ECON 201: ACORN is PEANUTS to OUR REAL ECONOMIC PROBLEMS

A response to: RUN! It’s ACORN to the rescue!

Once again, Mark Kiesling, you write a column that is supported by hyperbole and pot shots more than actual and significant circumstances. Sure, it’s funny and all, but not particularly insightful, or useful.

ACORN is by most accounts a terribly biased and poorly run organization. But even if they did somehow managed to get 100,000 families into homes at $200,000 per – as you left it open for discussion – their contribution to the mortgage piece of this economic crisis would be a miniscule $20 billion compared to the Sheriff’s new found helicopter money (not spread around by said whirly bird.) I seem to remember he bought a newer model last summer from all those foreclosures he racked up in early 2008. (Great timing to push through a frivolously expensive toy (gotta keep with the law enforcement Joneses) during a recession that started in December 2007.)

Why I say ‘miniscule’ in relation? 

This mortgage crisis, since that’s where it all ’seemingly’ began, is a multi-trillion dollar fiasco. $20 billion is like 1% of the pot – and highly unlikely for a haphazardly, easily decapitated organization like ACORN to matter one lick to this current dilemma. Bernard Madoff caused $50 billion by himself. A French trader did a French bank for $7 Bills. 

These ACORN idiots don’t amount to peanuts.

Sheriff Dominiguez probably isn’t much more than 2-3% of his county’s financial headaches (some law enforcement is untouchable), but he’s done nothing of real value to prove he deserves to take foreclosure fees and spend them like a teenage girl with a platinum card. Look!: Money!!! Gotta Spend IT!!!!

 

For the truest assessment of why America is heading for a Second Great Depression one only has to look at these things:

• Credit Growth (and Indebtedness)
•  Monetarist Policies (Reaganomics, Greenspan Turbulence)
•  Trade Imbalances (The China Syndrome)
• Risk Management (or lack thereof) 
•  Creative Finance & Derivatives (Burger Kingin’ your Bottom Line)

 

Baby GOT PLASTIC! IT'S SO FANTASTIC!

Ever since the 1^st credit card went plastic in the 1970’s – we Americans have been crackheads for credit. Funny though, we learned this from our government, who, since 1979, went from $909 Billion deficit (32% of GDP) to a current deficit of over $10 Trillion (nearly 70% of GDP.) (Statistical Abstract of U.S.)

 

They're comin' to take me away, HA HA!!!

About $7.7 Trillion of that additional budget shortfall happened on the watch of Reagan, Bush, and Bush II, with Bush II giving over to a Caligula impulse running up a debt nearly greater than all other presidents combined. (And Obama will likely increase it by another $5 Trillion…Over $1.25 Trillion on interest payments alone. Unless…Social Security, Medicaid and Defense are reduced significantly.)

Americans, as a whole, played ‘follow the leverage’ – using assets (home equity) and high interest loans (credit cards) to get what they wanted without saving, or saving less and less. (Negative savings during the Bush years for the 1^st time since the Great Depression.) As a result, this country’s total outstanding debt is greater than $55 Trillion – roughly $180,000 for every man, woman and child in America. (Kevin Phillips, Bad Money, and multiple authors, I.O.U.S.A.)

When Bush called for us to travel after 9/11, and go out and spend, while he introduced his tax holiday for the wealthy, meaning less receipts to the Fed Gov, who do you think suffered? You and I – Joes everyday. The wealthiest 1% have reacquired their lofty perch of nearly 29% of all U.S. Assets. (Wall Street Journal, early- January 2009.)  Once again, not seen since SHORTLY BEFORE the Great Depression. They lowered CAP gains to 15% so those Hedge funds could run wild too. (Oh and UBS, a Swiss bank, just coughed up some coin for allowing 19,000 U.S. citizens to park their wealth in banks there without taxation…a no no.)

Meanwhile, you and I are still busting hump for likely the same amount of dollars we earned in 2000 (adjusted for inflation), back when Seinfeld still ruled (even in syndication), Coldplay was just playing a new record, the Yankees won a World Series, Chicagoans loved Sammy Sosa, and no one besides the NSA, CIA, MI-6 and Israel knew who this Osama guy was, or really cared.

The 3rd Millennium still had Seinfeld on the brain: George is getting angry!!!

 

Talk about a time warp. Please take me back.

 

If Reagan was a savior, give me his devil. The much bally-hooed economist Milton Friedman favorite President started a conservative agenda that has turned America’s Midwest into a Wasteland that only T.S. Eliot could write properly about. While we injected capital into the financial paper market place (usually going to the top dogs) we forgot to rebuild or inject enough into the manufacturing veins of what kept America rolling throughout the 1920s-1970’s.

 

As unions got busted, and immigrants, who were conveniently let into the country (to reduce high wages on menial tasks) came about, the Wall Street hustlers of Michael Milken and Ivan Boesky would be at the forefront of shady and illegal practices that became common place as the unholy trifecta was completed by deregulation. Take away worker’s rights and benefits, find cheaper, more manageable, preferably illegal labor, cook your books (or trade on the inside knowledge), stir well, and simmer for five to eight years. Repeat as needed. Market should soar 100% in five years.

 

Meanwhile, also create a Globalization model that while sounding cool and progressive is usually exploitative and undermines social stability in multiple countries. (Using China as an example we import more in a day from China in 2006 than we did in a year in 1978. But as a result, 70% of Walmart stuff is from China, 75% of your toys are Chinese, and most ($180 Billion) of the world’s electronics are now made in China. (The Elephant and The Dragon, Meredith )  Meanwhile, your son or daughter doesn’t even get the chance to make parts for the China man – unless he or she is frying up rice and chicken down on Crenshaw in LA.

 

Which is a great dilemma to our national security: we pay China in U.S currency for those goods. They hold now somewhere in the neighborhood of $1.3 Trillion in our U.S. debt because they don’t hold all our money, but reinvest it back into America, subtlety, usually as a mixture of short-term and long-term T-notes. (Because we pay our bills…but as our credit worthiness gets worse, those interest rates go higher…more debt to pay…and more assets they hold claim against, in practical terms.)

 

Then, as if by some miracle, the Financial Modernization Act of 1999 came into being allowing banks to deregulate and become anything to anyone. Thrifts, insurance, investments and all shades of gray in between were encouraged.  The big, got much, much bigger, and more confused about the process. (Like a Viagranaire does when a hot, young dumb woman doesn’t think a 55-year old guy should last for 4 hours in the sack, and leaves him without taking his ill-gotten, mother load of money.)

 

(Note: Clinton signed the act with a likely ‘Monica issue’ used as leverage by lead Republican banking member Phil Gramm putting the banking plan together…which isn’t to say Clinton wouldn’t have signed it anyhow. Clinton was far from an ultra-liberal. Some of Clinton’s Economic team is helping Obama…)

 

Risk Management became a joke from all accounts – as interest rates dropped like a stone in 2002-2005 – the money poured out to the public in the form of high-risk, soon-to-be-bundled, sliced-and-diced loans. Cock “Teasers” went to the high school prom with the “Predatory” lending, and banks made God-like fortunes, and Wall Street buzzed with a melodic sound of: “We’re in the money!!! We are wearing… The Money!!!”

 

G. W. Bush is seen as genius by his Lafferite cronies on stock market-focused shows. 

 

But the bets made on the market – Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDO) – would be the undoing of Bear Stearnes, Lehman Brothers, Merrill Lynch, Indy Mac Bank, WaMu, Countrywide Financial, Northern Rock, and a host of others that would soon realize the risks taken on Joe American were indeed about as stupid as giving five 400 lb. brothers all-you-can-eat passes to Red Lobster for life in a town of 500 with only one restaurant.

 

Those boys will eat you out of business.

 

Those boys DID eat you out of business.

 

The start of the unraveling came with Lehman Brothers with Assets of 600+ Billion!

The CDS market makes the U.S Economy look like a 150 lb. cocky QB with a rust-n-ready truck. While it, the CDS market, is upwards of 44 Trillion in size. (New York Times) In the past, only .2% defaulted on their bets. But this total has risen, but how far? What if 10% defaulted? 4.5 Trillion is something the World Market can not handled – no one country could take that catastrophe.

 

And what else do we have for our guests in the Second Great Depression but a helping of 1980’s revisited. Ponzi schemes are just another financial scam instead of insider trading. Bush Era deregulation left the SEC (Securities and Exchange Commission) fellas, who, must be the lowest paid, most ignorant, and most unqualified MBAs on Earth to never come to a situation before the financial cow has been milked, stolen, butchered, and eaten, with only with the feces of the humans left as evidence.

 

Lots of crap from lots of people.

 

Ready to get down and dirty???

 

Millions of jobs lost only add into this downward spiraling plane that has seen Irrational Exuberance of Stock Pricing, mixed with Catastrophic Failure of Banking, Tinged with Turbulent Politics, and Sheer Greed and Avarice from Market Makers to Average Joe Bakers.

 

It will take a ‘Sully’ Sullenberger water landing by President Obama to keep this plane from disintegrating on impact…

Can President Obama do what Capt. Sullenberger did?

 

When that final impact is will be determined by the ability to sacrifice and set aside our bitterness about things no longer changeable, but possibly, correctable with time and planning.

 

It is up to all of us.

 

God Help the United States of America…

Obama Cabinet: Presidential Point Guards Distribute the Wealth of Ideas

I'll shoot to score after my options are duly noted

It has been a bit interesting to see how liberal (and conservatives, too) are unsure, miffed and aghast at Barack’s Cabinet members, so far. As if they could somehow put raw, if talented people on the court of politics, public opinion and world stages and not be criticized harshly for fielding a “team of amateurs.” Instead, Barack has taken the course everyone has been calling a “Team of Rivals” after Doris KearnsGoodwin book on Lincoln’s Presidency and Cabinet.

His B-ball playing team looks like this, so far:

Security Players (Power Forward)

Hillary Clinton as Secretary of State.

Robert Gates (Bush’s current Sec of Defense) held over.

Eric Holder, of the Clinton administration, a former Deputy Attorney General and a former United States Attorney for the District of Columbia, will serve as Attorney General.

Janet Napolitano, Governor and former U.S. Attorney for Arizona, will serve as Secretary of the Department of Homeland Security.

Dr. Susan E. Rice, a Senior Foreign Policy Advisor to the Obama for America campaign, a Senior Fellow at the Brookings Institution, and former U.S. Assistant Secretary of State for African Affairs, will serve as Ambassador to the United Nations.

General Jim Jones, USMC (Ret), former Allied Commander, Europe, and Commander of the United States European Command, will serve as National Security Advisor.

Economic Players (Shooting Guards)

• Secretary of the Treasury: Timothy Geithner
• Chairwoman, Council of Economic Advisers: Christina Romer
• Director, Domestic Policy Council: Melody Barnes;
• Heather Higginbottom will be Deputy Director
• Director, National Economic Council: Lawrence Summers
• Chairman, Economic Recovery Advisory Board: Paul Volcker
• Director, Office of Management and Budget: Peter R. Orszag;
• Deputy Director will be Rob Nabors
• Bill Richardson as Commerce Secretary.

As many liberal outlets call it, “not a lefty in the bunch.” They seem to forget Barack’s voting record tends toward a liberal platform.

But intelligent governance is not about extremes, certainly not a wise thing to swing from the crackpot ideas of Bush’s administration to a ultra-left policymaking organ. Gradual moves in thinking – like out of Iraq in a reasoned amount of time – is best, instead of a quick exit that might force you back into the conflict whence you came. For certain, Barack thought enough about what he’s accomplishing in these picks: continuity, intelligent people with opposing ideas to him, gravitas that at least can be respected here or abroad.

Barack’s job as President will often be as a point-guard. Run the offense. Set up teammates (cabinet members) for easy scores. Get the team to counter the opponent’s best weapons, and focus them in crunch times. Be the leader of the team with philosophies far different from his own. A President is often as good (or as bad) as the people that get his time and ear on major policy, or to continue the analogy: those that get the ball the most better score, else, the team will lose many games.

Time to Score!

You figure that each President’s day is broken up in 10 minute blocks of time for 10-12 hours per day. Likely, a President sees people or discusses issues anywhere between 40-60 times per day. National Security in Iraq. FEMA aid relief after a disaster. Housing and Urban planning in Metro areas. Domestic Violence centers in rural areas. Immigration. Tax relief to seniors. You name it, he hears something about it – and remembers what he wants to and forgets the rest.

He employs these cabinet members to get their underlings (and their underlings) doing the right things. Drafting policy, making the appropriate legislative overtures, and coming to THE MAN  with scoring ideas that can be ran time and time again. (An offense that works.) He takes up those policies that are going to move the team into an easy scoring opportunities.

Do you want inexperienced people, that might not have a firm grasp of the dealings of Washington, or do you want people that (like it or not) are close to the problems (some they created), but able to now get things accomplished with a President’s championing their ideas.

As this country faces some heavy obstacles, it makes logical sense not to put wet-behind-the-ears people in charge of senior advisory positions. Plus, as the team progresses through a 1st term, talent underneath likely will come up to replace those that are not pulling their weight. Rarely does any cabinet stay together for 4 years, or hopefully, 8 years of an Obama administration.

Right now, the team needs a Center (piece) to make some vital projects work domestically.

My feeling is Energy, EPA, Education & Interior are priority positions for ultra-left or experts on these policies. We need serious overhauls of Bush’s policy (or lack thereof) in these places.

(From Political Base)

Potential Secretary of Energy ???

• Brian Schweitzer (D), Governor of Montana (2005-present)
• Arnold Schwarzenegger (R), Governor of California (2003-present)
• Jeff Bingaman (D), Senator from New Mexico (1982-present)
• Al Gore (D) (Former VP under Clinton)

Administrator of the Environmental Protection Agency:

• Kathleen McGinty, Former Secretary of the Pennsylvania Environmental Protection Agency (2003-present)
• Ed Markey, U.S. Representative from Massachusett’s 7th District (1976-present)
• Mary Nichols, Director of the UCLA Institute of the Environment
• Lincoln Chafee (R), Former Senator from Rhode Island (1999-2006)

Secretary of the Interior:

• Lincoln Chafee (R), Former Senator from Rhode Island (1999-2006)
• Christine Gregoire (D), Governor of Washington (2005-present)
• Brian Schweitzer (D), Governor of Montana (2005-present)
• Robert F. Kennedy Jr., Environmental Lawyer and Co-Host of Air America Radio’s Ring of Fire
• Jay Inslee, U.S. Representative from Washington’s 4th (1993-1995) and 1st (1999-present) Districts.

Secretary of Education:

• George Miller (D), Representative from California’s 7th District (1975-present)
• Tim Kaine (D), Virginia Governor (2005-present)
• Linda Darling-Hammond, Professor of Education at Stanford University and Education Adviser to the Obama Campaign.
• Joel Klein, Chancellor of the New York City Department of Education, overseeing the largest public school system in the U.S. with over a million students.
• David Boren (D), Former Governor of Oklahoma (1975-1979) and Senator for 15 years, Boren is currently the President of the University of Oklahoma.
• Tom Kean (R), Chair of the 9/11 Commission and former Governor of New Jersey

 

With any luck, the distribution of talent in this cabinet will lead to a wealth of ideas that Obama can direct (assist) to the basket of accomplishing what President’s always love: a legacy of programs that people remember as “President Such-n-Such’s master stroke.” 

Obama’s master stroke will only be seen as such if it all works out…It rarely is that easy. Putting the ‘policy ball’ in the hoop in Washington is like taking a hook shot over Dikembe Mutombo and expecting it not to get blocked. There is always plenty of finger waving from the Beltway Crowd – “get that out of my house!!! Not on my turf! You ain’t gonna do that to my appropriation bill!!!”

So you better bring your A-game if you’re gonna play hoops in Washington.

Obama, it’s your pick…

Get that out of my house!!!

The 4th of July: A day of reflection on America’s past, present and future

As we go into the 232^nd year of our nation’s birth, we are faced with an inordinate amount of negative news that takes away from the pleasures and prosperity of being American.

Fuel and food prices are rising daily. Wage deterioration and job losses are consistently highlighted on the tube. Energy conservation and constrictions, environmental issues and policies and safety and security strategies are, in essence, all tied together by the fact that we, as human beings, have only this one world, and it is not unlimited in resources, but it is boundless in the harm it can do to us, if we allow it.

We are also reminded of these matters by the presidential election of 2008. A race highlighted by the 1^st woman and 1^st African-American to realistically run for the highest office in the land.  A political race with a man known first as a 5 ½ year veteran of a Vietnam prison camp, then as the oldest man to contend for the 1600 Pennsylvania Avenue address.

 

As this takes place, in the distant backdrop comes the idea of sports. The way many escape their problems and woes of 8-6 workday, complaining spouses and children, overbearing bosses and unhelpful nosey neighbors, and the fact, this world is perceived as worse than the world of our childhood, or our father’s childhood. In verity, it is only the changing faces of leadership and altered ways to communicating that may be at the crux of this worsening outlook we perceive.

But even these sports have gone astray in our minds.

The athletes seem ever more jaded – with the moronic media and money made fueling their contempt for us, the fans – and their gloss and glimmer is faded before we ever get to know them. The scandals, gassed up by online sites, radio blowhards (Rush Limbaugh as a well-paid version of this group) and the Extremely Stupid Pundits of News (ESPN) who drive recklessly, all over the ‘free’ airways, bastardizing the concept of ‘a scandal’ while in search of some mythical creature called: The Truth.

Amoral ownerships require new branding of their stadiums, new revenue streams (from that branding) and shameless promotion of those well-paid jaded athletes that are endemically tied to those scandals aforementioned. These owners will threaten to ‘take their team and go elsewhere’ if they do not receive new stadium deals on the taxpayers’ dole. Hundreds of millions (or more) spent on luxury palaces where, if a typical fan making under $50,000 a year comes, they will be lucky to visit once in a decade. But that’s American Capitalism buttressed by socialistic bailouts for the wealthy. And the battle of the billionaires and millionaires wages on the breaking backs of cup-of-Joe America, who clocks in and out for dollars these men wouldn’t bend over to pick up.

There is no joy in Mudville.

A place where a mighty Casey would strike out, bearing the weight of all failures on his broad shoulders.

America once had broad shoulders – now wrecked by the frivolity of politics, backroom dealing and undermining the American Dream for a quick sawbuck – but she is now in the midst of a maelstrom of her own unfortunate making. The debt outweighs the equity built. The infrastructure of morality, decency, kindness and common sense has all but been eroded to the point of inoperable and unjustified existence. The ill designs of men have turned markedly adrift and astray from the altruisms and protestations of our forefathers.

Yet, we have seen this all before in various incarnations throughout history (going back most logically to the Roman Empire.) That a society reaches a point where to go forward it must throw off the shackles of injustice and inequality.

We should remember most vividly our Declaration of Independence.

In 1775, as colonial America would begin their fight for independence at Lexington and Concord, we felt these truths are self-evident: that all men were created equal; that all men deserved life, liberty and the pursuit of happiness; that governments derive their powers from the consent of the governed; that when a long train of abuses and usurpations evinces a design that reduces us to absolute Despotism, it is our right, our duty, to throw off such government and provide new guards for our security.

Poetic our forefathers were.

Evincing a design of a new America is one that will require many, many millions to participate. To accomplish this feat of revamping our lives and securing our futures requires such sacrifice that has not been seen in several generations. This bold concept, using the innovative spirit of America, has to take hold sooner, not later. Time is not on our side.

We have to be the Americans of ideals and dreams, of sweat and blood, of clear vision and utter determination. We the people must take back the reins of destiny of this country. We must mold our future in the widening prospects seen in 1776, but leave behind constraints in ideas, justice and circumstances foisted in that time. We are a different world, for sure; but we are much the same, in operation.

But from the best ideas and hard work, we can be all that our forefathers hoped for in their writings.

We can be independent, secure, stable and fair-minded. We can lead a world that needs leadership in these dangerous and volatile times. We can provide the direction that is so often missing. And be the steadfast steward to the living concept that was founded on July 4, 1776 in the Declaration of Independence and enforced in the United States Constitution.

From those measures and methods, our enduring play and love of sport can continue to be a happy by-product of equal prosperity and unwavering social justice.

Happy 4^th!