"Untitled For Now" oil on board, 1990.

Down The Rat Hole

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

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

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

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

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

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

Stay tuned.

Paul Newman Remembered: 1925 - 2008

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

Saturday Is For Art

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

Chew Gum & Debate

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

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

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

Now for the debate tonight.

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

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

Stay tuned.

Taking a Day Off

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

On Second Thought

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

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

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

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

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

Stay tuned.