Sunday, January 31, 2010

Sunday Jan 31st: One Week From Super Bowl XLIV

I have started reading TOO BIG TO FAIL by Andrew Ross Sorkin. The subtitle is The inside story of how Wall Street and Washington fought to save the financial system -- and themselves. The filler about the characters involved, or the bullshit as I would refer to it, reminds me of OUR CROWD by Stephen Birmingham that I read almost 40 years ago. OUR CROWD was about the Jewish families that built the Wall Street firms in the 19th century. I will have more to say about TOO BIG TO FAIL in later posts. There are lots of names and dates in the book which is good, but the important thing for me is to see whether Sorkin can bring it all together. I, like a lot of people that knew what went on in the financial business, have our own ideas as to what caused what. It will be interesting to see if I agree with his conclusions.

Stay tuned.

Saturday, January 30, 2010

Saturday Is For Art

Friday, President Obama went before the Republicans in Congress in Baltimore. He made a brief opening address and then stood there for over an hour fielding questions. All of this was on TV. No prompters, no notes, just right off the top of his head he answered questions about a wide range of topics of interest to most Americans. I, personally, applaud him for trying to work with the Republicans in Congress, but I think it is a long shot that he will be able to convince them that it is in their best interest to do so. The hell with what is in the best interest of the country. If that had ever meant anything to members of Congress, D or R, we would not be in the economic mess that we find ourselves in today. Rules and regulations would not have been done away with so a very few could rob from the rest of us. It IS just that simple. Markets, banks and securities regulations are necessary, and there is no way around it.

Stay tuned.

Obama: A Commemorative Stamp, acrylic on MDO plywood, 2009. By F.D. Zigler.

Friday, January 29, 2010

Bernanke Is Back And That Is OK

The Senate put Bernanke back in the Chairman's chair at the Fed. That was the right thing and the smart thing to do. The vote was close for a Fed chairman, but 70-30 was it. I could try and write about the 30 senators that voted against his confirmation, but we all know that they play to their crowd.

Blaming Bernanke for the financial crisis is not fair or even close to being correct. Giving him credit for acting above and beyond his authority when the economy could have been in bigger trouble, had he not acted, is more in line with the reality of the situation he found himself in when the meltdown occurred.

The Congress and past presidents ask too much of the Fed, and it is not right. The Fed is a central bank that has the authority to run monetary policy. Too many people think that because monetary policy is put on steroids, it can make bad fiscal policy go away. It can't. Asking the Fed to correct the mistakes made in Congress or The White House produces, in my opinion, the appearance that the Fed is responsible for everything that happens to the economy.

I would like to see the Fed go back to managing monetary policy and take a smaller role in being responsible for the overall economy. I would like to see the Fed take on the responsibility for approving all triple-A ratings by every credit rating agency before they slap their triple-A on any piece of paper that the credit rating agency is paid to rate. The conflict of interest between the credit rating agencies and the investment bankers has not been dealt with to most thinking peoples satisfaction.

The book has not be written yet, I don't believe, but some day the story of Fed Chairman Alan Greenspan will be written and the world will see what an idiot we had running the Fed for so long. His influence had a big hand in the recent financial crisis because he believed all the crap about deregulation being the best way to go. Greenspan was dead wrong, and he now knows it. But, like the barn door, it is too late.

Money and Banking need rules. Without rules, we will face another financial crisis. It is just a matter of time.

Stay tuned.

Thursday, January 28, 2010

President Obama And The Republicans In Congress

I think you have to give President Obama credit for trying to work with Republicans in Congress. If it was me, I would tell them where to go. They have nothing going for them except for President Obama failing as president. So, I ask you, how can you work with people like this? Well, evidently President Obama means it when he says, it isn't about him. After all the crap that has come his way over the past year, he still wants to reach across party lines to work with the GOP. I wish him luck, but from where I sit, I don't see it happening. The white Republicans in Congress have nothing going for them except their skinny white asses, and I think they know it. Let this black president succeed, and what is going to happen to them and the GOP?

Stay tuned.

Wednesday, January 27, 2010

President Obama, You're The Quarterback Now

Tonight President Obama is giving his State Of The Union address to a joint session of Congress. And, as it has been for many many years, the speech will be televised across the nation.

My comments today must be understood in context with who I am, where I am from, and what I have seen in America over a period of 67 years. Those of you who were born after 1960, grew up in a much different America than I grew up in. For example, seeing a black quarterback run onto the field in an NFL game is nothing new to you. For some that are quite young, you may think that the NFL always had black quarterbacks. I remember the first black quarterback to take the field in the NFL. There was a lot of comment about whether a black quarterback was smart enough to quarterback an NFL type of offense. Today, as I write this, it is almost too funny to imagine that such a serious discussion of a black quarterback making it, in the NFL, ever took place, but it did. I was alive and I listened to it and saw it with my own eyes on TV.

To understand why there are so many Republican politicians in the South, you have to understand a little American History. Let me take you back to 1964 and the Democrats' National Convention in Atlantic City, New Jersey. This convention was a turning point in the political history of the United States. The event, in my opinion, that forced the issue of voting rights for black people in the deep South was the challenge from Fannie Lou Hamer and the black Democrats from Mississippi that asked to be seated as part of the Mississippi (all white) delegation at the National Convention in August, 1964. Two blacks were eventually seated and the rest is history. The South became almost solid Republicans in a matter of a few short years. The issue of Civil Rights had not been settled and the right to vote for black people in the South was not a forgone conclusion.

Now fast forward to 2008, the nation elects its first black president, and he enters The White House in January 2009 and takes office. But, this 'football" game is played differently than the one in the NFL. Within days of President Obama taking his seat in the Oval Office, comments start surfacing about how he should fail. Rush Limbaugh, the idealogical head of the Republican Party came right out and said, "I hope he fails." Others were looking to defeat him at his "Waterloo", and some just wanted their "country back".

I have my own theory, and here it is. The Republican Party wants President Obama to lose in 2012, and they think if they defeat him on every issue that he tries to implement for the country, that they might succeed. Throw him for a lose on every play, not allow him to make any yardage or complete any passes and hold him to zero points scored. That the country may suffer as a result of this strategy is of no concern. If a black president is successful, what will that do to the political landscape of the South and the rest of the country? What will the Republicans have left to stand for?

President Obama trying to be bi-partisan, in my opinion, is a big waste of time. It ain't going to happen Mr. President, you ain't one of them! I wish I could believe you when you say you would rather be a good one-term president than a mediocre two term president, because if you really meant it, you would jettison any and all attempts to work with the Republicans on domestic economic policy. The freeze is absurd. It is a bad joke. Stop trying to work with men and women that are working hard for your downfall. The economics of the situation call for spending not belt tightening. Get the economy back on its feet and you will be re-elected. Those are the only points you need to score.

Stay tuned.

Tuesday, January 26, 2010

The Problem Rests With A Congress that Refuses To Learn Anything From Their Mistakes

Yesterday I wrote a little about the political-economic philosophy of deregulation. This philosophy like most philosophies is grounded in some belief. I do not want to challenge that belief system because a person's personal beliefs concerning a supreme being are just that, personal. But, how can I start in the middle? I guess, rather than get tied up in a debate about religious philosophies and laws of nature, I will try and stick with economics in the hope that each person can think through what I write.

Doing away with banking and investment securities regulations brought us to where we are today. The existence of these laws is not the reason for the financial crisis, the mortgage-backed bond market meltdown or the recession that followed. Had these laws been kept in force and not weakened or eliminated, the size of the crisis would have been averted.

Economic panics have occurred throughout the history of the United States. But in 1913, Congress created the Federal Reserve Bank to be the banker's bank so financial panics could be avoided. In the 1930s, Congress created the Securities & Exchange Commission and later the Investment Act of 1940. These laws were designed to protect the consumer of investment products. And, for the most part, this is what they did for many years.

The laws that came out of President Roosevelt's administration were designed to deal with the world of finance that was rapidly changing with the technology of the day. But, by the late 20th century, technology had advanced so much faster than the laws to protect the investor that the "old laws" were erroneously believed to be no longer needed. As a result of this belief, the world of finance and investment was believed to be best served by the laws of free and open markets. This philosophy assumed that the markets would correct any and all abuses and that the Federal Government was not needed in this arena of enterprise.

After the building burned to the ground, Fire Chief Alan Greenspan admitted that he made a miscalculation. It was a lot more than the former Federal Reserve Chairman that made a huge miscalculation, several presidents and a Congress, not schooled in economics as much as in religion, partnered in this disaster.

Now, the Congress is thrashing around looking for a new scape goat and think they have found one in Ben Bernanke. Chairman Bernanke is not the problem. The problem rests with a Congress that refuses to learn anything from their mistakes and believes that the problem was too much government regulation. Such stupidity is a challenge to even the best economic theorists. I support the ideas of Paul Volcker and Elizabeth Warren. I wish them both much success in enlightening the administration and the Congress of the United States.

Stay tuned.

Monday, January 25, 2010

This Battle Is Far From Over

In order to have a fight, you have to have someone to fight with. We welcome Paul Volcker and Elizabeth Warren to the battle. Now, let us get behind them and push for a win. It is your money.

What happened on Wall Street just a short time ago was the culmination of years of work to destroy the world of banking and investment securities regulations. This world did not happen over night. The laws that were put in place almost 80 years ago was the target of men, of a philosophy of deregulation, that started before the ink was dry on that legislation before many of us were even born. This philosophy of deregulation was an attack on the philosophy of government that came out of the New Deal. From the election of President Reagan until the close of President Bush #44, the conservative philosophy of deregulation or the idea of self regulating markets had its way in Washington, in both the Congress and The White House. President Clinton was no better than any of the Republicans that came before or after him when it came to standing up to this error filled political-economic philosophy. Whether he knew better and did not care, I will leave to the historians to decide, the results is what matters.

I, personally, saw what crap was sold by Wall Street brokerage houses in the late 1980s and was appalled by what I saw. The New York Stock Exchange, that once required substance before a listing was granted, had decided that making money was more important than protecting the investor from ill conceived money making ideas. These products made money, but only for the brokerage firms that sold the crap and their brokers that pedaled the stuff to unsuspecting clients. Many of the brokers themselves did not understand that the stuff they were being given to sell was pure shit.

With deregulation becoming the tune of the day, investment houses became more bolder and more greedy as structured finance came into its own. It did not take long for the big investment houses to realize that the growth for the credit rating agencies was coming from the growth of the mortgage-backed bonds. From there, it was a short distance to the reality of "shopping" a rating. With the triple-A rating in hand, the investment firms and their teams of sales people could sell these bonds to professional money managers around the world. It was just a matter of time before the last shoe would drop and the game would be over and the mortgage-backed bond market meltdown will have covered the globe.

The two warriors that have entered the battle on the side on common sense and regulation is an 80 year old man by the name of Paul Volcker and a woman Harvard Law professor by the name of Elizabeth Warren. These two individuals need our support because they are trying to enlighten President Obama's administration to the need for regulation of banking and investment securities and their markets. On the other side of this fight are two men from the other side of the political-economic philosophy, that of deregulation. Larry Summers and Treasury Secretary Geithner need to go. It is just that simple. President Obama needs to tell these two men he has had enough of their advise, and that it is no longer needed, period.

This fight is far from over. We need people to write The White House and support the people that speak for the people on Main Street. Wall Street has their lobbyists and they are paid well. The rest of us need Paul Volcker and Elizabeth Warren to speak for us. Get behind them and write or call. This battle is far from over.

Stay tuned.

Sunday, January 24, 2010

Ski Cincinnati Caps Are Now Available

As a retired old man, I find that my Ski Cincinnati apparel, t-shirts, etc., sell a lot better than my art work. I have found that my art work, political satire, is a very limited group right now, and in Cincinnati, that group is almost non-existent. But, people like the Ski Cincinnati t-shirts because they are tongue in cheek and just quite simply a clean t-shirt with some good humor. You see, for those of you outside Cincinnati, the mounts are neighborhoods and parks and not mountains that you ski. I have now introduced a ball cap with the Ski Cincinnati logo, which by the way is trademarked. The caps are for sale at Benchmark Outfitters on Kenwood Road in Blue Ash, Ohio, and they do have a web site. The Cincinnati Museum Center in the old Union Terminal train station in downtown Cincinnati is also selling the cap in their gift shop, as well as the Contemporary Arts Center Gift Shop on the corner of 6th & Walnut Sts. in downtown Cincinnati. Anyone that would like to own and wear a Ski Cincinnati cap can contact these shops for details.

This afternoon and this evening, the NFC and AFC will be decided. While I do not care which teams win, I like to see the unexpected. Between the Jets and the Colts, I would think it interesting if the Jets pulled off the upset playing on the road. A rookie quarterback taking his team to the Super Bowl, I think makes for a good story. In the NFC game, I think most everyone would like to see the Saints make it to the Super Bowl. The city of New Orleans has been through tough times with Katrina and the recession. If ever there was a city that deserved a championship, I think New Orleans is that city. Good luck to all four teams and lets see two good games.

Stay tuned.

Saturday, January 23, 2010

The Phenomena Known As Rush Limbaugh

Saturday is for art will continue, but this Saturday I need to make a few non-art comments.

The phenomena known as Rush Limbaugh says more about America than it does about him. Rush Limbaugh can not help himself get out of the way of his own stupidity. I once worked with a fellow that described a co-worker as not having a clutch between their mouth and their brain. Rush Limbaugh does not have much of a brain, and as for a clutch to moderate his thoughts before he speaks, it is either unused or nonexistent. Rush's comments about the Jews and banking that he used as a fulcrum to go after President Obama really exposes several things about Rush. First, that he is not too bright is a given, but second, that he would dance with the age old canard about Jews and banking, demonstrates that his knowledge is weak, and that he will throw anyone under the bus to achieve his ends, which is tearing down President Obama. But, as I said in my initial sentence, Rush Limbaugh's success on talk radio says more about America than it does about Rush. Yes, I am Jewish. And, I once worked in five different bank trust departments as a bond trader and as a portfolio manager, but in each of those five banks, I was the only Jewish person working with the investment group. When you are part of a minority that makes up less than 2% of the population, you are going to find people of other backgrounds and religions working with you. So, in conclusion, while Rush may think that Jews control banking, he need only check into the facts to realize the error in his thinking. I hope Rush does a little research next time he opens his mouth.

Stay tuned.

Three Masks in acrylic on paper.

Friday, January 22, 2010

President Obama Gets It, And Now The Banks Will Too

It appears that President Obama has seen the light. Paul Volcker and those that we might consider in his camp for tougher banking regulations, have made a dent in the Summers/Geithner philosophy of deregulation.

As I have written too many times over the last two years, this stuff, money and banking, is not difficult to understand. And, it appears that President Obama has finally gotten it. How bright does one have to be to understand that running a banking operation out the front door and a trading operation out the back door leaves a bank at too much risk. But, when the risk is shifted to the shareholders, senior management feels no pain or for that matter accountability for the losses that mount up as a result of the trading operation.

Let us have commercial banks do what commercial banks do best. Take in deposits and make loans, and where they can charge fees for services provided. Investment bankers should go back to being partnerships and stop using shareholders for capital to trade on. That is my opinion. Too big to fail is totally unacceptable by any standard, but it will take more than the U.S. Congress to make that point stick.

I believe in capitalism and I believe in the NFL, and I know that neither can function without the proper rules and enforcement. For my simple mind, it is just that simple.

Stay tuned.

Thursday, January 21, 2010

A Congress Too Stupid to Understand Their Actions

It is unfortunate that the Federal Reserve is taking the beating from Congress. To me it is almost like blaming the little company in Ohio that makes the NFL footballs for the excesses of the players on the field. People do not understand what a central bank is or does and so when Wall Street and the economy went into free fall, just about everyone turned to the Federal Reserve for some answers. Quite simply, it doesn't work that way.

The Congress in their infinite wisdom removed the boundaries of the game, modified the rules and generally believed that markets in the 21st century did not need to be regulated as in the past. Remember Senator Gramm saying that big boys didn't need to wear little boys pants? Well, Congress passed deregulation, President Clinton signed the legislation, and Fed Chairman Alan Greenspan smiled his idiot smile.

The financial crisis, bond market meltdown and housing market collapse were engineered by some of the dumbest legislation in the history of the United States. And, now that the banking system, which in the 21st century, we could not hope to come out of a recession without, has been saved, everyone is turning to the Fed for answers. Go ask the women that make the footballs that will be used in the Super Bowl why one team will win and the other will lose, makes as much sense.

Bernanke did more than he was allowed to do, but he had no choice. The downward spiral, of a lack of confidence in the monetary system, would have driven our economy and perhaps the whole world's economies into a depression. Making cash available to mutual funds and others that were not technically banks prevented one huge panic here at home and around the world.

It is time that people begin to understand that this man made financial disaster was manufactured on Capitol Hill by a Congress that is too stupid to understand the gravity of their actions.

Stay tuned.

Wednesday, January 20, 2010

Bankers: Winners & Losers

Good News! The UNITED airlines has found my bag. They sent it to Vegas. Now they are sending it back to me via FedEX. I hope my green bag had a good time in Vegas and perhaps maybe even won some money.

As for talking about money and banking today, I am going to hold off for another day or two, as I am still getting back to my routine.

There is, it seems, more discussion of executive pay and its relationship to that of the lower paid employees of corporations and how the ratios have changed over time. The most disturbing fact is that even when management performs badly, the big salaries and bonuses just keep on coming. There has been a great deal written on corporate governance and now it is time to write more on corporate performance and how corporate compensation is tied to performance. The banks take risks and if the risks work out well and the bank makes money, all is fine. But, what happens when they take too much risk and things do not work out fine? Should senior management get to keep money earned for short term gains that put the bank in danger of longer term failure?

Stay tuned.

Monday, January 18, 2010

The Credit Card Game

Monday morning, and I am trying to get back into my routine. Hopefully, I will get a few things done this week, and perhaps my bag will magically show up on my door step. I am a little out of it having been away for a week, so perhaps later this week I will have more to say.

President Obama seems to be getting it with the banks. Perhaps he is reading my blog among the other things he reads. These guys on Wall Street are truly a different bred. They are greedy beyond belief, and I think the President is picking up those vibrations correctly.

The banks and credit card issuers are looking for ways to get around the new restrictions placed upon them with new fees. I have nothing against them trying to fee us to death as long as there is true competition, the consumer can shop for a better credit card deal. That is what free enterprise is suppose to be about, isn't it? Fee business is more dependable than playing the spread. We all remember what the spread is? The spread is the difference between the cost to borrow money and the price charged to lend to the consumer. With adding fees they make up for what they have lost through "restrictive legislation" on interest rates charged and raising the interest rate charged.

These guys are no dopes. They worship money and they will fight like hell to hold onto the game that is rigged in their favor.

Stay tuned.

Saturday, January 16, 2010

Saturday Is For Art

Back home. What an experience. Learn something new almost every day. Now to get back to what I do. But, I am not done with UNITED yet. Before this is over they will know who I am and why I am bothering them.

Stay tuned.

Friday, January 15, 2010

Last Day: No Airline For Old Men

I just want to get home now. My vacation is over. Get back to my routine of writing my blog, selling my Ski Cincinnati apparel and painting. It has been interesting, and I guess I learned a few simple things too. April is a few days closer and bike training can start when the weather breaks. I, like many, am tired of the cold weather.

Stay tuned.

Thursday, January 14, 2010

Part 3: No Airline For Old Men

Last full day of my vacation in LA, and still no luggage. This morning I spoke with a woman in Manila, the Philippines. The phone connection was not very good, and they still have no idea where my bag is. At this point, I am just hoping to get my bag back with its contents. I can't replace some of my stuff for any price.

Went to the Getty Art Museum yesterday. What a nice collection they have, and they have naturally added pieces since I was there in 1999.

I plan to make a negative comment about UNITED every day on my blog until I get my green bag back. And, Glenn Tilton, UNITED's CEO will know who I am before this little adventure is over.

I will get through the day and fly back to Cincinnati tomorrow.

UNITED has lost my bag now for 6 DAYS.

Stay tuned.

Wednesday, January 13, 2010

Part 2: No Airline For Old Men

Fifth day and still no luggage. I am dealing with an incompetent corporation, and there are many of them these days, or, an out and out theft of my bag by a UNITED personnel. Either way, I am still without my single green bag. So simple and yet so far away. Talked with a nice man in India this morning and that was fun. The same BS. They have a computer in India, so what? They need boots on the ground in Chicago to find my bag and that they don't have. I placed a call to Glen F. Tilton, Chairman & CEO of UAL Corporation World at 77 West Wacker Drive in Chicago this morning. I got an operator and she asked what was the nature of my call, and I told her "a lost bag". I left my cell phone number, so, I should be getting a call back soon, don't you think? I think I must maintain a sense of humor about this whole thing at this point. This airline, UNITED, is really fucked up.

Stay tuned.

Monday, January 11, 2010

No Airline For Old Men

Moneythoughts is on vacation this week and finding out first hand how fucked up UNITED is when it comes to getting your luggage when they lose it. Will be dealing with other shit now for a while.

Stay tuned.

Sunday, January 10, 2010

Don't Fly UNITED Unless You Have No Choice

On Friday, January 8, I flew United from Dayton, Ohio to Chicago and then to Los Angeles (LAX) California. United managed to lose my one bag that I paid them $20 dollars extra to fly with me. It is now Sunday afternoon in LA, and I still do not have my one green bag. United has their call centers in India and the Philippines, and if you ever talked to a person in India about a bag in Chicago, well, it is quite an experience. I could not understand a word they said.

The only people that should fly United are: 1.) people that have no other way of getting from point A to point B; 2.) people that only use carry-on luggage; and 3.) fucking idiots like me that tried to save a few bucks on their ticket. I am going back to flying Delta and Southwest. I have learned my lesson.

Not only did my bag not arrive with in LA with me, but United does not know where my bag is! They are the worst in my book. Anyone that fly United and has other options is just asking for disappointment. I could tell you that I have called United's number a zillion times, but they don't do anything to get my bag to me.

Be smart and don't fly UNITED!!!

Stay tuned.

Thursday, January 7, 2010

Goodbye Senator Dodd: I Will Not Miss You

One could build a case that nothing really of substance is being done to protect the individual consumer or the institutional consumer of financial products. That the Congress is just going to blow a lot of smoke up our collective butts, and think they have done something for the good of the people. Change comes slowly. As someone who has read his share of history, revolution is just a word, but rarely does change come from revolution. Change evolves. The history of this nation is a history of evolving change. Technology as it is used in the field of banking and finance moves faster than the creation of laws and commissions to protect the individual and institutional consumer. The banking industry hinds behind the ignorance of the people, and, even fights against the little reform that is so necessary for our continued economic growth as a nation. The real pain in the ass, is the fact that the bankers' lobbyists are now being paid with the peoples' money, our tax dollars as a result of the TARP program. I am happy to see Senator Dodd go, he is a sellout from the word GO. His leadership on the Senate Finance Committee is a sick joke. Go Senator Dodd! May you enjoy the money you earned and the homes you have around the world. Hopefully, his replacement will be a person of character, and an advocate for the good of the consumer and not the bankers, in whose pocket he dwelled. Goodbye Senator Dodd, I will not miss you.

Stay tuned.

Wednesday, January 6, 2010

Banks, Lending & Why Not

There is a lot of chatter lately about the banks not lending money to creditworthy customers. I am not surprised by this turn of events. But to understand this, one must understand how banks work, or, how they make their money - profits.

For many years banks, now I am talking about commercial banks, not investment banks (they are different) made their money by lending money to creditworthy customers, either commercial or individual. Banks took in deposits in the form of checking accounts or saving accounts. Traditionally, banks paid interest only on savings accounts. Banks then would loan money at an interest rate greater than the interest rate they paid on savings accounts and certificates of deposit. The difference between the interest rate they charged and the interest rate they paid on savings, less their expenses, was known as the spread. Banks collected a few fees every now and then, but their principle source of earnings was the spread.

If banks loaned money for a long duration at a fixed interest rate, but used savings that could be withdrawn at any time for the loan, and interest rates went up because of the Fed's actions to slow the growth of the money supply, then banks could find themselves in the position of having to pay a higher interest rate than they were receiving from their outstanding loans. This would then produce a negative spread and the bank would lose money on those loans. We don't want banks to lose money because when a bank loses money we all have to come up with the difference and make them whole again. That is what we just went through.

So, banks need to make a positive spread, after their expenses, to stay in business. But, over the years commercial banks discovered that they could have more predictable earnings if they developed FEE business. What is FEE business? You know charging the customer a fee every time they did a transaction. Fee business became the way for banks to make money if they were not too good at reading the future movements of interest rates, the economy or the Fed's actions.

The situation today is that banks can borrow from 0 to .25% at the Fed window, and while interest rates now are very low, bankers are not very good at figuring out which way interest rates are going. Figuring that they can not go below zero, banks are thinking that at some time in the near future, the Fed is going to raise interest rates. There is a whole thing about matching assets with liabilities, called risk management, but you have to think to do that, and even though all these smarty pants have MBAs from top business schools, no one wants to stick their neck out.

So, we have the present situation where commercial banks do not want to loan money even to creditworthy customers. What can the Obama administration do about this? Not much is my answer, except to jaw bone with the big banks, which probably will do nothing. Remember, the banks have FEE business now and they do not have to loan money to make a profit.

Under another style of government, and I am not suggesting that this is the only way to get banks loaning money, a few bankers are taken out and put against a brick wall and a drama takes place and then every banker gets the idea and starts lending money again. The Obama administration and the Federal Reserve Bank's Chairman, Ben Bernanke, can only do so much to encourage banks to loan money. After saving their collective asses, we now have to be at their mercy to lend.

Stay tuned.

Tuesday, January 5, 2010

First Grandchild Born Today

Today, my daughter gave birth to my first grandchild, a boy. As soon as I get my feet back down on the ground, I will continue writing MONEYTHOUGHTS. The mother and baby are doing fine.

Stay tuned.

Sunday, January 3, 2010

Sunday: Time For Pro Football & The New York Times

The Cincinnati Bengals are in the Playoffs. Last Sunday, the Bengals beat the Kansas City Chiefs and secured their Division Championship. Congratulations to the Team, the Coaches and the whole administration. This season has had its great tragedy, loss of key players and yet they held together and won. Today, it will be interesting to see which Bengals show up to play the New York Jets on Sunday Night Football. Do the Bengals try to win this game to carry the spirit of winning into the Playoffs, or, do they "rest" their key players to avoid injuries? The decision to pull out all the stops and try and win this game, as if the season was riding on it, is the big question for the team. Going into the Playoffs with newly injured key players does not make much sense. It will be interesting to see what the Bengals decide to do.

Stay tuned.

Saturday, January 2, 2010

Three Months Until April

Just three months until April. I can't wait. Warmer weather, sunshine and riding my bike. It can't happen soon enough.

Friday, January 1, 2010

Ben Bernanke: TIME's Person Of The Year

Happy New Year everyone! Now, let us get back to work. Oh, I forgot today is a holiday. OK, don't work, just read my blog. How's that?

TIME magazine has selected Federal Reserve Chairman Ben Bernanke as its Person Of The Year, and I think everyone in the United States should read the article about Ben Bernanke and the following articles on "How the Fed Works" and "Money In Motion". The latter two are also illustrated to help explain these two very important points. TIME would be doing the country a favor if it sent every member of Congress, both House and Senate, a copy of these articles. They could learn a lot, as I am sure there a many in Congress that do not know what is written on the pages of this issue of TIME magazine.

TIME has done a good job with this issue. The part on Bernanke himself and his rise to be Chairman of the Fed is well written. I agree that he was the right man at the right time and in the right position. I am not sure that anyone, except Paul Volcker, could have handled the financial crisis as well as Ben Bernanke did. That he admits that he did not see it coming is no surprise, few realized what had taken place in the mortgaged-backed bond market.

The three large credit rating agencies had slapped their triple-A credit rating on mortgage-backed bonds that should have never received that rating in the first place. What they did was to create billions of dollars in phony triple-A bonds. This then lead to the credit default swaps, which lead to the downfall of AIG. There were many safety devices that were eliminated over the years, or made weaker by a government that believed that regulation of the markets had no place. Alan Greenspan, the idiot savant that ran the Fed before Ben Bernanke, was locked in to the belief that the markets could run themselves. Big surprise. They can not.

I disagree with the purpose of the Fed as it has evolved today. In my economic system, the central bank is that, a central bank. It is not responsible for cleaning up after the Congress shits the bed. Getting rid of Glass-Steagall and other needed regulations lead to the financial crisis which lead to the economic crisis. Phil Gramm is the other idiot in the story. The job of the Fed is to protect the integrity of the currency - the US dollar, and, to see to it that there is enough money in the money supply to carry on the economic growth of the country. What the Fed has become over the years since its formation in 1913, is the repairman of the Congress and stupid Presidents. Now, after Bernanke has saved the country and possibly the world from another Great Depression, he is being attacked by members of Congress that don't know shit about monetary policy. Ron Paul and Jim Bunning don't know shit about what Bernanke knows, and has spent his life studying, but these two assholes think they need to replace the man that just saved this country from going over the cliff. Can we make a better comedy than this?

Even worse, Congress wants to politicize the Fed. If our Congress really wants to fuck up our currency, then they should go a head and politicize the Fed. The other central banks around the world will not sit by while our Congress screws with the US Dollar. Hopefully, when push comes to shove, the Congress will come to its senses. Ben Bernanke did a great job during this economic crisis, period.

Stay tuned.