Friday, July 31, 2009
Thursday, July 30, 2009
Robert made an interesting comment about my post yesterday about inflation. Yes, inflation can be a difficult thing to analyze. It is true that electronic prices have come down as the price of chips and other electronic parts that are mass produced flood the market. Then we have the forces of supply and demand at work. Car prices can be a bit more difficult as no one would suggest that a 2009 Ford Mustang is the same car that Ford built in 1969, 40 years ago. Automotive engineering, over 40 years, has certainly produced a safer and better car on so many levels. Would it make sense that the two cars, collector value not withstanding, be priced the same. Economists can also measure inflation by using a "basket" of items. The Federal Government uses what they call a "C.O.L.A.", cost of living adjustment. The COLA is used to adjust for inflation as the Federal Government raises benefit checks periodically.
But, the basic point I was trying to make is that inflation that results from inflating the currency year after year has driven home values up, real estate up and wages up. But, what about the savings rate? Who wants to save money if their money is losing purchasing power every year they hold it in a savings account that is paying a low interest rate? (Remember the Federal Reserve Bank can put more reserves in the banking system to keep interest rate down and thus encourage borrowing which propels the economy.) The incentive is to borrow and pay back the loan with inflated dollars. My question is: if this is the way our economy is going to be run, (monetary and fiscal policy), and people's savings are going to be eaten up by inflation, then the only option left is to invest in the capital markets. For giant pension funds, there really is no other option. Yes, they can buy commercial real estate, forestry lands, private equity funds, etc., but they must, by necessity, keep money invested in marketable securities that trade on a regular basis. Whether these securities are U.S. Treasury bills, notes or bonds, or common stock on or off an exchange (NYSE), the fact remains that large state and private pension funds must be able to liquidate their assets to raise cash, and actively manage their portfolios.
The Federal Government needs to take an interest in the shape of the playing field that these transactions are taking place upon. What percent of the American population, whether in a pension fund or 401-k, is invested in our capital markets? I do not think we need to count the number of families that have their retirement tied to our capital markets through retirement accounts. Yet, where is the march on Washington protesting the failure of Congress to protect the American people against the financial terrorists that bombed almost every family's financial security? There should be at least 100 million Americans up in arms about this.
Wednesday, July 29, 2009
More rain in Cincinnati and my sunflowers continue to grow.
The main topic today is monetary policy, or the way monetary policy is run in the United States. Monetary policy is run by the Federal Reserve Bank (1913) our central bank that was created by Congress. It is my opinion, that the Fed has gotten involved in things that should be handled by the Congress, but since so few people have any idea what monetary policy is, or does, no one, and, especially the talking heads on TV, say anything about this.
Yesterday I read a short article in TIME magazine about the minimum wage. Can people live on a minimum wage is a real good question. But a better question is: why does the minimum wage need to be raised every few years? Inflation? Yes, inflation makes it necessary for the Federal Government to raise the minimum wage every few years. But, did you know that on an adjusted for inflation basis, the minimum wage was the highest in 1968? Back then, you could buy 5 gallons of gas where today you buy less.
This morning while watching Morning Joe on MSNBC, one of the talking heads said that not everyone is going to be able to own a home. That there will be some people who, because they earn a minimum wage will have to rent their whole lives. That means that if you rent your whole life, you can not lock in your rent the way a person who buys a home and locks in their mortgage payment for 30 years. (I know in some parts of the USA there is rent control, but for my purposes, let us leave this out.)
Monetary policy is run for the benefit of those that can borrow. If you can not borrow money, you are left on the sidelines. Borrowing money to buy a home gives you a certain measure of stability. And, if you buy a building with several apartments, or a 2-family (duplex), the rents help you pay the mortgage. In periods of inflation, rents go up and more money comes in, while at the same time, the mortgage payment is locked in for 30 years. Owning is better than renting under the way monetary policy is run in the USA. The idea that everyone who can afford to own a home should try to buy a home is still a good idea. The trouble came when it became perverted and people that had no business taking on such a huge mortgage tried to buy a home on a liar's loan.
So, where am I going with all this? Right back to the issue of consumer protection for home buyers and SEC protections for investors. If, we establish that monetary policy is going to be run for the benefit of those that can borrow, see why credit ratings are so important to both individuals and corporations, then inflation will follow, and as inflation follows, it becomes necessary for a whole group of institutions to invest funds for the future. If people and institutions must invest to maintain purchasing power because monetary policy is going to be run in such a way as it creates inflation, then does not it fall on Congress to at the very least protect both individual and institutional investors against unsavory practices by Wall Street?
The old saying, "the rich get richer and the poor get poorer" is not too far from the mark. When Congress lets Wall Street make "marks" of us all, the whole country pays. Look around, the mortgage-bond market meltdown, the financial crisis and the economic crisis that followed are directly related to the lack of creditable regulation, auditing, oversight, transparency and enforcement of the Securities Laws (1930s) and the Investment Acts (1940s) that were already on the books.
People will have to wake up to the man made financial and economic disaster that just occurred before change can take place. It is your hard earned money they are stealing, and only you can stop it.
P.S. You need to write your Senators and your Representative about your concerns for a more level playing field for investors both large and small. Wall Street has highly paid lobbyists to make their case, you need to counter too. We have the vote, now we need to use it. The revolution is just beginning!!!
Tuesday, July 28, 2009
Today has got to be short and sweet. I have things to do and a new gallon of gesso to use.
Over the last 18 months, I have written a number of pieces about the economy, inflation, monetary policy, investment securities, etc. Travel back today a pick a post and read it. The economics does not change. The movement of capital is still the primary reason for investment securities. Capital from people that need to invest to people that need capital to grow their business. Whether a giant corporation or a start-up corporation, capital moves in the direction of those that can employ it to build their business. Credit, another form of money, needs to flow so that businesses have a reason to grow. Without customers for products and services, there is no reason to borrow capital to grow. The movement of credit at the consumer level moves the needle. Honest and fair consumer credit is an important piece of the economic puzzle.
Monday, July 27, 2009
The summer months, June, July and August, are the fastest months of the year as far as I am concerned. It is now already the last week of July and by the time I turn around it will be September. I love hot weather. Even as a little boy, I hated a cold summer day because I could not go swimming. Time maybe relative, but my favorite three months go by in a week.
The Dow, Dow Jones Industrial Index, went over 9,000 last week and it only brings us back to January of this year. Yes, earnings of some corporations are going to start turning around, while with some the red ink is drying up, others, the black ink is just getting uncorked. For years I have heard that the stock market anticipates future earnings. We are talking EPS (earnings per share). But what do we really know about how a large corporation manages their earnings? I watched as a stock I own fell like a rock from their own office tower in downtown Cincinnati. Now as it starts its way back up, I wonder how the growth of those earnings will be managed, or whether the earnings will be permitted to show through. There are more than a few tricks for management to manage earnings. I guess I will just wait and see.
I have not read enough about the new legislation to protect consumers and investors; however, I am interested in seeing what actually is put into law.
Sunday, July 26, 2009
Saturday, July 25, 2009
There are several pictures of my sunflowers that I want to post and share with you, so I think, rather than post old art, I will post new photos of the sunflowers. We are having a great summer for growing flowers. Plenty of rain and sunshine, I guess that is all it takes. I am not a green thumb type person, so the success of my flowers has gone far beyond my expectations. I hope you enjoy these shots.
Friday, July 24, 2009
I am busy today with other things, but I want to make a few comments about the craziness that is on TV. This talk about President Obama not being an American citizen is just plain crap, but it is also dangerous in my opinion. The Republicans had better not play with fire because when the wind changes direction they can get burned badly too. The responsible and level headed elder statesmen of the Republican party need to smother this because if it continues, it may come to no good. I repeat, the direction of the wind may change and those playing with fire may find themselves burned badly. Think of the good of the whole country, and let us play by the rules. Obama was elected by the majority of the people. He is an American citizen born in Hawaii to an American mother from Kansas. He is by our laws an American citizen. Smart Republicans, listen to me, winds change direction with little notice, put out this fire now.
Thursday, July 23, 2009
The present health care system in the United States is like a 90 pound weight around the neck of a 100 pound swimmer, it is pulling everything down. President Obama, in my opinion, made the case last night for health care reform in the United States. If we continue down the present path, we, as a nation, will weaken our domestic economy because of the drag affect that the health care expense is having on our economy. People, as a rule, are fearful of change, but continuing down the present road will leave this nation worse off than adopting some necessary changes.
It gets me when people say the only thing government does right is the military. But, if you look at the military up close, you will see that the military is not perfect either. We have government employees at many levels, from federal to the local village, and by and large all these people take pride in the job they do, so let us get off their backs, and drop the idea that government is the problem. In the United States, the people are the government. After 9-11 we do not hear too much negative talk about fire fighters, do we? Police risk their lives every minute they are on the beat. So, let us put away this crap about bashing federal, state and municipal employees, these men and women make this country work at the governmental level. I worked for the State of Ohio as an investment officer, and I was a member of a team of people that performed with professionalism and did a good job.
There are millions of families losing their health insurance and this is pulling the whole nation down. We need to change course. Even those with good health insurance can find themselves broke and homeless through no fault of their own. The health care system in the United States needs to be changed for the good of her people and for a sounder economy.
Wednesday, July 22, 2009
Yesterday, the Chairman of the Federal Reserve Bank, Ben Bernanke, spoke before the House Committee on Financial Services. Personally, I find this to be very interesting. Unfortunately, I missed it, but these are my comments.
It is my opinion, that our central bank, has as its primary responsibility to protect the integrity of the U.S. dollar. That, in my mind, is of primary importance. Let me put it in a sports analogy. The Fed, if we are talking baseball, is responsible for the integrity of the baseball. The baseball when hit by a bat should not travel as far as a golf ball, nor should it travel as little as a beach ball. For me, the integrity of the U.S. dollar is of primary importance.
Second, the Fed should see to it that there are enough reserves in the banking system to move the economy forward. However, in my opinion, it is not the Fed's responsibility to see to it that there is full employment. That is the job of Congress and the Administration, as they craft fiscal policy. Monetary policy is the wrong tool to deal with full employment. And, while Congress may think that everything they fuck up can be blamed on monetary policy, the truth is, this is not the case.
Asking the Fed to be responsible for something Congress should do is not surprising. Congress dropped the ball on regulation by deregulating the financial industry. Those idiots that think we were "now too big for little boys clothes", in their infinite wisdom decided that the country did not need financial regulation anymore because we were all grown up. Former Senator Phil Gramm is one of those idiots, and he has a PhD in Economics. I did not know you could get a PhD in Economics as a prize in a Crackerjack box. (My apologies to Crackerjack, they give decent prizes.)
The Fed is being asked to do jobs that a central bank should not have to do, but this is typical of the kind of lawmakers we have. I am at odds with the way monetary policy has evolved to be run in this country. In my opinion, it is not anywhere near being a level playing field. Monetary policy is run for the advancement of the economy at the expense of those that do not invest, but rather save their money in a bank savings account. To me, this is not a level playing field. People should not be "forced" to turn their money over to Wall Street to keep pace with inflation. Do you see where I am going?
The individual and institutional investors have little choice but to enter the capital markets and invest in fixed income securities (mortgage-backed bonds and other debt instruments) or stocks, whether common or preferred, to maintain the purchasing power of their dollars.
I am willing to go along with a little inflation for the good of the overall economy, but only if the investor and consumer protections are real, have teeth, are funded with live people to enforce the regulations, do the oversight and auditing, and then the investigation and prosecution of the bad boys that break the rules.
What we got from Congress was the dis assembly of the regulations passed in the 1930s and 1940s, an idiot savant like Alan Greenspan running the Fed, and a few presidents that did not give a shit about the ordinary citizen. And now, Congress does not think the Fed did a good job. Who is going to hold a hearing about the job Congress did to fuck it all up in the first place?
Tuesday, July 21, 2009
White House targets ratings firms for oversight
3:50 pm ET 07/21/2009 - MarketWatch Databased News
WASHINGTON (MarketWatch) -- The Obama administration moved Tuesday to crack down on credit-ratings agencies' conflicts of interest and other controversial practices, in a bid to rein in a part of the financial services industry that has been blamed for contributing to the credit crunch by issuing overly rosy ratings.
A central feature of the proposal unveiled by the White House would bar rating firms from consulting with companies they rate.
Rating agencies have come under stinging criticism for their role in the financial crisis, in part, because many of the leading firms gave AAA ratings -- the highest mark available -- to problematic mortgage securities containing sub-prime loans.
The proposed regulations, which are subject to Congressional approval, also would require corporations to disclose "pre-ratings" -- those obtained from rating agencies before a rating firm is actually selected to conduct a rating.
Under another provision, investors would have access to all the pre-ratings a corporation received for a particular security before a final rating firm is selected.
That measure is intended to eliminate a practice known as ratings shopping, in which a corporation solicits preliminary ratings from multiple agencies and then only pays for and discloses the highest rating it received.
The proposal will be considered by key lawmakers on Capitol Hill, including House Financial Services Committee Chairman Barney Frank, D-Mass. Frank and his counterpart in the Senate, B Christopher Dodd, D-Conn., have both indicated that they will seek to introduce some sort of legislation to reform rating agencies.
On Wednesday, Securities and Exchange Commission Chairwoman Mary Schapiro is due to testify before Frank's committee and she is expected to discuss ratings agency reform.
Ratings legislation is expected to be lumped in together with bills seeking to hike oversight of hedge funds, executive pay packages, credit cards and reform of bank regulators. A legislative effort in the House to create a Consumer Financial Protection Commission will be put off until September.
Some ratings-agency proposals don't require legislation and could be approved by the SEC.
The White House proposes to have the SEC set up a special office to watch over rating agencies. Schapiro indicated last week at a congressional hearing that she may support disclosures about such "pre-ratings."
However, Columbia Law School professor John Coffee argued that rating agencies would simply stop doing pre-ratings to corporations and instead provide broad qualitative descriptions about whether they have a high or cautious opinion of the security being reviewed.
"There will be a mutual agreement between the corporation and the rating agency not to provide a pre-rating because of the disclosure requirement," said Coffee, who specializes in securities law. "It will be easily evaded."
At the same time, Coffee backed the idea of barring rating agencies from providing consulting services to companies that are also ratings clients.
"This was a major problem, even if rating agencies said they had protective walls between the rating divisions and the consulting divisions," Coffee said.
The proposal also seeks to have a credit agency disclose the fees paid by a corporation for a particular rating as well as the total amount of fees paid by the corporation to the rating agency for the previous two years, in order to reveal any conflicts of interest between the two entities.
"Corporations pick and choose their favorite, in part, because of previous ratings," Coffee said.
Michael Barr, assistant Treasury secretary for financial institutions, said the Treasury examined a variety of models, including a mandate that investors, rather than corporations, pay for ratings. Barr pointed out that some companies are offering investor-paid ratings, which "add to the diversity" of ways ratings are produced. "We think it is good; we like diversity," he said.
The proposal also would require seek to limit conflicts that occur when a rating agency employee goes to work for a corporation that is having its securities rated. In such a circumstance, it would require agencies to conduct a review of ratings of the corporation to determine if any conflicts of interest influenced the ratings.
The White House's proposal also would have each rating agency designate a compliance officer responsible for overseeing internal controls. The credit rating firm would need to provide more details about risks related to any rated security, such as data about the probability of default.
Barr argued that investors will be able to rely on the data in addition to the ratings. "Having that information is good for the investors and markets," Barr said. "This additional information will increase market discipline by providing clearer estimates of the risks posed by different investments."
However, Evan M. Drutman, partner at Alston & Bird LLP in New York , questioned whether all that information will have any impact on investor decision making when it comes to ratings. "With the investor has all that information are they going to rely less on the numerical rating?" he said. "My guess is they will still rely on the numerical rating."
The job is not done until the legislation has passed and the proper funding is approved. Now is the time to let Congress know they are being watched.
Monday, July 20, 2009
Thanks, Fred ~
I think I can learn a lot talking to you. And, yes, I get it about "critical mass." What amazes me is how complacent I am, and others like me -- even though we've been victimized (lost lots of $$) due to the pervasive frauds, we seem content to sit back and let somebody else drive the bus. It's not that we're stupid or incompetent -- we're overwhelmed by the enormity of the crimes and feel impotent to do anything.
But 50 years ago, who would have dreamed that Obama could have been elected president? I cried on election day -- as I stood in line to vote, I felt so proud of our country and our people -- so proud that we had come far enough to allow Obama to even be running for office.
Human Rights and Financial Rights don't seem to equate in our hearts and minds. We're willing to go to the mat for equality, but somehow, we don't believe we can go to the mat for fiscal responsibility and soundness. I suspect part of the reason is that we've taken for granted that the people who guide fiscal policies are smart and honest. The first is emotional; the second, rational. We don't seem to know how to fight for things "rational."
Very well put. You get it. Now help spread the word. This stuff isn't rocket surgery. A tiny group of people hold the keys to power and Wall Street knows that they can "buy" politicians with campaign money. By changing the laws with regards to the financial industry, Congress destroyed the laws that protected the investor. The rest is the result of greed again by a very few. A tiny group, relatively speaking, became very wealthy at the expense of a whole nation. When enough people wake up to the realization of this fact, then real change can begin. The Federal Government has a role to play, but, unfortunately, we, the people, must see to it that they play their role properly.
Sunday, July 19, 2009
Saturday, July 18, 2009
This shadow box is a work in progress. It is made from a candy box lid, cardboard, gesso and acrylic paint. This is one of my many icons that I use in my political art. Mother & Child: A Shadow Box is nearly finished. I had put it to the side while I worked on other things. Now it is time to finish it.
Friday, July 17, 2009
Well, Friday is finally here. The day of the Cincinnati T-Shirt Festival. So, I have to get myself together and get down there and hopefully sell a few t-shirts. It is going to be a long day, but tomorrow I can rest.
The photo is of Bud, my room mate. Chubs, the cat, didn't get into this picture.
Thursday, July 16, 2009
Tomorrow is the Cincinnati T-Shirt Festival on Fountain Square. I will be busy tomorrow morning getting my booth set up, so I will probably not post anything tomorrow. In my effort to help fight inflation, I will be selling 50/50 poly-cotton t-shirts for $10 each or 3 for $20. 100% cotton t-shirts with the Ski Cincinnati imprint will be available in short sleeve $15, and long sleeve $20. All I need is a little sunshine and we should have a fun time. Hopefully, I will remember to take my camera and post some pictures from Friday's festival Saturday morning. Fountain Square is a beautiful place to have a t-shirt fest.
Wednesday, July 15, 2009
Tuesday, July 14, 2009
Yesterday, I took a little time to watch the Senate confirmation hearing of Justice Sonia Sotomayor. I guess you really have to be either a historian of American Political History, or have lived, and be able to recall the history you have lived during your past 66 years. I have the unfortunate position of being a little of both.
Watching Republican Senators from the South, like Alabama, talk about prejudice is a bit like living through an Alice In Wonderland story. Why are these men from the deep South Republicans anyway? In 1948, when Harry Truman ran for President, all senators from the deep South were Democrats. What happened that caused them to change?
I remember watching on black and white TV as Governor George Wallace read a speech and stood in the doorway of the University of Alabama protesting the Federal Government's interference in the "right of the state" to decide who could go to a state university. The major requirement back then to go to the University of Alabama was being white. In the early 1960s, during the Kennedy administration, a black man needed the help of the Federal Government to go to class. The south had back then what they called separate, but equal. It was separate, but it was not equal. Today, when I turn on my TV and see the complexion of the University of Alabama football team, I can not help to think back to that shot in my mind of Governor Wallace standing in the door and reading his speech.
The South flipped to become Republicans over the issue of States Rights. As they, in the deep south, saw it, the state had the right to refuse a person an education at a state supported university on the basis of color or race.
Now fast forward 60 years to 2009, and now we have a Hispanic woman well qualified to be a Supreme Court Justice, but we are hearing from the white senators from the deep South that this woman might be prejudice? These senators are cards like in the story of Alice In Wonderland, "off with her head?" No, confirm her as a Supreme Court Justice now. Enough foolishness, we have a country to get back on its feet.
Monday, July 13, 2009
What has happened to your money over the last 50 years? 40 years? 30 years? 20 years? 10 years?
For those of you who were not around 30, 40 or 50 years ago, you might ask, what does this have to do with me? My answer is, just wait, it will in time have everything to do with you.
The system of capitalism that has evolved over the ages, has a flaw. The flaw is in the way the Federal Government, and not just our Federal Government, has the right to print money and borrow money. Like any big business, the Federal Government needs income to provide the goods and services that it provides to its various departments. The problem emerges when the Government spends more money than it takes in. When this happens, the Government can borrow money by selling Treasury notes and bonds. Treasury Bills help the government manage its cash flow.
The central bank, our Federal Reserve Bank, is part of the system. The Fed can print Federal Reserve Notes. Take out a piece of your paper money and look at it. At the top of the bill are the words "Federal Reserve Note". The Fed operates monetary policy through its tools such as Open Market Operations (where it buys and sells Treasury Notes, putting or taking reserves into the banking system) also setting the Fed Funds Rate, that banks can borrow reserves at the discount window, and finally the Reserve Requirement, where the Fed can restrict or enhance the flow of credit. These are the basics.
Now when we have deficits over a long period of time, and there is more money in the system chasing fewer goods, or labor cost rise making it necessary to raise prices, we have inflation. Inflation over a period of 50,40, 30 or even 20 years can result in the purchasing power of your dollars declining. The house that you bought 50, 40, 30 years ago is now selling for a lot more than you paid for it. A car is selling for a lot more now than it cost 50, 40, 30 or 20 years ago. Your savings in a savings account has not kept up with inflation as you have paid income tax on the interest you have earned and yet the purchasing power of the dollars has evaporated.
How do you like the game so far? This is the game you are in, so I hope you like it. Your job is to figure out a way to maintain the purchasing power of the dollars you have put away for a rainy day or retirement. So, you invest. The problem recently is that the Congress has passed new laws that have made fraud by Wall Street legal. Now, how do you like the game? This is the game you are in, so again I say, you better like it. If you don't like the way the game is being played, you better get involved in changing the rules of the game. That means you are going to have to write and talk to your Congressional representatives and persuade them to change the game, or, just level the playing field so you have a fighting chance.
I have written before that this is not rocket surgery. This stuff, money & banking (monetary policy), Federal spending (fiscal policy) and the Securities & Exchange Commission, control your life and your future. It is not left or right, it is right down the center. People need to learn the capitalist system in the United States and make the changes to make it work for all the people. Not just the alliance between Wall Street and Washington.
Sunday, July 12, 2009
The sunflower batch is coming along. We continue to have plenty of rain, and when it doesn't rain, I water them. The flower in the early stages is an interesting study in lines and greens. Hopefully by next Sunday there may be some sunflowers with their burst of colors.
Saturday, July 11, 2009
MY ICONS, pencil on paperboard, 2004-2007.
The shape of this drawing matches an old wood window that came out of the apartment building I lived in for over 9 years in Columbus, Ohio. The most recent owner at the time replaced all the old windows with replacement windows, and this particular window and a few others caught my eye as I arrived from work one evening. The other wood windows are now being stripped of old paint. They will be used in the sunflower series that I hope to be working on later this year. I figure, who would not like an original painting of sunflowers? I have not drawn or ever painted a sunflower, but that doesn't mean I can't try. Who knows what I will see when I look into the face of a big sunflower. I have many sunflowers growing on the side of my house. They stand tall and hopefully, soon, they will bend from the weight of the big sunflowers that are growing at the top of each stalk. Drop back on Sunday and I will post their progress.
Everyone have a safe and pleasant weekend.
Friday, July 10, 2009
Joe Biden came to Northside Thursday morning and stood beside the old American Can Company building that sits on the corner of Spring Grove Avenue and Fergus and spoke to a few hundred people in Cincinnati. It is interesting to me that one block east of Fergus is Spring Grove and Mad Anthony where my father's hardware store once stood.
Before the vice president got there, I spent some time talking with a fellow classmate from high school, class of 1960. The morning was nice, warm and sunny as I looked at that old brick building and thought about how Northside has changed since I first came here 55 years ago. The American Can building project will no doubt be a great improvement over the eye sore that exists now. With apartments and condos and retail space, this project once completed would be an anchor to this neighborhood. Interestingly enough, I met and spoke with one of the developers. Of the $22 million, they are only looking for $1.6 million in stimulus money to get this project moving again. The developers have a track record in that they did a first rate job with another development in another part of the city. When the American Can building project is completed, it will be a huge improvement for Northisde. Then, all we will have to do is get the City of Cincinnati to pave our side streets so Northside does not look like part of a Third World Country.
At the end of his speech, V.P. Biden came down from the stage and started shaking hands and greeting the people, so I moved forward and shook his hand and told him as I looked at his face, " they need to fix the credit rating agencies because they are corrupt." Joe acknowledged my remarks and countered that they have something coming shortly. Well, I guess I will have to wait and see what they do. Had I had the time, I could have explained how the CRAs, because their credit ratings can not be trusted, is holding up the movement of credit for the entire economy. When someone cheats the system, people walk away from the table because they realize the game is fixed. May be they are smart enough in Washington to correct what needs to be corrected. We will see.
Thursday, July 9, 2009
Vice President Joe Biden is coming to my neighborhood today to talk about the stimulus package. It seems that a group is trying to get money to take the old American Can Company building and turn it into apartments or condos. This would help our neighborhood if the project was a success, but I am not sure why we need Federal money to get this done, if the project can stand on its own. I can go along with roads and bridges, but I am not sure I like condos being built with my tax dollars. If it is a loan, or a guarantee behind a loan, I can see it, but a private, for profit project, should stand on economics alone. So, I am going to clean myself up and walk down to where Joe is going to speak at 10am. I wonder if he wants to hear from me about the credit rating agencies?
Here in Ohio we have this Congressman who talks out of both sides of his mouth at nearly the same time. (Perhaps a trait that one has to have to be a Congressional Representative.) Anyway Congressman John from up the road in Westchester wants to take credit for shovel ready jobs while at the same time bashing the Dems for the Stimulus Package in the first place.
And, here I am, trying to write about economics and the markets and monetary policy and the credit rating agencies. I think, or should I say, I know, most Americans don't know enough about their own money to bring about the changes that are necessary to prevent another financial crisis, bond market meltdown or economic crisis.
So, I am going to take a walk and see Joe speak. You all have a nice day, and don't worry about money & banking, I will do that for you.
Wednesday, July 8, 2009
Yesterday, I found out that my application to have my SKI CINCINNATI T-Shirts in the Cincinnati T-Shirt Festival was accepted. So, now I am going to be getting ready for this big sales event to take place next Friday, July 17th from 11am to 11pm on Fountain Square. Fountain Square is at the corner of 5th and Vine Streets, right in the middle of the city. There is a big fountain on the square that you can't miss, with water coming out of it all over. It is a beautiful fountain and a landmark of the Queen City.
I have been selling the SKI CINCINNATI T-Shirt design since I came up with the idea back in 1980. The t-shirt business got going in '81 or '82. I have had a lot of fun with designing t-shirts, but I am not a very good promoter. This T-shirt Fest. will give me an opportunity to get my t-shirts out there, and hopefully a few retailers might want to carry the design on a few shirts. I will have short sleeve and long sleeve SKI CINCINNATI T-shirts for sale. I have designed other t-shirts for Cincinnati, but the best one is my first one.
So, if you are in Cincinnati on Friday, July 17th between 11am and 11pm, walk over to the SKI CINCINNATI tent and say hello. There will be t-shirts for sale too.
Tuesday, July 7, 2009
If enough people in the United States understood what took place over the last several years with regards to their money, their investments and how this whole thing was engineered by Wall Street & Washington, Inc., there would be a march on Washington, and very possibly a march on Wall Street. The financial crisis, the bond market meltdown and the economic crisis that followed was man made. What do I mean when I say "man made." Quite simply that the powers that be, the Congress of the United States, the Presidents since Reagan forward, the Chairman of the Federal Reserve Bank, Alan Greenspan, and the men on Wall Street and their lobbyists orchestrated the mess that 300 million people now live with. Greed is the word closest to the truth of the matter. The Government in Washington does not represent all the people. The people that can make large campaign contributions and as a result have access and influence is what drives our system of government. With all the smarts in this nation today, with all the mathematicians and economists with advanced degrees, this financial and economic crisis did not have to happen. This crisis happened because no one will call out those that took the money in exchange for their vote to eliminate or relax regulations that were needed to be enforced for the protection of the American people. Nothing, in my opinion, will change until the American people get smarter about their money and their investments. The large state pension funds should organize and bring their pressure of trillions of dollars in investment holdings to bear on the outcome. The regulations set down recently do not do enough and not one word has been said about the credit rating agencies. If people think that President Obama can bring change to this arena, they are mistaken. He can not. Changing Wall Street and the way it operates will take the pressure of a few hundred million out raged Americans to move the needle. The royalty of Wall Street will not give up without a fight.
Monday, July 6, 2009
Last Friday, I tried to bring a few of the threads together to give some background and history to the economic and financial problems we now face. If you missed the post from Friday, July 3, go back and read it. Today, I will try to carry some of those threads forward, and take my discussion another step forward.
We know the history of regulation as it pertains to banking, investment securities and investments. We know that while there were laws on the books, nevertheless, the laws were not enforced. The SEC and the Madoff fraud is just a recent example of the way the Securities & Exchange Commission did not do their job. The idea that deregulation was going to make the banking, the securities and investment businesses run better was a deception and lie from day one. What would an NFL football game on Sunday afternoon look like with one ref controlling the game and trying to enforce the rules? You get the picture. Congress was lobbied to deregulate, and they did what Wall Street wanted them to do. The disaster that followed is as much Congress' fault as anyone's. Deregulation along with new investment products, that did not exist before structured finance and securitization of mortgages et al, left the playing field heavily tilted towards the investment professionals on Wall Street. The lynch pin, in my opinion, that made this all possible was the credit rating agencies passing out their triple-A rating to ever piece of junk that came across their desks. This was the seal of approval that became the kiss of death.
So, where do we go from here? It is evident that the credit rating agencies, which in my opinion, should be taken over by the Federal Reserve Bank, is not going to happen. I would settle to take the triple-A rating away from the credit rating agencies and make that rating the purview of The Fed. The triple-A rating has a lot to do with the soundness of a commercial bank's portfolio as well as many pension funds and other large pools must use the triple-A credit as a guide to responsible investing. The triple-A credit rating should be taken away from the private credit rating agencies, and only be authorized by The Fed. But, this is unlikely to happen. Wall Street and Washington are already laying the foundation of the next financial crisis and bond market meltdown.
This disaster waiting to happen along with the need for institutions and other large pools of money to invest to stay a head of inflation, sets the stage for what is to surely follow, a financial and economic crisis. Until enough people understand how the game is played and take the effort to let their Congressional Representatives know that they know bull shit when they see it, nothing is going to change. Money talks and bull shit walks simply means that your person in Congress will continue to take money from the Wall Street lobbyists and vote in their favor as long as they think you can not tell the difference. When America wakes up to the fraud that has been perpetrated on them for all these years, then change will take place.
Sunday, July 5, 2009
My sunflowers now stand what looks like 9 to 10 feet tall, and the flowers will soon open. This spring we have had the right about of rain and sunshine. I have never planted sunflower seeds before this spring. I got one sunflower from my neighbor last year and this spring I planted a bunch of seeds on the side of my house by the porch. The plan is to take pictures through their life cycle and create some paintings from the photos. Many artists have painted sunflowers, so why not me. My back screened porch is clean now, and my drawing table is up and ready for work. There is plenty of room to sketch and paint. All I need now is some good lighting, and I will be ready to work in the evenings. I am going to take a break from my political art, or, at least I think I am. Once I get my table saw set up, I will be ready to rock.
Saturday, July 4, 2009
Friday, July 3, 2009
Today is the 126th birthday of Franz Kafka (1883-1924). A writer, he wrote a story about a man who wakes up one morning in his bed and finds that he has become an insect. The story is called The Metamorphosis.
Once more, I am going to try and bring together the several threads that run through my story and bring them together in such a way, that we can see how they build to create the situation we all find ourselves today.
The monetary policies of the Federal Reserve Bank, the tools that the Fed uses to run monetary policy and our system of banking, along with the fiscal policies of the Federal Government, combine to create an inflationary environment where the purchasing power of our dollars evaporates over time. Because of our policies, your dollars and mine, over an extended period of time are worth less, they buy fewer goods and services. This inflation factor, affects not only families, but large institutions as well. Placing money in a savings account at your local bank will not over an extended period of time maintain the purchasing power of your dollars. Pension funds, insurance funds, mutual funds, foundations, endowments and every other large pool of money that must meet certain actuarial assumptions of total rate of return must invest their money. Because of our monetary and fiscal policies as a country, investing is hardly a choice. The large state pension funds have a responsibility to grow their fund to keep pace with inflation so that retired workers will be able to receive a pension that will purchase the necessary goods and services for their survival. It really is that simple. Large pools of money with a responsibility to millions of people have no choice but to invest their funds for the future.
As a result of the Stock Market Crash of 1929 and the subsequent Great Depression that followed, the Federal Government passed laws to protect the American investor. There were the securities laws of the 1930s and the investment acts of the 1940s, and most importantly the Glass Stegall Act that separated commercial banking from investment banking. These rules of the game did not eliminate all the problems that arise in a market, but they prevented a major meltdown and a serious economic crisis.
Wall Street lobbied against these laws and Congress changed the rules and even an era of deregulation took over those that should have been watching the store. As a result, we have the economic turmoil that we now enjoy. This economic crisis, financial crisis and bond market meltdown was man made in Washington by a Congress that sold out the millions of American people right down the drain. For a very small number of people on Wall Street, the investment bankers, the Congress of the United States sold your economic well being to a bunch of economic and financial terrorists. In my world of justice these people would receive a trial and then be hanged for the economic crimes they committed against the American people. In the old days, it was called fraud, today they call it a bubble.
Americans will have to get smarter if they want to protect what they have. Goldman Sachs and there investment bankers view you as a "mark" when they look around the table. They do not view their job as having any responsibility to you the investor. Wake up America, the Boll weevil is at your door!!!
Thursday, July 2, 2009
There are a number of people writing about the financial crisis that created the economic crisis that affected nearly everyone, and this is a good thing. But, we need bloggers from all over the country to set the Internet a buzz. The TV news shows cover what they think brings them the highest ratings, and that is why the death of Michael Jackson is on MSNBC, "the place for politics" they say. Newspapers need advertisers to stay in business, and magazines are about the only thing left other than bloggers and 6 degrees of separation to spread the word. We need to spread the word about the fraud that was perpetrated on the American people by Wall Street. We know they did not do this by themselves. Wall Street did this with the help of Congress and the rest of Washington. We need to get a few million people knowledgeable enough to put pressure on our government to do the right thing. A small, very small number of people brought the financial crisis about and our Federal Government failed to protect the American people. Protecting the American people must mean more than protecting them from foreign or domestic terrorists. Protecting against the financial and economic crisis is just as important as protecting against a foreign invader. In my opinion, there are a number of people that should be brought to trial for economic treason or financial terrorism. What a few did to so many should never have happened, it is that simple.
Read the article in the ROLLING STONE magazine of July 9 - 23, 2009 by Matt Taibbi titled THE GREAT AMERICAN BUBBLE MACHINE: THE BAILOUT - HOW GOLDMAN SACHS RUNS WASHINGTON. Tell your friends to read this article, and get as many people interested in why we Americans suffered the worst financial crisis since the Great Depression.
I have great hopes for the Internet, as I know the American people do not want a repeat of this economic crisis again.
Wednesday, July 1, 2009
Today I am off to Columbus for a meeting. Don't know what it is about, but I was asked to attend, so I am driving my beemer and praying nothing goes wrong. I, in the past, have had my share on problems on I-71 with my beemers, so my concern is not without foundation.
Again I encourage everyone to read the article in the ROLLING STONE July 9 - 23, 2009 issue by Matt Taibbi: THE BAILOUT - How Goldman Sachs Runs Washington. You can read this important article on-line, so there is no excuse for not reading it. Until we get a few million people up in arms about the Wall Street - Washington Alliance, nothing is going to change. Do you enjoy being made a "mark" by Goldman Sachs? Read this article and find out why we need to change the system, a lot!!!