Thursday, December 31, 2009

President Obama: Meet Fannie Lou Hamer

Tonight, I will complete my seventh decade living in America, and I have seen and been a part of its history. The inauguration of President Obama in January of this year was a most remarkable thing when you consider our history and the story of full civil rights for black Americans. That the Republican Party does not want a Democrat in the White house to score any points is nothing new. America's history is filled with examples of political fighting between the parties. But, this time it is different. At least for this historian it is different. Let me explain.

In the summer of 1964, after graduating from the University of Cincinnati with a bachelor's degree in American History, I decided to hitch hike to New Orleans. There I got a job on a Norwegian freighter and took a cruise to Venezuela, Columbia and the Dominican Republic. After my cruise, I tried to get a job on an American freighter, but the economy was slow in the summer of 1964, so I hitch hiked to Atlantic City. In Atlantic City I found a job developing black & white film for United Press International (UPI) in the basement of the Democratic National Convention.

Up stairs on the convention floor was a woman by the name of Fannie Lou Hamer. She was from Sunflower County, Mississippi and she was black. In 1964, the Democratic delegation to the convention was all white and anti-civil rights. But, this was about to change. Fannie Lou Hamer was a member of the Mississippi Freedom Democratic Party, also know as "Freedom Democrats". As Vice-Chair of this delegation Fannie Lou Hamer pressed her case to be seated as part of the Democratic delegation from Mississippi. They won two seats to the consternation of President Johnson. This cost the Democrats the South for many years as Nixon's Southern Strategy opportunistically took advantage of the racial hatred that manifested itself during the Civil Rights movement.

While I was developing black & white film in the basement, Fannie Lou Hamer was making black & white history on the convention floor. She died on March 14, 1977 in Mound Bayou, Mississippi many years before she could see our country elect its first black president. But, she is not forgotten by those of us who where there in the summer 1964 and remember her words, "I am sick and tired of being sick and tired."

So, knowing the American History that I lived through and the battles that were fought for racial equality in America, I am not surprised by the attacks on President Obama. President Obama, Fannie Lou Hamer had it a lot worse.

Stay tuned.

Wednesday, December 30, 2009

Corrupt Politicians Make It Difficult

Moneythoughts has a lot of stuff to take care of today, so, if you feel like it, go back and read some of the posts that I have written over this last year. As I have said many times, this financial stuff is not difficult to understand once you know the terms - the language of economics and finance and the capital markets.

Difficult is manipulating proteins in the human body to stop the blood flow to tumors. That kind of work and research is difficult, not the work that goes on in the world of finance and the capital markets.

Moneythoughts believes that if we are going to use the capital markets to grow our economy, then the government should see to it that investors, both large and small, are treated fairly. This then requires a Securities & Exchange Commission fully staffed and financed to do the work that is before them. Without regulations of the capital markets and financial products, the greed factor takes over and we all get the financial crisis, bond market meltdown, and the bursting of an economic bubble. The credit rating agencies must be regulated and better yet, the Federal Reserve Bank should be the arbiter of what constitutes a triple-A credit.

As I have said many, many times, this stuff is not complicated or difficult. Politics and lobbyists and corrupt politicians make it difficult.

Stay tuned.

Tuesday, December 29, 2009

The Way Business Is Done In The USA & Congress

Yesterday's blog had a lot of stuff crammed into a few lines. Today, let us move on from there. With Monetary Policy in the United States geared towards economic growth, which also leads to the creation of new jobs, we can understand that there is a national purpose in our central bank's desire to see to it that there is enough money in the banks to grow the economy. By keeping interest rates (Fed funds) low and by not raising the reserve requirement for commercial banks, our central bank can help the large corporations, that borrow on a daily basis, have the necessary financial environment in which to grow. With all this said, is it necessary that they also get Corporate Welfare as well?

What is Corporate Welfare? Corporate Welfare in my book is any special legislation from Congress that gives a corporation or a group of corporations an advantage that otherwise, without the special legislation, would not be there. Take for example Health Care Insurance Companies that are exempt from anti-trust laws so they can control a piece of the insurance business. The fact that the consumer can not shop outside his or her state for a better and cheaper insurance product is a form of Corporate Welfare. The weakened laws regarding the sale of financial products and a weakened Securities & Exchange Commission are also another form of Corporate Welfare, in my opinion.

The history of the capital markets in the United States is one of trying to control greed and unethical behavior. The Congress knows this only too well. Until they suffer huge financial loss, the Level Playing Field is only going to be an idea. But, more importantly, Congress must be made to suffer for their lack of concern by being voted out of office. Only when the electorate wakes up to the fact that Corporate Welfare in this country has come before the security of the family, we will see some meaningful change.

The TV news shows are not going to educate the masses to what ROI, IRR, EPS and Corporate Welfare have to do with the economic crisis and the fact that so many people have lost their job, or their retirement. The American people are going to have to get this themselves, and want this themselves, if they are going to see a change in the way business is done in the United States and in Congress.

Stay tuned.

Monday, December 28, 2009

ROI, IRR, EPS vs The Level Playing Field

For several months, MONEYTHOUGHTS has discussed the concept of the Level Playing Field as it relates to Monetary Policy and Investment Securities Regulation in the United States. Because of the way Monetary Policy is implemented by the Federal Reserve Bank, along with the deficits and borrowing that is done by the Federal Government, Monetary Policy in the United States is decidedly for the benefit of corporate America. The bottom line is, that over a period of 20, 30 or 40 years, loss of purchasing power due to inflation is an economic fact of life in the United States.

You have a choice: 1.) you can put your savings in a bank and earn interest; or, 2.) you can invest your money in the capital markets and try to hedge yourself against inflation and the loss of purchasing power of your money. We all know that we have long term responsibilities to ourselves and our families. Whether it is investing for our own retirement or a child's college education, we recognize that over an extended period of time, our money will not be worth what it was when we placed it in a savings account 20, 30 or 40 years ago.

I do not believe that Monetary Policy in the United States will change with regards to its second duty - put enough money into the economy to further economic growth. In my opinion, the Fed's first duty of protecting the integrity of the dollar is in reality a distant second. As such, investing, not saving, for retirement is really the only way to get from point A to point B.

I have asked this question before. For whose benefit is Monetary Policy in the United States directed? My answer is economic growth. There is nothing wrong with that answer as we need our economy to grow if we are going to survive as a nation.

That brings me to the role securities regulations play in our quest to meet our financial responsibilities to ourselves and our families. Securities regulations and the credit rating agencies are the weak links in the system.

Corporations exist to make money. Profits is the name of the game. Without profits a corporation has no purpose to exist. Publicly traded corporations produce a lot of financial information for their shareholders like Earnings Per Share (EPS). But it is the Return On Investment (ROI) that moves EPS. Corporations look at many ideas before they decide to invest in a new project. The project they decide on is usually determined by something they call the Internal Rate of Return (IRR). The Modified Internal Rate of Return (MIRR) takes into account the cost of capital. Borrowing money is leverage for a corporation and can propel its earning per share. Earning Per Share is what many CEOs have their salary and bonus based upon. As a result, EPS are very important to them and their Board of Directors. The ability to borrow in the capital markets at low interest rates gives the corporation the ability to have a higher Return On Investment (ROI).

The Federal Reserve Bank serves business first and the family second. I challenge any economist to prove me wrong. If, the Fed is going to place the interest of the corporation before the interests of the individual and his/her family, then does it not make sense that the regulation of the capital markets should be sincere and if tilted at all, should be tilted in favor of the investor, be they individual or institutional?

Stay tuned.

Sunday, December 27, 2009

Sunday: Time For Pro Football & The New York Times

The Bengals need to win this afternoon. They play the Kansas City Chiefs at Paul Brown Stadium at 1 pm. With home field advantage, this should happen, meaning the Bengals should win. Does not have to be pretty, just get it done. Good Luck Bengals!!!

On Monday, MONEYTHOUGHTS gets back to talking about those economic factors that influence our monetary policy here in the United States, in my opinion. There is a lot of material to cover, lots of terms and concepts to understand, but I will try to keep it simple. MONEYTHOUGHTS is written for everyone, not just the economist or the banker. We need more people involved and literate with the terms and the concepts of monetary policy and financial products and the regulation that I think is needed.

Stay tuned.

Saturday, December 26, 2009

Saturday Is For Art & Literature Too

Today, I want to put in another plug for a book I received as a gift this season. THE FAMILY by Jeff Sharlet is turning into a even better book than I could have imagined from just reading the cover and a few pages. Those of you that are interested in American Social and Intellectual History, this book is a MUST!!!

I know, many of you think history is boring, but that is not true. An American History textbook can be boring, but a well written and researched piece of history, any history, can be a very rewarding experience. I re-new my recommendation of THE FAMILY - THE SECRET FUNDAMENTALISM AT THE HEART OF AMERICAN POWER, and I believe that this is a key piece of American historical literature.

Mother & Child: An American Icon No. 2, styrofoam, cardboard, cereal boxes, paper mache, gesso, acrylic paint, 2007-08. Artist: F.D. Zigler, designed and constructed.

Friday, December 25, 2009

Merry Christmas & The Level Playing Field

Here in the United States, today is a holiday, Christmas Day. Hopefully, for many, it is a time of family and friends, joy and warmth of the season. Enjoy the day, the weekend, the next week, if you don't have to go to work.

But for me, I will take the day off from writing about the Level Playing Field for only a short time. There is still work to be done. The process of educating the masses is never finished. While the lesson is not difficult to comprehend, repetition is the key. There is a balance I am trying to get across to those that read this blog.

The balance is: 1.) reduce inflation and make saving money in a savings account a viable alternative to investing in the capital markets; or, 2.) regulate the capital markets with enough regulations to make an investor's portfolio reasonably safe from fraud. In that, it is reasonable to expect that there will be those that will battle against both points #1 and #2, with huge piles of money, the masses will have to learn what they don't know to survive. This is the balance I put forth.

There will be no meaningful change to protect the financial welfare of the masses until the masses understand their choices. While the Level Playing Field may only be an abstract idea, for millions of families, their financial security is no abstract question.

Stay tuned.

Thursday, December 24, 2009

The Wall Street Journal's Christmas Editorial & My 2 Cents

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.

So the light came into the world and the men who lived in darkness were afraid, and they tried to lower a curtain so that man would still believe salvation lay with the leaders.

But it came to pass for a while in divers places that the truth did set man free, although the men of darkness were offended and they tried to put out the light. The voice said, Haste ye. Walk while you have the light, lest darkness come upon you, for he that walketh in darkness knoweth not whither he goeth.

Along the road to Damascus the light shone brightly. But afterward Paul of Tarsus, too, was sore afraid. He feared that other Caesars, other prophets, might one day persuade men that man was nothing save a servant unto them, that men might yield up their birthright from God for pottage and walk no more in freedom.

Then might it come to pass that darkness would settle again over the lands and there would be a burning of books and men would think only of what they should eat and what they should wear, and would give heed only to new Caesars and to false prophets. Then might it come to pass that men would not look upward to see even a winter's star in the East, and once more, there would be no light at all in the darkness.

And so Paul, the apostle of the Son of Man, spoke to his brethren, the Galatians, the words he would have us remember afterward in each of the years of his Lord:

Stand fast therefore in the liberty wherewith Christ has made us free and be not entangled again with the yoke of bondage.

This editorial was written in 1949 by the late Vermont Royster and has been published annually since.

I read this Christmas editorial for many many years, and now I have something to add.

Would Jesus have sided with the insurance companies or would he have been in favor of a public option?

Would Jesus have sided with those for a Medicare buy-in ?

Would Jesus have been for or against universal health care, even for those that could not afford health care?

Stay tuned.

Wednesday, December 23, 2009

The Best Government Money Can Buy

The health care bill, with no public option, no Medicare buy-in, etc etc etc, and we are suppose to feel that our vote counts? The whole thing is one big joke. I would believe that Jesus walked on water before anyone could convince me that this health care bill is anything but another victory for the insurance industry. Even if some form of the bill passes and is signed into law, who is going to enforce it? Who is going to line those insurance executives up against the wall if they do not honor the terms of the contract? Things will have to get a lot worse before the American people will demand that their representatives speak for their welfare and not the corporate welfare that passes for capitalism here in America.

Insurance corporations need the protection of the Congress in order to do business with the American family? Their power in terms of financial resources is such that they need special laws passed by our Congress in order to make a profit? The Congress of the United States will continue to represent special interests until those in Congress that choose to ignore their constituents will be turned out by the electorate. That day is coming.

As more people realize that there is no pea under any of the shells, the American people will wise up.

Stay tuned.

Not So Balanced Budget: Capital Hill For Sale, The Envelope Collection, acrylic on paper envelope.

Tuesday, December 22, 2009

A Picture For Christmas

A few years ago, on Christmas night, I took this photograph of a house at the end of my street in Northside. I like this picture, so, to all those who read Moneythoughts and celebrate Christmas, I post this picture.

Hopefully, in the new year 2010, we may hear more about the idea of the "Level Playing Field". I am not interested in revolution or for that matter leaving capitalism, as I think, as an economic system, it can work. Sports work, but they must be regulated. Without regulation, which is the goal of the "Level Playing Field" there is no contest. We can give a little on inflation, if we can get something from regulation of the capital markets in return.

Stay tuned.

Monday, December 21, 2009

All I Want For Christmas Is A Level Playing Field

Since Christmas is near, and so many are shopping and getting in the spirit of the holiday, I am not going to bore you with a bunch of numbers. Today, I want you to think about money. The name of this blog is moneythoughts, so today I am going to talk about money.

We all understand what inflation is, right? Inflation is when our money does not buy as much goods and services as it did a few years ago. Inflation, put another way, eats up purchasing power. This is pretty straight forward and simple.

So, we might conclude that holding a lot of money, say for retirement or a child's college education, in a savings account is a good thing, but over a long period of time, with prices going up, our savings, while earning some interest, is losing ground to inflation. So, what do people do?

People invest their money. They might invest in the capital markets, also known as the stock and bond markets. They may chose to invest in almost anything they believe will increase in value. I want to talk about investing in the capital markets.

People can either buy mutual funds, or, invest in specific stocks and bonds. But if the stock market crashes, or if there is a meltdown in the bond market because the regulations of the market are too lax, or the credit rating agencies and the underwriters sell phony triple-A bonds, who pays the price? The small investor trying to hedge himself against the loss of purchasing power due to inflation pays the price.

So, I come to this point. The Federal Reserve Bank needs to be more fair in their interest to advance the economy by expanding the growth of the money supply. The Congress needs to put regulations back in place to control the bad behavior of the investment bankers. Both of these things need to be done if ordinary people are going to have a decent shot at hedging themselves against inflation. The game, the way it is run now, is totally unfair to the little investor. During this last wave of shit, some big investors got their sails trimmed too.

Congress can level the playing field. It is in their power to do it. Why do we have a rigged game with millions of people being hurt for trying to do the right thing for themselves and their families? Ask your Congressional representative the next time you see him, or pick up your phone and ask him, why do you tolerate an investment environment where so many are hurt and so few make out like bandits?

Stay tuned.

Sunday, December 20, 2009

Sunday: Time For Pro Football & The New York Times

The Bengals play the Chargers in San Diego at four o'clock, and a Bengal win would put them in the playoffs. (Or a Baltimore loss)

The tragedy of Chris Henry's death this past week can not be ignored. A young man with so much talent and potential is lost to his family, his children and his team.

The health care bill passed through the Senate, but is a long ways from complete. We will all see what we get in the end. Hopefully, it will provide more people with health care and not hurt those who already have it.

The college football bowl games have begun, so, don't lose all your Christmas bonus betting on the wrong teams.

Stay tuned.

Saturday, December 19, 2009

Saturday Is For Art & Literature Too

Last night a friend gave me a book for Hannukah. The Family by Jeff Sharlet is the kind of book that is right up my alley. The sub-title reads, The Secret Fundamentalism At The Heart Of American Power. I have seen Jeff Sharlet on MSNBC many times talking about his book, so, I am curious to learn more about what he has researched and written.

Anyone who has ever walked through an art museum will recall that early European paintings used religion as their subject matter. In an era when few people knew how to read, religious paintings help tell the stories of the Bible, both the Old and New Testaments.

Twenty years ago, I painted the above painting in oil on board, and I gave it the title Mother and Child: An American Icon. I built the frame out of wood and covered it with gold metal leaf. (There is a difference between gold leaf and gold metal leaf, and the difference is cost.) I exhibited this piece in a show at the Carnegie Art Center in Covington, KY in May, 1992 and in June, 1992 in Chicago at the R.H. Love Contemporary. The exhibit was titled STARS & STRIPES FOREVER The Flag in Contemporary American Art. This piece, I thought at the time, was political art.

If this piece survives a hundred years, I am wondering to what purpose it may be put? What the painter had in mind at the time can easily be distorted when he is no longer around to explain his work. Well, it is something to think about.

Stay tuned.

Friday, December 18, 2009

Ski Cincinnati Hats On The Way

Ski Cincinnati ball caps are on the way. The Ski Cincinnati logo, which is trademarked, has been digitized and some sample caps have been made. It will not be long now before everyone that wants to wear a Ski Cincinnati hat will be able to purchase one. I created the Ski Cincinnati logo almost 30 years ago and over the years have wanted to bring its tongue in cheek humor to people around the world. Why not? Humor and a good joke keep me going, and I got to believe that humor such as Ski Cincinnati has to be good for everyone too. More about where you can get your Ski Cincinnati cap in the future, but for now here is a picture of the logo on a black cap with white stitching.

Stay tuned.

Thursday, December 17, 2009

Ben Bernanke: Man Of The Year

Ben Bernanke is TIME magazine's Man Of The Year. Well, that is an interesting pick, isn't it. The Chairman of our central bank Man Of The Year? Why?

Writing about monetary policy and the tools of monetary policy reminds me a lot of when I worked in bank trust departments many years ago and tried to explain monetary policy to the men and women I worked with. It was if I was speaking in Hebrew, which I do not speak, because they did not really understand a word I was saying. Back then it was Paul Volcker, today it is Ben Bernanke. Where do I start?

Running a central bank is quite a challenge even if your own country does everything right in the first place. Dealing with other central banks around the world is not a walk in the park. But, when you have your own politicians throwing sand, gravel and pieces of glass into the batter, the bread you come out with can be difficult to digest.

Some of our politicians think they understand the role of a central bank, but from their comments criticizing Chairman Bernanke, it is quite clear to me that they don't have a clue what his job entails. The former Chairman of the Federal Reserve Bank, Alan Greenspan, was in the position long enough to shoulder some of the blame for the financial crisis and the meltdown of Wall Street. Alan Greenspan has now gone on the record as saying he made some mistakes. His biggest mistake was in thinking that banks and Wall Street would conduct themselves in their own long term self interests. That proved not to be the case. Banks and Wall Street need to be controlled by regulations much in the same way an NFL football game needs to be controlled with yellow flags on a Sunday afternoon.

Bernanke walked into a building on fire and ready to collapse, and to his credit, did not do a bad job of putting out the fire and supporting the building even though much of the structure had been badly damaged. For this, I think TIME magazine made him Man Of The Year. Keeping the economy of the United States from falling into pure hell while the financial sector was in serious trouble, took a lot of smarts. Why? Because, he really did not have the tools to do what he did. He just did them anyway. He performed open heart surgery on the banking system with a fountain pen.

Paul Volcker will always be to me the guy who saved this country back in the late 70s and early 80s. The fact that the Obama administration does not use him more is troubling to me. He is not allowed to appear on any of the Sunday morning network news programs, and that in itself tells me something. I would like to hear from Paul Volcker and hear what he has to say. I have heard from Geithner and Summers enough.

We are not out of the woods yet. Banking and Wall Street are headed back down the same road, and I am not speaking in Hebrew.

Stay tuned.

Tuesday, December 15, 2009

They Would Not Fuck With Me

Can you believe the heads of Goldman Sachs, Morgan Stanley and Citi Corp did not go to The White House for the meeting yesterday? They in essence told the President of the United States to go fuck himself!!! They said they were fogged in. They could have taken a train or come the night before. If I was the President of the United States and those fucking assholes did that to me, I would have thrown their asses in jail for one night, and I don't give a shit what statute I would use to do it. Those fuckers have a lot of balls, and I would have put their collective asses in jail!!! President Obama's problem is Wall Street and the Republicans want to treat him like he is the hired help. I would set them straight real quick. I might be only a one term president, but no one would get away with fucking with me like that!!! For all the help the Federal Government gave those assholes, directly and indirectly, to keep their fucking heads above water, and this is the way they show their respect for the Office of the President of the United States?

Stay tuned.

Monday, December 14, 2009

Botox & The Big Three Credit Rating Agencies

Here is a quote from Sunday's New York Times that says it all for me.

"What you see in these bills are Botox shots." Joseph A. Grundfest, a professor of securities law at Stanford Law School, on what he sees as inadequate bills to overhaul the Big Three credit rating agencies. "For a little while, everyone is going to be frozen into a grin, and then the shots are going to wear off," he said.

It is good to see someone else beating on the same drum for once with me. I have written about the credit rating agencies and what role they play in the mortgage business in the 21st century. President Obama can beat on the bankers all he wants, but cleaning up the Big Three credit rating agencies would go a long way towards bringing housing back, both for those wanting to buy as well as those wanting to sell. Mortgage-backed bonds are not the problem. Giving mortgage-backed bonds the proper rating is the problem.

Again, the Fed should decide what is triple-A and what is not triple-A. With the Fed behind the triple-A rating, the mortgage-backed bonds can start trading again. This is a small piece of the puzzle, but a very important piece of the puzzle. Congress does not begin to understand the significance the Big Three credit rating agencies play in this mortgage bond process. Without creditable credit rating agencies, there will be no housing recovery.

Stay tuned.

Sunday, December 13, 2009

Sunday: Time For Pro Football & The New York Times

First, the art sale was a bust for me. But, I think I learned something and got a good workout setting the stuff up and taking it down.

UC lost their football coach to Notre Dame this past week. People in Cincinnati are upset. Coaching is a job. A job enables a person to provide for his family. Who wouldn't change jobs for the bigger money that ND was offering Brian Kelly?

The Bengals go up against the Vikings this afternoon. If the 9-3 Bengals win today, they clinch the playoffs. I agree with Boomer that Chad needs to join the team and start acting like a team player and not a distraction. Unfortunately, I don't think Chad knows what the word distraction means. Go Bengals!!!

Well, I received my Sunday New York Times today and I will have more to say about the economy on MONEYTHOUGHTS tomorrow. Banking and lending, especially, mortgage lending needs work and I will be discussing that aspect Monday.

Stay tuned.

Saturday, December 12, 2009

Northside Holiday Art Sale Is Today

I am up early this morning; however, I did not plan it that way. I have the Holiday Art Sale today, so I better get going. Don't know what to expect, yet I am hoping to have fun. If you can make it over to Northside, drop in and take a look around. There are going to be 25 artists and craft people selling their creations. I am taking boxes of the note cards with the Christmas Cactus and some prints of the sunflowers and a few other paintings. And, if the weather will cooperate with a little sunshine and not too much wind, it will be a perfect day.

Stay tuned.

Friday, December 11, 2009

The Triple-A Rating & "Kosher Light": Not In My World

Two short items for this Friday as I am already getting excited about the Northside Holiday Art Sale tomorrow. (See yesterday's post for more info.)

First, this issue about bonuses for Wall Street workers, to me this is just so much crap. Taking them away doesn't get people back to work. In fact, it does nothing because they are now giving the bonuses in stock that can not be sold for five years. Big deal. Fixing what needs to be fixed, Congress can not find its ass with both hands tied in back. Clean up the credit rating agencies and that would go a long way towards restoring confidence in the system. As I have written many times, all triple-A rated paper must be approved by the Fed before the rating can be given. Only the triple-A credit would need to be checked over by the Fed. The lesser credit ratings can be left alone. There is no money in fudging those ratings, although I am old enough to remember how Abe Beem got Moodys' to give back New York City's A-rating in the early 1970s. The Triple-A rating, unlike other ratings does not have a "+" or a "-" after the rating letter. Triple-A is like kosher. It is or it's not. There is no such thing as "kosher light".

Without the TARP money there would be no bonuses either, even for Goldman Sachs. Without the AIG bailout, they all would be looking up to see bottom. To me, it is like a batter that strikes out and then the man from the government standing behind him hits the ball over the fence with a fungo bat and tells the guy he hit a Home Run and that he should now run the bases. That's not a Home Run, that's a bunch of crap. The same is true with the bonus money Goldman now wants to pass out.

Second, I disagree with Krugman today about the Fed needs to do more to fix the unemployment rate. Yes, the Fed could buy more securities to put more reserves in the banking system, but that doesn't mean that the banks will lend the money. Don't ask the Fed to do the job that the administration and the Congress should be doing. I know there are millions of families out there suffering, but asking the Fed to fix the problem is the wrong tool. The Fed can get credit moving again if they would take the responsibility for giving a credit the triple-A rating. Then, in my opinion, a triple-A bond would once again mean something. Remember, tonight is the first night of Hannukah and there is no such thing as "kosher light". Chairman Bernanke knows I am right, he just needs a little push.

Stay tuned.

Thursday, December 10, 2009

Northside Holiday Art Sale Dec. 12, 2009

Time for a word from our sponsor. Just one more reminder that this Saturday, in Northside will be the Holiday Art Sale. Besides my paintings, I am also going to be selling boxes of note cards I made a few year ago with my drawing of a Christmas Cactus. Ten note cards and envelopes in a box for $10, I think should be a hit. I will also have a few prints of paintings too. Then, there will be several paintings ranging in price. The place is just off Hamilton Avenue at Knowlton Street, just follow the crowd to OFF THE AVENUE STUDIOS.

Stay tuned.

Wednesday, December 9, 2009

Another Article About Goldman Sachs

Economics is a vast field that today is very often reduced to numbers, but there is another side to economics that is more than just numbers. There are the people. I have been writing this blog, MONEYTHOUGHTS, since February 13, 2008, and while I have enjoyed having this small piece of routine every morning, I am also hoping that more people might take an interest in the events surrounding world of finance as it pertains to and influences each of our lives. There is a lot to learn. Information and terms to understand is just a part of it, but the people making the bets and taking the risks are at the heart of what is happening.

I received my copy of VANITY FAIR yesterday in the mail and sure enough there is another story about Goldman Sachs. What will VANITY FAIR do if Goldman Sachs would disappear? In the January 2010 issue of VANITY FAIR, starting on page 82, is THE JOB by Bethany McLean. Those interested in getting a little better feel and understanding of what went on at Goldman Sachs during this period will, I think, find this article interesting. This is an article that talks about people, not just numbers or dollars. It is not the last word on the subject, but just another piece of the puzzle.

We, those of us living in a post industrialized society like the United States, live in a very different world than the world for us only 50 years ago. We do not walk or drive around with a lot of cash in our pockets. Most of us have a credit card or two and we use these to execute the transaction for the goods and services we need. Pay checks, pensions and Social Security checks are now directly deposited into our bank accounts. We have faith and confidence that the dollars that show up on our computer screens will be there when we need them. But, in this fast changing world of finance, we need to understand some, and perhaps most, of the machinations that go along with our way of life. This stuff, in my opinion, for us today is more important than knowing the earth is round or that the earth travels around the sun. Those items are nice to know, but understanding finance in the post modern world may keep you alive. Spread the word, people need to understand money and banking.

Stay tuned.

Tuesday, December 8, 2009

Poor Misunderstood Bankers

Bankers, commercial bankers specifically, are a poor misunderstood lot. They are so different from their cousins the investment bankers, who are a totally different breed of cat. Bankers in the early days of this country were not a well liked group either, because I would say, they are such a misunderstood group.

Banks in the early days of this country started up with a few dollars in gold or silver, or even copper as a reserve against the paper money, bank notes, that they issued. In the early days, there was no central bank such as the Federal Reserve Bank. Banking had very little if any regulations. People that accepted bank notes on any given bank were saying that they had confidence in the people that ran that bank. They also felt that if they presented those bank notes for gold, that the bank would meet their demand because the bank would have gold on deposit in the bank's vault. But, like all things human, some banks issued more bank notes than they had gold on hand to back up. A loss of confidence in a bank could mean a run on the bank and if everyone demanded gold for their bank notes, well you can see what would happen.

Now let us jump forward about 200 years to the present. The banking system in the United States consists of a central bank, the Fed, and several National and State chartered banks. The situation in 2007-08 when the Fed came to the rescue of the commercial banks prevented what might have become a run on the banks. But, what would have that meant in 2007? If everyone went to their bank to withdraw cash money, bills, so they knew they had their money in their hands, the banking system would almost certainly collapse, in my opinion. Banking and confidence go hand in hand.

The Fed did not have much of a choice in 2007. The first order of business was to prevent a run on the banks and maintain the confidence of the people, and hope that they would leave their money, in the form of savings and demand deposits (your checking account) in the banks.

So, is it any wonder that the banks would be the first to be made whole and the rest of us to lag behind in the present recession. I have nothing wrong with this scenario, except, all the banks that were "saved" were not commercial banks. With the end of the Glass-Steagall Act in 1999, banks were permitted to enter other businesses like securities brokerage and insurance. Goldman Sachs and Morgan Stanley became banks so they could keep their heads above water in 2007. The Fed permitted this and now we have banks that are not banks, but they can borrow at the Fed's window. The ability to borrow at the Fed's window means you are a commercial bank.

I realize I have run a lot of history into a very few words, but I hope you get my drift. Helping commercial banks from going under to stabilize the economy and prevent a run on the banks is understandable. But, the misuse of the word bank in the present era, I do not go along with, and it still leaves this country and our economy at risk. Unfortunately, our Congress does not have a clue about all this, and so, we are headed down the same road again.

Stay tuned.

Monday, December 7, 2009

John Boehner Does Not Understand The Stimulus

If we listen to people like House Minority Leader John Boehner, we would believe that there is no such thing as a lagging economic indicator. Representative Boehner and the rest of the Republican tribe would have us all believe that if the Stimulus Package that Congress passed earlier this year does not hit the economy like nitro hitting a heart patient, and giving immediate results, then it does not work. Well, as usual, I think they are all wet.

The Stimulus will work, just as the stimulus worked in bringing us out of the Great Depression. World War Two was in effect a stimulus. What Republicans do not understand is that a stimulus does not have to be for tanks and planes to work. A stimulus to rebuild our infrastructure as a country will have the same, if not a better effect. And, while we are at it, we need to rebuild the electric grid of the whole country. Talk about National Security, I can not think of anything as important to our National Security as our electric grid. Money spent on the grid will pay off big time as we move into the 21st century.

Keeping police, fire and teachers on the job by helping the states with their budgets is also part of the stimulus and, in my opinion, part of our National Security as well. The more people we can keep working at jobs that already exist the faster we can come out of the recession.

Credit remains a key factor to bringing the economy out of the current recession. Credit is money in the 21st century, and without credit businesses and consumers are reduced to paying for everything with cash. A cash economy does not grow as fast as a credit economy. The banks need to be encouraged to lend, but they also need to be put back into the banking business, only. If they do not have any other means of earnings, they will lend money.

The Stimulus will work and it is working, but it is going to take more than a year for it to be really felt. An economy the size of the United States' economy does not react like a Kool-Aid stand on the corner of Main Street on the 4th of July.

Stay tuned.

Sunday, December 6, 2009

Sunday: Time For Pro Football & The New York Times

First, I want to congratulate the University of Cincinnati Football Team for winning the Big East title for the 2nd year in a row with a 12-0 record. I have to admit I could not watch the Pitt game as I did not want to jinx them. I saw part of the first half and thought the fix was in as the refs were doing everything they could to see to it that Cincinnati was not going to go undefeated. The thrilling ending would have been too much for me to watch, but I am very happy for them. Now, the big question is: Will Brian Kelly stay in Cincinnati? I like so many Bearcat fans hope he will stay. The Bearcats by winning the Big East go to a BCS Bowl. Great job Bearcats.

The Cincinnati Bengals just got by Cleveland last Sunday. I think the game was too close when the Browns' overall record this season is considered. But, a win is a win. This afternoon the Bengals play the Detroit Lions. Good luck Bengals and lets see some offense today. The Bengals have too many good offensive players to be just scoring 16 points. I, like a lot of fans, hope they light up that scoreboard this afternoon at Paul Brown Stadium with lots of points.

Stay tuned.

Saturday, December 5, 2009

Saturday Is For Art

A few years back, when I was reading The Wall Street Journal everyday, there was an article about Andy Warhol's estate. In the thirty some years I read the Journal, there was not a lot written about art and artists. Naturally, this article caught my eye as I was interested in how the Andy Warhol Foundation and a major art auction house in New York were trying to cheat the executor of Andy's Will out of his rightful fee by undervaluing the art in his estate. Art meets big big money and a conspiracy is hatched. Well, when I got my copy of Art In America, they too had their own article about these events surrounding Andy Warhol's Will and his executor. That did not happen too often, if ever at all before. What I mean is having a story in the Journal and the same story in my art magazine. So, where is all this going? Well, now I read ARTnews. Personally, I like it better than Art In America, but that is my opinion. In the December 2009 issue of ARTnews is an article about the artwork that was picked out for the Obamas' White House. And, can you believe that there are people writing about their picks. First, they only got to pick from a selected group of artworks as many pieces were not available to them from the Smithsonian museums, yet, critics of the Obama administration found room to criticize them for what they hung on the walls of The White House. If anyone is interested in reading this short article it is titled Critics Nix Obamas' Pix Mix by Robin Cembalest, pp 42-43. To what lengths people will go to criticize our first black president, I guess, will never cease to amaze me.

Today's piece I think must be Tribute to Jackie Robinson: Leveling The Playing Field 1947-2007 in acrylic on a black envelope and now in a private collection in Houston, Texas.

Stay tuned.

Friday, December 4, 2009

Northside Holiday Art Sale Dec. 12, 2009

Next Saturday, December 12, I am going to participate in the Northside Holiday Art Sale. See the above poster for time and location. Northside is a neighborhood in Cincinnati not too far from the downtown and close to the University of Cincinnati. Many young families live in Northside as property in Clifton is more expensive. I will take several pieces of my political art to this sale, and a few prints of my work as well. I hope to have a few prints of the sunflowers available too. This is my first Holiday Art Sale and so I don't know what to expect, but for six hours, 11 to 5 pm, I am sure I can have a good time.

Stay tuned.

Thursday, December 3, 2009

Afghanistan: Why We Are There

The press reports just about everything and anything. Some reporting is good and some is terrible, but in a democracy almost everything gets reported. One Senator stands up and talks about the President and his policies and naturally it is reported. But, I guess it is up to us, the listener, to decide whether what they have said makes any sense.

Senator John McCain has decided that to tell the world we will remove our troops by 2011 is a bad more. Why tell the enemy your plans? Personally, I don't think there is a muslin in that part of the world that would bet his turban that the American Forces will be out of Afghanistan by 2011.

How many years is it since the end of WWII? 64 years? 64 years and we still have bases and troops in Germany and Japan. Yet, we are worried we are telling the Taliban that we are leaving in 18 months. The Taliban are praying we will be out by 2011.

As I wrote Wednesday, the important thing about this region of the world is the fact that Pakistan has nukes and nuclear material. The last thing the west needs is for al Qaeda to get their hands on nukes or nuclear material. While we do not have troops in Pakistan, the presence of troops in Afghanistan along with the mission to bring more stability to the Afghan people and their government, is enough of a reason to be in the region. True, al Qaeda does not have to be in Afghanistan to operate, but with Pakistan right next door, it is imperative that we stop al Qaeda from getting their hands on nukes or nuclear materials.

I realize that the Republican Party has now seen their Southern strategy run its course. It played well for them for many years. They would be smart if they would say Kaddish for their Southern strategy and light a candle after they bury it, and then start thinking about a new strategy. Beating on our black president day in and day out is getting old, and the majority of the people, remember it takes a majority to win, see through it now.

Stay tuned.

Wednesday, December 2, 2009

Afghanistan: Not Putting Our Head In The Sand

What are we, the United States, doing on the other side of the world in two Islamic Republics? The simple answer is nukes. But, if the President of the United States says that we are over there because Pakistan has nukes, then there is no theater. The world needs a little theater. What will the world look like if the international terrorist network, known as al Qaeda, a.k.a al Qaida, or, al Qa'ida, gets their hands on a nuclear weapon or nuclear material? That is the real bottom line.

The talk about helping Afghanistan, an Islamic Republic, build up its defenses to be able to put down the Talaban and al Qaeda is just a piece of the story. Unfortunately, Pakistan has nuclear weapons and that, in my opinion, is what brings us to the region. As we could bomb al Qaeda, in the mountains between Afghanistan and Pakistan, from the air, from now until we run out of jet fuel in the 22nd century, or level the mountains from a century of bombing, the facts will not change. The enemy is al Qaeda and there is no signing a peace treaty with a terrorist network that has no boundaries. Now, by giving Afghanistan time to get their shit together, and again, in my opinion, we have no good choices here, we can hopefully help Pakistan arrive at a more stable republic. This stuff is not like WWI or WWII, where you have a clear victory and an end to the fighting. Shit in this part of the world goes on and on and on. I know, no one wants to hear or believe that. Wrap it up and put a ribbon around it and mail it in time for Christmas is the way the western mind works, except this is not the west . This is not Europe. This is Asia, and this is traveling back in time to another century.

Our President doesn't have any good choices here, but the ball he must keep his eye on is the nukes that the Government of Pakistan have. Pulling out of Afghanistan is in reality not an option, it is putting our head in the sand.

Stay tuned.

Tuesday, December 1, 2009

The Economy & Monetary Policy

Last night I read where Fed Chairman Ben Bernanke wrote an op-ed piece in Sunday's Washington Post describing how "political influence" would screw up our central bank's ability to conduct monetary policy.

Our Congress behaves so poorly that it is almost enough to make me become a conservative. The only thing holding me back is that the conservatives in Congress do the same thing - act poorly.

Would not it be a good idea to require that members of Congress read and learn something about monetary theory and policy before they screw things up. But these people in Congress know it all already. Mark my words, if Chairman Bernanke can not influence this new legislation, the United States will see a big change in the way the world will treat our debt and the holding of US dollars. We, those of us in the country, might not see it, but the rest of the industrialized world will react to the politicalization of our monetary policy. The ministers of finance around the world know a hell of lot more about monetary theory and policy than Senator Dodd and the rest of our Congress. They are not fools and they will not tolerate our foolishness and stupidity.

With credit card interest rates at 29.99% APR (Annual Percentage Rate), monetary policy to a certain extent has shifted from the Fed to the banks that set the interest rate for credit cards. Let me explain. The Fed is keeping interest rates low in the hope that banks will lend money to businesses so that they will expand and hire more people. This is good because this is the direction we all want our domestic economy to go in. Unfortunately, the issuers of credit cards are making their own "monetary policy" when they raise the interest rate on the unpaid balance to 29.99%. This will cause people to buy less or cut up their credit cards altogether. Just the opposite of what the Fed is trying to do by keeping the cost of money low for the banks.

Going back to a cash economy is a step backwards. Credit and the availability of credit is what permits an economy to grow at a faster rate. The banks know this, but they are not concerned with the overall economy. Banks are concerned with making as much money for themselves and their shareholders. The problem is - banks and credit are the tools by which our domestic economy can move forward at a faster pace.

The Fed needs greater control over monetary policy not less.

Stay tuned.