Saturday, September 27, 2008

TODAY'S CARPETBAGGERS

About 140 years ago, following the Civil War, Northern businessmen flocked to the South with carpetbags, prepared (so Southerners thought) to loot and plunder the defeated South -- to the victor belongs the spoils. These carpetbaggers bought up the land at huge discounts to the land's former value, and then expected to reap huge profits in cotton with the help of the former slaves, now free men. Most of these "businessmen" never developed a love for the land, like its previous owners had from birth, and subsequently hung on to the land just long enough to turn a nice profit. They took their quickly gotten gains and headed elsewhere, changing little, but upping the cost of business for everyone else who followed them.

Is this starting to sound familiar?

Today's carpetbaggers have not been trading in land. Today's "land" is now virtual real estate in the sense that what is being traded is not the physical property but the mortgage attached to the property - the financial instrument. Today's carpetbaggers went to Wall Street with bags full of mortgages all bundled together, and generated huge commissions based upon the cash flow assumed to be forthcoming from these mortgages. Where the banking community erred was in assuming that there would be an endless supply of able buyers supplying these cash flows. After all, during the period when all this creative financing was making lots of people millions of dollars, if a buyer had trouble meeting his payments he simply turned the property over to another buyer and more paper was created. This paper took the form of second and third mortgages and balloon payments, and a plethora of new and esoteric financial instruments, all based on a forever upward price spiral in real estate. After each "turnover" everyone involved helped themselves to profits and commissions, and even cash back to the purchaser on closing.

Where this ends up is where we are now. The carpetbaggers have sold their bundles of mortgages and moved on with their millions (billions), and the rest of us get left with their empty bag. It is too bad that the money these financial geniuses and masterminds made isn't as virtual as the financial house of cards they built and are selling to the taxpayer. What sickens me is the fact that all the phony profit these people made is being turned into real money as we speak, by the government. Private profits turned into public losses. For shame, for shame.

Saturday, September 20, 2008

Republican Political Savvy At Work

American Political Savvy?


Out from the Alaskan wilderness comes a former beauty queen (runner-up) to the second highest office in the land. Are you kidding me? This stroke of brilliance from the Republican masterminds is a sleight-of-hand worthy of David Copperfield. A party which has recently failed this country in every measure of merit common to industrial nations, and done so in opposition to the wishes of the public it governs, has successfully diverted public attention from the major issues facing our country. This speaks volumes about the public’s political savvy. I am in awe of the fact that a Republican candidate who has voted for the reckless policies of the Bush administration 90% of the time can manage to distance himself from the results of those policies.

While the middle class has seen a drastic erosion of their real incomes, their standard of living, and their net worth and security (most middle-class American wealth is tied to the value of their home) the top 2% of the nation’s wealthiest people and corporations are still receiving bailouts and tax breaks. It further astounds me that the people most negatively affected by the costs of unending wars and unconscionable price manipulations on the part of the oil barons would even consider electing someone closely associated with these disasters.

It is beginning to look like the democrats’ decision to overlook Hillary Clinton for Obama’s running mate might be a fatal one. Americans seem to be more interested in a pretty face at the podium than in the war, the economy, education or health care. So be it. We get the government we deserve.

But wait! Breaking news! The Bush policy of laissez-faire with regard to corporate financial responsibility is actually making news again. As a few more of our oldest, largest, and most respected institutions crumble, Wall Street takes the worst beating since 9/11/01. This, unlike oil prices, won’t have as much impact on the middle class. It is America’s wealthiest who suffer most from collapsing stock market prices. If the current administration’s fiscal policies carry forward to the next administration, more government bailouts of private institutions will undoubtedly be necessary.

Maybe this latest example of the disastrous Bush years will refocus the public on how we got here. In a few short months we will have our answer. Hopefully sanity will prevail and the middle class will have looked past lipstick and rhetoric. Our national focus will move away from the acquisition of obsolete and environmentally harmful energy sources by any means possible, including more war. With a responsible and forward thinking administration we can develop those resources we have an abundance of here in the good old USA; like sunshine, propane, and clean nuclear and coal power.


One final note. It is a real possibility that McCain could have health issues. In spite of the fact that he is in the tightest race in his political career, he has managed to take ample time off and uses weekends to recoup. He is likely to be the last person in politics to accept a 3 a.m. phone call. His age must be considered. If, God forbid, he should succumb to the pressures he inherits from his predecessor, Sarah Palin will step up to the plate. The fate of the free world would then, theoretically, rest in the hands of a prolific soccer mom.



PS: Anyone who thinks a hawk like McCain will back off our military spending to save the economy needs a reality check.