Basket Case

The federal government (read the Pelosi/Reid lunatic ward) has just allocated $200 million to bail out the NBA. Are we f…ing crazy? We give this corrupt “Show Me the Money” organization our hard-earned tax money so that their million-dollar, gold-brick players can get more tattoos and wear more bling-bling? Perhaps we should just cede our government to Donald Trump or Bernard Madoff and get it over with?

Some More Pet Peeves

Conspicuous Consumption -- Take a few hours off one afternoon and watch some of the teen-directed cable channels (such as MTV) and gag your way through their presentations of the newly rich and famous (rap stars, professional athletes, etc.) giving us a tour of their McMansions ("This is my video game room." "Here are my paintings on black velvet." "This is my large collection of high-performance cars and motorcycles.") And see if you can find any redeeming social value in such lurid displays of conspicuous consumption.

Turkey Pastrami -- pastrami needs to be made from juicy beef brisket and marbled with copious fat … otherwise it is just spiced cardboard. Making pastrami out of turkey is like constructing Manhattan skyscrapers out of Tinker Toys.

Multi-colored Kids’ Plastic Outdoor Stuff -- I don't mind these toddler playground contraptions hidden away IN THE BACK YARD! But increasingly brain-dead parents are placing them in highly visible locations so that many houses are taking on the appearance of a McDonalds' playpen.

Child Car Seats -- I understand the need for infant car seats … but now we must place children up to their Sophomore years in college in contraptions that cost too much and do nothing but take up sitting space in our cars. Parents with more than two small children are therefore compelled to buy huge SUVs or vans just to hold these child cages proscribed by our nattering class.

"American people want …" -- Politicians who aver (usually on Cable TV) that "The American people want … blah blah blah". James Carville started this smarmy trend … now followed by such luminaries as Chuck Schumer and Chris Matthews. How these morons (usually liberal) know what the "American people want" is beyond me? I usually DON'T desire what is claimed of me and strongly resent such words being put in my mouth.

Hope and Change

The Dow Jones Industrial Average (DJIA) is down over two thousand points since Barack Obama was elected (from 9,617 to 7.553). I don’t know if this is a contra-indication to “hope and change” or possibly a reaction to the doom and gloom forecasts of Obama and the Democrat party. But it clearly is in spite of the fire-hose of money that is being spewed around ($700 billion of TARP funds, $20 billion to the auto industry, $787 billion in the recent Stimulus Bill to be signed into law today, AND over a trillion dollars of federal guarantees to Fannie Mae, Freddie Mac, AIG, Citicorp, Bank of America and other distressed financial companies.)

Why has this seeming disconnect occurred? Perhaps, because of the constant drumbeat of pessimistic pronouncements coming from the incoming administration. This morning, one talking head on “Morning Joe” suggested that maybe Obama had overdone this negative sell as a way of pushing through his stimulus bill. If this was the cynical case, then maybe our President, now that he has gotten what he wanted and with his marvelous rhetorical talent, could please talk us back out of this hole?

A Fast One

The fast talking team of Obama/Reid/Pelosi scammed the American people on Friday last when they pushed through Congress (not misnamed considering what “congress” is also a synonym for) the reconciled $787 billion Stimulus Bill with just three shaky Republican votes in the Senate (as opposed to eight dissenting Democrat votes in the House). This was done on the basis that we are in an economic crisis and could not spare one extra day for our legislators to actually read this 1,073 page tome which, I’m sure, contains item after item of special interest largess. (This reconciled bill was actually published just hours before it was voted on.) However, why then is Barack Obama waiting four extra days to sign this bill into law in Denver on this following Tuesday? Could not this time have been better spent uncovering all the Democrat agenda goodies hidden amongst the reams of camouflage? Perhaps these traipsing triplets could not wait for the voters to find the pea (pee?) under their rapidly moving walnut shells?

In the next six months the Obama presidency, I hope, suffers the drip, drip, drip in the media’s uncovering these honey dollops ... until such time as it becomes necessary for the next stimulus hog fest.

Elections Have Consequences

Show this to your grandkids. And then have them save it for their grandkids. (The last bar is 2009.)

Bambi

I should be supportive of Tim Geithner because he is from my alma mater. But his performance today, explaining our country’s financial itinerary out of our current economic crisis, was sub par at best. We were told last night by the Chosen One in his prime-time address to expect great things from his new Secretary of the Treasury, the Artful (tax) Dodger. Instead of getting St. Peter, we got a peter-out. His performance was devoid of promised specifics (“were not going to give the details of this plan until we get it right”) and was long on blame for his predecessors (of which he seems to forget that he was one). And, as a result the stock market is down 382 points and Obama has had to improvise in his Ft. Myers speech and pledge to redo things early next week.

Throughout his performance Geithner had that deer in the headlights look that George Bush was often criticized for having … thus Geithner’s new nickname, Bambi.

Caribou Barbie

Last night I heard some info babe on MSNBC refer to Sarah Palin as “Caribou Barbie” … bragging that she was the one who coined this appellation (she didn’t use the word “appellation” as I think it was above her pay grade.) I just Googled these words and find that Stephanie Miller, a progressive radio talk show host, is credited with this snot-nose term. And apparently this insult has been around from before Sarah Palin made her appearance on Saturday Night Live. (Surprisingly, Stephanie’s late father, William E. Miller, was Barry Goldwater’s running mate for his failed 1964 bid for the presidency.) Ms. Miller’s talk show, “The Stephanie Miller Show”, is L.A. based (surprise, surprise) and apparently is also in modest syndication (including Sirius Satellite Radio) … although I’ve never heard of it before.

So, I’ve been asking myself why am I bothered by this elitist comment? … particularly, when I am not upset by Rush Limbaugh’s insulting term, “femiNazi” or his aphorism,“feminism was established so as to allow unattractive women access to the mainstream of society.” I think what puzzles me most is why liberals seem to hate Sarah Palin with such a crazed zeal. It feels that liberals despise her mainly for her old-fashioned values (self-starting, family-first orientation, corruption fighting, rugged individualism, etc) combined with her good looks. To pose an analogy -- if Barry Goldwater (ironically) were to have a child with Annie Oakley, the result would be something like Sarah Palin. Perhaps (to play psychoanalyst), Stephanie Miller may be exhibiting a latent hatred of her father and consequently his politics? Or maybe she just wants to get more ink (like this blog entry).

I Was Wrong …

When I predicted that, after the election was won by Obama, the Democrats and the main stream media would stop talking down the economy. In fact the drumbeat of doom and gloom has intensified to the point of near hysteria. But, I now predict (with much more confidence) that, after the Democrats’ spending (er, stimulative) bill gets passed, that suddenly, within weeks if not days, the sun will rise, the birds will be singing, and the wind of Obamania will blow away the specter of economic catastrophe. This will occur despite the fact that the true impact of these spending (er, stimulative) provisions will not kick in for months or even years (and in most cases, never).

Tina Katriina

Nearly one million people are without power in our Nation’s midsection going on the sixth day. At least forty-two people have died as a direct result of devastating ice storms that have left the center of the country (mostly rural Ohio, Kentucky, Texas, Missouri, West Virginia, Oklahoma, Indiana, and Virginia) gripped in continuous sub-freezing temperatures. No heat, little water, and in many cases sparse communications are the plight of over 500,000 homes -- a huge swath of U.S. citizenry have been forced from their houses. This devastation is not as large as was experienced with Hurricane Katrina (with over one thousand deaths directly and indirectly attributed to the hurricane) … but this one is spread over a much large area and has about the same number of people having been dislocated as was the case in New Orleans … but, hopefully, for a much shorter time.

Local officials are upset at the poor response from the states and the Federal Emergency Management Agency. What has President Obama been doing? He did declare a federal emergency for Missouri – five days after the fact. But he hasn’t even flown over the region in Air Force One to inspect the plight of this mostly white area of the country. Instead, he is throwing a Super Bowl party in the White House where the steaks served cost $100 per pound. Many have been speculating as to whether President Obama indeed has much empathy for the citizenry of these mostly “red” states.

[I do realize that this, although accurate, is grossly biased reporting, but I am just trying to mimic how the drive-by media excoriated Bush after Hurricane Katrina.}

Taxing Issues

Tom Daschle has hit a snag in his appointment to head HHS. Apparently he has had to correct his tax filings for the last three years and is paying around $130,000 in back taxes and interest (no penalties). He somehow forgot to account for his use of a free limo and driver for this period of time. (I think he has also had tax problems in the past associated with a vacation home he owns in North Carolina.)

Tim Geithner, just shamelessly confirmed to head our Treasury Department, has also had to pay self-employment taxes for 2001-2004 when he worked for the IMF. After these oversights were found, he had to pay back taxes and interest (no penalties) of $43,200. (Even though Geithner was re-imbursed by the IMF for the taxes he hadn’t paid, President Obama labeled this an “innocent mistake”.)

Representative Charlie Rangel also failed to report some $75,000 in rental income from vacation properties he owns in the Dominican Republic. He will (someday) be filing amended returns. It is expected he will owe the IRS thousands of dollars. Strangely he also has paid no interest on the mortgage he used to buy this property … weird? (He heads the House committee that writes our tax code.)

There are many, many more politicians who face IRS scrutiny, Ted Stevens from Alaska and William Jefferson from Louisiana to name but two … maybe even Christopher Dodd if he ever gets around to disclosing the terms of his sweetheart mortgage from Countrywide Finance.

Therefore, my solution to our rapidly growing national deficit is for the Internal Revenue Service to give all politicians of any stripe a colonoscopic audit of their tax filings for the last five years. The money that they would recover should be monstrous. But wait, since Geithner is now head of the Treasury Dept. under which sits the IRS, this seems somewhat unlikely to happen.

Politicians vs. Statesmen

My memory is becoming more and more unreliable, but I seem to recall that we once had such things as “statesmen”. These were people who placed what would be best for our country ahead of their and/or their party’s political ambitions. I recall such people as Daniel Patrick Moynihan, John Danforth, John F. Kennedy, Everett Dirkson, Barbara Jordan, Alan Simpson, and Sam Nunn often exhibiting such patriotic selflessness. Now, we have a new administration that, together with Congress, has placed before the American public an $800 billion package of government programs that is meant to stimulate job creation and insure economic recovery. It is called the “Economic Stimulus” package. It is, in fact, a wish list of liberal power grabs, special interest spending programs, and constituent payoffs that have only a passing semblance to job creation. What we need instead is a set of tax and regulatory incentives that lead to a re-awaking of the economic giant that is the United States.

What we also need are statesmen. What we have instead are Nancy Pelosi and Harry Reid … unbridled by our new President who has promised change and is now trying to take advantage of our current economic problems to lock in four years of his leftist programs in one fell swoop. If this Economic Stimulus package gets implemented as it currently stands not only will it not bring us out of our current economic malaise, but it will surely sink us further … only to create the need for more shined-up Socialism within the following year.

Na Na Na Na-Na!

You think you could run up deficits!

Family Shopping

(a rhyming poem)

With the hours spent waiting for my wife,
I could've added two more years to my life.

Politics Ain’t Beanbag

Caroline Kennedy’s on-again, off-again, on-again, off-again quest for Hillary Clinton’s Senate seat ended with a whimper as she finally gave up, you know, and reacquired her married name, you know, Schlossberg. There is lots of speculation as to why Governor Paterson left the daughter of Camelot slowly swing in the wind for so long and then, assumedly, told Caroline that she wasn’t going to be the anointed. Now, the obvious question is, why?

May I suggest that Caroline’s early endorsement of Barack Obama (along with her uncle, Ted) and her serving as co-chairman of the Obama’s Vice President selection committee … both together made her mega-toxic to Hillary and Bill Clinton. And this Pleasantville daring-duo are not used to losing their political skirmishes. Therefore, I can easily imagine that the Clinton’s famed opposition research team finally found some real dirt on Caroline and consequently flushed her into political purgatory.

Now, despite what the Clintons may have found out, I don’t believe that she was as scummy as most politicians we are exposed to these days (Ted Stevens, William Jefferson, Charlie Rangel). So, in a strange way, I’m sorry to see her savaged by her political enemies the way she is … kind of like that doey-eyed baby impala having its throat ripped out by a cheetah.

Chicken Little

Jim Hansen, a leading NASA scientist has been crying wolf about Global Warming since 1988. His latest warning (see The Sky Is Falling) is particularly shrill and doomsday predicting. Now Herr Hensen might be right in his dire warnings but, then again, the tone of his rhetoric suggests to me a bit of panic in that there has been a decided public opinion shift toward the doubters … perhaps due to the spate of very cold weather we have had lately. (Also, perhaps because global temperatures have not increased since 1999 and, many scientists say, are falling back to levels more normal to the last century.) I chose to believe that it is cognitive dissonance that is driving the Chicken Littles of the Global Warming Cult to up the heat-level of their public pronouncements … from the sanctity of their Gore-created-and-protected Mount Olympus.

If we could only package all this bluster and shoot it off into space, we surely could delay the possibility of real global warming for another century.

More Compound Interest

In the previous piece on Interest Rate Swaps (IRSs) it is stated that these derivatives now total some $400 trillion. This is a huge number, yes, but there is some amelioration to this figure. First, this number represents the principle debt that is being hedged and not the interest on this principle. Therefore, the amount of interest that is being hedged must be something like 5 or 6% of this figure, or about $20-$24 trillion -- still a very big number, but not as large as all credit default swaps (including the Collateralized Debt Obligations, CDOs, arising from the sub-prime mortgage industry) that may total $60 trillion.

Also, in most cases (except for runaway inflation … a very important exception) the amount of exposure to the guarantor or guarantee against interest rate swings would be smaller than this number, say just one or two percentage points (100 to 200 basis points). This suggests that the total risk exposure from IRSs is smaller still, say around $4-$8 trillion, far from a trivial number. But this may have also effectively doubled (to roughly $10 trillion) the total counter-party risks that financial institutions found themselves burdened with last summer when the LIBOR swung up one and one-half basis points at the same time as Credit Default Swaps on sub-prime mortgages were being called in … if (and a big “if”) we assume just the first level of CDS exposure. One more salient point, unlike CDSs, the IRSs are zero-sum. In other words for each financial loser, there should be, without defaults, a financial winner. Who they are and were I haven’t a clue.

But still the $400 trillion of IRS’s principal does show the degree to which the world financial markets had been over-leveraged … perhaps encouraged to do so by the false sense of security that IRS derivatives seemed to provide them. This is a good reason why this whole notion of interest rate swing hedging should be rethought in the future. It might be OK if just a few do it, but not OK if everyone is doing it.

Compound Interest

I have written in the past about Credit Default Swaps (CDSs), a form of financial derivatives that appear to be a major reason for our recent banking and insurance industry crises (see here). Basically CDSs are unregulated insurance policies naively written by many companies without sufficient reserves to cover any subsequent claims. When, due to the sub-prime mortgage crisis, many of these “policies” came due and there was not enough money at the guarantors to pay the guarantees off. A rough estimate is that there are now almost $4 trillion of defaulting sub-prime mortgages but something over $50 trillion of CDSs written against them. In other words, CDSs had become a huge financial industry Lotto game.

Now I am learning about another financial derivative that may be even more onerous – Interest Rate Swaps (IRSs) … again, unregulated and seemingly out of control. IRSs are a form of financial barter that allows institutions to hedge their monetary return from variable-rate interest-bearing securities by exchanging this interest for a “less-risky” fixed-rate cash-flow stream. The unsettling statistic is that these derivatives now total some $400 trillion … yes, $400 trillion. This pile of monetary obligations far exceeds the Gross National Product of the world … and probably also is approaching total world assets ... estimated to total around one quadrillion dollars. To better understand this mare’s nest of financial legerdemain see Interest Rate Swaps and also PIMCO Explanation. And, if you do understand IRSs, please explain them to me (and to many of the Risk Assessment Officers at the companies that are now receiving TARP funds.)

When you read these explanations of IRSs you will see that the key variable interest rate that is the touchstone of many of the various IRS options is the LIBOR (London InterBank Offering Rate). This is the rate at which banks around the world are willing to lend to one another … a little like the U.S.’s Federal Reserve Discount Rate. Now, if hundreds of trillions of dollars of interest rate bets are keying off this one number, then small perturbations in this number can whipsaw IRS guarantors and guarantees dramatically. And if, as it happened, the LIBOR rose dramatically when the world-wide financial crisis hit last summer (see LIBOR Rate Chart) , then the shock to the IRS markets must have been mind-numbing. Yes, the LIBOR rate swung dramatically back at the time of Clinton’s last year in office. But, the amount of IRSs in force then were lower by at least 80%.

Now, to let my paranoia surface a little, why wouldn’t someone or some country that wanted to damage our world’s financial markets do their best to perturb the LIBOR rate? This seems to me to be an Achilles’ heel of the financial derivative markets and may be a reason to reformulate IRSs entirely.

The More Things Change …

Obama’s Clintonista pre-election advisors – Franklin Raines, Jim Johnson

Obama’s Clintonista transition team members -- John Podesta, Sandy Burgler, William Perry, Madeleine Albright, Robert Rubin, Betty Currie

New Clintonista Obama administration members -- Rahm Emanuel, Eric Holder, Greg Craig, Tim Geithner, Bill Richardson (oops), Larry Summers, Hillary Clinton, Susan Rice, Carol Browner, Shaun Donovan, Leon Pinetta, Elena Kagan, David W. Ogden, Thomas J. Perrelli, Dawn E. Johnsen, Nancy Killefer, Julius Genachowski

Can we (you) get (y)our money back?

Are We Mad?

Here are a translation of some of the cell phone conversations between the Mumbai terrorists and their Pakistani handlers: Praise Allah. I don’t know where they came from (NSA?) but surely, were they intercepted inside the United States, they would be deemed by many as an invasion of the Constitutional rights of the callers. This by itself would cause paroxysms of consternation at the ACLU to the point where what actually went on there would be drowned in the din of protest. Sigh …

Thumper Stumper

Barack Obambi proposed today an economic stimulus program which will cost taxpayers (our children and grandchildren mainly) at least $800 billion and create (or save) 3 million jobs. This works out to $267,000 per job created (or saved). Now I don’t currently have a full-time job and, considering what is happening to our economy, I think that I need to get one. But musing further on this issue, I think I would rather have the cash.