Wednesday, October 8, 2008

Sooners No. 1

In case you haven't noticed, the Oklahoma Sooners are No.1 Go Sooners--beat the hell out of Texas!

Sooners No. 1

Last Night's "Debate"

To call last night's repeat of the same old BS by the presidential candidates a debate is a disservice to American voters. Neither gave direct or complete answers to any of the questions. Senator McCain may well have lost the election by not attacking Obama's same old irrational give away programs without any mention of how he was going to pay for them--"I'm going to cut taxes for 95% of Americans." Why didn't McCain ask him to explain how he was going to cut taxes for 95% of Americans while under his proposed tax program some 25% of Americans would pay no taxes at all? Duh, that math doesn't add up unless 5% are going to pay for increases for 95%, of which some 25% are not paying any taxes at all. McCain needed to attack every nonspecific claim made by Obama and not back off until Obama could come up with a specific answer. McCain also lost an opportunity to throw the blame for the current economic crisis right back onto the Democrats (both Bill Clinton and Democrats in Congress) who have insisted that Fannie Mae and Freddie Mac make loans to those who could not afford them based on historical income to debt criteria. McCain only has a few weeks to expose Obama as an empty suit spouting half-baked ideas with no details on how they would be implemented or paid for and as a truly unknown in terms of beliefs, accomplishments, affiliations,and most of all, absolutely void of any record of leadership on any level. Against a backdrop of economic chaos, a biased national media and an apparent unwillingness to truly "take the gloves off," Sen. McCain is facing an almost insurmountable job. Nonetheless, much can happen in three weeks, including , God forbid, some new global crisis; an opportunity for the recently passed government economic programs to be implemented; some new revelations about Sen. Obama or he commits a major gaff. Also keep in mind that polls were shown on several occasions during the primaries to be fallible . Perhaps most importantly, I suspect many Americans will have second thoughts about turning over the reigns of leadership in difficult times to a totally unknown quantity versus a man of proven leadership skills in the worst of adverse conditions. Regardless of who is elected, the job will be difficult because they will be saddled with an inept Congress that has shown no willingness to step to the plate and make decisions based solely on what is in the best interest of all Americans. Rather, they have consistently voted on a partisan basis with personal political gain as the primary determining factor. What America needs now is proven leadership under adversity. That sure as hell won't come from the Congress and one of the candidates for President has never been in one leadership position in their life . Fortunately, the American people have shown throughout our history an ability to face and conquer any and all threats to our way of life regardless of who controls the White House or the Congress and we shall do so again.

Last Night's "Debate"

Tuesday, October 7, 2008

Economic Mayhem--A Little Simplification

Please excuse my absence from the fray. My wife and I just returned from a two week visit to France, a long delayed trip celebrating my retirement some year and one-half ago. This won't make you feel any better but people are as confused and distraught in Europe as they are here about the economy. I may not be able to make you feel any better but at least I hope I can help reduce all the mass media and political excrement to plain English. Think of it all as what happens when you throw a rock into water--it sets up a rippling effect of ever increasingly larger waves. The rock in this case was composed of tens of thousands of mortgages of which some 5 to 10 percent were much larger than the recipients could afford and became foreclosures. (We'll come back to the cause(s) in a minute.) Most banks sell home mortgages to secondary markets and make their money in origination fees. Larger banks and some pure home mortgage lending companies, retain many of the mortgages they make, thus increasing their margins by keeping the origination fees plus the interest paid by homeowners. The largest home mortgage lender in the nations were quasi government- owned "Fanney Mae and Freddy Mac." When large numbers of homeowners begin to default on their loans, those institutions holding the mortgages begin to lose revenues. Unfortunately, home values also began to decline in a number of geographies and this trend accelerated. Therefore, a large percentage of mortgage defaults left lenders with assets (houses) that had values less than the money owed on these houses by defunct homeowners. In other words, lenders were left with collateral worth less than the amount of money they had loaned and continuing to decline in value. And the number of defaulted home loans was increasing dramatically.

So, who's at fault? In this election year, each political party is pointing fingers at the other. Here are the facts. In the late 1990's during the Bill Clinton administration, Mr. Clinton decided that more low-income Americans ,particularly minorities, should have an opportunity for home-ownership and directed Fannie Mae and Freddie Mac to lower their requirements(income, credit record, down payment). The result was-- guess what? thousands of previously unqualified borrowers were given home loans. But this is only part of the problem. Greed was the real culprit as home values had been dramatically increasing for a number of years and "everyone" wanted a piece of the action. After all, one could borrow more money than one could afford but not worry because the value of houses was going up so fast that borrowers figured they could always sell at a large profit. Flipping houses became the game of the day. Meanwhile, banks wanted in on the action because they viewed such loans as virtually risk free because of the accelerating values, thus if a borrower defaulted on their loan, the bank would gladly foreclose and sell at a nice profit. In this atmosphere of greed, banks and other mortgage lenders relaxed their loan qualifying requirements. The situation was this--borrowers were willing to take chances beyond their income and many lenders were encouraging them to do so.

Meanwhile, investment banking firms, like lehman Brothers, were like greedy sharks smelling the blood of profits to be made off all these mortgages. They bought the mortgages and bundled them into marketable securities. Further, to tempt investors, they also created and issued instruments that amounted to insurance against potential defaults, though they did not label them as insurance to avoid regulatory issues. Banks and other investors all over the world were also tempted by these enormous potential profits from mortgages and/or the securities made up of mortgages. Thus, such mortgages, so many of which were made to borrowers who were not qualified, became leveraged many times to investors all over the world.

Therefore, when defaults began flowing like water over Niagra Falls and home values began tanking from unrealistic and non sustainable levels, the tentacles of disaster ran wide and deep, resulting in the demise of investment and commercial banks around the world, as well as major insurance companies, like AIG, who also had succumbed to the temptation of greed. The result has been a "drying up" of available capital--banks just don't have the money to lend or are unwilling to do so in this environment. Without capital, our economy cannot be sustained, let alone grow. Thus, we have seen the federal government step in with several actions designed to increase liquidity of funds and try to avoid the greatest recession/depression since the Great Depression. Many citizens and small business owners have been and remain under the impression that the government funds being infused are simply "gifts" to bankers and big business. That simply is untrue. The government is receiving assets for these cash infusions. Granted, no one knows what the present or future value of these assets is or may become, but they are not gifts. This misunderstanding is the fault of the media to a great degree, calling such actions "bailouts" and other terms implying that they are free and clear gifts. Even the government only has so much money it can put into the fray and it must choose where it does so based on getting the biggest positive impact toward restoring a healthy economy. Clearly that is the banking industry which must supply needed capital to fuel big and small businesses and thus attempt to restore economic vigor. Government interference in a free economy such as ours is difficult medicine to swallow. Unfortunately, it's the only alternative.

Let us hope that in tonite's debate, both candidates will quite pointing fingers and put forth concrete ideas and detailed implementation plans to help solve our economic crisis. Neither has done so to date. We continue to hear a lot about the need for change but never details as to what that means. Distortion is rampant at this stage in the campaign. Unfortunately, that is nothing new. It's time to force some specific answers from the candidates. Let's hope tonight's format of voter participation in the questions will hold their feet to the fire and maybe, just maybe, someone, whether voter or moderator, will have the guts to say, what the hell are you talking about and what do you mean and not let them off the hook until they give a full ad detailed response.

Thursday, September 4, 2008

2008 Elections Provide Window Into Changing U.S. Political Scene

The post-babyboomer generation of American voters will exert its strongest influence to date in the 2008 presidential election, signaling the beginning of the end of party, Washington Insider and "good old boy" controlled politics. Governor Palin and Senator Obama are both examples of this changing tide.

This newer generation has the largest number of independent voters in U.S. history, reflecting the growing decline in major political party affiliations. Why this changing trend? First, the proliferation of mass communications permits American voters of today to access all the information they need to make an informed decision. Only 30 to 40 years ago, these sources, certainly not in today's numbers, did not exist--i.e., independent cable television networks, talk radio, the internet, etc. As a result, voters depended heavily on the two major political parties and their respective platforms to guide voter decisions. And, the candidates of each party adhered strictly to those guidelines. Voters no longer must depend on the political parties for their information.

Another reason for the changing trend is the growing disdain by this generation for Congress and other professional politicians. In all public opinion polls, Congress falls at the bottom, followed closely by lawyers and the mass media. The perception by a growing number of Americans is that these groups are prejudiced and unreliable sources who have their own agendas and clients.

A third reason, is that this younger generation of voters has grown weary of partisan politics where "the Party" always comes first, regardless of what is in the best interest of individual citizens and the nation.

So, what do these winds of change mean going forward?

For the first time in many national elections, this younger generation of voters has been energized by new faces from outside the Washington D.C. beltway--i.e., Palen and Obama. At this stage in the election, Biden, I believe, is viewed as "more of the same" and McCain, though a veteran of the Senate, has a reputation as a maverick against the status quo, including his own party. Who knows what all of this means in terms of the election results.

I believe a couple of things are for certain however--first, it will be a very close election that will be determined by this growing number of independent voters; and, second, Sarah Palen is going to make it damn entertaining. At the end of the day, though, what independent voters, and others as well, want is effective leadership that they can trust to keep them safe and solvent.

We have had non-Washington "outsiders" elected president and vice president before--Harry Truman, Jimmy Carter and Bill Clinton. The truth is, presidents, whoever they may be, simply cannot effect the kind of change today's generation of voters seek. That can only happen with a fundamental change to our approach at electing those in Congress and fundamental changes in legislation governing "guaranteed" tenures of bureaucrats who populate and control the very bowels of Washington.

In my opinion, we must return to the basic tenants of elective service as envisioned by our founding fathers. Simply put, Jefferson and his colleagues never intended that Congressmen and Senators would serve more than one term before going back home to work and make an honest living. They viewed elective office as a sacrifice for their country and not as a life-long gravy-train for a bunch of self-perpetuating politicians using pork barrel "give-aways" to buy the support of voters in their election districts and states.

I am encouraged by what I see from today's younger voters and believe they are in the best position of any generation to make decisions based on fact and to help right the ship of state.

Sarah The Lion Hearted

Sarah Palin was a breath of fresh air last night at the Republican convention. Honestly, she would not have been my choice as I believe there are better qualified women available. But, damn, I like her and sincerely hope John McCain proves to have been right in his choice. It remains to be seen if she can stand the closer scrutiny of non-orchestrated press conferences, debates and the rigor of the daily campaign trail without committing a major "foot in mouth" or, God forbid, have some devastating skeleton revealed. With that said, Obama and Joe are going to be running the rest of this race looking over their shoulders, because Sarah is going to be taking some big time shots at their butts. You go girl!