DogJ's Blog

‘Twas the Night Before Christmas

 

by: DogJ - 2008

 

 

‘Twas the night before Christmas, when all through the land

 

Not a person was working, not a woman or man;

 

 

The stockings were hung by the chimney with care,

 

In “Hopes” that Uncle Sam soon would be there;

 

 

The children were nestled all snug in their beds,

 

While visions of I-pods played in their heads;

 

 

And mamma in her ‘kerchief, and I in my cap.

 

Had just settled down for a UAW mandated nap.

 

 

When out on the lawn there arose such a clatter,

 

I sprang from my bed to see what was the matter.

 

 

Away to the window I flew like a flash,

 

Tore open the shutters and prayed to see cash.

 

 

The light on the breast of the woman next door,

 

Gave lust to the night, like never before.

 

 

When, what to my greedy eyes should appear,

 

But an armour truck and eight tiny reindeer.

 

 

With an ethic driver, so promising and slick

 

I knew in a moment it was the President-elect.

 

 

More rapid than rabbits his followers they came,

 

And he whistled and shouted and called them by name.

 

 

“Now Joe! now, Rod! now, Rahm and Barney!

 

On, Chris! on Ted! On Hillary and Nancy!

 

 

To the top of the leadership, to the top of the wall!

 

Now give away, give away, give away to all!

 

 

As ink dries, before the presses are done,

 

Not an obstacle before us, can more cash not overcome.

 

 

So, up to the banks the coursers to save,

 

With a bag full of money, to regulation they said ney.

 

 

And then, in a sound-bite, I heard on the TV

 

The the promises and guarantees were all for me.

 

 

As I drew my gun and was turning around,

 

Down the chimney Uncle Sam came with abound.

 

 

He was dreessed to the 10’s, from his head to his foot,

 

And his Pension was safe, and a pay raise to boot.

 

 

A bundle of “Change” he had flung on his back,

 

And he looked like a politician just opening his PAC.

 

 

His eyes – how they twinkled! His “Change” so merry!

 

His “Hope”was like roses, his “Promises” like a cherry!

 

 

His droll little words wrapped up in a bow,

 

His pockets full of money, for everyone you know!

 

 

The butt of a cig held tight in his teeth;

 

And the smoke and mirrors encircled us with belief.

 

 

He had a broad re-distribution plan, but no money,

 

So he shook and he laughed, “the presses must print honey”!

 

 

He was typical and biblical, a right jolly young man,

 

And I laughed when I saw his economic Plan.

 

 

A wink of his eye and a twist of his promises,

 

Soon gave me to know, I would suffer great losses.

 

 

He spoke too many words, and performed little work,

 

But, plundered the hard working, like a real live jerk.

 

 

And laying his “Vision” ahead of all reason,

 

He stole my hard work! is this not treason?

 

 

He sprang to his throne, to his team gave a whistle,

 

And away they all flew with the greed of a politician.

 

 

But I heard him exclaim, ere he went out of sight,

 

“Merry Chrismas to all, and to all a good-life”

 

Merry Christmas to all the Fox4 bloggers.

May all of you have a happy and safe holiday.

I'll be back on the 26th if there's any news to share.

Recently, another blogger asked me why I only blame society for our economic ills, and not the corporate big-wigs that have perpetrated fraud(s) upon the common man while raking in millions in compensation? So, allow me to respond… and invite your comments on where your blame is directed.

 

First, I blame everyone; Gov’t, Corporate big-wigs and the individual citizen. Yes, I would tend to fault the average Joe more than the others because Joe has the ability to control the others. Unfortunately, Joe has allowed the others to control him, and even more direr, Joe has allowed himself to become dependant on the others.

I’ve lived my life by three simple principles: 1) If it sounds too good to be true, it is. 2) Buyer beware. 3) If I don’t have the cash I can’t afford it. Two of these principles probably sound pretty familiar (1 & 2). I make an exception to #3 for mortgages.

 

Clearly, our Gov’t under two different administrations (Reagan & Clinton) bear great responsibility for where we are today. Reagan dismantled Anti-trust laws that have allowed companies to become “To Big to Fail”. Clinton repealed the Taft-Hartley Act that controlled what banks could and could not do. Combine these two events together and recipe for calamity is in order.

 

Corporations, with new found products and security (if we get big enough we’ll never fail), then went on a rampage of disversification and leverage that has only been seen in the Great Depression. For the last 30 years corporations have only focused on quarterly earnings, not 5, 10 or 20 year visions. As long as this massive growth and earnings were met, we (Joe) allowed the compensation levels to expodentially grow, UNQUESTIONED! Our wake-up call on executive compensation was Enron… and we slept throught the alarm.

 

Regulators (a.k.a. Gov’t) were handcuffed by all the new regulations and accounting principles which accommodated “leverage” WAY beyond what created the first Great Depression. Sarbanes and Oxley has become a joke given the new GAAP (Generally Accepted Accounting Principles). Why is Madoff afforded “house arrest”? Heck, if I had defrauded anyone for $5,000,000 (one tenth of his fraud) I’d be sitting in a 4x6 cell.

 

So now we come to Joe. Why would any Joe need a 125% mortgage? Why would Joe need an ARM when mortgage rates are at 30 year lows? Why would Joe need an interest only mortgage? Why would Joe need a Home Equity (adjustable rate) loan to pay off his credit cards and then not destroy those cards? Why does Joe need a department store credit card for 10% off today without understanding the terms? Note I said “need”, not want. Yes, I fault a lot of Joes’ for finacial stupidty. Would Joe buy week old hamburger meat for .10 a pound? Would Joe buy a “new” GM auto for $500 without looking under the hood or aksing questions? Why does Joe take out ANY mortgage because a realtor or banker told him he could afford it? Does Joe have no idea what HE can afford? Why does Joe pay a mutual fund manager manage his money? Why does the Gov’t force Joe to put his 401k contributions into managed mutual funds and not a self-directed IRA? Why does Joe vote to re-elect the people (Congress) who created this mess?

 

If our country is founded on the principles of, “Of the people, by the people and for the people” shouldn’t the “people” be primarily responsible?

 

This post is somewhat simplified, but who do you blame, and why?

From the Wall Street Journal Market Watch - December 11, 2008

WASHINGTON (MarketWatch) -- Stung by the loss of more than $2.8 trillion in their net wealth, the nation's households paid down debts in the third quarter for the first time since at least 1952, the Federal Reserve reported Thursday. As of Sept. 30, the total outstanding debt for households shrank at an annualized rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report. Households paid off more mortgage debt than they took on for just the second quarter on record. Mortgage debt fell at a 2.4% annual rate to $10.54 trillion, as foreclosures mounted and fewer new mortgages were taken on. "Paid down debt... for the first time since at least 1952... "! Are you kidding me! 60 years of increasing debt, and now the consumer can't pay it back, Hum. The Great Depression

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

Second, there are structural theories, most importantly Keynesian, but also including those of institutional economics, that point to underconsumption and overinvestment (economic bubble), malfeasance by bankers and industrialists, or incompetence by government officials. The only consensus viewpoint is that there was a large-scale lack of confidence. Unfortunately, once panic and deflation set in, many people believed they could make more money by keeping clear of the markets as prices got lower and lower and a given amount of money bought ever more goods.

The Great Depression was overindebtedness and deflation. Loose credit and over-indebtedness fueled speculation and asset bubbles.[

Does any of this sound familiar?

Those who ignore history are destined to repeat it.

The rest of the world cannot understand how after a bitter election campaign, American politicians can so quickly return to reality. For instance, Sarah Palin has invited to her great state of Alaska the men who defeated her, Barack Obama and Joe Biden.
She will provided a moose hunting trip for their enjoyment and has hired two prominent men to assist them.
Dick Cheney will instruct them in safe gun handling and Ted Kennedy will drive them back to their cabins in the evening. What a gal, that Sarah

I'm not a "Sports" blogger, but couldn't resist analyzing the whole BCS controversy. So, let me start with OU/Texas/Tx Tech.

Texas beats OU; Tech Beats Texas; OU beats Tech - Three Way Tie

All Texas can talk about is that they beat OU! For some reason... (because OU "destroyed" Tech), none of the Big 12 talk includes Tech. So, from a seemingly neutral position, I would favor OU because they eliminated Tech from the conversation.

In the last weekend before the Big 12 championship, Texas had to hope for a Baylor upset of Tech to be crowned the champion. Barring such an upset, Texas would be at the mercy of the BCS ratings. No upset, the three way tie turns into a OU/Texas shouting match. So again, what happened to Tech in this conversation? If you don't control your own destiny, how can you claim the top spot?

So, before the BCS, what was a 'normal' tie-breaker? Some cursory researched turned up two typical tie-breakers.                  

a) The point differential between the three tied teams, (assuming they played each other, which they did.). In this instance OU has a +34; Texas a +9 and Tech a -43. Again, OU wins.           

b) The point differential between the three tied teams - for ALL common opponents. (OU, Texas, Tech, A&M, Baylor, Okla State & Kansas). Under this scenario OU + 183; Texas +100; Tech +55. Again, OU wins.

So, the way I see it, Texas never has had an argument against OU! If Texas wants to talk about beating OU, then they need to also talk about losing to Tech!!! Wake-up Longhorns.

Now, Florida (who lost at home to an unranked team) jumping over Texas; that's a conversation.

Remember when:

The Iraqi war was our main concern?

Spending 10 billion a month on the Iraqi war was a concern?

A 500 billion annual deficit was outrageous?

"Renewable energy" was an immediate concern?

Everyone would get Universal Health Care?

Your mail box contained 6 Pre-Approved Credit Cards?

125% Mortagages were the norm?

Okay, enough about last week. Have a happy and safe Turkey day.

Yesterday, in an editorial in the USA Today,  President elect Obama reiterated many of his "promises" that propelled him to his historic victory. So that all of us can reflect back in four years, to see where this great orator has taken our country, I have listed his promises. Please Cut, Paste and Save.

1.    I'll give a tax break to 95% of workers and their families, and eliminate income taxes for seniors making under $50,000 a year. If you work, pay taxes and make less than $250,000, you won't see your taxes increase by a single dime.  2.    I'll end tax breaks for corporations that ship our jobs overseas, and give them to companies that create jobs in America. 3.    I'll eliminate capital gains taxes for start-ups and small businesses, the engines of our job creation. 4.    We'll create 2 million jobs by rebuilding our crumbling infrastructure and laying broadband lines that reach every corner of the country. 5.    I'll invest $15 billion a year over the next decade in renewable energy, creating 5 million new green jobs that pay well, can't be outsourced, and can help end our dependence on Middle East oil. 6.    My plan will make health care affordable and accessible for every American. If you already have health insurance, the only change you'll see under my plan is lower premiums. If you don't, you'll be able to get the same kind of plan that members of Congress get for themselves. 7.    To guarantee every child a world-class education, I'll invest in early childhood education and recruit an army of new teachers. But I'll also demand higher standards and more accountability. And we'll make a deal with every young American: If you commit to serving your community or your country, we will make sure you can afford your tuition. 8.    When it comes to keeping this country safe, I'll end the Iraq war responsibly so we stop spending $10 billion a month in Iraq while it sits on a huge surplus. 9.    I'll finally finish the fight against Osama bin Laden and the al-Qaeda terrorists who attacked us on 9/11, build new partnerships to defeat the threats of the 21st century, and restore our moral standing so that America remains the last, best hope on earth. Have a great day.

"We're From the Government and We're Here To Help" - the Mortgage Bailout Plan.  The FDIC is working with the US Treasury and Federal Reserve on a plan that would share the costs of restructuring loans for home owners to enable them to avoid foreclosure.  For 2008-2010, Moody's estimates that their will be 7.3 million defaults on mortgages with 4.3 million losing their homes.  However, the program could actually increase the number of home owners defaulting and then attempting to access the program.   Why?  LUC.  Mortgage holders who can are making timely payments, but are under water on the value of the home have every incentive to restructure the contract.  

 

 

 

This is why government is more often the problem not the solution.  While progressive politicians like to think they are acting in the best interests of the people, they often ignore the best interests of the economy and enact legislation that has ramifications beyond their level of understanding.  Let's face it if Ben Bernanke and Hank Paulson have problems with reaching into the economy, what hope do we have that Congress is going to do a better job?  In times of great economic uncertainty, the electorate wants protection and what they perceive as safety of the state.  What they will get will be unintended. - BAD LUC

Have you ever tried logging into myfox.com/blogs only  to be greeted with a Notice that your account has been temporarily "Gagged"?

Well, I have, and it gave me the opportunity to talk with and get to know webmaster Rebecca. I'll repeat this later, but what a very nice and understanding person.

So, you must be wondering, how did I get "Gagged?" Well, if you read the Terms of Service and blogging rules, there are a number of reasons why a person can get gagged. Seems I broke the rule of posting personal information about another blogger, which is technically correct. I say techincally, because the person who turned me in actually posted the information and then got riled up when I read it and referred to it in a couple of comments, (Hum). But, to get me, or anyone else for that matter, they deleted the Bio with their personal information, but submitted my usage of it to Rebecca; Sly little fox, weren't they, or snake-in-the-grass, if you prefer; (notice I'm not mentioning any names:-)

So, I email and phone webmaster Rebecca to find out why I've been "Gagged." Rebecca responds within an hour and explains "Why" I've been gagged, but won't disclose "Who". Rebecca and I carefully discuss what has happened and why I posted the personal information, (as if I need to be told Who). I knew Fox could "reconstruct" anything put on their site, and I even had screen prints of my accusers 'deleted'  Bio. So, after friendly diliberations, it became apparent that it wouldn't be timely or cost effective to recostruct, afterall, it was only a 5 day gag. 

So, I'm back, and with a profound appreciation for what Rebecca has to put up with behind the scenes. And to the blogger that manipulates Bio's and Post's to meet your needs - be careful, your being watched.

The moral of this post is, don't post personal information about another blogger, even if the blogger you are posting about did so FIRST!!!

Rebecca, you are great and handled this situation with true professionalism.

 

I've lost more than half my money and I still have a wife!!!

Have a great weekend.

I don't care if you are a Republican, Democrat, Communist, Libertarian, Conservative, Liberal or Centralist/Moderate, PLEASE read the details of what the U.S. Senate passed last night. It contains an additional $150 BILLION in PORK to persuade members of Congress to vote for it.

I don't care who anyone votes for in the Prseidential election, but if you vote to re-elect ONE current member of Congress I HATE YOU! (tongue and cheek people, tongue and cheek).

I urge EVERYONE to contact their Congressperson and say HECK NO to this package (real LOUD please).

Is it possible for Congress's approval rating drop to negative numbers?

Not much has been mentioned in the news about Hedge Funds, so allow me. Hedge Funds are the playground for the rich and edcuated. Want to play with the big boys?  Want to earn returns 3,4,5, or 20 times the norm? Hope you have a minimum $100,000 to throw in. So,  why aren't we talking about the estimated demise of 20-30% of all Hedge Funds, and the underfunded liquidation of 50% more?

Because it's the rich who are getting burned - we don't care. Now understand, these Funds have hurt your bank or investment firm, but nothing like they've hurt their shareholders - those nasty rich people. This my friends is the "UNREGULATED" playground.

How does it work? First, I am no MIT graduate but I do understand the basic concept, so here goes.

A Hedge Fund manager goes out and raises $1 million in cash, (just an example). Then they buy U.S. Treasuries that yield 2%. They take $100,000 of the Treasuries and use it as collateral to borrow $1,000,000 U.S. dollars worth of Japanese Yen at .5%. They convert the Yen to New Zealand dollars and buy N.Z. government bonds yielding 7%. They take 10% (100,000) of the NZ bonds and use them as collateral to buy $ 1,000,000 worth of Mortgage Back Securities (MBS) yielding 6.75%. Then they take 10% of the MBS's and use them as collateral to buy $1,000,000 worth of Crude futures, which act as a hedge against their cross currency exposure. Throw in some puts (shorts) on the finacial firm that lent you money and...  Are you lost yet.

This process is done over and over again, crossing over many commodities, currencies, equities and bonds to where the return on the original $1,000,000 approaches 12, 20, 40%. Does this look too good to be true? Well it's not! It's not until one piece of the puzzle is lost. Oh, I forgot to mention the Credit-Default Swap which insures against the complete failure of the whole puzzle... lol (They just forgot that it can't be a whole puzzle if one piece is missing).

In the 90's, Long-Term Capital Corp. and Franklin Savings in Topeka were two large Hedge players who failed when the historical yield curve inverted for an extended period of time, (they forgot to hedge against something that had never happened). Today, an unprecedented mortgage default rate has caused a big piece of the Hedge Fund's puzzle to disappear. When this happens, margin calls are made, which causes sales of collateral, which causes the net asset value to fall which causes investors to seek redemptions which accelerates the cycle. Things are great when markets are stable and monies are flowing in.

Hedge Funds represent the biggest of the big speculators. They demand and get borrowing facilities that can reach 100 - 1 debt to equity ratios. The returns are astounding, the fall is blinding.

In reality, speculators have very little influence on the market because their speculation/hedge is a move to protect an offsetting position. It's when the market turns ugly that the speculators get exposed. The market kills seculators, speculators don't kill the market. I wonder how many Hedge Funds bought Crude futures above $120? (ouch).

Anyway, Hedge Funds are run by the greatest (oxymoron) mathematicians from MIT, Ivy League and Wall Street. They cruise the streets of Martha's Vineyard and Cape Cod selling their wares. To date, Hedge Funds have not succeeded. Wake up Ivy League.

Hedge Funds will add to our pain, but any attempt to bail them out "for the good of the citizen" is a simple ploy to help some rich friend.

If you own any Hedge Funds, SELL!!!

Feel free to correct me because in some instances my calculator will not handle all the zeros... and I'm not a math major.

 

If the current financial crisis is based on faulty mortgages, and it will take $700,000,000,000 to correct or soften the crisis, then...

 

We would divide the average price of a home into the $700 billion. Assuming a median home price of $200,000 in 2006, we could estimate that there are 3,500,000 homes in or will be in irreparable default.

 

If there are 300,000,000 people in the U.S and 3.2 people per household, then there would be 93,750,000 homes. This mans that 3.73% of all home mortgages are irreparably in default. 

 

Historically, the home mortgage default rate runs just below .25% (one quarter of one percent). Also historically, home mortgage rates run 2% over the cost paid to fund the mortgage. (i.e. A person with $200,000 in cash is paid 4% to fund the home. The buyer of the home pays 6% to "borrow" the $200,000 and the banker gets the 2% spread for arranging the deal and the risk {the banker will always have the obligation of returning the $200,000 and 4%). With a 2% spread and a .25% default rate the bank expects to make 1.75% return.

 

Game on!

 

With the bank making 1.75% and the default rate @ 3.73%, (or any where above 1.75%), the bank is losing all their interest and almost 2% of principal. WAIT, let's throw in a 10% decline in the home value and the bank has lost 12% of the depositors’ principal!!! Do you have money in a bank or a financial firm that holds mortgages??? (Yes, I do). So, if the bank called all the loans and the depositors demanded all their money, the depositors would only get .88 on the dollar AND no interest!

 

So, the questions that need to be answered; Are there really 3.7 million homes in irreparable default? Is $700 billion enough (to much) for you to get your dollar back?

 

Game on!

 

Yeah, yeah, I know, mortgages aren't 100% of the problem and not all deposits become mortgages, so try not to ruin my fun.

 

 

 

Despite the expiration of the time limit to vote for the Bail-out, and the measure failing, House leaders have refused to strike the Gavel, which by parlimentary procedure, must occur to "officially" signal the end of the voting.

House members are chasing around those that voted NO, trying to get them to change their vote.

If the House can't abide by their own rules, (voting time-limit), it certainly must give us great confidence in thier ability to handle the Bail-out monies.

This is like watching a Hollywood movie!

I wonder how much bribery is going on right now... to get someone to change thier vote?