Dec
10
After spending over ten weeks watching and listening to this process unfold into many different variations, I’ve come to realize we have not only a moral responsibility, but also an American responsibility. Our global friends have always looked to us as the shining star and today is judgment day. What we do as a country to mend our financial markets and help each other out of this financial crisis will most certainly show the world what Americans are made of. I have come to the conclusion that we need to fix this mess together from the top to the bottom. My favorite analogy of this would be most befitting as I close my blog. The housing market began its boom on the ideals that everyone could own a piece of the American dream. The banks opened up their vaults and began to offer what seemed an endless stream of cash to anyone who wanted to succeed. Thus began the age of the “fixer upper”, or “handy man special”. We all spent our dollars at Home Depot and began from the top to the bottom making something brand new again. Hence we created a glass ceiling. As the 21st Century began expanding in every direction, we lost sight of our dream and allowed greed to take control. Millions of Americans chose to partake in this housing boom and must therefore be held accountable. We cannot expect to go on a spending spree of borrowed money and blind ourselves of the repercussions down the road. This is a life lesson for us all and now that the ceiling has been shattered, we must clean up the mess. Whether it is seven hundred billion or an additional trillion to stabilize our country, now more than ever we need to step up to the plate and do this right. Let’s hold our congress accountable and make sure we balance the checkbook. Let us take our time and build a solid ceiling that will last through the ages. 
Dec
10
The Motor City Blues….
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With Congress on the brink of lending $15 billion in taxpayer money to Chrysler and General Motors, some legislators are worried that those funds will end up overseas. Congress and the White House struck a tentative deal late Tuesday night, but the plan faces substantial obstacles from Republicans. Will Detroit’s “Big Three” use the loan to buy foreign-made components or expand operations abroad? Can The Congress restrict bailout money?
In a draft of the auto industry loan legislation that Congress will likely vote on this week, and most ultimately pass, there was a provision designed to deter the Detroit automakers from spending their money outside the United States. It would require them to report to an overseer, a car czar as it is told, appointed by the president, any investment or purchase they made in excess of $25 million. As of today, Ford will not be part of this bail out. All of this information begs the question, how could this situation have been avoided? In my opinion, the clearest avenue would have been in tax incentives. Of course these incentives would be restrictive to usage. Meaning, if you keep a certain percentage of your business in America. Why not? Now that we are in this situation of lending our tax paying dollars, it seems far less costly to have just set up a governed tax program for any business of this size to continue to employee Americans! All in all, I am sure going forward we will find a way to re-invent ourselves. After all, that is the American way….
Dec
3
A Season for Giving…..
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With the holiday season fast approaching, I have to wonder how the retailers are going to handle the Christmas rush, or the lack there of? I found it rather amusing to hear how stores are creating deep discounts as much as 70% off retail prices. What does that mean when there is NO discount? Are we actually paying two to three times more for something than what we should pay? Again, is this another type of fleecing of America? It seems everywhere I turn I find just how much of our world is a rip off. I guess you could say one of the benefits of hard times is really seeing the truth. I also would like to make note of our automotive leaders choosing to drive their hybrids to Washington. Frankly, I’m not sure how to take this. After all, it seems condescending when you’re asking for 34 billion dollars from the taxpayers to help stimulate your sales. Then on the second breathe you blame the hand that feeds you by claiming your 34% slump is due to lack of confidence in your ability to operate. A word to the wise Mr. Big-shot, threats are usually met with hostility. But.., since this is a time of giving and appreciation, I would like to offer a suggestion to my readers. Take this time to appreciate the things you have and enjoy the people you care about. Life is short and what matters most is something so easily obtained. One last shout out to Uncle Sam. I think that was a generous move on FNMA to lay off the foreclosure proceedings until after the New Year. Nice to know people can enjoy the holidays in their homes before they get booted! As for our state of affairs; this too shall pass.
Nov
29
Uncle Sam’s Deep Pockets…
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This past week was filled with an assortment of questions regarding the credit crisis. We’ve watched 10 weeks of financial turmoil unfold at a speed none of us imagined. Just in these short 10 weeks we’ve seen our jobless rate soar to 6.5%, the largest in 14 years. We watched our government bailout FNMA, AIG, and Bear Sterns. We watched Lehman Brothers file for bankruptcy and Merrill Lynch purchased by Bank of America. We watched as the Dow Jones fell almost 1,000 points in one day. We watched the two largest holding companies, Morgan Stanley and Goldman Sachs become part of the regulated banking industry. We watched mergers like JP Morgan/Chase purchasing WAMU and Wells Fargo purchasing Wachovia. These are amazing times my friends. One for the history books you might say. What next? Well, no one really knows for sure. In my opinion, I think the government is in a perfect leveraged position. If the decision makers skillfully plan this, they just might pull off one of the greatest strategic coos ever seen in financial history. Oh but let me say again my friends, we’re talking serious strategic magnificence! Will we see record deficit numbers? Oh yea…but, socialism at its purist moment will show big government taking over big business and providing the relief necessary to not only stimulate our economy, but also control the global direction of American business. Somehow or another I bring myself back to the statement of 700 Billion not being enough. I am convinced now more than ever we are about to see an additional trillion or more going into “the saving of our country plan”. Hang on to your seats kiddies…this is going to be one heck of a ride!
Nov
10
Every twenty years it seems we go through this morality issue within our political arena. It all seems to be connected to greed. Mankind has shown over the centuries that money is the root of all evil. Much like the old Greek myth of Pandora’s Box , whereby Pandora opened her box and let out all the evils into the world except one; hope. She held this back and soon realized that without it, humanity would cease to exist. We all realize now just how accountable we are when it comes to the production of currency. 2.6 Trillion in personal debt. Americans have to realize now more than ever that this mess we have created is going to to take a decade or so of strict accountability. I enjoyed the comparison of debt to the home equity paid Disney vacations! Since I spent many years as a mortgage consultant, I am acutely aware of how many equity lines were used for such impulsive desires. Again, this is a great analogy to Pandora’s Box. The need for a moral reorientation is much like what happens when the child pushes the parent to far and has to be put in time out. This blog is quite befitting on this Veteran’s Day coming up with mention of our troops and how they see this election of a new President. We have made our voice heard by choosing a change from the status quo. A man who shows confidence not insecurity in his inspiration. Determined to lead and change the world. We can only see how this plays out but know this my fellow Americans, we too have a part in this process. Pandora has offered her hope to the world. Will we help our cause or will we ignore the responsibilities we have to the American Dream?
Nov
8
A New Son Arising…
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Well, it’s finally official. We indeed have a new President. President Barack Obama. In my life time we have finally elected a mutt, as he would call himself. I happen to love mutt’s! Born in Hawaii in 1961 to a native Kenyan father and an American mother. It doesn’t get anymore rounded than that. Lucky for him he wasn’t 3 years older or he would never have been President at all! I myself lived in Hawaii for many years and know all to well what the Hawaiians feel about multi-racial people. Most all of my friends were of some three to five different ethnic backgrounds. It is quite different growing up in the Hawaiian Islands than state side. Which is what makes Barack so special. His eyes do not see color, they only see the character of a person. This is what sets him apart from all races and creeds. What we gain from Barack is the education of no color. As Americans, this is as profound as it gets. I can only hope we all understand this message and view or new President-elect as the beginning of a new era for Americans! Brilliant as he is, Mr. Obama is in for a real mess as the leader of the free world. So many areas to cover and such little time to do it in. Do we set him up on some great God-like pedistal only to watch him fall from grace? After all, what can one man do in four or even eight years? We all should realize right now, that even though Barack seems to be highly committed, masterfully skilled at organization, he still has to deal with the status quo of capital hill, not to mention, what the global leaders are expecting from him. I, myself, see this amazing, brilliantly crafted man coming forward with this beautiful smile and intoxicating voice of reason offering his audacity of hope and change. I only hope everyone is in this with him, same goal, same desire, same dedication to the future of our planet. After all, we are Americans, and this is what we set out to do 232 years ago, bring change, and hope for the independence of all.
Oct
26
The Hottest Game in Town!
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The bailout is now the hottest lobbying game in town. Insurers, automakers and American subsidiaries of foreign banks all want the Treasury Department to cut them a piece of the largest government rescue in U.S. history. I liken the process to the Red Cross and hurricane victims in a relief effort. Whereas, the government, (Red Cross), is unloading from the back of a truck the relief in the form of cash and the hurricane victim, (industries), waving their arms and jumping over others to get what they can. The humor of it!! But, who are they really trying to relieve? Is it the economy or their own CEO pockets? Lobbying efforts are intensifying. The expansion of this millennium has been so ill-managed that the trickle affect is heard round the world. Our capitalism in America has lost all accountability. We lost an entire Decade to GREED! In biblical terms; we are the new Babylon! 
http://en.wikipedia.org/wiki/Babylonia Another analogy came to mind. Picture the musical ice cream truck rolling down the street, ever so slowly. All the children in the neighborhood running to greet the truck. Everyone of them has their wooden nickel ready for that delicious treat! The anticipation is overwhelming for the ice cream man to offer his selection of yummies! He opens his window, waving their wooden nickels they shout out what they want from his truck. How can he give his treats out when all the little kiddies have fake payment? It turns into a chaotic stampede! This is what our financial crisis is turning into and as I mentioned before, 700 billion will never cover a global mess of this magnitude. The question is, will the Bush administration wait on this until the next presidency? After all, we are only 3 months away.
Oct
15
Is Greed a Global Issue?
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I guess after reading the blog, Greed is Global, we can assume that this is a global issue. I think what is shocking for me is just how much the global banks have leveraged. AIG has almost single handedly sunk the European Union. Again, where is the accountability? How can so many nations be so blind to this crisis? How do you not see the destruction coming at you like a freight train? No wonder the global economic leaders all met in Washington last week to discuss our financial crisis. What we are now seeing unfold here is just how much our financial stability affects the world. When countries like Russia, who clearly doesn’t like to connect to the U.S. has market crashes and trading halted, this just shows how much we are affecting the world. I’m amazed at the graph showing the leverage from the largest global banks. I was always under the impression that most countries were far more conservative with their investments than this. The statement about regulatory capital versus risk mitagation and how AIG leveraged close to 80% of its assets is astounding! For that matter most of the companies listed on the graph have leveraged their assets to that level or higher. This is the same as the homeowner who refinanced his home at 90% loan-to-value and today the value is over-leveraged. Hence the reason to choose foreclosure over paying into an upside down investment. I wonder if companies like AIG are thinking the same. Yes, I now see that greed is global and the tremor will be felt in ways that none of us have ever seen. I cannot see how we can possibly fix this mess with just 700b. I have great sympathy for our next leader. I cannot imagine how he will fix this problem in four or even eight years.
Oct
4
This week our congress voted to pass the bailout bill and the President signed it into law. Most of us are probably not sure what impact this has on the average American. Before I begin my own spin let me first say that it is now called a rescue plan and it includes an additional 150 billion in (pork bellies) or incentives to those on the house floor who had to approve it. How else can they sell it to their respective states. Now my spin; Our government will free up cash for our troubled financial companies, (banks, etc.) Free up, hum… funny term. All those bad loans that the banks cannot get rid of because they’re full of messiness. Perhaps you know someone who bought a house in the past 5 years and at some point the interest rate began to rise like a volcano and oh yeah, it exploded. Well, now your friend cannot afford the payment and they get foreclosed on by the bank. They leave the home empty and the bank now owns their house. Problem is there are too many people like your friend. I mean too many as in millions of people! All of these houses hit the market somewhat at once. What goes up, must come down, right? Yep, that’s what happened! The banks have these bad loans and empty houses that no one can buy. Why? no money! Now the bank turns to Mr. business owner who wants to expand his company and hire more people to make more goods. Americans who still have a home hope for a promotion so they can afford their house payment and maybe they won’t have to work that second or third job anymore. Guess what, Mr. business owner goes to the bank to get a loan for the expansion of his company and the bank says, sorry, we have no money to lend. Now Mr. business owner has to start lay-offs because he cannot continue the high payouts. This is where the rescue comes in. See, if the government buys some of those bad loans from the banker, then the bank can lend some of the money to Mr. business owner and in return he can expand his business. Now Americans can get their promotions and make their house payments.
We all need to go back and play monopoly again to fine tune our skills! Ok, if you were paying attention then you saw how the 700 billion was being spent. Remember the millions of foreclosed homes? The BIG question is; is it enough? How long will this take before we see results?
Sep
24
The Gordon Gekko Prize
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First, let me start by getting everyone familiar with Gordon Gekko. http://www.youtube.com/watch?v=JaKkuJVy2YA
Here’s the thing, this movie came out in 1987. Pre-Internet, Pre-Media Blitz, and I assume, prior than most readers were born. Yes, Michael Douglas won the Oscar that year! Well, here we are 2008 and we’re up shits creek without a paddle! Our country is experiencing the greatest financial defeat in modern times and the wall came tumbling down in just short of 36 months. How solid can our economic policies be if this can happen to the richest country in the world!! Asleep at the Helm, you bet. Greed is good for those chosen Wall Street and Main Street Golden Boys who, as we speak, are enjoying their life styles of the rich and famous. How can they justify asking for help from the American people who cannot even make their house payments. We are suffering through the greatest foreclosure, job loss, with no health care and we’re just trying to do right by our children and possibly give them a piece of the American Dream. We should be gathering up everyone of these monsters off shore accounts and putting it back into the very companies they have been stealing from. How dare they ask us to front their debt! So it is today, a befitting day indeed, that I give the dubious Gordon Gekko prize to our glorious leaders on Pennsylvania Avenue, Wall Street and Main Street for selling us out. One more thing, It took only eight years to create this $11,000,000,000,000 debt. I think we can wait another 3 months for the next regime to get us out of this mess!