Thursday, April 02, 2009
DON"T TOUCH THE QUEEN
DON"T TOUCH THE QUEEN! She is fragile and friable. She could turn to dust! OMG, Michelle's big mistake - she thought the QWEEN was a person. Michelle probably couldn't help herself. Apparently, she just wanted get in touch, reach out, and make a connection to another person. Michelle and Obama are more like Princess Diana who represented the British people a lot better than the Queen seems to. I'm glad we have humans in the White House. Charles might be a human, too. If you can't touch the Queen, it's pretty hard to win.
Wednesday, April 01, 2009
Populism? Poppycock!
The people at the top don't get it. This is not populism, it's ANGER! Why are Americans angry? Because they got screwed and mislead. First they were led to believe that in the "ownership" society, they should be little entrepreneurs. Little Bill Gates's! Manage your own 401k. Invest in yourself! Your responsible for your own fate! Not everyone is able to be their own entrepreneur. Most people have no idea how to manage their investments. I know some very smart people who haven't the foggiest idea about investing let alone how Wall Street and Main St. work. No problem, you say? That's why we have investment advisors? Salesmen in disguise! Wolves in sheep's clothing!
Americans got screwed by the unrestrained greed of everyone in the financial world, especially top executives who felt a million, a hundred milion, a billion was not enough. So they gave loans to anybody and everybody regardless of ability to pay, knowing that they could pass the "risk" on to someone else in the form of CDOs and other garbage. When this house of cards collapsed they they used their connections to bail themselves out with our dollars.
Why are Americans angry? Because of bad behavior at the top! Millions of individuals suffering - no job, house values dropping, 201k's instead of 401k's. The bailouts reward the greediest. People who acted responsibly see people who lied and bought way more house or houses than they could afford being rewarded with foreclosure relief. What ever happened to "moral hazard?" Almost everyone is angry, except perhaps, Hank Paulson, Tim Geithner, Alan Greenspan, and the "too-big-to-fail" rip off artists. Even rich people are angry. Look at all the poor rich people who got ripped off by that guy who "Made Off" with their funds.
This is not right wing populism. It's ANGER! When people feel threatened they get angry with the potential for violence The right wing and Republicans are trying to claim this anger, but the problems were created by almost thirty years of Reaganism. The MBIA, Bear Sterns, WAMU, Wachovia, Merrill, Lehman Bros., AIG collapses all happened on George W.s watch. The various bailouts were initiated by "W's" Treasury Secretary. BTW, who set off the collapse of the housing market. Ben Bernacke raised rates high enough to collapse the housing bubble created by Allan Greenspan to save his own neck.
This anger isn't going away and has the potential to get really ugly. Obama and the Democrats had better pay attention and channel it toward the real culprits, rather than let right wing demagogues focus it on them.
Americans got screwed by the unrestrained greed of everyone in the financial world, especially top executives who felt a million, a hundred milion, a billion was not enough. So they gave loans to anybody and everybody regardless of ability to pay, knowing that they could pass the "risk" on to someone else in the form of CDOs and other garbage. When this house of cards collapsed they they used their connections to bail themselves out with our dollars.
Why are Americans angry? Because of bad behavior at the top! Millions of individuals suffering - no job, house values dropping, 201k's instead of 401k's. The bailouts reward the greediest. People who acted responsibly see people who lied and bought way more house or houses than they could afford being rewarded with foreclosure relief. What ever happened to "moral hazard?" Almost everyone is angry, except perhaps, Hank Paulson, Tim Geithner, Alan Greenspan, and the "too-big-to-fail" rip off artists. Even rich people are angry. Look at all the poor rich people who got ripped off by that guy who "Made Off" with their funds.
This is not right wing populism. It's ANGER! When people feel threatened they get angry with the potential for violence The right wing and Republicans are trying to claim this anger, but the problems were created by almost thirty years of Reaganism. The MBIA, Bear Sterns, WAMU, Wachovia, Merrill, Lehman Bros., AIG collapses all happened on George W.s watch. The various bailouts were initiated by "W's" Treasury Secretary. BTW, who set off the collapse of the housing market. Ben Bernacke raised rates high enough to collapse the housing bubble created by Allan Greenspan to save his own neck.
This anger isn't going away and has the potential to get really ugly. Obama and the Democrats had better pay attention and channel it toward the real culprits, rather than let right wing demagogues focus it on them.
Monday, March 30, 2009
Beyond Leverage!
I just got back from a talk by David , a man who in the past sixty-five years , made tons of money in real estate. David pointed out how you could leverage real estate using OPM ( other people's money). Even at 20% down, you have a five to one ratio. Eighty per cent is from the bank. Of course, the bank is using OPM, too - yours! Insurance companies, like AIG, use OPM, too - the premiums you pay.
It appears that the "best and the brightest," have been using your money to get rich. It turns out "the best and the brightest" are the "worst and the dumbest." Several years ago, I spoke to an online real estate broker about refinancing. He asked me if I wanted to provide documentation. I said to myself, "Are you crazy? A bank is going to give me a loan without knowing if I have any income or assets?" He had offered me a "liar's loan"! I knew it was the beginning of the end. Then a friend tried to buy a house in San Francisco where the average house seems to cost $1,000,000. He put together all the money he had for a down payment and would have had to pay half his monthly income on mortgage payments. Since he had a good income from an I.T. job this was a prime mortgage. The mortgage broker couldn't care less if he would be able to make his payment or even eat. All the broker wanted was his commission, so he could take his family on a very expensive vacation. Then I spoke to a "recovering" drug addict at Twin Peaks in San Francisco. He told me that thanks to his newly found belief in God, he was now a rich man and that he owned five houses in San Francisco and Sacramento which he bought for no money down apparently with subprime mortgages.
About a year later. the value of an MBIA bond, the biggest name in the Municipal Bond insurance business, dropped ten percent overnight. The reason? MBIA had been insuring CDOs, SIVs and other alphabet soup. Not satisfied with a very lucrative insurance business using OPM, greed led MBIA down the slippery slope along with all the other lemmings. Why were mortgages brokers and bankers so non-chalant about writing bad loans? Because they knew they could unload them. Just bundle them into tranches of CDOs and sell them to everybody else. More OPM. So the "best and the brightest" ended up selling bad loans to each other.
Back to leverage, more OPM. These banks and brokerages, more accurately, investment banks ( What ever happened to Glass -Steagall, Mr. Greenspan?) used leverage with ratios like 36/1., like totally other people's money. So everybody including the "best and the brightest" assumed that housing would continue to go straight up. Any fool knows that things fluctuate - even J. P. Morgan said that. Rapacious greed led the entire financial establishment to build a house of cards on bad loans. Give anybody a mortgage! Now the lemmings have reversed gears, and refuse to lend money to anybody including each other. Get a bailout - more OPM - but fight any regulation that might restrain the failings of rapacious capitalism. Karl Marx and Adam Smith were each right about some things and wrong about others. What they both missed is the role of greed in economic life. Marx's biggest errors - the labor theory of value and a complete miss on human nature - the role of incentive or, in plain English, greed. What Smith missed, is the destructiveness of unrestrained greed. Free markets go to extremes and need to be modulated by regulation. When the stock market approached irrational exuberance, Greenspan, just shrugged, Ayn Rand style, and saved himself in his time by creating the housing bubble. One can hope that a third way will work , but I'm afraid the "best and brightest" will always find vast piles of money "bubblicious." They will probably just continue to get high on OPiuM.
It appears that the "best and the brightest," have been using your money to get rich. It turns out "the best and the brightest" are the "worst and the dumbest." Several years ago, I spoke to an online real estate broker about refinancing. He asked me if I wanted to provide documentation. I said to myself, "Are you crazy? A bank is going to give me a loan without knowing if I have any income or assets?" He had offered me a "liar's loan"! I knew it was the beginning of the end. Then a friend tried to buy a house in San Francisco where the average house seems to cost $1,000,000. He put together all the money he had for a down payment and would have had to pay half his monthly income on mortgage payments. Since he had a good income from an I.T. job this was a prime mortgage. The mortgage broker couldn't care less if he would be able to make his payment or even eat. All the broker wanted was his commission, so he could take his family on a very expensive vacation. Then I spoke to a "recovering" drug addict at Twin Peaks in San Francisco. He told me that thanks to his newly found belief in God, he was now a rich man and that he owned five houses in San Francisco and Sacramento which he bought for no money down apparently with subprime mortgages.
About a year later. the value of an MBIA bond, the biggest name in the Municipal Bond insurance business, dropped ten percent overnight. The reason? MBIA had been insuring CDOs, SIVs and other alphabet soup. Not satisfied with a very lucrative insurance business using OPM, greed led MBIA down the slippery slope along with all the other lemmings. Why were mortgages brokers and bankers so non-chalant about writing bad loans? Because they knew they could unload them. Just bundle them into tranches of CDOs and sell them to everybody else. More OPM. So the "best and the brightest" ended up selling bad loans to each other.
Back to leverage, more OPM. These banks and brokerages, more accurately, investment banks ( What ever happened to Glass -Steagall, Mr. Greenspan?) used leverage with ratios like 36/1., like totally other people's money. So everybody including the "best and the brightest" assumed that housing would continue to go straight up. Any fool knows that things fluctuate - even J. P. Morgan said that. Rapacious greed led the entire financial establishment to build a house of cards on bad loans. Give anybody a mortgage! Now the lemmings have reversed gears, and refuse to lend money to anybody including each other. Get a bailout - more OPM - but fight any regulation that might restrain the failings of rapacious capitalism. Karl Marx and Adam Smith were each right about some things and wrong about others. What they both missed is the role of greed in economic life. Marx's biggest errors - the labor theory of value and a complete miss on human nature - the role of incentive or, in plain English, greed. What Smith missed, is the destructiveness of unrestrained greed. Free markets go to extremes and need to be modulated by regulation. When the stock market approached irrational exuberance, Greenspan, just shrugged, Ayn Rand style, and saved himself in his time by creating the housing bubble. One can hope that a third way will work , but I'm afraid the "best and brightest" will always find vast piles of money "bubblicious." They will probably just continue to get high on OPiuM.
Sunday, March 29, 2009
Ratigan Rats Out
It appears that Dylan Ratigan of CNBC is ratting out on the network. Is he the first to go? Maria Bartiromo? Jim Cramer? Susie Gharib and others skipped out almost a decade ago to, horror of horrors, Fox News, or was it MNSBC with Lou Dobbs. Rats leaving a sinking ship? Wither Jim Cramer, viciously attacked for his support of the status quo - touting people into krap all the while. At one point I was addicted to CNBC. Were you addicted, too? It will be most interesting to see where the peripatetic, manic Cramer lands. In outer space? In an insane asylum? I doubt it! Despite all the attacks, I like Cramer and you do, too, or did, because he at least appeared to be outside the box - a very fancy trick for a Wall Street insider. I suppose I should rant against CNBC, but frankly I think there a lot more despicable characters out there.
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