Easy credit makes things cost more…

October 3, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

Those who control the nation’s credit markets rule. When you sign that note of credit you have signed a deal with the devil.

The world of high finance loaned money to people who could not pay back and then loaned more money based on notes with people who could not pay back and so on and so on and it worked for a long time. When the bubble finally burst and the paper was shown to be worthless, the high finance people told us all you either bail us out or we are taking you down with us. There was some resistance. But the high finance people were better at poker, natural-born gamblers that they are. They called the bluff of the resisters to the $700 billion Wall Street bailout by refusing to lend money. In turn Wall Street stocks went into the tank (even though they did go up and down after that). But that one-day drop and the fact you can’t even get a car loan was enough to make the resisters fold their hands.

So now we have the bailout. If it works, well I guess that is good enough. We go back to status quo and go on with our lives. If it does not, what then?

It seems that the Democrat Barack Obama could well win the presidency over the economic mess. He will probably be forced into applying even more government involvement into the economy, strangely enough something started by a Republican president.

If this all brings more caution into the credit markets, maybe this is a good thing (with the bailout I am not sure that it will). In my non-economic mind, I have always thought easy credit makes things cost more.

Tight credit should bring higher interest rates and more savings. If those who sell things know that people can’t just charge it, they might be forced to bring prices more in line with what people can afford.

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Bail fail, VP debate, rebuilding America…

September 29, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

Could this be the beginning of another Great Depression? The $700 Billion Wall Street bailout bill went down to defeat today in the House of Representatives and stocks plunged and there have been bank failures across the globe just preceding this. Apparently there will be no more action on this until tomorrow and maybe not even till Thursday.

My last blog was headlined: Democracy altered bailout, can it kill it? Guess I got my answer. Actually it was democracy and politics. No one wants to take the blame; everyone wants the credit, and there is no way to know what will happen if the bailout (or rescue)  ultimately passes or fails. Leadership is needed, but who can lead?

That was a new lead and now back to my blog as written hours earlier:

The bailout bill is said to be posted on the House Financial Services Committee website, and I know it is posted elsewhere on the web, along with summaries or news stories about it. I only quickly read over a summary on the LA Times site and listened to reports on TV.

As it now stands, the $700 billion would not all be allocated all at once. In some cases the government would buy up bad assets and in some investors would purchase government underwritten insurance on questionable assets. There are also provisions for the government to gain an equity stake in companies benefitting from the program in order that if the market turns around the government can actually make money on the deal. There are also to be curbs on executive pay for firms that take part. All that was from a summary I read in the LA Times.

…. It looks like the upcoming vice presidential debate on Thursday promises to be more exciting than the presidential candidate one this past Friday. How Sarah Palin could possibly stand up to Joe Biden is a wonder to me, but then again, I am often surprised at the outcomes of things (like that borefest last Friday). But let’s pray that Sarah does surprise us all. We can’t afford even the possibility that she would become president some day if her past performance, especially before Katie Couric, is any example of her knowledge and abilities. Just poor Sarah’s luck that Katie would finally start acting like a news person again and she, Sarah, was her first victim. I don’t care for Mrs. Palin’s politics. I think, however, she is a well meaning person catapulted into something that is way out of her league. It’s a little sad, and a lot embarrassing. The word is that she is sequestered down at the McCain Sedona spread in Arizona cramming for the big test. My guess is that she will bend pre-programmed talking points into an answer for each question whether it fits or not. 

… Something strangely left out of Friday’s foreign policy debate between John McCain and Barack Obama was what is going on down Venezuela way. Russian war ships are set to exercise with that country’s navy in November and Venezuelan president Hugo Chavez claims his country may work on a nuclear power deal with Russia. As I wrote in a previous blog, that would have been a cause for alarm and amounted to a threat to start World War III back in the Cold War days, i.e. , the Cuban Missile Crisis of the early 60s. And what about the Monroe Doctrine?

… And back to the economic thing. From what I am reading I do see the signs that life in America is not going to be the same with or without the latest bailout bill. My hope is that while there could be some discomfort it will serve as a kind of catharsis and then we will forge ahead with a new and more prudent but still vibrant way of doing business that will eventually lead to a new prosperity.

We really need to find some way to declare victory in the Middle East and come home.

Four thousand plus dead, thousands more wounded, and as much as a trillion dollars invested so far to help nations that fight internally among one another instead of working together to be free. And Iraq keeps its oil money and forces us to spend our own treasure. In my opinion we should get the oil revenues because we invested in it with our money and blood.

There was no reason to go into Iraq other than the oil. And as far as Afghanistan goes, why do we have to send a whole army to get one man? Originally we went into Afghanistan because they apparently were harboring Osama bin Laden, the admitted master mind of 9/11. It seemed as if Iraq had essentially by its actions put itself at a state of war with us. But after all this time it seems foolish to use an army to hunt one elusive man. Everyone knows that we are trying to create by blood sweat and tears a Middle East that is friendly to us. It’s not worth it.

Some say it is better to fight “them” over there than to fight “them” here. I don’t know. I think we need to rebuild our own country and that we are running out of money to fight “them” over there. I say let’s put our resources into the job that needs to be done at home and by God if “they” want to fight us here we’ll be ready.


Democracy altered bailout, can it kill it???

September 28, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

While a compromise has been reached in the $700 Billion Wall Street bailout bill and it may go to the House as early as Monday, I would think that the same public outcry that caused it to be delayed and reworked could kill it outright, although the pressure from money experts who have a vested interest in a system that up until now has been working quite well for them may win out nonetheless. This stuff is so complex that few, if any, seem to fully understand this global market and highly sophisticated finance (the basics reamin simple, though).

I believe you can get a full text of the bill via your usual news sources, such as CNN online, and I know that Huffington Post online has it too (I have not read it).

I recommend you read the comment from Susan at the bottom of this blog. Personally, I do not pretend to have the answer for all of this, but I do have thoughts. My old lead and previous, but related blog follows (and please read the comment):

Today, Sunday, it looks as though some type of compromise has been reached in the $700 billion Wall Street bailout bill and I think it proves that democracy is alive and well in America.

And not a minute too soon, this is happending, for the second richest man in America, Warren Buffet, has reportedly warned congress that if it does not get something done ASAP that there will be a complete “economic melt down” across the nation. While I wonder on that, who can argue with Warren Buffet?

But the reason I say that democracy is alive and well is that last weekend the Bush administration tried to push through a one-way no questions asked bill that would have simply given $700 billion in taxpayer money to the Secretary of the Treasury to hand out to reckless speculators. But there was an outcry among the public with e-mails (and thank God for e-mail) and phone calls flooding the offices of congress. That alerted congressmen and senators that they needed to pay attention to the public will. So now a compromise is in the works, that while extraordinary will hopefully be a more prudent, sober, and reasonable approach.

The question in my mind remains as to whether this is all necessary and whether the free market should be allowed to work. On the other hand, it is probably inaccurate to say we simply have a free market. There are government controls, but sometimes they have not been enforced and we may need a little more oversight, to say the least.

An interesting thing about language —  a senator was telling reporters of the problem and I think he gave an example why poor English often heard in everyday speech is misleading. People often use the double negative, such as “it don’t have no value.” I already forgot how the senator actually expressed himself, but he awkwardly said something about mortgage-backed securties the government proposes to buy up “don’t have no value.” Actually, as he went on the explain, that doesn’t mean they do not have value, it means just what he said, they don’t have no value, instead they have value, but the problem is no one knows what it is. He said the governmnet will set a value on them. Now I am not exactly sure how that works, and he indicated he did not totally understand it either, but he said that eventually when (and if) the markets stabilize, the government (and in turn one hopes the taxpayers) stands to make a profit, but it could also only break even or worse yet, lose. (I did not mean that the senator was inarticulate, he was just making a statement in an impromtu fashion.)

The underlying problem is that the bubble burst in the housing market and along with it mortgage- backed securities, and something not realized by many of us, our total economy from Wall Street to Main Street has been riding on these securities. And now there is a lot of paper out there which is either worthless or at least the market does not know its value, so the credit market has come to a standstill at the higher levels, at least, and stocks are expected to tumble if the uncertainty remains.

The following is an already-posted blog on the same theme:

…I’m reading that the powers that be are still hoping to get some version of the $700 billion Wall Street bailout bill into law or all-but into law over this weekend. And I have read in a couple of places where people have reminded the public that it was not just Wall Street who got carried away but anyone who is over-extended on their credit or who went into a mortgage and should have realized they had no ability to keep it up. It all adds to the mound of bad debts that have clogged our financial system. I still say just cancel everyone’s debt and let us start over again – but then I suppose that would make everything worthless, I don’t know.

As little as I know about economics, I have written a lot this past week or so. I have noticed that nearly a week after we were told the world would come to an end if congress did not pass Bush’s bailout with no strings attached for Wall Street everything is still standing, okay a couple of banks have gone under. I still say, take it a step at a time and along the way let’s revamp the system, not perpetuate the problem.

For some strange reason, business people, who often or usually consider themselves conservative, have over these past many decades pushed folks to charge things up on credit cards and the real estate industry, abetted by Wall Street financiers, and yes Democratic (and Republican, I think) politicians pushed for everyone to get in on home ownership and either dropped qualifications or looked the other way as to the probability that folks could really pay back their mortgages.

The old timers were right. They shied away from credit and saved back, putting their money out at interest, knowing that better a lender than a borrower be (although someone has to borrow for someone to lend).

And the inflation in housing caused by easy credit hurt renters too. They have to pay high rents for landlords who don’t own property free and clear and may be behind on their own payments and property taxes.

I’m so far out of my league in economics that probably no one would want to pay attention to me, but I think there is something to be said for a cash society. In capitalism, there does need to be capital, and in order for there to be capital (at least the kind with any liquidity), there needs to be savings so financial institutions can take those savings and lend them out at interest. If there is caution and careful rules, such as requiring sufficient reserves, things can work out fine.

And now I’m really getting in too deep. But I think that for the most part capital should be used to invest in things such as the production of food and durable goods, and the provision of services, all of which, along with jobs created in the process, make up our quality of life. But when you reduce the whole thing to some type of gambling game in which you just borrow money and lend it out and then turn around and borrow money on the money you lent out and so on, that can lead to too much wealth in too few hands and a reduction in the quality of life for the nation as a whole. I know that some of the financial trading has the utility purpose of I think they call it adding liquidity to the market. There has to be safeguards, though, in order to prevent the near catastrophe we are told we are facing.

I apologize or beg forgiveness to anyone who has read this far and understands this whole thing far better than I and feels he or she has just suffered a fool. But don’t get too haughty, I think I get it better than you may realize.


The debate, Newman death, credit woes…

September 27, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

It’s the morning after the great and flat debate (yawn), but I interrupt this blog to note that I just read that actor Paul Newman died at the age of 83 on Friday of cancer.

I think the first time I ever saw him on screen was in “The Hustler” in 1961. I had just recently reached the age of puberty and I was at the movie theater in the old downtown of Yuba City, Ca. I went to the show by myself and saw this incredible black and white movie – and I interrupt myself here again to note that once when my granddaughter was younger she was watching TV and asked, “why is it (a movie, not The Hustler) in black and white?” Well, I don’t know why they chose to shoot The Hustler in black and white, but then again I know that it would not have had the effect if it was in color. And I don’t even know if it was considered a great movie. But both Jackie Gleason playing legendary pool player Minnesota Fats and Newman playing a young hot shot hustler “Fast Eddie” Felson were at their best.

Newman had his boyish good looks (nearly all his life) but he also had what great actors all have, that certain something that made him unique, otherwise he’d just be another pretty face (and I hope I’m not sounding gay here – hey, I have a wife, two children and two grandchildren). And he could really get into character, method acting, I think they call it.

Gleason of course was a comedian primarily, but a natural-born actor, who you got the impression just automatically went into a roll without effort – he certainly did so in The Hustler, with only a few short lines, a puff or two on a cigarette and gestures.

Fast Eddie was addicted to gambling via pool, and booze and would forsake all, even his girl friend, for it.

But a great thing about Mr. Newman, the real person, is that unlike many in his trade, he stayed with his wife, actress Joanne Woodward, since 1958. They had acted together in the movie “The Long Hot Summer.”

….. I’m still reading debate reactions (I gave my own immediate reaction as soon as the debate was over in my last blog). And I’m trying to scan the web to see what the polls suggest as to the outcome. So far I get the sense that it was, as I initially concluded, a draw. But if you were for Obama going in, you may have felt he won and if you were a McCain partisan, you probably thought he won (in my immediate reaction blog I gave the edge to McCain and I’m definitely not a McCain partisan, just different I guess). I think the Wall Street Journal concluded McCain won on foreign policy and Obama on domestic policy. Although I definitely favor Obama, I don’t think he gave a knock out performance (one thing I read was that McCain was too mean, and Obama too nice).

And I think one of the problems is the debate formats they use nowadays. It’s been so long since I have seen what I would consider a real debate – seems like the last one I saw was William F. Buckley vs. I don’t know who on whether we should give up the Panama Canal (we did under Carter).

Correct me if I’m wrong, but in a debate, shouldn’t both contestants be given a topic and then each one presents his case, with each getting a rebuttal (with the moderator’s only function being to begin and end it and make sure rules are followed)? I think that gives the listener a more coherent and complete message and forces the debater to lay out a case and support it with evidence. Some might think that unfair because it might give a polished debater an advantage. But I suggest that if you are running for President of the United States, you don’t have to be a silver tongued orator, but you ought to have to be able to give a full explanation of your position and be able to support it. There was far too much bickering back and forth between the two on semantics more than anything, or on whether one or the other voted on some version of a bill. The multi-multi question back and forth and back and forth method to me is too confusing and lacks focus and serious discussion. And this is serious.

We’re not looking for details here candidates; we want your broad policy outlook, even though of course you may have to make some references to individual actions to state your case.

I’ll move on – maybe I’ll do a full day after or two-day after debate review later (or not).

…I’m reading that the powers that be are still hoping to get some version of the $700 billion Wall Street bailout bill into law or all-but into law over this weekend. And I have read in a couple of places where people have reminded the public that it was not just Wall Street who got carried away but anyone who is over-extended on their credit or who went into a mortgage and should have realized they had no ability to keep it up. It all adds to the mound of bad debts that have clogged our financial system. I still say just cancel everyone’s debt and let us start over again – but then I suppose that would make everything worthless, I don’t know.

As little as I know about economics, I have written a lot this past week or so. I have noticed that nearly a week after we were told the world would come to an end if congress did not pass Bush’s bailout with no strings attached for Wall Street everything is still standing, okay a couple of banks have gone under. I still say, take it a step at a time and along the way let’s revamp the system, not perpetuate the problem.

For some strange reason, business people, who often or usually consider themselves conservative, have over these past many decades pushed folks to charge things up on credit cards and the real estate industry, abetted by Wall Street financiers, and yes Democratic (and Republican, I think) politicians pushed for everyone to get in on home ownership and either dropped qualifications or looked the other way as to the probability that folks could really pay back their mortgages.

The old timers were right. They shied away from credit and saved back, putting their money out at interest, knowing that better a lender than a borrower be (although someone has to borrow for someone to lend).

And the inflation in housing caused by easy credit hurt renters too. They have to pay high rents for landlords who don’t own property free and clear and may be behind on their own payments and property taxes.

I’m so far out of my league in economics that probably no one would want to pay attention to me, but I think there is something to be said for a cash society. In capitalism, there does need to be capital, and in order for there to be capital (at least the kind with any liquidity), there needs to be savings so financial institutions can take those savings and lend them out at interest. If there is caution and careful rules, such as requiring sufficient reserves, things can work out fine.

And now I’m really getting in too deep. But I think that for the most part capital should be used to invest in things such as the production of food and durable goods, and the provision of services, all of which, along with jobs created in the process, make up our quality of life. But when you reduce the whole thing to some type of gambling game in which you just borrow money and lend it out and then turn around and borrow money on the money you lent out and so on, that can lead to too much wealth in too few hands and a reduction in the quality of life for the nation as a whole. I know that some of the financial trading has the utility purpose of I think they call it adding liquidity to the market. There has to be safeguards, though, in order to prevent the near catastrophe we are told we are facing.

I apologize or beg forgiveness to anyone who has read this far and understands this whole thing far better than I and feels he or she has just suffered a fool. But don’t get too haughty, I think I get it better than you may realize.


Mr. Wall Street: ‘Your money or your life!’

September 26, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

The word this morning is that John McCain will take part in the debate this evening and apparently those pushing the $700 billion Wall Street bailout bill are hell bent on getting it done today (tonight).

 I find myself in the strange position of being on the side of those House Republicans who yesterday were holding out for some different type of bill that would use private money (government guarateed, I guess) instead of the straight bailout. I don’t know what the status of all that is now and whether they were sincere or just making a show for the folks back home who are skeptical.

I thought the political cartoon in my local newspaper this morning said it all: A big fat cat Wall Street tycoon was sitting up against a wall and begging to a little older couple with a sign that reads: “Please get me out of debt, or I’ll be forced to ruin us all.” The little slender old man is standing there with his hands in his pockets while the wife hands the sobbing tycoon some cash from her purse. I think we are all asked to be that lady.

It is hard to swallow that a whole society can be dependent upon those who borrow and leverage and borrow on what they borrowed and leverage and anyway, make money on money they never had in the first place (and pardon me if I don’t tell this is strict or correct financial language, I’m a layman).

Perhaps as a society it is our collective fault for not paying enough attention to the inner workings of our economy and letting ourselves be misled by leaders who don’t understand it themselves and that goes for those in both major parties.

And I am still scratching my head trying to figure out what the urgency is in this bailout thing. I realize it would not be a good thing to let the financial market go down the tubes in a panic because it thought phony money was not available anymore. But folks, if it is all that bad, we need to fix the system. That should be the urgency, and that may take a little more time.

And by the by, I plan to watch the debate tonight. I think this could be the most important presidential debate that has ever taken place. I plan to blog on it afterwards. And now for anyone who is interested, my previous blog follows:

I now recall seeing an earlier tape – was it Monday? – of Republican Alabama Sen. Richard Shelby asking Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake if they had thought of an alternative to the $700 billion Wall Street bailout plan. I don’t think Paulson answered – he seemed to just sit there bewildered and speechless (maybe he did mumble something), anyway I didn’t think much of it.

But a self-satisfied Shelby, chairman of the senate banking committee, came out of the specially-called Bush meeting Thursday afternoon before anyone else and told reporters: “There’s no deal.”

Where it all stands today, who knows? It’s like a Howie Mandel Deal- No Deal game.

What will Wall Street, picked up Thursday by hopes for a deal, think today?

This $700 Billion giveaway plan for Wall Street is one of the most bizarre, implausible and maybe even frightening turn of events ever. A Republican president proposed to bail out gambling investors on Wall Street, threatening that failure to do so would be the near instant ruination of the whole nation’s economy, with implications world wide.

(No one argues that there is not something terribly wrong right now with the economy. No one, not even the administration, though, is claiming to know exactly how to fix it.  Supposedly, the government might eventually recoup losses – make money, I don’t know – in the plan to buy up bad debt. While the official price tag is put at $700 Billion, the $1 trillion figure is often used, especially when the already-approved bailouts are counted.)

And it gets stranger all the time. Now we have Democrats seemingly pushing for a quick movement on a bill, but one with “safeguards” and help for some distressed homeowners who can’t make their mortgages and provisions to prevent Wall Street executives from getting multi-million dollar perks after receiving tax-payer dollars to bail them out. Some Republicans are on board too, but reportedly some 100 House Republicans are not.

A poll I heard on Thursday said that one third of the voters are against it, one third for it, and one third undecided.

The latest is that the objecting Republicans are proposing that it all go back to the drawing board and that a plan that would use private capital (probably much less than $700 billion), with some government incentives, such as tax breaks, be presented. And actually, that in principle, sounds reasonable to me.

It’s hard to tell what the motivations by the various parties are.

I suppose the original idea just to hand over $700 billion with no questions asked was never popular with most Republicans, let alone Democrats, especially since it was from a Republican president. On the other hand, they might have supported it if they really thought the world would come to an end otherwise. And some Republicans may have deviously thought, well at least it will help business and if the Democrat Barack Obama is elected it will tie his hands somewhat in getting social legislation through.

Then came the outcry from the constituency. Especially staunch conservatives or just citizens with a sense of fair play. You can’t just say when the man on the street makes a poor or unfortunate financial decision that it is his problem, don’t go crying to government, but when Wall Street investors make a bad or a just plain reckless move, the taxpayer must bail them out.

Meantime, Democrats saw the hypocrisy of the bailout and the cost, but thought, oh well, if it must be done let’s at least tack on some programs we want – and that was good politics.

Republican presidential candidate John McCain did not know what to think. But now he seems to be pushing some type of bailout (he was against it before he was for it), what type, we don’t know. And of course, meantime, he has suspended his campaign and threatened not to take part in tonight’s (Friday) presidential debate. Many think this is all a ploy. I suspect for the most part it is. It is a rather weak argument to suggest one cannot run for president and make decisions at the same time. Isn’t that after all, making decisions, pretty much the job of the president? Why even George W. Knows that – “I’m the Decider” (although not-so-much now).

Both presidential candidates were at Thursday’s meeting at the invitation of Bush. Actually McCain apparently was the one who came up with the idea to drop everything and put the debate on hold so he could run back to Washington to play hero (he didn’t seem to get anywhere Thursday). Obama reluctantly agreed. And in a statement late in the day, long after Shelby made his “no deal” announcement, Obama implied that he and McCain due to the politics of the whole thing may have actually been a distraction (of course they are politicians). McCain for his part said he was hopeful something (what?) could be passed soon.

P.S. That Hillary might replace Biden as VP thing I inserted as a new lead in my last blog came out of the Drudge Report (as reported somewhere else) and the report said that while it was just a rumor, the usual myth debunkers, such as Snopes and one the Obama campaign has set up, are neither confirming nor denying it. I usually would not bother with something so thin, but I couldn’t pass it up. It seems plausible (if a little Eagleton-like risky). It’s hard to know where the presidential race stands now with polls contradicting each other. Some say McCain is falling on his face, others say he’s made some crafty or clever moves, such as the suspending campaign move and picking Palin – and then there’s always the race card.  And if Obama says he’s “behind Biden one hundred percent”, don’t quit your day job Joe.


Bush not convincing me on bailout…

September 25, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

Maybe I’m just too tired, but I listed to President Bush’s plea for support of the $700 billion Wall Street bailout and was not convinced.

I am convinced that there is serious turmoil in the markets and that the credit industry is at a standstill, but maybe I have listened to the proponents of the free market economy so long that I can’t keep from asking why not let the natural market mechanisms play out and let the market right itself.

The answer is that it will take a lot of pain and suffering over a long time throughout the economy affecting nearly all Americans to do that, at least that is what Bush and the bailout proponents are saying.

Personally, I would rather see a bottom up approach with help given to the people first, rather than those at the top of the heap who brought us this trouble in the first place, through their own poor management, deriliction of duty, and greed.

About the only thing Mr. Bush laid out clearly in his address was the scenario that led to the problem, unregulated lending practices in the real estate industry and a failure to make sure folks actually had the wherewithal to pay the loans, resulting in an over supply as the result of too easy credit and wild inflation. The bubble burst when people with adjustable rate mortgages could not make the payments and was further aggravated when people found themselves upside down in their mortgages due to a downward spiral in home values, resulting in even more foreclosures.

Maybe Americans need to go through some pain to realize that the piper has to be paid eventually.

Public opinion is running about 95 percent against the bailout (prior to the president’s address), but as I understand the prediction, congress will be forced (by the fear of what might happen in the markets, I guess) to vote yes on some form of the proposal.

And that is the difference between true democracy and representative democracy, perhaps. If it was done by computer vote, the bailout would not pass. But perhaps congress is wiser, or just has too much invested in the market itself.

Bush does claim that the government stands to recoup the costs in buying up bad debt because things will turn around and then the bad securities the government would hold will have value again – well maybe. It just makes my head ache.

No one actually knows the full details of the bailout, but the administration is pushing for a vote ASAP, the high pressure sale.

The immediate threat as I understand it is that the credit markets will dry up (or already have) and business will come to a standstill and millions of jobs will be lost. The stock market is demanding action.

If the free market does not work, what are we to do? State-operated economies do not have a good track record.

P.S.  And just to keep it all straight, the full cost of the bailouts, to include the ones last week is probably more than $1 trillion.


About Sarah: don’t dis, disagree….

September 24, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

Bill Clinton has it 100 percent right this time. He said that Democrats should lay off taking personal jabs at Sarah Palin. They should just say they disagree with her positions.

Then again, once you elevate someone up to the status of  they are worth disagreeing with, you have possibly given them status they don’t deserve. I said that. But, really, strategy wise, Bill has a point.

Also, there is no doubt she has caught the popular imagination as a down home folksy and gutsy woman (if a little vapid at times) who can handle the task given her, by golly.

But again, do we really want her to be (vice) president? (Worse yet, do you want McCain?)

Some folks seemed to think George W. Bush had that down home quality (I never did). Hard to see why. He was born with a silver spoon in his mouth and is more East Coast than Texas and is just not terribly bright and not terribly articulate, although he has come along well in his speech lessons over these past eight years – still stumbles a little, but much better. But I don’t care for the message.

… Meanwhile, it appears the rescue-bailout plan may not be a done deal, with congress and many voters saying “not so fast.” I know I personally have never gone for the high pressure sale, you have to make a decision now! Why?

And now a report on the network news says that McCain is in the driver’s seat on the rescue package because if he votes against it other Republicans will follow suit and the bill will go down to defeat (ouch! I hate when that happens!). Of course then if the economy goes down the tubes he takes the blame. But McCain is a gambler. I’ll bet he either wants to vote no and look like the hero who stood up not only to his commie captors in Hanoi but to the fat cats on Wall Street, or make a yes vote contingent on some high flyers doing a perp walk (or something tantamount to that). McCain smells blood. An FBI investigation has been announced already.

Obama has little choice but to vote yes, but insist that there is something for the people, mortgage help, etc., in it (well beyond keeping the business machine from collapsing).

And he is probably stuck with his cerebral and cool and just a little insistent pose. I think McCain has the ownership on the I’m mad as hell and I’m not going to take it anymore stance.

Many of us are basically just watching in wonderment. Should we be mad? Should we be afraid?

And here’s something that bothers me. Why can’t we do this thing from the bottom up. If $700 billion or more can be handed over to Wall Street, why not instead take that same amount of money and use it to help people renegotiate their mortgages, stay in their homes and do the things homeowners do, buy all those consumer goods for the house. That would help more people and would do a far better job to stimulate the economy one would think.

Wall Street’s track record was to invest and reinvest and re-re-invest in real estate, wildly inflating the prices and then the bubble burst.

And now I heard on TV Treasury Secretary Henry Paulson admit that under the terms of the rescue plan foreign banks would be allowed to get American taxpayer money. That in and of itself  seems wrong (even allowing foreigners pump a lot of money into our economy). But I have read that a lot of the capital in the mortgage market came from the Middle East. Those oil rich nations invest in housing here but don’t help their own people. No wonder there is so much unrest in the Middle East.

Oh those Arabs who say they care so much about Palestine. Why don’t they pump money into the Palestinian territory and make it a Garden of Eden that would rival Israel? 

… And another plug for investing domestically into alternative energy. I read about a paper mill in Maine that may go out of business because of the cost of oil. A subsidiary paper plant uses wood debris left over from logging to power itself. But installing that capability at the larger plant is seen as too expensive. But what if the government didn’t pay for that outright but offered an incentive for investment? It would cut down on dependence on foreign oil and save jobs right here at home.

…. Just a thought: during the Bush administration there has been a convenient excuse for Republicans not to support social programs, besides the fact that is not in their nature, there is the costly war thing. Now with the need to spend a trillion dollars or more on corporate welfare, sorry guys just can’t afford all that military action (now of course no one would haggle over war funding if we were actually repelling invaders. Then again, we’d rather fight them over there than here. Maybe we should send up a star ship to mars with troops – the Martians might be plotting against us. Let’s invoke the Bush Doctrine – definition for you Sarah, that means we have a ready excuse to go to war anywhere anytime).

There’s a popular saying:

“If you’re not part of the solution, you’re part of the problem.”

That’s catchy, but I’d transpose it, you might say:

“If you’re part of the problem, you’re not part of the solution.”

Okay, what I mean is that it is hard to believe that the folks who got us into this financial crisis, at least some of them, are now the ones who are working on this historic, earth shattering plan for the U.S. government to gobble up untold Wall Street bad debts, to the tune of $1 trillion or more (first it was $500 billion, then 700 billion, and some suggest $1 trillion, which may include the most recent bailouts or may be beyond that – I really can’t keep track).

So virtually all of the players in this rescue scheme took part directly or were closely associated with the modern financial activity that got us into this mess. It all has to do with ever more clever and complex ways to slice and dice securities, especially mortgage securities, in order to sell and resell and sell and resell, and that’s all well and good until something happens to put a monkey wrench in to the works, such as adjustable rate mortgages adjusting too high and spikes in the cost of living and unemployment and finally foreclosures when the person at the bottom doesn’t pay. That triggers a chain reaction that in the past week or so has threatened to bring our whole economy down and even the world’s economy down, since everything is interconnected in this grand global market. Gee maybe that’s what they mean by the “new world order.”

All of this is so complex that no one really knows what will or could happen.

So now we know that all those hot-shot money experts that have been barking at us to do this and buy this and so on, are not so smart after all – that is unless some of them are telling us to do one thing but are doing the opposite behind our backs, selling us short, you might say. I wonder sometimes.

I continue to wonder in my non-economic mind what the cost would be to do nothing, to let risk takers lose. Would that be an end to risk takers? No, because there would be even more of a risk and probably more of a gain than bailing everyone out now but instituting even tighter regulation to make sure it doesn’t happen again.

And in a previous blog I mentioned that you could call all this absorption of losses at public expense a form of socialism, but that it also resembles fascism.

Then I read in the San Francisco Chronicle today a piece that seemed to agree with me, and that always gives me a thrill when someone actually agrees with me or I think of something that someone else was thinking too. And now I can’t find the article…

At any rate, if the government assumes such a large direct stake in the economy as proposed, the action resembles both socialism or communism as practiced by the old Soviet Union with its state-owned and directed economy and fascism as it was practiced under Hitler by the Nazi party in Germany, with the state working hand in hand with business and exerting total control over the economy and the life of everyday individuals. As has been often noted, there is no difference between the far left and the far right, they both seek to use government to control people’s lives. And now I have answered my own earlier question as to how a Republican administration could be in the once inconceivable position of taking over a large part of our economy.

We could do little to nothing, or we could at least take the slow, but sure approach.

Congress has not blinked so far. One senator I saw on C-Span asked for an explanation, saying that he did not understand because he was just an “old dirt farmer.” 

I guess he didn’t want to buy a pig in a poke.