Talking or Walking?

[WhiskeyGirl]

I listened to some of the commentary regarding the current financial crisis on tv.

Here is a good summary I found about candidate positions -

JOHN McCAIN

• Create a bipartisan board to monitor the payout to distressed lenders.

• Track who receives money and give the public access to those transactions, including on the Internet.

• Cap executive compensation for rescued companies to no more than what the top government official receives.

• Ban unrelated measures, or earmarks, attached to the legislation.

• Provide a way for taxpayers to recover the money.

BARACK OBAMA

• Cap executive compensation of companies that receive money.

• Create a bipartisan board to provide oversight of and accountability on the bailout.

• Return any profits made by the government; institute a new fee on financial services to repay the government.

• Provide assistance to help to families struggling to stay in their homes.

http://www.dallasnews.com/sharedcontent/dws/news/politics/national/stories/DN-bailoutbox_25pol.ART.State.Edition2.268535b.html

I heard a comment on tv that the US has now been reduced to third-world status due to the size of our national debt.  I would agree.  IIRC, Senator Clinton seemed to be the only candidate that recognized that the national debt was a problem that needed immediate attention.  IMHO, all other issues pale in comparison.

Why should bailout money be used to compensate executives or high level employees?  Golden parachutes?   I'm thinking they had years to feather their nest, pay reduced taxes through tax cuts, and salt that money away for a rainy day (they must have known was coming for some time, imho, these are not stupid people, just 'ignorant' when necessary-like during any govt. fact finding probes).

Was it one of their goals to look for a government bailout?  Was it a goal to write mortgages and expect no repayment? 

Did anyone keep track of the failure rate and look to turn it around?  Did anyone ask questions?  Did anyone answer? 

Is there anything documented to show that there was a problem, someone noticed the problem, and someone attempted to fix it?  Or, didn't anyone notice that something was wrong?

Why not reward the banks and mortgage companies that invested in mortgages and expected to get paid back?  Those that had good results and are in good condition.   

What not make money available for borrowing from banks and other institutions that have a good track record? 

I expect that the candidates still have a job in the Senate.  Are they still collecting their Senator pay and compensation? 

I believe that the financial crisis is job one.

People have been talking about the problems for years, talk, talk, talk.  The crisis is here, in the moment.  It's time to put words into actions and start walking the road to recovery. 

We can't go back and fix the past, the future of America is being crafted today...

Where are the leaders?

[WhiskeyGirl]

Presidential Debates

Is it really about multi-tasking? 

Or, is it about the ability to determine what is important and prioritize? 

Can the nation put off the financial crisis for another week?  Month?

Can the debate be rescheduled for another week?  Month?

~~~~~~~~~~~~~~

Are homeowners in danger of losing their homes, able to hold on for one more week?  Month?

Maybe put the financial crisis and debate on hold until next year?  Maybe things will look better?

In the mean time, lets just talk, debate, have some refreshing beverages and use diplomacy.

(What would Hillary do?)

[WhiskeyGirl]

How NOT to Multitask - Work Simpler and Saner

(snip)

First, a few quick reasons not to multi-task:

- Multi-tasking is less efficient, due to the need to switch gears for each new task, and the switch back again.

- Multi-tasking is more complicated, and thus more prone to stress and errors.

- Multi-tasking can be crazy, and in this already chaotic world, we need to reign in the terror and find a little oasis of sanity and calm.

Here are some tips on how NOT to multi-task:

- First set up to-do lists for different contexts (i.e. calls, computer, errands, home, waiting-for, etc.) depending on your situation.

- Have a capture tool (such as a notebook) for instant notes on what needs to be done.

- Have a physical and email inbox (as few inboxes as possible) so that all incoming stuff is gathered together in one place (one for paper stuff, one for digital).

(snip)

read more here ~
http://zenhabits.net/2007/02/how-not-to-multitask-work-simpler-and/

That word "multi-task" is something I associate with people who promote the goal of "raising the stock price" above all else, like sanity.  jmho

[WhiskeyGirl]

The Perils of Multi-Tasking

September 21st, 2008 Posted in Web 2.0

Fascinating read in the New York Times that text-messaging can be dangerous because some people can get distracted if they do it while driving or walking down the street.

It’s amazing people think they can do a variety of things at the same time rather than focusing on the task at hand. (Apologies for the dripping sarcasm).

The amazing thing about multi-tasking phenomena is most people think can they pull it off without skipping a beat. The reality is few of us can successfully pull it off, which means we end up doing too many things in a mediocre or half-assed way.

Part of the problem is people think they need to be everywhere as opposed to focusing on being a few places well. You end up stretching yourself too thin, which means rather than being an engaged and involved member of a community, you’re here, there and everywhere without being somewhere.

http://www.markevanstech.com/2008/09/21/the-perils-of-multi-tasking/

If the U.S. is looking for a place to point the finger, maybe technology is a good place to start.

Maybe people were to busy texting, emailing, facebooking, chatting, using Ipod and other goodies to pay attention to the crisis that has been building for years?  Perhaps the next generation could have everything delivered via IPOD of MP3?

What happened to people that were numbers smart?  People that could look at and make good decision about financials?

What happened to reading the nitty-gritty about bills before the Senate and House?  No time?  No one looks at the paper anymore?  Why can't Johnny or Suzy read?   

Doesn't reading or studying about the nations business make good press?  Good news reports on CNN & FOX?

Go Russ Feingold, he still knows how to read.  jmho

 

[fatcatlurker]

I have to post: McCain has not voted since April, Obama July according to FoxNews you decide....And they do not need to be present for the bickering, they can just fly in and vote when an agreement is decided on by the Senate.

Also as to not paying attention, I think most middle class american's the majority in the US have money in 401K's, maybe some mutual funds and don't feel like they should need to watch it all the time.  We have been taught to put the money in and let it ride to grow, don't move it too much.  This has done very well for the most part.  The big guys and the clever ones(daytraders) have quickly moved funds all over and if you have any blue chips or have enough stock in something to actually get paid dividends in check form than you are watching your money and know what I'm talkin. Most of us just roll it back in and when one loses another may gain so it evens out, not the idea I had in mind when investing my money and exactly why I am aganst mandatory privatization of Social Security, because no one pays attention, we are not educated enough to know, and (I know some will hate me for this) there is NO REGULATION!  Thank you for depositing your money into my fund where I welcome Day Trading, Inside Trading and all bets are off the table, except mine.....hee hee. 

Now my 2 cents on the mortgage: again when we have no regulation we have crap loans that are destined to fail, I have a friend, let's call him Loan Broker, he told me in April 08 that his bank was getting rid of in-house FHA/VA inspectors and Underwriters (using a IndependentCompany for these resources now)and none of the brokers were very happy about this.  Infact loan broker friend is so upset he is contemplating quitting.  Now fast forward to Sept08.  They are all let go and have FBI and IRS in their records.  HMMMM do you think having your own inspectors and underwriters inhouse with your loan officers all buddy buddy could cause some illegal activities to take place, you bet. 

I think people knew this was heading this way and it was kept hush hush, I was told to take any money I wanted out of my Home Equity line of Credit late 07, because freezes yet to come.  I see it in simple accounting terms, but I still do not see how all of Wall Street is fitting in????  The big rush has me all confused and the numbers of foreclosures just don't add up to this present nightmare....  Anyone out there have a clue what I mean?

[GreatOwl]

Of course I know what you mean.  Since late 2001 I have not made a cent on any of my mutual funds collectively.  My fixed is doing just fine.  Brokers will always advise that you ride it out.  "It is a long term investment."  No one has been able to define long term to me.  In the mean time I have lost over 60% of the value of the variable.  The stock market rises for a short period of time and then come the profit takers.  We begin all over again.  Deregulation has led to the small investor losing, retirement accounts being depleted and those who can get in and out in a hurray are making money in disproportionate amounts.

There is a great deal of confusing or just plain misinformation out there which makes it difficult for the average investor or taxpayer to do anything but support the life styles of those on the inside.  JMO

[A's Fever]

I think there is an enormous need for financial and economic education out there.  I am very fortunate that I worked in banking for over 20 years, because it has given me some idea how the credit markets work.  But in reading the responses citizens give to reporters when asked about the bailout, I am astounded at how naïve they sound.  People seem to think that this is about bailing out Wall Street and that it has no impact on the average American.  People don’t seem to understand that if the financial system is compromised, if liquidity is absent and if credit disappears, the economy will come to a screeching halt.  If businesses can’t borrow, or there is no money for them to borrow, be it large business or small, their operations will be threatened.  Businesses rely on credit to build inventory, to cover operating costs pending conversion of accounts receivable, for capital expenditures to purchase the machinery and equipment needed to do their work and grow and compete, and to survive through seasonality. Loss of credit means massive job loss, and of course our pensions and 401(k)s will take huge hits as the market declines. And that scenario does not even take into consideration the impact on the consumer, which accounts for two-thirds of our economy. Seems to me it is way past the time for assessing blame, and time to act.

Education needs to start in high school – though I know our schools are already over-burdened and under-funded as it is.  But it would benefit all citizens to know how our economy works, what “the Fed” is and does, what the roles of the banks and Wall Street are and how Main Street is connected to the whole fabric.  And watching those Senators on TV during the hearings this week, I don’t think a lot of them know what they are talking about.  President Bush made an effort to educate in his speech last night, but I am not sure he was successful in providing an explicit link between the banking crisis and the average American.

I am also distressed at the poor performance of mutual funds over the past few years, and 401(k)s are at great risk now. But again, investor education is of the utmost importance.  Every investor needs to know what they are holding, how it is performing, if it is diversified, what level of risk they are facing, who their fund manager is and what is his/her investment philosophy and track record.  I too believe that we have been conditioned to buy and hold, with Warren Buffet being heralded as a god among men.  He is awesome of course, but he buys companies not stocks.  He also started at a much different time, and was a market participant through times of great prosperity (will we ever see such times again?)  Every time I have bought a stock and held it for a long period I’ve seen the gains disappear, as the stock peaks and pulls back to the original level.  So now I trade actively, and take advantage of momentum, sector rotation, and the usual cyclical movements of the market.  I find it much more profitable – I support myself doing this and no longer work outside the home (for now, while my two youngest are still teenagers) – but it is very time consuming.  I read and study constantly and consider myself a student of the market, and I also spend a lot of time analyzing financial statements, a skill I learned when I was a commercial lender.

Education is key to everything! Ok, off my soap box now . . .

[WhiskeyGirl]

I spoke with one friend today and watched someone on tv.

My friend heard on tv that all this bad debt/paper making up the $700 billion might really be worth $800 billion or more.

What are the chances of that I asked?  She said WE were getting it for pennies on the dollar, she heard someone on tv say that, and some politicians wanted to make sure the public got to keep any funds over the $700 billion.

I saw a man on the tv say something similar...  No protection in the bailout bill for the taxpayer coming out ahead. 

Maybe someone didn't think about that because it is unlikely?

I'm of the opinion that WE would be paying like $1.00 and getting $.10 of assets.

The person I believe?  The one that said this is the "worst paper".  What exactly does that mean?  Does it mean that after the money transfer, the $700 billion in assets on paper represents $70 billion in tangible property?  Some might go up, but I expect that much is completely worthless.

Why would it be worthless?  I think some worthless paper is the result of scammers and fraud. 

Based on information I've gleaned over the past couple of years -

1. People getting loans for property they don't own and running off with the money.

2. People getting loans for things like "old shoes" - not real property, just something to use as a paperweight.

3.  People getting multiple loans for the same property and running off with the money.

4.  People getting loans for property with exaggerated value and walking away.  Example, loan for $500,000, property worth $250,000 today.

5.  Loans for bridges and swamp land.

6.  Loans for things I cannot imagine, like the commercial loans someone brought up.  What exactly falls in that commercial category...hmmm?

I think (and I told my friend this) WE would be lucky to get $.10 returned/recovered for every $1.00 spent.  WE could hold some of these things forever and their value would never appreciate. 

People and money are long gone.  It is a second scam on the American people.  jmho

I anticipate that there will be a scam for cars and recreational vehicles next.  No place/space for lending institutions to dump/make public these problems.  imho

What would it do to their stock price?

The assets/cases could easily be put on the internet, so everyone would know how smart the deal makers were.   

I've read about some of the good pieces of these companies being sold to foreign interests.  The leftovers are for US. 

I also read one commentator state that the US will be bailing out FOREIGN banks (due to FOREIGN greed perhaps)?  No government seems to be standing in line to save the US.  Third world debtor nation status awaits us.

In the first depression, you could wipe your butt or paper a room with worthless stock certificates.  In this financial Pearl Harbor, I think the public will need all that paper to heat their homes this winter (up north).  Not sure what the folks down south will do.  Maybe re-roof after the next storm. 

I'm not feeling warm and fuzzy, no confidence, yet.  Warren can be happy because he's buying into something that just dumped the mother of all loads. 

just my humble opinions

[A's Fever]

I don't share your skepticism, in fact, I think this is a great opportunity for tax payers.  If there was a way for individual investors to buy up some of this "toxic paper" I would be first in line. 

Both Dems and Republicans seem to agree that this crisis was brought on by a combination of the burst of the RE bubble, and the proliferation of cheap, easy credit.  While there might be some fraud involved somewhere along the line, by and large the problem is that a great number of people can't afford the houses they bought, not massive fraud. 

In my neighborhood, I can think of two houses that are advertised as "bank owned".  Two years ago these homes might have been appraised for $600K or $700K, but now they are probably worth about $400K or less, and they are in foreclosure so they are toxic to the lender, who is required by accounting practices to take a loss on it, increase reserves (which ties up capital) and it impact their tier one ratios, which may require the bank to raise more capital.  The government has no such requirements, and has the added benefit of time.  It is not going to come in and pay $700k or even $400, but pennies on the dollar, and we (taxpayers) will keep the collateral.  These are viable homes that will in time be sold to families for fair value.  The US can either turn around and sell to private firms that will hold the debt, or the US can keep the paper itself, for it will certainly appreciate over time, and sell later. 

And look at AIG!  The government bailed out AIG and took an 80% (I think) equity stake in the company.  The stock was worth about $2 then, today it closed at about $3, after moving higher than $4.  That's a great return on equity for taxpayers.  And that was a situation in which one division of the company (that which bought mortgage backed securities) brought down the entire company, even though the insurance part of the company is ongoing, viable and profitable.  The company also pays a dividend. What a great deal for taxpayers.

Remember, the Resolution Trust Corp turned a profit for taxpayers. While it is not exactly the same situation, there is a precedent here.  Key is who is brought in to manage this enterprise on behalf of the government.  But the taxpayers could definitely come out winners, over time.  IMO. 

[WhiskeyGirl]

A's, thanks for that explanation.  I will try to hold on to that optimism.

I would love for taxpayers to come out ahead.  Maybe some of that excess money could be used to pay down the national debt.

From watching the I.O.U.S.A. movie, I believe reducing the national debt will also free up some cash, and not pass that burden on to our children and grandchildren.

I think much depends on the governments ability to pay the "pennies on a dollar" and not the inflated 'dollar' value.  I'll just have to wonder how many pennies it will take to buy these bargains. 

Thanks!