Saturday, October 31, 2009

Saturday Is For Art

This is the first level playing field I ever painted. I painted this in 1990 in oil on board, and recently had an opportunity to take a better photo of it. I gave it to my friend Stert in 1990 after I had it framed. From time to time, I have given him other pieces of my art. We have known each other since 1954, and have been goods friends for a number of years.

Tonight is Halloween. My late wife loved Halloween because she thought it was the one holiday that all children could celebrate together. That idea of all children being able to come together and celebrating a shared holiday was very important to her. So, whether you are staying at home to pass out candy or driving around the neighborhood, please remember to drive slowly and keep an eye out for the children trick or treating.

Stay tuned

Friday, October 30, 2009

Sam Hollingsworth's New Blog

Today, my friend Sam Hollingsworth put up his new blog. Sam is an artist and a painter. He paints in watercolor. My father painted in watercolor, and I can tell you that it takes thinking ahead to paint in watercolor and do a good job. You see, in watercolor, there is no white paint. The paper is the white "paint". So I would like to encourage those of you who like art to take a look at Sam Hollingsworth's paintings on his new blog.

Leave a comment or two about his paintings too.

Stay tuned.

Thursday, October 29, 2009

Money, Whores And The Senate

Today, I am posting a new photo of an old stamp painting titled FEDERAL HOME LOAN BANK. This piece is on paper and is done in oil. It is one of several commemorative stamps that I created and painted by the exhibit at the Carnegie Art Center in 1992. In the late 1980's, we had another financial crisis. This financial crisis involved the savings & loans. Until Congress passed a new law, savings & loans could only invest in mortgages, but Congress in its wisdom decided that savings & loans could also invest in junk bonds. Today, there are no savings & loans, but rather we have Federally insured Federal Savings Banks. The mask in this painting is made from an American flag, that was crafted for the savings & loans by the Congress in the background so they could steal money. As I have written many times, money talks and bullshit walks. If you have enough money, you probably can get Congress to do almost anything. The health care insurance companies do not want the people to have a public option so they too are spending lots of money to see that it does not happen. The Senator from CT, Joe Lieberman, is one big whore who has taken their money and now does not want to let the public option even come to an up or down vote. Some whores rub me the wrong way.

Stay tuned.

Wednesday, October 28, 2009

Senator Joe Lieberman: The Big Whore?

With Halloween just a few days away, I thought I would post Three Masks, a piece I did just a few years ago. The politicians surprise us all the time. Take the so called liberal Senator Joe Lieberman, who is planning to vote against a public option. This whore from CT is from the Joe Lieberman Party, and we all understand that. Too many big insurance companies in CT for old Joe to go with the people on this one. Which mask is Senator Joe wearing today?

Stay tuned.

Tuesday, October 27, 2009

The New Regulations Are Meaningless

I find it interesting, that of all the people from the Obama administration that are paraded onto the various TV news shows, Paul Volcker, a past Chairman of the Federal Reserve Bank and a member of the Obama administration, has yet to appear on any of these shows even once. What does this say about the Obama administration? Perhaps if a few people would write to The White House and the TV news programs about this, perhaps we would get to hear from Mr. Volcker. No, I doubt it.

Unfortunately, the Obama administration, like other administrations, is tied to Wall Street. The men and women on Wall Street in addition to being very greedy, are very smart. They give money to both major political parties and make sure that regardless of who occupies the Oval Office, they have access. That is why they have so much money, because they understand that the name of the game is, "pass GO and collect $2 billion dollars!!!

I thought we had a shot at a different presidency, but the more I see of this one, the more I realize that names may change, (but in some cases they do not), but the game remains the same. The new regulations will be meaningless because the bigger problem of "too big to fail" is not going to be dealt with honestly.

We are headed down the same road because the vehicles are being driven by the same kind of people.

Stay tuned.

Monday, October 26, 2009

Too Big To Fail Can Be Fixed

The Congress of the United States is trying to come up with regulations to deal with the problem in the financial system in America of "too big to fail." Politics makes this difficult along with the fact that there is a lack of financial literacy even in Congress.

It is very easy to understand that we don't build building 5 miles high into the sky. What additional problems would we have if we permitted such a thing to be built? Without going into them, do you think you could come up with a few? The situation with financial institutions is really quite similar, but because there is nothing to visualize, size and failure are harder to pinpoint.

Paul Volcker has it right when he says we need to go back to some form of the Glass-Steagall Act of 1933. The separation of banks and investment banking would help resolve the issue of "too big to fail." The second part, in my opinion, would be to not permit an investment banking company to issue common stock to the public. The investment bankers would have their own capital at stake and as a result would be a lot more careful in the process of committing their capital to the underwriting of new issues. There is no good reason why we can not have several smaller firms instead of these huge firms that present everyone with the problem of "too big to fail."

Maybe if the press and TV cover the story as to why Paul Volcker is not being listened to, we might get some movement in that direction. Larry Summers does not know everything about investment banking and finance, and someone needs to tell President Obama that little secret. Paul Volcker knows more about running a central banking system with investment banking separated from commercial banking, and why, than anyone in Washington. President Obama needs to know this now.

Stay tuned.

Sunday, October 25, 2009

Sunday Is For Sunflowers & The Bengals

The Bengals play Da Bears today at 4 o'clock. The Bengals could use a win to keep hope alive in the Queen City. Last Sunday's loss to the Houston Texans now puts them at 4-2.

The Cincinnati city council elections are this year, and Cincinnati could use some intelligent people on council. I sure hope more than a few really intelligent people win a seat on council. This city could use a few smart people setting policy and trying to bring people back to the city.

The UC Bearcats' football team won again. I missed Home Coming and the free hot chocolate and donuts on Clifton Avenue again. Gee, I wonder if they still do that?

Stay tuned.

Saturday, October 24, 2009

Saturday Is For Art

There is a lot going on now. Besides Major League Baseball, we have the NFL games and college football. However, this past week one thing caught my eye that was not a ball, and that was this stuff about The White House and FOX News. FOX News is not news, and it is just that simple. FOX News is a caricature of what TV news is suppose to be. But, even a caricature must be permitted to cover The White House. I don't even watch FOX News as I know where they are coming from and I understand what they are attempting to do. The people at FOX News work for a conservative man that owns FOX News by the name of Ruppert Murdock. Murdock knows how to make a lot of money, but not much else. The White House must realize that their tagging of FOX News as an undesirable to cover The White House has only elevated FOX News into a real news story. This is the closest FOX News has come to a legitimate news story in their entire existence, and they have The White House to thank for it. You know, being bright takes many forms, and more people should realize this, especially those advising the President.

I am putting up the sunflower print again in the hope that I may get some orders for a signed print. Prints are $50, and that includes the mailing tube and postage anywhere in the USA. The print is in full color on a quality Epson paper. The paper size is 14" x 11", and the actual print size is 13" x 10.5". You don't have to be in the art market to buy this print, but a signed print may be worth more than $50 some day. Think of it as buying a discount note that at some future date will be worth par. Your return will be the difference between the amount that you paid and the amount that you receive when you sell the print. The appreciation in value is your return on your investment. If you frame your investment to enjoy it and protect it, you will have gotten the pleasure of looking at your investment while it appreciates in value. Now that is as close as you can come to having your cake and eating too.

Stay tuned.

Friday, October 23, 2009

Now Who Has The Biggest Balls?

There is a lot in the news about the Federal Government controlling, limiting salaries and bonuses of bankers this week. To me this is just so much BS. Yes, these CEOs make far too much money for what they do for their shareholders or for the economy as a whole. But, this is not the problem. This is strictly for the the media and making the average Joe feel like the Federal Government is doing something about these ridiculous pay packages. But, let me just drop this point for now and get into why I think this is just so much BS and eye wash.

One of the big issues through this whole bailout thing has been the words "too big to fail." My question is: why would we tolerate a construction that would be "too big to fail?" For example, would we permit a building to be built knowing that if we put too much weight on the top floor, that the whole building would collapse? No, building codes would ever approve of such a construction. But, weights and measures, elements and compounds, stress and torque are all considered when putting up a tall building. Things that are engineered are a lot easier to see what the final results will be if the math does not hold "water".

The idea of removing commercial and investment banking should be as basic as a stress test for steel, but unfortunately it is a lot easier to show what will happen when the steel is too thin or is made too cheaply. Investment banks need to be separate from commercial banks because the commercial side of the bank does not need the extra stress. The only reason I can think of as to why the bankers want the larger entity is because they get to go it alone on the underwriting of a large loan or bond issue. They can let other firms into their selling group if they need help with distribution, but the underwriting fees go into their pocket, and that is what counts. "Now, who has the biggest balls?", they can sit around and talk about.

Smaller firms in partnership form, that means without the common stock in the hands of the public, but their own balls in the game, is, in my opinion, the way it should be. Then, with proper regulation, transparency and enforcement the chances of another too big to fail is taken off the table. Simple. No, not so simple because the investment bankers want to use your money to gamble with, not theirs.

I realize that most people that read this do not know the difference between a syndicate and a selling group, or a divided from and undivided liability, but that is not important. The problem at hand is constructing a system of firms that provide the service of bringing together lenders and borrowers without them becoming the drama of the story. I know the politics are too great for my ideas to take place, but I thought by at least presenting my ideas, I could lay out for the reader what ball to keep their eyes on. By the way, Florida State played UNC Thursday night on ESPN and won 30 - 27. The Tarheels blew a lead in the second half. They took their eye off the ball too.

Stay tuned.

Thursday, October 22, 2009

Obama: Listen to Paul Volcker

I do not have a good feeling about which way the political winds are blowing. Yesterday, I mentioned two newspaper articles about what is taking place both in the economy and politically in Washington between Paul Volcker and the Obama administration. Volcker is the gold standard for a public servant. Make no mistake, this man, in my book and I am sure several others, walks on water when it comes to his heart and mind being in the right place for this country. Even though he blew me off once at an annual private equity meeting in Washington several years ago, I lived through his tenure at the Fed as its chairman while managing several fixed income portfolios and I followed his leadership on a daily basis. He saved this country's economy and the US dollar with his work as the Chairman of the Fed to wring the inflation out of the economy. Reagan replaced him because he was running the central bank the way it ought to have been run, not like Greenspan ran it.

Volcker's position on the idea of commercial banks and investment banks not being allowed to exist as a combined corporate entity is correct. As someone who was brought up in a hardware store, I learned that the right tool for the job was a big factor in the job being done correctly, or not butchered. Glass-Steagall needs to be brought back. The repeal of the Glass-Steagall Act in 1999 was a big mistake and lead to the financial crisis of 2007-2008. While there are many other factors that played a part, the end of Glass-Steagall is an important factor. People in Washington and the Obama administration need to listen to Paul Volcker. He is the gold standard when it comes to how to run a central banking system and why commercial banks need not to be involved with underwriting securities. The investment bankers should go back to partnerships and not be using commercial bank equity money to leverage their deals. Too big to fail can be dealt with, you just need to take them down a few notches. What is wrong with smaller investment banking partnerships? They can still get together and form syndicates to underwrite the biggest of new issues. So they wont be able to do big deals by themselves, too bad. The country does not have to be the bailout for these geniuses' mistakes.

Stay tuned.

Wednesday, October 21, 2009

Read This Article in The Washington Post

Read this:

This article in The Washington Post was brought to my attention by Butch this morning. I read it and I agree with it. I think if more people read articles like this one, perhaps even those not so bright right wing conservatives might learn something. A monopoly or near monopoly (90% of the business going to one insurance company) is closer to socialism than it is to capitalism. But, explaining that to a closed mind requires more talent than I possess.

Another article I think everyone should read about Paul Volcker and the banks. I have said as much several times.

Stay Tuned.

Tuesday, October 20, 2009

Who's Playing Thursday Night?

I am not big on conspiracy theories, and the reason is that I have seen how government works and there too many parts moving around to really pull it all together to pull off a conspiracy of any sort. That is not to say there are not small conspiracies that do get pulled off with a great deal of expertise and effectiveness, but the massive big conspiracy, in my opinion, is not in the cards.

A few days ago, I quoted Henry Paulson from an article in VANITY FAIR in which he made the remark that there was a lack of financial literacy even among college educated people. This lack of financial literacy is only part of the problem, in my opinion. Yes, there are several factors for the economic situation we find ourselves in today. As a student of history, I am not one to limit the outcome of events to a single cause. But, with that said, I do think we, here in America, have too many toys and diversions, whether you believe they are planned or not is not important, that causes us to take our eye off the ball. (The MLB Playoffs are going on right now so baseball analogies are in season.) See, this is what I am talking about. We don't have lions eating Christians as the Romans did, but we have even more diversions than any Caesar could have ever imagined. We almost have football games on the tube every night during football season. And, if we are not watching football, we are watching some comedy show on TV, or listening to music, or, if we are creative, writing music, a book or painting a picture. Who has time to be concerned with the details of money and banking or investment securities and their markets when there are so many other interesting and fun things to do?

Behind all this nonsense, the members of Congress are free to do as they please, or, more accurately, listen to the lobbyists that are well paid by the banking industry to do their bidding. Where is the safety net to protect us? There is none, or, the safety net is when the markets say the game is over and has a meltdown. How many times will the taxpayer bailout the financial service industry? Answer: As many times as necessary. By the way, who's playing Thursday night?

Stay tuned.

Monday, October 19, 2009

Now That's Insurance Reform

Reading THE MATCH KING has been fun because, while it takes place in the 1920's, there are so many pages of the story that remind me of my early days in the investment business. I strongly recommend this book for anyone who would like to understand a little piece of the background of what we refer to as Wall Street.

Back in the 1920s, foreign governments gave monopolies to companies in exchange for a loan and a favorable interest rate. The Match King, Ivar Krueger, took advantage of the economic situation in Europe to arrange loans for foreign governments in exchange for a match monopoly in a country in need of cash. The United States had anti-trust laws that prevented legal monopolies from happening. Well, at least they were not called a monopoly. Take health care for example. Not permitting people to shop for their health care insurance outside the state in which they live gives the health care insurance companies a type of monopoly. Now right wing idiots can't figure out that being exempted from anti-trust laws by an act of Congress is the same as giving the insurance companies a legal monopoly. The logic of that seems to escape them. (That is why I say not everyone can have a liberal mind, some people have to work hard to reach that level of intelligence.)

The fight in Congress today over health care has several parts. The public option is the best club to use on the health care insurance companies, but if Congress does not have the balls to stand up for working class Americans, and pass a public option, perhaps they will remove the exemption to anti-trust laws and open up the competition. There are several other pieces like pre-existing conditions and turning down procedures and giving the person working for the insurance company that turns down a procedure a bonus. In my system of justice, anyone getting paid a bonus to turn down a medical procedure would be shot along with the CEO of the company that put in place such a policy. Now that's insurance reform!!!

Stay tuned.

Sunday, October 18, 2009

Sunday Is For Sunflowers & The Bengals

Well, I am still peddling my sunflower prints. Robert suggested that I need a big name to sell my art, that what I paint is not important. Well, anyone who has any ideas how I can get a big name, please pass it along to me. Thank you.

The 4-1 Bengals could not sell out for this afternoon's game at Paul Brown Stadium, so, there will be no TV of the game for the locals. Anyone interested in seeing the game can probably find some decent tickets for sale on the street near the stadium. The fans in Cincinnati are hurting from the economy and also from the fact that they don't like the owners. I wish the Bengals success today against the Houston Texans, and hope they can make it 5-1. That would be a good start for the 2009 season. Go Bengals!!!

Saturday, October 17, 2009

I Wish I was In The Art Market Too

We all know what fiat money is now, so we can go on and talk about other stores of wealth. In review, fiat money is paper money that is printed, in our case by the government. Take out a piece of paper money and check the words at the very top, FEDERAL RESERVE NOTE. That is what all are money is, except if you have lots and lots of money, you may want to place your wealth into other forms of "money".

Real estate while a good thing to own, if purchased at the right price, is not exactly a very exchangeable form of money. One of the chief characteristics of money is that it facilitates the exchange of a products and services. Works of art, paintings or prints, can become a form of money if they are readily convertible into a more useful medium such as FEDERAL RESERVE NOTES or other foreign currencies. Diamonds and other precious stones have substituted for money when taking money out of a country was forbidden. There is always a way around the law. Before WWII (World War Two), Jews that wanted to leave Germany were restricted as to how much cash they were allowed to take with them. Some people that had the money, converted their money into diamonds and sewed them into their clothes so they would have something to exchange for money when they got to where they were going. We all know that you can't eat money, but you need money to eat.

In my effort to sell a few of my sunflower prints, I emailed several people that I knew about the present print sale. Some people informed me that they were not in the art market. I understood what they meant, but my sunflower prints for $50 is hardly what I think of as the art market. I wish my art was a part of the art market. The real art market has collectors buying art with price tags of several millions of dollars. Why are people buying art and paying millions of dollars even for contemporary art at auction? The answer gets back to not putting all your eggs in one basket. (I am surprised that Jeff Koons hasn't done a basket with eggs yet to go along with his balloon dogs!) When people have great wealth, they spread that wealth around. They diversify their portfolio into items that maybe called near money. Art that sells in the millions, in my opinion, is near money. It may take until the next auction, but art selling in the millions can be sold, sometimes at a loss, but, nevertheless, for enough to buy a few meals in a pinch.

Stay tuned.

Friday, October 16, 2009

Today I Am Selling Sunflower Prints

Today I am selling my Sunflower print to the world in an effort help me out and our domestic economy. If anyone is interested in buying the above print, you can contact me at:

The signed print is on 14 x 11 inch quality paper and the actual picture size is 13" x 10.5". Unframed prints are $50 US dollars, and includes the mailing tube and postage anywhere in the USA.

Signed prints custom framed in wood frames with a mat are $150, and includes packing and shipping anywhere in the USA.

This sunflower print is totally apolitical; however, the title of the painting from which it is from is Two Sunflowers Talking About Van Gogh. My first cousin came up with that comment and I like it for the title.

Stay tuned.

Thursday, October 15, 2009

From The People, Loud and Clear

Wednesday I had the opportunity to get together with a good friend for lunch. He also had a few birthday gifts for me as we could not get together because he is working 24/7 most weeks. Besides a couple of very good cigars, I received a book that he said was right up my alley.

THE MATCH KING by Frank Partnoy is a book I highly recommend after just reading a few pages. It is the story of Ivar Kreuger, "the financial genius behind a century of Wall Street scandals."

One quote from Ivar Kreuger, I would like to leave you with. "Everything in life is founded on confidence."

Over the months that MONEYTHOUGHTS has been written, no about of analysis of economic events can replace the simple truth that when people invest, confidence is the most important ingredient. When confidence disappears and panic sets in, markets implode.

Greed is not going to go away. More people need to understand that in a complex financial system, controls are necessary. The fact that Phil Gramm and Alan Greenspan did not understand this has resulted in millions of people losing the little that they had. Government, the Federal Government is the appropriate organization to repair the damage done to the financial system and the appropriate organization to put in place the regulations, the accountability, the transparency and the enforcement of the laws that govern our financial service industry. The lack of financial literacy in this country is the fulcrum by which the greedy rob the working class of America. When people understand this, then change will come to Wall Street because Washington will have received the message from the people loud and clear.

Stay tuned.

Wednesday, October 14, 2009

Rainy Day In Cincy

I do not have anything new this morning. (As if I have something new everyday.) I am working on a few projects, so, I will just say have a nice day. It is raining here in Cincinnati and it is cold too.

Stay tuned.

Tuesday, October 13, 2009

The Movement of Capital Will Not Be Helped

There is a lot of chatter about the speed that the economy is coming back. Economists are saying that job growth will take a little longer, perhaps another year. With so many people out of work in the country and the financial system still in a state of shock, it is not surprising that job growth will take a while.

Two things concern me as I think about our domestic economy. The first is the availability of credit for consumers and businesses. Credit in the 21st century is money. Without lines of credit the recovery will be much slower. But, once the economy is up and running once again, the second problem is inflation. Gold is not selling at $,1000 an ounce for nothing. People are hedging their bets that when the domestic economy is up and running again that the fiat money, that we all use, will be worth less. In other words, our dollars will buy us fewer goods and services than they do now. Right now the problem may be deflation, but that can turn sharply when there are too many dollars in the system chasing too few goods. (Although with China making almost everything we consume, I wonder if that will ever be a problem.)

Do not look to the banks for help. Their wild ride is over for a while and they will be reluctant to visit the edge of the cliff again, or, at least so soon. Banking and the investment banking business needs to be separated, but I do not expect that Congress will try and get into that. As the Fed chairman has his hands full, he will not be suggesting to go back to the Glass-Steagall Act of 1933 that served this country so well for so many years. The Gramm-Leach-Bliley Act of 1999 repealed the Glass-Steagall Act, and put this country in hot water financially in less than 10 years. Former Senator Phil Gramm is another idiot with a PhD in economics.

The credit rating agencies, for me, is still the fly in the cake batter. The triple-A rating should be lifted from their rating sheets and the responsibility for the triple-A credit rating's final approval should sit with the Federal Reserve Bank. As long as the credit rating agencies have the power to give a structured finance debt obligation a triple-A rating, that rating will be suspect and the movement of capital will not be helped.

But, with our Congress not knowing its ass from a hole in the ground when it comes to finance, banking and investment securities, do not look for any quick solutions to these problems.

Stay tuned.

Monday, October 12, 2009

Two Sunflowers Talking About Van Gogh

Sunday, I had my brother photograph this sunflower painting. It is not finished; however, I wanted to see it as a print at this stage to see if I liked it and whether others might like it too. I am looking into offering this as a signed print for sale, framed or unframed, so I am interested in critical feedback.

Last September 2008, the whole financial system almost imploded. We came very close to the edge. Without the help of a few friends around the world, there would have come a Monday that would have seen all the gears of the financial system come to a halt.

In reading about this, there was mention of one investment bank's group of men standing around a muted TV watching the New York Giants play on a Sunday afternoon, while the head of the firm was negotiating needed capital from a Japanese bank. It occurred to me that the NFL, National Football League, is better run than our financial system in this country. Let me explain.

First, the owners of the teams in the NFL do not issue common stock to the public. They have their own money at risk. There might be a partnership of several individuals, but each person is in for a stated amount and the success of that franchise is dependent upon their actions in hiring the right GM, general manager, and coach. The NFL has rules, and the rules are enforced both on and off the field. The NFL even has instant replay and challenges to make sure that the games are called right.

These finance people love to watch the NFL every Sunday because they put a contest on the field that is backed up by rules and enforcement and quality play. Wouldn't it be nice if the financial industry went back to partnerships and rules and enforcement and quality play too?

Everyone wants an edge. Whether it is sports, school or business, everyone wants to be successful. But being successful and killing the sport or the system is not good for the country. We need to understand that without the level playing field, we have nothing. Without a few friends around the world, we would have all been rubbing two sticks together again to stay warm. It is past time for people to wake up and realize that abusing the financial system so a few can make outrageous money is not what this country, or any country, should be about.

Stay tuned.

Sunday, October 11, 2009

Sunday Is For Sunflowers & The Bengals

The sunflowers are all dead, but the Bengals are very much alive in their conference. Today, the Bengals have a big opponent, the Baltimore Ravens at Baltimore. If the 3-1 Bengals beat the Ravens, the Bengals will have turned the corner as a loser. I wish them all the best, but I would not bet against the Ravens and Ray Lewis in Baltimore.

As for the sunflowers, bottles of seeds are put away for next spring. I am playing with creating a sunflower print for the holidays.

Stay tuned.

Saturday, October 10, 2009

Saturday Is For Art

I was up early this morning and so I finished a VANITY FAIR article (Wall Street's Near-Death Experience) about the almost collapse of Wall Street in September 2008. I enjoyed this article because it showed how fucked up the system really is. While I would like to write about the article today, Saturday is for art, so, I will table that thought and talk about art.

Many years ago I was interested in the philosophy of history, known as historiography. When historians write a history, they use several types of sources. There are primary and secondary sources, and for me there is art. Yes, art as a source for social and intellectual history. No, I am not talking about a history of art or a history of painting, but rather the use of art objects to interpret history. Without going into specific examples, there are many paintings over the centuries that make this point by their acceptance or rejection and by the noise they created about them. If we just take the 20th century and look at art from the early part of the 1900s to what art became by 1950 and continued to evolve to in the last decades of the 20th century, we see huge changes even within the works of say a particular artist, like Picasso. From Picasso in the early 1900s, to my "favorite" ,Ellsworth Kelly several years later, we see a huge movement. Even if we limit the discussion to American artists working at home or abroad, the range of styles and work mimics the speed that society changed during that 100 years. I find it fascinating and I believe it speaks to the changes that took place during the 20th century. I can think of no other 100 year period that changed so much, in my opinion. In another 100 years, it would be interesting to see how the art of the 20th century relates to the art of the 21st century, just as the art of the 20th century relates to the art of the 19th century and so on going back to the beginning, drawings and paintings on the walls of caves.

POPULAR MESSIAH, acrylic on paper envelope.

Friday, October 9, 2009

Pig In A Poke

This week I wrote four good posts. Unfortunately, those that need to read what I wrote most, will never see it, and those that do see and read it are not in a position to influence Congress or the administration. This stuff, as I have written many many times is not complex or difficult, but there is a lot of money at stake. When there are many chips on the table and the stakes get high, people pull out all the stops and go for broke, especially if their life style depends on it.

The firms that create and trade the investment securities need regulation. They know it, but they resist because there are afraid their competitors might find an edge and beat them to the pot of gold. There is a lot of detail work involved in good regulations and Wall Street is afraid that government does not have the knowledge of the investment securities industry to write the kind of regulations that will reign in risk taking, yet at the same time let the free market keep the corporations, that issue their equity and debt obligations, honest.

This thing is a double-edged sword. If you come down too hard on Wall Street then the corporations that issue equity (stock) and borrow through issuing debt (bonds) take advantage of the situation and withhold vital information about the profitability of their corporation. This is not a good situation either. Information needs to be out there, and the markets need to be free to react by either buying or selling the investment securities of the corporation in question. Giving corporations, that use Wall Street to raise capital (whether issuing more equity or borrowing in the debt markets), an edge to keep silent is not a good option either. There needs to be a balance so neither is left holding a pig in a poke.

Stay tuned.

Added Comment on President Obama and the Nobel Peace Prize:

It is pathetic that there are Republicans, and other brain dead assholes out there, that can not accept their President winning the Nobel Peace Prize. You have to ask yourself, what do they fear from Obama's presidency? One thing for sure is that compared to the last several Presidents, this man has it all over them. Even Bill Clinton doesn't measure up in my opinion. I don't know if all the fault finding by his opponents with this talented and decent man, will even wake up independent fair minded people to the unfairness of these attacks, yet I sure hope so. He has been in office less than one year and his opponents, who are against government involvement in the economy, are saying he hasn't done enough to create jobs, while all the time speaking and voting against the Stimulus Package. What the Republicans really are afraid of, is that he will set the bar so high, that their next presidential candidate will have to talk and act like he/she has a brain, and knows how to use it.

Thursday, October 8, 2009

Their Greed And Stupidity

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes 287-212 BCE Greek mathematician, engineer, inventor and astronomer

Now take that thought and read the article in VANITY FAIR, November 2009, titled WALL STREET'S NEAR DEATH EXPERIENCE starting on page 172.

What you have is men in powerful positions trying to move the world to reach the ultimate pot of gold. But, when the financial system starts to unravel no one can stop it, not even a few powerful men.

As I wrote yesterday, when trust goes out the window, and everyone is scrambling for their cash, all bets are off. It is now survival at the most basic level.

Yes, the instruments are complex and there are words and names you have never heard of, but when panic takes hold and everyone starts withdrawing their CASH, the beginning of the end is at hand.

If ever there was a reason for investment securities reform, better and more comprehensive regulations, transparency and enforcement, than what Wall Street put this country through in September 2008. Oh, they are now all composed and ready to take on the world again, but for a few days, even the toughest of them were plenty scared of failure.

The low level of financial literacy among the members of Congress, the Obama administration, the Federal Reserve Bank's board members and the SEC, makes for a very dangerous situation going forward. That the banks are spending millions of tax payer dollars to lobby Congress and the administration not to put in place the safeguards and regulations that are needed, is only evidence of their greed and stupidity.

The secret to bringing back the domestic economy of the United States does not rest on a bailout or a stimulus package, but trust between lenders and borrowers. When the new lines of the game are drawn and enforcement is put in place, the economy will come roaring back, not before!!!

Stay tuned.

Wednesday, October 7, 2009

Money & Trust: Trust & Money

Who would not use an edge if they had one? Every athlete works hard to create an edge so they can defeat their opponent. But, should an industry like the financial service industry, create or maintain an edge to the detriment of the rest of the population?

Yesterday, I cited an article in VANITY FAIR that I thought gave the reader an inside look at a man that worked his life in the financial service industry and rose to the top of his corporation as its CEO. Then reluctantly made the switch to become the Treasury Secretary of the United States at the end of George W. Bush's presidency. I think Hank Paulson was trying to put out the fire, but the fire was out of control. The financial system is to a large measure based on trust. I spoke of this trust yesterday, and I want to repeat that trust is the most important element in the financial industry. When trust is broken, it is like the chain on a bike breaking and there is no connection between the pedal and the back wheel.

Congress, unfortunately, is not up to the task of regulating the financial service industry. If they knew which end was up, they would not need to take money from the lobbyists from the financial service industry. They would now understand how close we all are to the edge of the cliff. Once the trust is gone, it will take years to repair the damage. The slow start back from the present recession is no more than a lack of trust within the system as a whole. Everyone is watching to see who will be the next one to get burned in a big way.

One of the first things I learned when I sold municipal bonds was that ratings are based on a state, county, city, authority or school district's ability and willingness to pay their debt in a timely manner. It sound quite simple. Retire the debt as it matures and pay the coupons as they are presented for payment. But, when debt instruments come under question, the system slows to a halt. There is no reason why better regulation would hurt the financial service industry. The movement of credit from lender to borrower is what it is all about. I wish I had the ability to explain this simple point to the Congress of the United States.

Stay tuned.

Tuesday, October 6, 2009

"There's A Great Lack of Financial Literacy"

"There's a great lack of financial literacy and understanding in this nation, even among college-educated people." Henry Paulson, former Treasury Secretary.

Source: VANITY FAIR, October 2009, Henry Paulson's Longest Night p.212.

I recommend this article to anyone interested in reading about the financial crisis that hit the United States in 2007-2008. What is the point of the quote above from the article about the former Treasury Secretary?

This to me is the danger that this country faces. Not a terrorist attack or an invasion from a foreign army, but the extreme greed of a few people with the money and the political power to corrupt the financial system of this nation. There is an internal bomb ticking in the financial service industry and not enough people realize this or understand it. The politicians in Washington do not have the knowledge to deal with the problems as they are unfolding, nor to stop the financial industry from bringing down this nation.

A system based on trust requires that trust be present for it to work. When trust disappears because trust has been abused repeatedly, the system will ultimately fail. The system came close to failure just a short time ago, but repeated attempts to corrupt the system will eventual result in the system, based on trust, closing down for the entire nation.

The Congress and President Obama do not realize the seriousness of the financial industries' contempt for the American people. If a few hundred people can pay to corrupt the Federal Government and keep reforms and regulations from being meaningful, then millions of people, at home and abroad, will suffer. As James Baldwin once said, "the fire next time."

Stay tuned.

Monday, October 5, 2009

We Are Talking About Real Money

I saw Greenspan on TV Sunday, but I did not listen very closely to what he was saying. The guy is so overrated that it makes me sick to see the talking heads still interview him. He sat on one of the most important seats of economic power in this country and was blind to the happenings as they were taking place. As someone who came out of Wall Street, he should have known that regulations and its enforcement was a necessary piece of the equation, but instead he did nothing to protect the millions of families that had invested in our capital markets.

I take a very narrow view of the duties of a central bank such as our Federal Reserve Bank, but given the realities of our situation, a good Fed Chairman would have worked the system to protect the many and not the few running the investment banks and the greedy of Wall Street. In my opinion, Greenspan failed to do this.

A central bank in a system of fiat money must be concerned with the integrity of the currency first. The United States, because of her military strength and political stability, along with her economic strength, is regarded around the world as a currency to hold. That does not mean other countries sit with U.S. dollars in their vault, but that they are very comfortable to hold U.S. dollar denominated assets such as U.S. Treasury notes. But, even the United States has a top side as to how much paper foreign governments are willing to hold. By borrowing constantly, and the central bank keeping interest rates low, will eventually put pressure on our ability to borrow at home and around the world. The deficits that were created during the Bush administration from 2001 to 2009 will present a problem as the Obama administration tries to get our economy back to full employment. Can we continue to waste giving billions of dollars away to foreign governments that do not get the job done or are so corrupt that it is the same as pouring the money down a rat hole? You know a billion here and a billion there and pretty soon we are talking about real money.

Stay tuned.

Sunday, October 4, 2009

Sunday Is For Sunflowers & The Bengals

I will miss the Bengal's game this afternoon as I am working at the Contemporary Arts Center (CAC) downtown all day. The thought of the Bengals going 3-1 for the season will be great for the economy of the city when they return to Paul Brown Stadium. We need to fill the place and bring people into the downtown. This afternoon the Bengals are in Cleveland and the Browns, no matter how poorly their season is going, find a way to upset the men in Orange and Black. Go Bengals!!!

A few years ago while I was working as a gallery attendant at an Opening of an exhibit at the CAC, a man started taking pictures on the fourth floor gallery of one of the exhibits. I approached the man and politely told him that he could not photograph the exhibit. He informed me that he was the artist of the exhibit he was taking pictures. He looked at me as if I should have recognized him as a great artist, but unfortunately I did not. What was the work of art that he was taking a picture? The work of art was three mirrors of different sizes placed in such a way that they could seen, all three, from one perspective. After I told him he could not photograph the exhibit, I realized that I was telling him not to photograph three mirrors. Photographing mirrors is not exactly what I think of when the directive is not to photograph the art. But, then again this is contemporary art, and what do I know about contemporary art when they do it with mirrors?

Saturday, October 3, 2009

Saturday Is For Art

I have not posted this piece in a while, so, I thought I would throw it up once again. For me creating art does not have to be an expensive proposition. I enjoy working with items that are on their way to the trash and turning them into something nice to look at. I guess that is the way I am wired. I could break off into a philosophical discussion about how a liberal mind works in this artist's old head, but I will save everyone some time and not go into it. People that enjoy making things can find a way of turning almost anything into a work of art. This piece measures 36"x27"x6" and is made of styrofoam, cardboard, cereal boxes, paper mache, glue, gesso and acrylic paint. While I put many hours into this little project, I enjoyed working out the many little details of construction as I was putting it all together. The only plan of instructions was photographs that I took of my inspiration and the rest was in my head. The title of this piece is: Mother & Child: American Icon No. 2.

I hope you all have a nice weekend, and may your team(s) win.

Stay tuned.

Friday, October 2, 2009


Today, I am not going to write about the economy or any of the topics that relate to it, like health care. Today I will post a great piece of art that says it all in one picture. So, for my 67th birthday, I present one more time, MOTHER & CHILD: LEVEL PLAYING FIELD OUT THE WINDOW. I picked the painting up yesterday as the art show that it was in closed Wednesday. Enjoy and have a nice weekend.

Stay tuned.

Thursday, October 1, 2009

Read The Article In THE NEW YORKER

Today, I am posting a link to an article in THE NEW YORKER that I think you will enjoy. You must paste it in your browser otherwise it does not work, and you will get the wrong page. Sorry that it is that way, but it was sent to me that way with those instructions.

The word is getting around about the financial crisis and what caused it. As I have written many many times, this financial crisis and bond market meltdown was man made. It certainly could have been avoided and had the laws that were written after the Great Depression left standing as they relate to investment securities and the Investment Act of 1940, the damage would never have been this great. The issue of the credit rating agencies is going to be key because of the position the credit ratings on debt obligations hold in the system of borrowing and lending. Major changes must be made, or, we are all headed down the same road again.

Stay tuned.