"Untitled For Now" oil on board, 1990.

Down The Rat Hole

If enough Americans understood what has happened in this country economically and to the financial system with Congress’s approval, there would be a revolt in the streets of Washington. Thank God for Major League Baseball, college and professional football and NASCAR racing. Sports keeps nearly everyone inside glued to their TV or in a stadium cheering for their team. The Romans did not have a thing on us. We have our own circuses. The only problem down the road will be the price of bread, but may be congress can bailout the bakeries too.

The country will get the $700 billion dollar bailout, but nothing is going to change because regulation, oversight and auditing are not going to change. Standards should be taken over by the Federal Reserve Bank. By that I mean the rating of debt instruments should be permanently lifted from the likes of Moody's, S&P and Fitch. It would be safer to give them responsibility for garbage pick up, they know garbage. Without removing the rating of debt instruments from the hands of these three private companies with a profit motive, this same disaster will take place again. This is not the first time the rating companies failed to do their job. The New York city default in the mid 1970’s was another time they failed to do their job.

Yes, I know we had a housing bubble, but how do you think the housing industry creates a bubble without financing. The securitization of mortgages and the placement of AAA ratings on mortgage debt not worthy of the AAA rating produced the housing bubble and eventually the mortgage bond market meltdown. You can not have a bubble without air, and giving out AAA ratings on mortgage bonds that should have never received this high rating was the air that formed the bubble. Unless some very fundamental changes are made in the securitization of asset backed bonds, we are just extending the period of time before the next financial crisis.

The reason for the gridlock in the financial and banking industry is because of one word, trust. Trust is the key component of any working financial system. Without trust, borrowing does not take place, loans do not get made. Financing of business grinds to a halt. That is what this is all about. To take trust to a higher level, a system needs to be built that will do for the investment and banking business what the division of weights and measures does for commerce.

This move along with bringing back the Glass Steagall Act and securities enforcement as it was meant to be enforced may get this economy rolling again. As I have said many many times in my postings before, this is not rocket science or brain surgery. Much of this is simple common sense. What is missing is the will of the congress to make the situation right. That means in part the end to shooting fish in a barrel and taking the old and unknowing to the cleaners. As long as congress believes that everyone is a mark until proven otherwise, this shit will continue to go on. The fat cats want their fresh meat, but our congress has to protect the individual consumer from putting poison in their portfolio or their financing of a home. This must stop. It is time for a level playing field.

Now for a word about the debate Friday night. Obama clearly demonstrated that he has foreign policy knowledge and can be the commander-in-chief just as well as McCain and perhaps even better. But it was McCain's appearance on THIS WEEK with George Stephanopoulos that was interesting to me. McCain, in my opinion, doesn’t care about whether his campaign ads are truthful because Obama would not do the town hall meetings with McCain as McCain wanted him to. That's McCain's logic and reason. Furthermore, McCain’s attitude was that he doesn’t care about those of us watching a news program at 9am on a Sunday morning, that the people that will vote for him don’t need the truth. I sure hope the American electorate is watching and learning as we have just over a month to go before election day. I think Obama-Biden is the stronger ticket and would serve most Americans better than another four more years from a Republican administration. I hope everyone will join me and vote for Obama-Biden come election day.

Stay tuned.

Paul Newman Remembered: 1925 - 2008

I grew up watching Paul Newman in the movies. And, like a lot of people, I enjoyed his films and the characters he brough to life with his acting skills. From the movie HUD to COOL HAND LUKE to his later great films, Paul Newman gave us all a lot of enjoyment and fun. He gave a lot and we all got a lot from him. His films; however, will continue to live on and entertain us and generations in the future. Paul Newman was a good man.

Saturday Is For Art

This Saturday I am posting some drawings. I like drawings. In my bedroom, I have drawings hanging on the walls. No paintings hang in my bedroom. We have had a busy week with a lot of business news and politics culminating with a presidential debate Friday night. Saturday is a good time to look at art, and this Saturday it is going to be drawings. I hope you enjoy them.

Chew Gum & Debate

The bailout is coming, it just might not look like the original package of $700 Billion. These politicians have to go back home to their constituents and ask to be voted in for another term and they know that a $700 Billion dollar pill may not be so easy for the electorate to swallow. So, as is usually the case, they will break it up into pieces and put whipped cream on top of it so the people don’t really get a good look at the golden pie the guys that screwed up are getting.

But, it seems like there are a lot of economists that do not like this bailout and they are writing and speaking up. Perhaps we will see some corrective action along with the bailout. But, believe me, just as I write this and you read it, there are people still pushing the philosophy of deregulation of the banking and securities business. These people are called lobbyists because they talk to the politicians in the halls of congress. And believe it or not they still believe that deregulation of the markets and putting aside the securities laws is the best way to go. Why are we not hearing from former Senator Phil Gramm? He wrote the law that did away with the Glass-Stegall Act.

Deregulation and lack of enforcement got us into this mess. It will be interesting to see how many politicians have their head on straight and understand this. The Republicans who have been pushing for deregulation since the ink on the New Deal was just dry, have now seen first hand what deregulation and soft enforcement brings. I would like to have hope, but today the TV will carry any lies spoken and leave them alone. The Republicans will talk shit and no one will call them on it.

Now for the debate tonight.

This is the classic Republican strategy: go after your opponent's strongest suit and try and make it his weakest. Kerry, a Vietnam veteran, was as they say Swift boated. The guy he ran against never saw Vietnam during the war, yet Kerry was vilified for his service.

Obama can think on his feet, but McCain can’t walk and chew gum at the same time. Answer, cancel the debate. What a crock of shit. I sure hope even the most red (neck) Republican can see through this and ask himself, what gives, can’t this guy McCain even stand up to this guy and debate? Well, we will see.

Stay tuned.

Taking a Day Off

In that my brother is coming in town, I am suspending Moneythoughts for today. If John McCain can afford to suspend his campaign for the country, then the least I can do is to suspend Moneythoughts so we can all work on passing this $700 Billion piece of legislation to help our economy. Moneythoughts recognizes that while our message and postings are important to the survival of our domestic economy, a day of rest is sometimes needed. Moneythoughts will be back tomorrow just as mean as ever against those fat cats on Wall Street. So, if you need a fix of Moneythoughts, check out one or more of the many postings I have written about the economy since February 13, 2008, when I started Moneythoughts. If you don't feel up to reading, then just look at my art work that I post every Saturday. Remember a picture is worth a thousand words.

On Second Thought

On second thought, let us fix the foundation before we pour more money down this rat hole.

The $700 billion all at once is a lot of money, but that does not mean it will be put to work all at one time. This we know from the testimony of Secretary Paulson. But something is bothering me about this deal, this infusion of fresh cash that I can not quite put my finger on, but I think I am getting close.

The need is there, there is no question that $700 billion will help mop up a lot of bad debt on the books of many commercial banks. My problem is not with the need, but with the system. When will reforms take place? Do you throw money into a system before the footer and foundation are redesigned? Or, before the reinforced concrete is poured? When does the foundation that supports the whole structure get redesigned and rebuilt?

The Federal Government and the lobbyists that run the politicians do not have a great track record when it comes to reform lately. Everyone knows where the money for reelection comes from on K Street, so what is the incentive to put in place the needed regulation, oversight and auditing that I and others have been talking about for some time. Oh, one more new word, and I love this one, transparency. In the hearings yesterday, the word transparency was used quite often by Secretary Paulson. You would have thought that that was a new word for Washington.

I wish these hearings before Congress were held in the evenings so people that work during the day could watch the hearings if they wanted. This stuff is not that difficult to understand and if more people listened and watched these hearings, perhaps more pressure would be brought to bear on the politicians and government officials. The few retired old people and journalists that watch this stuff is not enough to bring about the change that is needed. We need a mass conversion of political philosophy. From an emphasis on deregulation to the realization that greed & fraud and fraud & greed need to be stamped out of existence, and a new and improved political-economic philosophy needs to be ordained for the United States today . When the Congress and the administration can walk on the water in front of the Lincoln Memorial, then regulation will not be needed. But, until then, the Federal Government better get out the laws from the ‘30’s and ‘40’s and learn from their stupidity and greed of the recent past. The philosophy that regulation is not needed and that it costs too much is pure crap. The cost of ineffective regulation as the Republicans would have it is costing this country trillions of dollars!!! If the majority of people do not understand what brought about the present economic mess and do not vote out of office a political-economic philosphy based on greed and stupidity, then this nation is indeed on its way down. The final chapter of this once great country is being written.

Stay tuned.

New Territory For Our Economy

The history of what got the United States in its current financial mess has been written about on this blog, Moneythoughts, numerous times, but let us review the story briefly once more.

The housing and the mortgage market are tied together. Builders can build houses, but without buyers that process soon stops. My example: the early 1970’s before there where mortgage bonds and the whole process of the securitization of mortgages. Taking mortgages and putting a giant rubber band around them and selling them as a mortgage bonds is a great idea, but was not around in the early 1970’s.. The problem is that unless the mortgages, their quality and that means their ability to pay principal and interest on time, are properly graded and given the correct bond rating, then eventually the market looses confidence in the mortgage bonds and the bonds stop trading because no one knows what is in them and you have a mortgage bond market melt down. There are billions and possibly trillions of dollars in mortgage bonds that no one knows what is there ability to pay. The US Government is about to buy all these bad mortgages and give the banks fresh cash to replace them.

At the same time that the mortgage bond market is being abused by the underwriters and the rating agencies, the domestic economy receives a jolt in the sudden rise in the price of gas and diesel. This takes money out of the system at a time when the people in mortgages they can not afford are trying to hold onto their homes. Then the continuous drain as the American consumer continues to buy everything under the sun from China and other countries. Add to this the amount of debt being created by the US Government to pay for the “war” in Iraq. The debt issuance by the US Treasury weakens the US dollar in the foreign currency markets forcing up the price of oil that is traded around the world in US dollars (oil prices are quoted in US dollars). As the US dollar weakens the price of oil continues to go up taking more money out of the system. Remember the story about the basketball and you can not take the air out of it and expect it to have the same bounce?

OK, now that and a series of bank and investment house bail outs and we are up to present day. What now? Well, we are with our collective backs against the wall. There is literally no where for us to go. The US Government and the US Treasury and Henry Paulson will now be the bank. That is right, just like when you play Monopoly, the board game, someone is the bank. Well, Mr. Paulson is the bank and the US Government is going to give him $700 billion to start the next round of the game. Where is this money going to come from? Well, the Federal Reserve Bank can create demand deposits with each bank that sells the US Treasury its bad mortgage bonds and other bad debt and whatever crap they might have hanging around their balance sheets.

Oh, there are a lot of politicians and talking heads on TV acting like they know what they are talking about, but until you see a real economist on TV talking, the safe thing to think is that we are in uncharted waters and no one really knows what is going to happen. This much I can tell you. The next round of inflation is going to further erode the value, spell that purchasing power, of the US dollar for all of us. And that includes those that accept US dollars for payment overseas.

I want to come back to the idea of regulation, oversight and auditing. These three things right now must replace Father, Son and Holy Ghost. That is how important regulation, oversight and auditing are to the survival of our domestic economy today and in the future. The idea that the conservatives have been espousing for many years now that the markets will regulate themselves is plan unadulterated CRAP!!! I hope you understand that I am understating its importance for the sake of brevity. Think air traffic controllers, would you want to fly without any air traffic controllers on a commercial jet and try and land in New York, Chicago, Atlanta or Los Angeles? Think about all those planes picking their own time to land and the runway they want to land on. What kind of commercial air business do you think we would have with that layout?

Stay tuned.

Greed & Fraud And Fraud & Greed

This is hardly the time to pile on, we have seen enough stupid stuff from government and the financial industry since the 1970’s to the present to last us for another 100 years. Is there anyone with half a brain that still believes that the securities industry and investment banking does not need regulation and oversight? Regulation and oversight not just to exist, but to be enforced. I will continue to repeat myself from previous postings because, as I have said many times, this is not rocket science or brain surgery. The “mistakes” were not mistakes, they are the result of fraud and greed. Or, how about greed and fraud, and every combination of the two.

Now this country is in deep shit. There is no other way to put it. We as a country have done the equivalent of removing all the air traffic controllers, trains signals and highway and street traffic lights from our transportation system, and now after we have experienced numerous crashes from coast to coast, we now are admitting we need regulation and controls. Well, you can thank the stupid people that thought that the free market system could run itself. Such nonsense is just too much for me to swallow. I believe that there were people that knew what the end would look like, but chose not to care because as long as the fat cats got their money, fuck the rest of the less fortunate. Well, now we have the Treasury secretary and the Chairman of the Federal Reserve working together to bail the financial system out of the worst disaster since the Great Depression. Welcome to the world of free markets and unchecked greed and fraud.

This country has been run by some of the dumbest people alive, and now most of America is paying the price. We, as a nation, have our collective backs against the wall. The seriousness of the failures of our financial institutions and our markets have hit the wall. The fall out without government action would be of such size, pain and duration that the ability of this country to survive would be at stake. The measures taken by the US Treasury and the Federal Reserve Bank were absolutely necessary.

As I opened this with the words, “this is hardly the time to pile on,” I want everyone that reads this to know exactly where I stand and what I think. If this country elects McCain-Palin, there will be some serious hell to pay for such an irresponsible decision. These two have not the slightest idea what to do and their economic advisers would spell the death knell for this country. That is how bad the economic and financial situation is in America today. The only intelligent choice to put this country back together on a sound footing is OBAMA-BIDEN. You may think I am playing politics, but I am not. The Republican Party and their ticket will spell the end to America as we have known it.

Saturday Is For Art

This is a rooster I have been working on recently. I know, I copied someone else's rooster, but I don't have any roosters running around my place to paint. I am painting it for a friend's kitchen. I am now known as her cock artist. Whatever. As long as I get paid for this rooster, I'll be happy. This rooster is on canvas, gallery wrap 12"x12", with acrylic paint.

I am working on another larger piece to be titled "Time For A Level Playing Field." This piece is 24"x24" on 3/4" plywood. I will take photos and post as the work is in progress. I have painted a number of level playing field pieces starting in 1990. I sketched the idea for this piece on a Southwest Airlines napkin during my recent trip to California for my daughter's wedding. I love Southwest Airlines.

Even Shakespeare Could Not Have Written This Farce

The problems with our domestic economy and the problems on Wall Street are serious. I and others, more knowledgeable than me, have written over the last several months what needs to be corrected in the area of regulation and oversight with regards to the securities industry. But now since the most recent bit of turmoil on Wall Street with the sale of Merrill Lynch and the rescue of AIG with an $85 billion loan from the people, John Q. Public, tax payer, we hear from presidential candidate John McCain. John McCain is now going to shake up Wall Street and fire the head of the Securities & Exchange Commission (SEC). This is the same John McCain who is for small government and little to no regulation. If the situation was not so bad, it would be funny. Is this a farce I am watching in real time? Shakespeare himself could not have come up with a farce this funny. The guy who calls himself a conservative and a Reagan Republican is now for tougher regulation of the securities industry. As Bill Clinton would say, “give me a break.” However, I think John McCain is serious. Serious about saying anything that he thinks will help get himself elected.

If, the American electorate buys this line of crap, they deserve the government they get.

My fellow Americans, if you are hurting from this economy and you want a change in the direction our country is going economically and politically, then join me and vote for Obama-Biden on or before election day.

Stay tuned.

The Markets Can Get Worse

The stock markets are down and investors are worried about when this falling stock market will reach bottom and start back up. Sell-offs are a normal part of any market. It all revolves around the fact that there are more sellers than buyers and the market makers continue to drop their bid with each trade. When the buyers come back into the market the trend will reverse and the market will go back up as the price of individual stocks go back up.

But, this time, it may take a lot longer to bring stability and equilibrium to the markets. For several months, we have seen a lot of money leave this country. Oil purchases have taken a tremendous amount of money out of our domestic economic system. That along with all the products that are being bought from overseas, means there is much less money in the economy. We have spent our money on gas and oil and other products and we have sent too many dollars out of the country. The increase in oil prices alone has drained a tremendous about of cash from our domestic economic system and our personal wealth has suffered. If $4 a gallon gas has not caused you any problems with your budget then you are among the wealthy few, but if it has caused you to change your buying habits, then you can understand what you have not been able to buy. Your purchasing power has declined as a result of the greater expense to fill your tank.

Move the price of one thing, oil and see what happens to the economy. Our president and vice president just gave the oil companies, their buddies, a big pay off or present. Take a look at what the oil companies made off this jump in the price of oil. Now that the economy is in the tank, no pun intended, the price of oil is coming back down. You don’t need much oil if you are in a recession or heading in that direction. Oh, I forgot, we are not in a recession, we are in a mental depression, and we are a bunch of wieners. Did you know Phil (Ph.D.) Gramm is back advising McCain on the economy and his campaign? Get used to him, he is going to be McCain’s Secretary of the Treasury if McCain get elected. Watch what happens then.

The election of McCain-Palin will put our domestic economy in the tank. If you think things are bad now, just wait they can get worse. This duo knows nothing about running a government and working with the economy at the world level. The foreign element in this equation, I am talking about the other major economies of the world, will back out and off of this ticket as soon as the day after the election. That is my prediction. Those two unqualified people running the largest economy in the world with their ideas about deregulation will spell more pain and suffering for the American people. There could even be a revolution against the injustices perceived to exist on Wall Street.

The world is watching this presidential election with a great deal of interest because investors around the world that hold billions of US dollars and are invested in our stock markets, have skin in the game. Without regulation and oversight, the corrupt practices in the securitization of mortgages into mortgage bonds and the bond rating process, will mean that that kind of business will dry up. Remember, the problem was not with the idea of securitizing mortgages, but the lack of work that went into the rating process. If this one element is not changed, the same mistakes will be made again with the same bad results. The world is watching to see if we have enough sense and the will to correct the abuses and the corrupt practices that exist in our markets. If you think the market is low now, just wait until McCain is elected and watch what the world of investors outside the United States does with their money. They do not have to put up with a corrupt system. They can cash out and take their money to other stock markets. We, the United States, may be the largest game in town, but we are not the only game in town. In fact, the process of selling US dollars has been going on for a while now. It is part of the reason the price of oil had gone up.

Think about it.

It Is Bigger Than AIG

As I have written before, this stuff is not rocket surgery. Building a sound financial system with the proper controls is well within our reach. It is a matter of will. Unlike cancer and other serious health problems that we are still working to unlock the mysteries of, and thus their cure, the financial field is more like correcting the department of weights and measures.

Yesterday we read that the huge insurance company commonly known as AIG (American International Group) has been rescued with an infusion of cash. Why did they need cash? Let me explain.

AIG sells insurance to insure municipal bonds. That means, if you own a municipal bond that is insured by AIG and that municipal bond can not pay the principal and interest, AIG will step in and pay. This is known as bond insurance. Now Moody’s Investor Service and Standard & Poors, who also rate municipal debt, lowered AIG’s bond rating, and as a result of this action by the rating agencies, (I hate that term rating agencies, but more about that later), AIG was required to come up with more cash in reserve to pay off the municipal debt, IF, the municipal debt would go into default. Mind you, nothing has happened yet, no one defaulted, but the way things work, as soon as AIG’s bond rating was lowered by the rating agencies, they, AIG, needed to come up with new cash. It was this new cash that put them in play and forced them to seek help.

What is wrong with this picture? The companies that give the bond ratings for companies like AIG, are the same companies that passed out AAA ratings like candy for all those mortgage bonds that resulted in the mortgage bond market meltdown. Do you see where I am going? The problem of an independent rating service controlled by the Federal Reserve Bank is what is needed. If the US Government is going to jump in and rescue every major financial firm that gets into trouble, then I think the responsibility of calling the game should rest with the league officials. In this case the league official is the Federal Reserve Bank. The rating agencies, and I hate that they are called agencies because they are companies with a profit motive, need to have the responsibility of calling the game taken away from them. They are, in my opinion, a miserable failure.

Now here is the sad part, everyone on Wall Street knows this and they have known this for years. Now, perhaps you can understand why this should be turned over to the Fed just like weights and measures are run by the state government and not by private industry. Do you want the oil companies checking the gas pumps to make sure you are getting what you pay for? At $4 a gallon, I think you want an independent checker of a true gallon. Wall street needs the same thing, an independent checker for the issuance of debt ratings. If the Fed is doing it, and the profit motive is removed from the table, then everyone can be assured that the research and study went in before the rating went on.

See, this is not rocket science or brain surgery, despite what those guys in those nicely tailored suits tell you. What I have just laid out for the Fed, would, I guarantee, prevent another bond market meltdown. There would be no mystery as to how many studs were in the wall. We would know exactly because the Fed would take the time and money to check it out. Here I go again spending the people’s money for more Federal Reserve Bank workers. But, what are we, the taxpayers spending on all these bailouts? Ask yourself, which is cheaper?

Now ask yourself, why is not this going to happen? The sharks on Wall Street at the investment banking firms like to eat fresh meat, that’s why. The privatization of profits and the socialization of losses, that is what Wall Street wants. These people care about one thing, money. Greed is their religion. And, they will get away with it until someone stands up to them and changes the game.

I do not think the Republican Party has the balls to stand up to Wall Street. The Republican Party is in bed with Wall Street. That is why I am voting for Obama-Biden. I hope you will join me.

Stay tuned.

The Sky is Falling

The sky is falling. Well, it might feel like the sky is falling, but it is not really falling. What we are experiencing is panic. Why is there panic? There is panic because many people do not know how many studs have been removed from the wall that supports the markets. When a structure is covered such as a wall is covered with either drywall or plaster, the structural integrity is hidden from view. The question then becomes, are there enough studs in that wall to support the structural integrity of that wall? Unfortunately, no one really knows for sure. One reason that investors are running for the door is that since the Reagan administration and continuing to the present and including the present Bush administration the protections that were designed in the 1930’s and 1940’s, more ancient history, have been disassembled. So, here we are in September 2008 and we really don’t know what is going to happen. We have seen the sub-prime mortgage crisis, the meltdown of the mortgage bond market and now the collapse of another investment banking firm (Lehman) on Wall Street. And, now everyone is wondering, how bad can things get?

Well, my fellow Americans, elect John McCain and his future Secretary of the Treasurer, Phil (Ph.D.) Gramm, and as Paul Krugman thinks, we have a very good chance to have another Depression. But, don’t worry, the rich Republicans will be OK. And all the rest of you out there, well, at least you have your beat up Ford F-150 pick up truck, your pro-life candidate in the White House, no stem cell research, no gay marriage and last but not least our flag. So, the economy may be in depression, but certainly man doesn’t live by bread alone? Oh, you need a job to eat and support your family? But, I thought you were a Republican? And, I thought Republicans only need faith.

There is this clever little saying that those who do not learn from history are doomed to repeat it. The Federal laws that dealt with banking and the securities industry and markets that came out the Great Depression attempted to prevent this country from going through another Great Depression. But over the years, as things held together, the Republicans wanted to destroy what President Franklin D. Roosevelt and the men of the New Deal put together. The safety nets were slowly removed and the lines were blurred and the sharks swam free to feast where they choose. So, trying to put the integrity back into the wall after the Republicans for years have been tearing its structural integrity apart, is not going to happen over night. Unfortunately, another generation will come and go before the wall will be repaired again.

The drama and economic dislocations that our domestic economy is going through right now did not have to happen. These events were man made. There are more than just a few of us out here that know this to be the truth. The presidential election this November may be the most important presidential election since FDR beat Herbert Hoover in 1932. The world markets are watching to see just how dump Americans are. Will the American electorate vote their stomachs? That remains to be seen.

Stay tuned.

Oversight, Regulations & Consumer Protection

"The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren't minding the store," Obama said in a statement. "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression."

Well, how about that, one of the presidential candidates has mentioned oversight and regulation and consumer protections while discussing the problems with our financial system and Wall Street. Can you guess who that may be? Yes, my choice for president Obama is the one candidate who realizes that you can not have a sound financial system without oversight and regulation. The sharks when they smell blood in the water will eat each other. As for the consumer, usually not versed in the finer points of the market, are no more than fish being shot in a barrel.

Wouldn’t it be nice if we didn’t need traffic lights, think of all the money that could be saved. How about highway signs and yellow paint for double yellow lines, just think how much more money could be saved. And with no traffic lights, speed signs or directional signs or double yellow lines, just think how much fun driving would be for the family. Those that want little or no oversight or regulation are asking for the problems we all now suffer with. Without adequate oversight and regulation of the securities business and investment banking, total and unchecked greed takes over.

My fellow Americans, the Republican Party, for the most part, has been disassembling the protections put in place by President Franklin D. Roosevelt and the New Deal that came about as a result of the failures and the greed of the 1920’s and culminated in the Stock Market Crash of 1929. I know for many people in American today that 1929 and the 1930’s is ancient history, but in our case, it is OUR ancient history, and that makes all the difference in the world. Wake up America, if it is not too late, you are being told if you take down the traffic lights and traffic signs, that the traffic will be better. Ask yourself, better for whom? How many foreclosures do we need? How many pension funds their market value decimated do we need? When the guys in the beat up Ford F-150 pickup trucks realizes that I am talking about them, then perhaps, we will have change. I can only hope that that time is rapidly approaching.

Stay tuned.

Saturday Is For Art

It was 16 years ago that I first exhibited my political satire paintings at the Carnegie Arts Center in Covington, Kentucky. The date was May, 1992. Because of my interest in collecting American postage stamps, I hit upon the idea of creating my own commemorative stamps. As you all know, the U.S. Post Office issues regular postage stamps as well as commemorative postage stamps. I painted at that time only in oil and so I had to seal the paper that I used for the stamps with gesso. Here are a few of those stamps I created before May, 1992. All of the subject matter 16 years later is still in the news. Our Energy Policy and Housing this year have hit a new high. Gasoline hit $4 a gallon and so many people have lost their home to foreclosure. These issues were pressing 16 years ago, just not as pressing as they are today.

Many years ago, before photography, movie film or TV, it was the artist that told stories through pictures. Going back to the scenes on cave walls, people have tired to communicate through pictures. In the Middle Ages, when few people could read or write, paintings told stories. In that sense, my work is very traditional, I am simply telling a story or giving my opinions through pictures. Even many years ago, the great painters of Europe founds ways to inject their paintings with political or social comments. Some times it was the subject of the painting and at other times the comment was much more subtle, nevertheless, it was there. While I have shown these three paintings before, I hope you enjoy them.

Time For A Level Playing Field

Marketing, to me, is a most interesting facet of business or for that matter political campaigns. Creating a desire for a product or service that we may not want or even need is basically what marketing is all about. Who needs a watch that costs several thousand dollars to know what time it is? Look at all the watches that will give you the correct time for under five hundred dollars. Or, how about a hand bag for several thousand dollars? I know these are luxury items for those that can afford them, or, for people that don't know what to do with their money.

Now let us turn our attention to the presidential campaign. If you are a Republican, and you vote Republican all the time, straight ticket as we say, then you can stop reading right here, because what I am going to write, you don't want to read.

This campaign season has produced its own buzz words. The most notable of which is the word "change." Obama, I think most people would agree, was the first to use this theme in his campaign. But, now we find that McCain is also using the word and calling himself the agent of "change." It is a fact that McCain voted with President George W. Bush 90% of the time, and yet McCain wants the American people to believe that he is the candidate that will deliver "change." McCain has been in the Congress for something like 26 years and while he has his name on several pieces of legislation, he is hardly the maverick that he would like us to believe he is.

Recently in the campaign, the McCain people have been running ads in Ohio on TV in which it talks about a bill in the Illinois legislature that Obama did not sponsor, but was for. The bill dealt with helping young children know and defend by knowing about sexual predators. McCain's campaign has taken this and turned it on its head and goes on TV saying Obama wanted to teach children about sex before they could even read. It is because of crap like this that I will never vote for a Republican even if he says all the right things. Here we have a man, a father of two young daughters, and this is where the Republicans go after him? I have no use for such people.

If the Republicans are interesting in digging up old dirt, they should look in their own yard, there is plenty of old dirt to dig up there. Have you ever heard of the Keating Five? Well, look it up? See who the Keating Five were and what they did? Charles Keating went to jail for breaking the law. He hurt a lot of old people who had their savings in his savings & loan. This is real stuff, I am not making it up. Google Charles Keating and Lincoln Savings. Google Keating Five. You want dirt, how about real dirt as opposed to made up dirt?

It is no secret that I am voting for Obama. And, I know he alone can not bring all the changes we would like to see by himself. But, I think this November, we might see a big "D" voter turn out. Government can not do everything, and most Americans don't expect it either, but government can level the playing field. Now is time for a level playing field!

Stay tuned.

Remembering 9-11

In memory of those people who died on September 11, 2001.

Untitled For Now, oil on board, 1991.

Ohio Again May Decide The Outcome

In sports today, we have a term “working the refs.” It refers to coaches talking to the refs from the sidelines and giving them an earful about their calls that do not please them. In politics, the term used is access. The talking heads on TV never refer to the business community as working the politicians. There is nothing wrong with every facet of the nation working their politicians to present their point of view, that is the whole point of representative government. We talk and they listen. But the question becomes, who do they hear and listen to?

Tax policy can influence behavior. The country has decided that owning your own home is good for the country so we allow home owners to deduct the interest they pay on their mortgage from their taxes. We tax tobacco to discourage people from smoking because studies have found that smoking is related to several medical problems. So, we see tax breaks or the lack there of can influence behavior. Giving corporations tax breaks is suppose to make them more competitive in a global market. Unfortunately, giving tax breaks to corporations to move jobs in America overseas doesn’t help the people that lost their job. Giving tax breaks to big oil corporations does not promote alternative energy usage. We need to work the politicians to get them to hear the middle-class. That is what this election should be about.

I listen to the political analysts on the TV and they figure that this presidential election may come down to 4 key battleground states. My state, Ohio, is one of those key states. I sure hope the people of Ohio will vote their self interest this time. In 2004, the big issue on the ballot was “gay marriage”. I wonder what issue will decide which way Ohio goes this time?

I have my own set of politico-economic indicators. Come November 4, we will see where the pain index in Ohio is. If the pain index is high enough, Ohio will vote for Obama-Biden. In 1932, the pain index was pretty high and Ohio voted for FDR. There is nothing wrong with people voting for a little relief. The contest will come down to whether the majority of those voting will be influenced by issues outside their own self interest. With the loss of jobs in Ohio and the spike in the cost of gas, perhaps enough people in Ohio have had enough. We will find out in less the 60 days.

Stay tuned.

The Political Season

Don’t you just love the political season? You can actually smell the BS in the air.

McCain-Palin now have the answer to the problems of Freddie Mac and Fannie Mae. You know my friends, understanding what happened in the housing and mortgage business is not that difficult. All you need to know is the definition of a few economic terms or words and you can understand what took place. The first word is market value. Market value is the price something will sell. Market value occurs when you have a buyer and a seller agreeing to exchange a piece of property at a set price. The asking price is the price the seller is asking for a piece of property. The appraisal price is the price someone, who knows the market of a particular area or sector, believes that conservatively the property will sell for. The problem occurs when the appraisal price exceeds the market value. To give a mortgage loan on a property whose market value is less than the appraisal price is courting disaster. When people have their monthly mortgage payment adjusted because they were encouraged to take out an adjustable rate mortgage, and the value of the house falls below what they owe on the house, people may choose to walk away from the house rather than continue to pay the adjusted upward new mortgage payment. When you have enough properties on the market at the same time, the market value of the properties will fall.

What if for example, everyone that owned a BMW put it up for sale at the same time in the United States? What would happen to the price of used BMWs? Do you think the price would go up if the market was flooded with used BMWs for sale? When there are too many houses on the market, the price of homes comes down too. Too many homes because too many people could no longer pay an adjustable rate mortgage payment on a house that was worth, market value, less than what they owed on the house.

A lot of the problems have occurred because of greed and sloppy business practices. As my old investment boss, Joe Hutton, once said, if you keep research files that reflects why you did what you did, they can’t prosecute you for being stupid. You have all seen videos for sale on cable TV called “Girls Gone Wild”, well there isn’t a video yet, but what we had in the United States was Appraisers Gone Wild. Putting a value on a house that has no or little relationship to the market value of the house is simply bad business practices and should be monitored. Oh, that would cost money and be expensive! Well, we hire people to go around a check scales and pumps to make sure the consumer is getting what he pays for. Isn’t the mortgage industry important enough to double check where these appraisal values are coming from?

Greed, greed, greed. It makes the world go round. My favorite song from the movie Cabaret is Money. And that my friends says it all. Money talks and bullshit walks. Home prices will come back because when the housing crisis is pasted, and builders are building new homes again, the price of the construction of the new homes will raise all boats. I told you, my friends this is not rocket surgery or anything difficult like that. Most of this stuff is just common sense, which I know, is not always that common.

Bottom line, I think the Federal government did the right thing in the case of Freddie and Fannie. There are millions of households in America that played by the rules, own one home or possibly two and are not flipping houses to make a buck. For all those families and the retired segment of our population, the government did the right thing. They just need to insure better and more comprehensive business practices when it comes to so many facets of the real estate and mortgage business.

My friends, Stay Tuned.

Bye Freddie, Bye Fannie

There are several factors that brought about the problems at Freddie Mac and Fannie Mae, but the one thing that I continue to come back to is regulation, oversight and auditing. This isn't finding a cure for cancer or building a battery that will power a car 400 miles. These kind of challenges we don't have answers to. But running the mortgage business correctly is not brain surgery or rocket science. What I would like to do with the heads of these two organizations is fire them; however, my kind of firing would be against a wall and put on TV. This is more about mismanagement and greed than anything else. The Federal Reserve Bank and the U.S. Treasury need to make the case for a better and more vigorous enforcement of standards. In my opinion, too much shit passes for acceptable business practice. Everyone wants their piece of heaven and so the struggle for more money continues. Too many people are in these businesses for the wrong reason. Greed unfortunatley is at the top of the list.

Yes, the price of some homes are coming down, but as buyers enter the market a market level will be established where buyers and sellers can do business. The cost of building new homes is not going to come down a lot because the cost of materials is not falling by much if at all. Labor cost may be down as a result of higher unemplyment, but this will be only temporary. The big screw up occurred in the financing of homes and the securtizing of mortgages. Had the rating companies and the investment banks behaved in an ethical manner much of this would have never got on the ground. Why hasn't the Justice Department looked into the business practices of the rating companies and the investment banks? As I have always said, money talks and bullshit walks. No investigation because we don't want to know who did the bad things. Let us just call it the economic cycle and cover it up. The people that lost money in Freddie and Fannie, the shareholders, they are not at fault. The authorities should be looking at the upper levels of management for their clues of mismanagement. But, it appears these guys will just get to walk away from the wreck they helped create. Don't want to make an example of nice greedy people.

Saturday Is For Art

Here are two shadow boxes made from the top and bottom of a Whitman's Sampler box of candy. I used cardboard, cereal boxes, gesso, glue and acrylic paint. The top box is from one of my icons the Butterfly Flag. The bottom box is another one of my icons, The Level Playing Field. Art does not have to be expensive. I like the idea of using cardboard and cereal boxes to make new art.

1948 To 2008: I Have Been There

In 1948, I was really to young to understand that Truman had upset Dewey to win the Presidency as I was only six years old. We did not have a television, now known as a TV, in our home until 1950. By the time 1952 rolled around, I was a little more aware of what was going on as the TV gave me a view of the nation and the world that the photographs in my weekly LIFE magazine could only hint at. There was the newsreels at the picture show that I would see every Saturday when I walked to the Forest Theatre for a double feature of cowboys and war films. But that little 12 inch screen on our Trans View television in its wood cabinet, brought the political world right into our home. Everyone liked IKE, he was the hero of the Second World War. But Richard Nixon was something else for me at least on television. As a 10 year old, I thought Dick Nixon's smile was forced and not real the way Ike's was. Even Stevenson, who was my man, had a natural smile that said he was a good man. Bottom line, I did not like Nixon's looks at age ten, and by the time he ran against JFK in 1960, that's John F. Kennedy for those that don't know what JFK means, I still did not like Nixon's looks and thought he was a sick guy with some serious problems. Back in 1960, America looked quite different. Television, except for sports, was nearly all white. The '60s had just begun. The election of the first Catholic as president in November, 1960 was a major event in America's political, social and intellectual history. Today, 48 years latter, it is perhaps difficult for someone born in the '60s,'70s,'80s or early '90s to fully appreciate what that time meant to so many of us that were not White Anglo Saxon Protestant, also known as WASPs. Here we are in 2008 and another challenge awaits us. Whether you are a Republican, a Democrat or an Independent, the United States as the dynamic society it is, continues to move towards its ideals. Life, Liberty and the pursuit of Happiness gives each one of us something to strife for. It may not always be there, but like the Level Playing Field, it is the challenge to get there and the opportunity to make it a better country that gives us hope.

The Federal government is a big organization made up of people just like you. Some do a good job, I know this because I have talked to them on the phone when I needed help. Some should be fired. But, regardless who gets elected, the Federal government is not going away. The idea that one party is going to change all that is a myth. As a country, many problems must be addressed at the Federal level, there is no way around it. Nebraska does not need its own Navy. Health care for our people is something we should all have regardless of our pay grade or if we even have one. A national energy policy to reduce our dependence on foreign oil is long over due. And, my favorite issue, better enforcement of the investment and brokerage and investment banking industry is also long over due. Level the playing field for the trillions of dollars invested in public and private pension funds for millions of American workers. Fraud and near fraud must be stopped if people are to have confidence in the market. Shooting fish in a barrel has got to stop. People saving for their retirnement are not fish.

So, here we are 2008, like 1960, has a new hope in the air. JFK was not the first Catholic to run for the presidency. Al Smith tried in 1928 and lost to Herbert Hoover. Obama-Biden, a black man and another Catholic, are making a run at the presidency today. If they lose, I hope it is because people voted for McCain and not out of fear of a black man sitting in the Oval Office. I am a Democrat. I am hard wired that way. I will vote for Obama-Biden in November and I urge everyone that reads my blog to look at the issues and vote. Vote FOR something, I am.

Check this out: http://www.washingtonmonthly.com/archives/individual/2008_09/014563.php

Stay tuned.

What's On The Tube?

I returned from the west coast recently and still in the process of getting caught up with things. The political conventions have taken over the news along with the weather in the gulf. Just 2 more months before the presidential elections and I am receiving stuff on the Internet, some emails, that makes me wonder just what the combined IQ of this nation is? Something as important as who we elect as president of these United States is reduced to such nonsense by the politicians, their operatives and the media. Countries really do get the governments they deserve. In a democracy like ours, we get to vote for a president every four years, and while each political party tries to present their candidate as the best person for the job, there are a number of differences in each candidate's approach to government and the issues that affect us at the national level. Some people buy after they read a consumer report of the product, while others just buy a product because they like the way it looks. Presidential elections are the same way. Some read and study the differences on the major issues, while others just go with what appeals to them in looks. In 2008, there are some very significant issues that require leadership at the national level, and the economy is just one of them. It will be interesting to see if the majority of people that will vote for our next president in November will be more concerned with the candidate's position on the issues, or, will people vote mostly on appearance. Since the beginning, the United States has only had white men as presidents, but this year for the first time we have a choice of color. It will be interesting to see if the United States is ready for a black president. Personally, I like Obama's position on most of the major issues affecting this country. I also think McCain is a decent choice too, but he doesn't line up with me on most of the issues. I also think Joe Biden is a better vice presidential candidate than Sarah Palin. I hope the voter turn out in large numbers. Our president is an important leadership position for us at home and around the world. It will be interesting to see what factors drive this election and how the majority will vote. Stay tuned.

Mickey Mouse Nation

Happy Labor Day.