what they’ve already done?

Filed under: Barack Obama, Detroit, Government, Our Beloved Congress, The housing crisis, credit crisis, economic crisis, mortgage crisis, politics, retirement — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , — @ 3:04 pm

The basic tenet of government hiring is that you never hire anyone smarter than you, because then they’ll be after your job. The second most important tenet is that you always hire in “twos” and let them fight each other, instead of trying to take your job.

So far, President Obama has been unexpectedly “refreshing” in his candor and his actions.  My “gut” is rumbling, telling me it’s not going to last, that he doesn’t have the sheer tenacity of will required to take on the Washington that exists, as opposed to the Washington that we’d like to exist.  Washington keeps talking about the $700 billion dollar bailout.  There never has been a $700 billion dollar bailout passed.  What passed Congress was an $850 billion dollar, pork-laden bill that funded some of the same nonsense that’s helped to build our “old” national debt to over $8 trillion dollars.  Washington, especially the Treasury, isn’t giving us any substantive information about where all the money’s gone so far, or even how much has been comitted or spent, so we have no clue what our “real” national debt is.  There’s the “official” $350 billion, plus the several TRILLION in funds that were used, with legal authority that I wasn’t aware existed, by people other than our Congress, to bailout various banks and Wall Street firms, “backstopping” Citi’s debt so they can continue to spend money as if there’s no end (there probably isn’t as they seem well connected in Washington).

Yes, I know, Citi was “kind” enough not to actually take delivery of  their new 7x series private jet, which is somehow supposed to make us feel better.  So they’re only going to have, what is it, five?  Seven?  We’re talking the epitomy of a company that doesn’t have a clue about reality, and a government that seems determined to keep them from having to face reality.

Now, Tim whatever his name is, at Treasury, wants to “nationalize” the banks.  I have a problem with that.  First, the only “thing” the taxpayers will get out of the deal is more debt.  We’ve already provided hundreds of billions/trillions of dollars to these “institutions” and it’s been squandered.  So all we’re talking about here is taking over something that, I’m not sure about you, but quite frankly, I don’t want.

Let them fail.  How could it possibly be any worse for the “average” American.  Again, I’m not sure about you, but I don’t have a bunch of CDS’s (Credit Default Swaps) sitting around, or SIV’s, CDO’s, and my retirement is pretty much worth less than the paper the statements are printed on.  Exactly how would letting these banks fail cause greater problems for you and I, than “buying” all that toxic debt with trillions more dollars in money that we don’t have?   Only Washington could come up with a “plan” like this.

Let’s break it down.

Currently the banks that we’ve so graciously supplied with billions of dollars aren’t lending money.  If we allow them to fail, then they would no longer be in business, and they would, by default, not be lending money.  No loss there.

The banks, we’re told, are dying because of all the “toxic debt” they have on their books.  So, under Tim’s plan, we’ll take that “toxic debt”, and buy it from the banks.  That way, you and I will own the “toxic debt” and the bank will be “healthy”, will have our money, which they’re receiving from funds that Washington doesn’t have yet.  I believe that’s an “enhancement” to the classic ponzi scheme.  Maddoff paid off current clients with money coming in from new clients .  Washington is paying off it’s well connected friends on Wall Street and in the banks, with money that they not only don’t have coming in, but money they are only “hoping” will be available as we continue to print money (treasuries) 24/7/365.  Looking at the two, Maddoff  vs. Washington, I’d say Madoff had a “scam” that had a much better chance of lasting for a longer period of time.

So, President Obama and your Treasury, “nationalize” the banks, don’t “nationalize” the banks, it doesn’t really matter.  It’s all symantics, word-play.  You’re calling it a golden opportunity, and it’s nothing more than monopoly money.  The real problem is that your administration is working hard to first, reduce our belief that you  are personally able to stand up to the the stupidity in Washington, much less change it, and second, we continue daily, to lose confidence that our government either understands the underlying problems and is able to do anything about them.  Standing back in five or ten years and telling us your administration was successful won’t work.  In that period of time, our economy will  right itself, not because of Washington, but in spite of Washington.  The “Grand Delusion”.

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