Marks Blog

"My wallet's gone!"

I’m wondering how this government bailout is really going to work. I know, it is old news and therefore uninteresting, but after seeing today that the government will infuse $250 Billion into the banking industry I really have to wonder if we are seeing the largest bait-and-switch ever perpetrated.

Look, the Fed controls money flow, even as Congress controls how much that monetary ceiling will attain. They attempted to keep the economy running smooth by brokering the Bear-Stearns sale to JPMorgan and followed that with bailing out AIG. AIG was heavily involved in the real culprits, Freddie and Fannie. Thus AIG was the next part the Fed had to stabilize.

But Freddie and Fannie going junk proved that our real estate mortgage market was primarily a junk-based theory. After going the distance with what seems the appropriate acronym BS (Bear-Stearns) as well as AIG, the final straw was Freddie and Fannie proving to be what they were - the financial wing of the federal government (and Congressional Democrat re-election) in tandem with the Federal Reserve.

That the Fed is titularly separate from our government does not mean it actually is so. The Fed Chairman is chosen by the President and confirmed by Congress. The money they print is based on debt-ceilings provided by Congress. This is why Congress had to authorize the $700 Billion bailout.

So much of this is chimera, but for the short-term it serves the purpose. Infuse banks with funds (US authorized debt) that can be used in the manner Freddie and Fannie served - as guarantors of loans. What I have failed to hear about is how the rules for loans have been rewritten. Are we still giving the minimum-wage earner $200K mortgages? Since I haven’t heard, my best guess is “yes” and that means within a year we will crash again...

Harder.

Vote early - and if you were registered by Obama's ACORN - vote often...

The problem with deciding which politician to support is that they lie with ease. In the following article, we find that Florida‘s 16th Congressional District is once again facing a scandal-plagued incumbent.

In 2006, Florida’s 16th was represented by none other than Mark Foley. He was to become the symbol of Republican Congressional corruption that swept the R’s out of power. Democrat Tim Mahoney won using a rather odd campaign screed about “Restoring America's Values Begins at Home” and moral countenance - a particularly applicable word meaning strictly the appearance of such..

As the article shows, Mahoney was busy with his hired help in a much more lurid fashion than the Foley e-mail scandal. However, he is a Democrat and should be forgiven regardless of whether or not he seeks help for his sexual addiction like Hollywood actor David Duchovny did recently.

My friend KellerKowboy makes a compelling case for the end of the United States as it was for the last four decades or more. I’d like to delve into this line of thinking, because it has quite the basis in fact.

Businesses make a plan for their future based on what they know. If they don’t know what to plan for regarding taxes, the safe play is to assume the worst. What is the worst? Obama wins and raises taxes on the company enterprise. If taxes are raised (this is what liberals either don’t understand or willfully ignore) the business will either cut payroll or scale back expansion - usually both.

After all, the idea is the business will generate a profit for those who invest, and some extraneous cabal (government) dipping into that profit means less return on the investment. Thus, investment becomes tenuous when questions remain.

We are on the cusp of electing the first openly socialist president. Okay, maybe he doesn’t call his proposals socialist, but if they smell like it, they are indeed. Our markets are in the throes of second-guessing - not to mention the fallout from the fallacious and idealistic theory that simply giving a minimum-wage earner a mortgage will lead to them earning enough to actually pay for it - leading up to this election.

As always, elections should be decided on the basis of ideas, not chimera. Obama is not a Muslim. Nor is he the anti-Christ (as a Christian, I would never presume until I really knew). He is the Democratic candidate for president. His ideas should be what we are looking at, even as we evaluate his unfortunately grave social connections with (alternately) an unrepentant terrorist, a racist, a communist, and his best fundraiser-turned-convict. The names are Ayers, Wright, Frank Marshall Davis, and Rezko - in case you were wondering.

You will notice I spent zero time on John McCain. The reason is simple. We know him, and while there are aspects of him that repulse conservatives, we already know what those aspects are. I’m guessing the markets know them, too…

As a matter of course, I have completely failed to do anything with my 401K in the light of the "crisis" on Wall Street. Sure, I saw I was down around $40K over the past month. Anytime I see my future decline I worry.

Still, my patience has more to do with how heavily invested I am in this means of retirement. I have another 20 (-ish) years before I reach retirement age. I have a Roth IRA I am running in parallel with my 401K, and it is contained within the "sure thing" of my financial institution (insured by the federal government - oh, I feel safe now).

I am not about to make any changes. Today I saw signs that traders are searching for deals, and those deals are out there. Strong companies exist, and price-to-earnings (P/E) ratios are at a peak.

It could be that this is indeed the worst we could face: A full market crash that drags everything down. Perhaps, but unlikely. Why? Again, P/E ratios. If consumption declines - a big "if" when compared to requirements of consumers - I would consider changing my course.

For now, I'm all for keeping a close watch on the market. Indeed, I am much more concerned that the governments of the world might overreact. The conservative within me wonders if they already did...

I have the unlikely pleasure of writing about my stepson’s charge:

Sgt. Stigma (name changed for obvious reasons) has performed all of his assigned duties in an exemplary way. He has leadership qualities that transcend his forced separation, and for that reason I write this report.

Due to his refusal to adhere to military regulations regarding immunizations he is to be separated from military service. This in no way should be interpreted as an indictment upon his work ethic and personal character, of which I have had the pleasure of knowing for 3 years.

I had the unfortunate circumstance of writing a similar evaluation on the best Second Class Petty Officer under my tutelage in 1997. Had he in fact taken the road many-traveled, I’m certain I would be looking at Navy retirement this year.

Why? You don’t get to the top without good people, and once I lost Michael I lost my lifeline on the USS Tarawa. I’m not complaining - I am memorializing. I’ve never worked with a finer person.

You think our current politics are poisonous? Out-of-bounds accusations flying? Dirty tricks? Back-stabbing? Believe me, Obama vs. McCain is kid’s stuff compared to the honest-to-goodness cutthroat nature politics was like in 1800.

A new book titled “A Magnificent Catastrophe: The Tumultuous Election of 1800, America's First Presidential Campaign” details the highly-charged political nature our Founding Fathers endured in the first campaign the United States actually had a contested presidential election. Robert Novak writes this review of Edward Larson‘s historical research:

"Imagine that in the 2004 U.S. presidential election, President George W. Bush was directing the government to arrest, convict, and imprison his critics. Imagine that John Kerry was paying a scandalmonger to dig up dirt on Tom DeLay. Imagine further that John McCain was working secretly against Bush's re-election, that DeLay was plotting to replace Bush with Dick Cheney as president, and that John Edwards was conspiring to be elected president instead of Kerry. […]But 204 years earlier in the presidential election of 1800, that's roughly what took place."

I have watched movies that didn’t hold this much intrigue. Further, I am reminded that the vast majority of presidential power transfers are peaceful. I pray that continues long after my time on this Earth is ended.

Okay, so Bill Ayers was just some guy in his neighborhood who Obama happened to share board membership with?

Oh, my! Notice the Obama spokesperson continuing to dig the hole...

Oddly, this is reported on the Controlled News Network (commonly referred to as CNN).

Democratic Presidential candidate Barack Obama is in favor of allowing ex-felons who have served time in prison to regain their right to vote.

Obama has co-sponsored a Senate measure that would allow all ex-felons to vote, but his campaign isn't directly targeting ex-felons for registration. His campaign does include relevant info on its Web site and educates volunteers so they can explain state laws to those who may not realize they have the right to vote, said spokesman Kevin Griffis.

Excuse me??? “All ex-felons“??? Look, there is a whole lot involving restitution to the victims and favorable completion of parole that must be taken into account before restoration of voting rights should even be considered. If some drunk killed your mother and was sentenced to two years in prison followed by 5 years parole and family victim compensation of, say $300 thousand dollars, would you want the offender voting after serving 1.8 years in prison and not fulfilling the remainder of the sentence requirements?

McCain has said states should decide whether felons have voting rights. But he personally believes ex-felons should forfeit certain rights when they commit a serious crime and that the right to vote should be restored only on a case-by-case basis — much like Virginia's process.

McCain has it correct. Let the ex-felon fulfill all obligations imposed by the judge regarding the conviction. Vermont and Maine fail such a test. I advise anyone who dislikes crime to avoid these two states. I further advise anyone who doesn’t understand the obligations of the “ex-felon” to learn the facts before jumping on this bandwagon.

People can change. I personally believe that if felons (with the exception of those who have committed murder, battery, kidnapping, terrorism, or rape - all of these proving an inability to assimilate with society and thus an incompatibility with basic reasoning) complete ALL parts of their sentence (not just time behind bars) they should have all rights restored. If they fail to complete even one aspect of their sentence, they cannot have all rights restored.

Voting is often misinterpreted as a right to all citizens. Tell that to the Soldiers and Sailors across the oceans of this world who will be unable to vote this cycle because their state requires all absentee ballots to be received by election day. This is impossible when requests for absentee ballots must be received no earlier than 1 month before an election, and the processing of such requests take 3 weeks.

If Obama were to focus on people who have proven their love of law and country - and subsequently Obama ensured their ability to vote, I might not think this ex-felon drive is political…

With the passage of the $700 Billion socialistrescue bill today, who would be better at administering such a monstrosity: Republicans or Democrats? Obviously Democrats are much more schooled on the subject of socialism, therefore having the distinct advantage of knowing how the Soviets failed, how Cuba failed, how Venezuela is currently failing (along with Bolivia and several other Central- and South-American countries) and how China is thriving when instituting policies designed to spread miseryeconomic equality to the proletariat. Naturally the ruling class will continue to be first-among-equals in such a system, since the working-class louts can’t even reliably vote Democratic.

Thus, Barack Obama - having a very clear understanding of this system of government - is the logical choice to try to make this system workable. After all, it was Barney Frank (D-MA) who stymied the needed reforms to Freddie and Fannie because any responsible reform to those government sponsored enterprise programs meant unqualified people could not get home loans. This status quo ballooned into the jumbo loans that people making minimum wage somehow qualified for so long as they took the variable APR rate. But hey - they got their home!!!

John McCain, the maverick who likes taking sides that cause serious conniptions among his fellow Republicans (McCain-Feingold, Comprehensive Immigration reform, Cap-and-Trade) has a problem understanding what socialism entails. Therefore, he would be the wrong choice for ruining the United States.

Partially switching gears, I would like to remind Senator Joe Biden that Article I of the US Constitution deals with the Legislative branch of government. You know, that august body that Joe belongs to in the upper chamber. The Framers - our Founding Fathers - rightly determined that the true power within this country is Congress. Laws govern the United States, and Congress writes them. They can place anything into legislative form, but if such runs afoul of the Constitution the Supreme Court can nullify the legislation (um - Joe, that would be Article III of the Constitution).

The Framers concluded that the Executive branch was of less consequence than Congress. How could they think this? They thought this based on origination. Legislative bills arise in either chamber of Congress; however, spending legislation only originates within the House of Representatives (Question: Why is the current socialistrescue legislation lawful? It originated in the Senate…a legitimate question I would be interested to hear either answers or theories from anyone).

It is this that reminds me that Democratic Speaker Tip O’Neill declared President Reagan’s proposed budget was “DOA” every year Reagan proposed his initiatives. Congress subsequently was cajoled into some of Reagan’s program proposals, but at such an expense that we are still feeling the effects from those years because Reagan granted Democrats so many of their pet programs.

Reagan was committed to burying the “Evil Empire”, and ultimately was vindicated. Subsequent Administrations have failed to quell the enthusiasm Congress has for their own initiatives - excepting Congress from 1995 to 2001 (run by Republicans who had not at that point sunk into the cesspool of corruption) - thus we continue our march toward government-controlled economic success. I hope Obama studied Marx, the Soviet collapse, and the rise of China with equal zeal. Making a centrally-planned government economy work has sunk many more nations than it created.

I just watched the Senate pass some form of bailout for Wall Street. While I am not privy to the details, I am quite certain that our future is at stake in the passing of this legislation. Where I am uncertain is how necessary this particular legislation is to the benefit of our economy. I’m guessing that this is important, but I can’t put my finger on what is bad (other than we taxpayers are on the hook).

If Senator Judd Gregg (R-NH) is right, we have the possibility that this will fix the toxic lending anchor that dragged our economy down. I’m not certain we have a proper answer, but being stupid is the proper forte for Congress. Thus, we get something I cannot fathom in any way.

This leads me back to a subject some of my long-time readers might recall: How to reign in Congress! In order to change Congress, we have to call for a Constitutional Convention. Why? Because we will never change Congress via Congress (we tried that in 1994 and 2006, only to get probed by aliens), the only way Congress can be changed is by Constitutional Convention.

Given the fact Congress passed into Democratic hands in 2006 and nothing changed - in fact our government accountability worsened as evidenced by this horrible bailout - I find zero reason to worry why a Constitutional Convention is any worse than another Congressional session chaired by either party.

Am I wrong? How so?

Looks like members of the GOP have an open invitation to commit political suicide. I like the wording:

Minority Leader Rep. John A. Boehner, R-Ohio, "I'm encouraging every member whose conscience will allow them to support this."

As all of us (um, those of us who understand business versus government, at least) know, the idea that we could sustain such endeavors as "Government Sponsored Enterprises" (GSE's) without the attendant corruption and cronyism found so often in government enterprises - whether simply regarding Congress as the benefactor of particular projects, or government administration of said projects - is simply head-in-the-sand/pie-in-the-sky ignorance. Our media does a significant disservice by failing to report the timeline (and rogue players) associated with the Freddie and Fannie debacle. Quite simply, Rep. Barney Frank (D-MA). End of story. For a review of how and why, read this.

And let us hope that our market can survive this shock. If it can't, I'm certain we will be embracing Marx very soon. Senator Bernie Sanders (Socialist - Vermont) should be proud - if he isn't cheerleading already. There are already rumblings in favor of nationalizing even more of our markets (the auto and medical industries spring to mind)...like Freddie and Fannie - already nationalized markets even before this meltdown, and at the center of fault. 

Some of my old commanding officers, specifically RADM Robert P. Hickey and VADM D.V. [listed as Denny] McGinn - two people who signed a number of documents during my career including some significant awards - have joined together in a force of 300 plus to endorse John McCain. I think Obama is sitting on 16 former flag officers endorsing him, none of whom I know personally - not that such is important - but 300 to 16? Okay, maybe Obama has more than sixteen. Twenty? Whatever...

On the debate tonight, I saw nothing that was particularly bad for either candidate. Obama did seem like the proverbial deer-in-the-headlights at times, but he is inexperienced. Perhaps if he runs another campaign or two against real candidates like McCain he will find his way...

I don't know about you, but I would avoid this hospital in the future.

I wonder what he will name the baby?

I've been watching the government attempt to prop up Wall Street with not just a little bit of interest. My money is there, thus I, probably like many of you, have an extremely keen interest in this mess. After hearing the "plan" that has come out of Paulson/Bernake-land, I am satisfied that there is a plan, that government is making an attempt to right the expensive and expansive wrongs of two administrations (Clinton-Bush), and that it will change the course of our government in a way that should wake America up to the fact that our elected officials in Washington are running our nation into the ground.

Please, don't insult my intelligence by telling me either Obama or McCain will right those wrongs. The only people who can effect change are found in Congress. Every law, whether spending, civil or criminal statute, and state mandate originates in Congress. Presidents suggest laws, then Congress promptly declares those suggestions "dead on arrival" and create legislation they feel is the best way to get reelected. Not reelection for the president, but themselves.

After reviewing the cost of this upcoming bailout, it is clear that our government will be saddled with $1 trillion or more in new debt overnight. Just to make it a visual, check out our current debt here. Within two weeks, there will be a new trillion added to this total, and make no mistake about it: When we roll over the $10 trillion milestone, this should lead us to realize that our public debt will rise from an estimated 60% of GDP in 2007 (Gross Domestic Product is all goods and services produced by a country) to 78% of yearly GDP. 78% of GDP? That means, based on my read, in order to retire our debt, you and I would need to be taxed at a rate higher than 78%. Indeed, since the federal budget is $3.1 trillion (and rising every year), an additional $700 billion will be added to that total, thus approximately 82% of our collective income would need to be taxed in order to retire that debt within one year. This is the breaking point. From this point on, additional debt raises the fact that we cannot pay the bill if our investors feel inclined to demand their money today or tomorrow, as opposed to 20 years from now.

America likes their pet projects. A Department of Education? We need it because of our children. A Housing and Urban Development Department? Sure, home ownership is important and why shouldn't the federal government fund this important program? Department of Transportation? Hey, we need highways, and every congressman loves to fund a new turnpike in their district. Department of Labor? Sheesh, we need someone to keep greedy businesses from employing underage workers.

Face it, folks. Our current federal focus is outdated. Education should be the purview of the states. In the US Constitution, the Tenth Amendment says: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Housing and urban development sounds like something States should deal with as well. Labor laws have not been substantially changed in decades, and we already have laws on the books for business processes. Why can't the Department of Justice handle matters of enforcement? Oh, they do already. So what does the Labor Department do? HUD? Education?

Our government is both broke and broken. If we continue with status quo, it will remain so, and the next bailout will cost more than just money.

Congress is the why, and the solution is to get rid of those in Congress who cannot find any reason to reform our government for the betterment of our financial future. Indeed, they continue to feed upon our future, eating our young, so to speak. Our financial crisis is based solely within our obligated debt. Our Dollar sinks faster than our debt rises, meaning inflation will be smacking us in the head in the coming months.

When I bought my house back in 2000, my realtor attempted to sell me a house for $250K. I told her I am not about to go back to eating Ramen Noodles for dinner every night like I did in the Navy. I lived in Southern California and rent was atrocious. It ate up my paycheck faster than the IRS could audit me (trust me on this, the IRS audits very quickly, it is the aftereffects that are lingering). I gave my realtor my maximum asking price, and she reluctantly adhered to my wishes. It is obscenely obvious that our present crisis is fueled by a mindset that clouded reality.

I am not going to make this a partisan issue. If you feel either presidential candidate is better qualified on this subject, perhaps you should read Peggy Noonan's latest article. My point (and I believe Ms. Noonan made it) is that neither matters in this crisis, because we have literally run out of options. Our way of life is about to change, and it is probably not for the better no matter who wins in November.

Yet Congress runs on cruise control...does the American public?

My best guess is "Yes"...