Previous month:
February 2008
Next month:
April 2008

THE MOST HATED MAN IN GOVERNMENT RESIGNS

The beginning of rationality in an irrational world?

"WASHINGTON, D.C, February 15, 2008 - David M. Walker, Comptroller General of the United States and head of the U.S. Government Accountability Office (GAO) today announced his intention to resign his position effective March 12, 2008 in order to accept the position of President and Chief Executive Officer of the newly established Peter G. Peterson Foundation."

David M. Walker

David M.

Walker

(Arguably one of the most hated men in the government)

Hated by the Administration and members of Congress on both sides of the aisle.

The most hated man...

When ordinary people hear the words "government" and  "hated" used together, they immediately imagine the names "Bush" and "Cheney." Or  an assortment of House Members and Senators depending on your political viewpoint.

But when the words are heard by members of Congress and the Administration, the name that most often surfaces with great regularity is that of David M. Walker, a man virtually unknown by the public but whose work was touted almost daily in the media, often in glaring headlines.

The government's chief truth teller...

David M. Walker was the Comptroller General who headed the Government Accountability Office.  And it was his team that is charged with rooting out corruption, waste and fraud. And, most importantly, rating the effectiveness of government programs and noting their shortfalls. Embarrassing to everybody mentioned, to say the least. 

Something Congress, with their profligate spending and special interests legislation, and the Administration, with their increasingly expensive wars in Afghanistan and Iraq, did not want to confront on the front pages of major newspapers or answer to in on-air media interviews.

There is no doubt that many of his own departmental employees did not like Walker, especially since he decided many of them were over-compensated and refused to sign off on bonuses, raises and even cost-of-living adjustments. 

The government's gadfly...

Walker most irritated "the powers that be" when he put together slide presentations and started making the rounds trying to explain why the United States was heading toward financial hard times. His comments on under-funded social programs such as Medicare and Social Security especially irritated both the Administration and Congress... many of whom were pandering to the public for votes in the upcoming election cycle. 

The final straw: Walker walks...

It is believed that one of the deciding factors leading to Walker's resignation as the GAO chief was his efforts to reform the government pay system and bring it more into line with compensation found in the real world. His own employees revolted and decided to self-organize and affiliate with a union. An act which should not be tolerated by the government as it removes the perceived impartiality of the department and may make the department susceptible to "union influence." Especially from unions which may be linked to corrupt practices and organized crime. A "watchdog" agency needs to be free of all outside concerns as many of the entities which will be investigated may have union contracts or affiliations. A direct conflict of interest.

Departing for the (not so) real world?

While it would be nice to think that Walker was departing to a position in the real world, like many other civil servants at the end of their tenure, Walker is going to head up the "Peterson Foundation" which promises both an abundant salary, great perks and, above all, continued access to the media. Unfortunately, most foundation jobs only produce little more than positions and paperwork. So we will have to wait and see if this Foundation and its new leader will measure up to the good works which were performed at the GAO.

According to Walker's resignation press release...

"Walker noted that his decision [to resign]was motivated by his desire to maximize his ability to make a real and lasting difference to address the fiscal, entitlement, health care, energy, education and other major sustainability challenges facing the United States." 

"The Peterson Foundation will be dedicated to engaging in various actions designed to educate and activate Americans, especially younger Americans, the business community and the media, while also seeking and supporting sensible policy solutions to a range of sustainability and transformation challenges. Peterson has committed to contribute at least $1 billion to the Foundation and related efforts over the next several years."

From the Foundation's website...

"The Foundation's initial focus will be on:

    • Unsustainable entitlement benefits.  As 78 million baby boomers retire, America’s unfunded entitlement promises (i.e., Medicare and Social Security) exceed three times the annual GDP of the country.
    • Unsustainable current account deficits, primarily accounted for by unprecedented trade deficits.  Now at twice previous record levels, these leave America dangerously dependent on foreign capital and require America to save much more both at the national and personal levels.
    • Unsustainable and ballooning healthcare costs.  These costs are now more than twice as high per capita as the rest of the developed world with no appreciable differences in health outcomes or longevity.  And, this healthcare system leaves 47 million Americans uninsured.
    • Unsustainable and gluttonous energy consumption - and its first cousin, global warming.  With less than five percent of the world’s population, America accounts for 25 percent of the world’s consumption of oil.  This gluttonous consumption leaves America dangerously dependent on unfriendly and unstable foreign sources of oil and, in some cases, fuels terrorist activities.  Most energy experts agree that, of course, over the longer term, building alternative energy sources is important, but if the energy challenge is to be resolved over the near-to-mid term, it must be resolved, basically, on the demand side through conservation and not the supply side.
    • Unsustainable competitive gaps in our educational system.  America’s economic leadership in an increasing competitive global economy is not sustainable when half of the young in our urban areas and 30 percent of all young Americans do not graduate from high school.  Nor is it sustainable in an increasingly technological world where the capacity to do basic research and to invent the next big technologies is crucial and where Asian countries are now producing more master degree and PhD technology graduates than the United States.  Furthermore, America's education system is not doing an adequate job in the areas of financial literacy and civics.
    • The undeniable, transcendent threat to our collective future: The potential for nuclear and biological warfare materials falling into the hands of terrorists.

Seemingly all areas which should be covered by current Congressional and Administration initiatives without the intervention of another foundation fielding yet another legion of lawyer/lobbyists to make its points. Here Walker may speak out on the issues more freely and with far less restraint than was available with his government position.

For the conspiracy nuts...

Some even warn that the Foundation is actually a continuation of the vast right wing conspiracy by pointing out that Pete Peterson made his money on Wall Street as the former Chairman of Lehman Brothers and as co-founder of the Blackstone Group, served as Chairman of the Federal Reserve Bank of New York and serves as the Chairman Emeritus of the Council on Foreign Relations. We cede the fact that he is well-connected, a billionaire and someone who wants the best for his country and someone who wants to exert influence at the topmost levels of government.

Prescriptions for the future...

There is no doubt that both the Administration and Congress are out of control when it comes to taxing American Citizens and spending their tax dollars in a profligate manner which is either self-serving or aids the special interests who curry favor with the government in exchange for perks, privileges and profits unavailable to the ordinary citizen.

Now we have former Speaker of the House, Newt Gingrich, and the former head of the Government Accountability Office, Dave Walker, now bringing fiscal mismanagement and prudent policy to the forefront. At a time when presidential candidates and those seeking election or re-election to Congress are unwilling to discuss in-depth proposals to return the United States to a sound fiscal footing, both Gingrich and Walker will provide additional insurance that imprudent spending on wasteful programs are, at the very least, moved to the forefront of the discussion.

What can YOU do?

Continue your education on financial matters affecting you as well as the United States. Become more aware of how your tax money is being spent at the local, state and federal levels.

Complain when you see waste, fraud and mismanagement. Send an "open" letter to your Congressman and a copy to your local media sources. Only by speaking up will you become part of the solution, rather than the silent majority who simply accepts whatever inequities are foisted upon them.

Check what the candidates are saying against the estimated costs of their proposed programs. Then multiply them by a factor of one hundred and add $2 BILLION for good measure. Then decide if the program is worthwhile without having stringent controls against fraud, waste and mismanagement in place BEFORE the program is implemented.

Do not vote for any candidate or current politician who is willing to subvert the safety, security, sovereignty and economic strength of the United States or limit an individual's right of self-defense for their personal philosophy, power, prestige or profits.

-- steve

Quote of the Day: “It is dangerous to be right when the government is wrong.” -- Voltaire

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Reference Links:

More information on the Peter G. Peterson Foundation may be found here.

Newt Gingrich's American Solutions Foundation (with a great video on "Solutions for America's Economic Challenges" can be found here.

For more information on a film on the financial future of the United States, you may want to see I.O.U.S.A. More details can be found here.


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



THE HOUSE OF REPRESENTATIVES MUST BE RACIST, SEXIST AND PERMEATED WITH SPECIAL INTERESTS...

Why else would they tolerate groups such as the Black Caucus and the Hispanic Caucus which were formed to openly consider matters based on race and ethnicity rather than deliberate on legislative matters that apply to all Americans?

Why else would they tolerate Congressional Member Organizations that represent special interests? 

Do they not have enough committees that represent broad areas like healthcare, transportation, national security, etc.?

The big question: does Congress have a group that represents YOUR interests?

Congressional Black Caucus

"The Congressional Black Caucus is an organization representing the African American members of the Congress of the United States. Membership is exclusive to African Americans and its chair in the 110th Congress is Representative Carolyn Cheeks Kilpatrick of Michigan."

"The Caucus describes its goals as 'positively influencing the course of events pertinent to African-Americans and others of similar experience and situation,' and 'achieving greater equity for persons of African descent in the design and content of domestic and international programs and services.'"

Congressional Hispanic Caucus

"The Congressional Hispanic Caucus  is comprised of 21 Democratic Members of the United States Congress of Hispanic descent. The Caucus is dedicated to voicing and advancing, through the legislative process, issues affecting Hispanics in the United States and Puerto Rico."

"The Congressional Hispanic Caucus aims to address national and international issues and the impact these policies have on the Hispanic community. The function of the Caucus is to serve as a forum for the Hispanic Members of Congress to coalesce around a collective legislative agenda."

Congressional Hispanic Conference

"The Congressional Hispanic Conference was founded on March 19, 2003 by six Republican members of the 108th United States Congress. The stated goal of the CHC at its formation was to promote policy outcomes of importance to Americans of Hispanic and Portuguese descent.

"It should not be confused with the Congressional Hispanic Caucus, which is a similar organization for Democratic Congressmen."

What can YOU do?

What can I say or what can you do about organizations which are openly admitting a bias for advocating for the rights of their constituency on the basis of race, sex, gender,  ethnicity and special interests rather than for all Americans? Nothing. It appears to be what it is!

This looks like a situation ripe for lobbyists who represent special interests, both foreign and domestic, to influence individual members of the House.

Check below to see who belongs to which group and if YOUR interests are being adequately represented.

-- steve

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Are YOU represented?

110th Congress Congressional Member Organizations

All Members listed below are officers of their respective caucuses; each caucus maintains its own membership list.

21st Century Health Care Caucus
Rep. Patrick Kennedy (Michael Zamore, 202-225-4911)
Rep. Tim Murphy (Michael Baxter, 202-225-2301)
Rep. Anna Eshoo (Vanessa Kramer, 202-225-8104)
Rep. Jon Porter (Alanna Porter, 202-225-3252)
9/11 Health Caucus
Rep. Carolyn Maloney (Anna Cielinski, 202-225-7944)
Rep. Vito Fossella (Brendan Williams, 202-225-3371)
Addiction, Treatment and Recovery Caucus
Rep. Jim Ramstad (Andrew Mckechnie, 202-225-2871)
Rep. Patrick Kennedy (Rachel Bornstein, 202-225-4911)
Afghanistan Working Group
Rep. Steve Israel (Mike Ryan, 202-225-3335)
Afterschool Caucus
Rep. Ralph Regula
Rep. Nita M. Lowey (Jean Doyle, 202-225-6506)
The Appalachian Caucus
Rep. Nick Rahall, II (Erika Young, 202-225-3452)
Rep. Chip Pickering (Hugh Carroll, 202-225-5031)
Rep. Bill Shuster (Stephen Martinko, 202-225-2431)
Rep. Zack Space (Aaron Schmidy, 202-225-6265)
Albanian Issues Caucus
Rep. Eliot Engel (Jason Steinbaum, 202-225-2464)
Rep. Mark Kirk (Jeffery Phillips, 202-225-4835)
Americans Abroad Caucus
Rep. Carolyn Maloney (Jennifer Keaton, 202-225-7944)
Rep. Joe Wilson (Paul Callahan, 202-225-2452)

Continue reading "THE HOUSE OF REPRESENTATIVES MUST BE RACIST, SEXIST AND PERMEATED WITH SPECIAL INTERESTS..." »


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



DID THE U.S. STATE DEPARTMENT TURN ITS BACK ON AN IRAQI JUDGE BECAUSE HE CREATED A PUBLIC RELATIONS PROBLEM OVER MISSING BILLIONS?

The story is simple and has been repeated numerous times and in many foreign lands...

Basically, the United States finds itself in a political quagmire in a foreign country. Seeking to short-cut resistance to United States policies and programs, the U.S. either recruits or appoints people that seem capable of delivering much-needed results. Of course, when someone does their job well, resulting in the discovery of wrongdoing or mismanagement, that person is shunted aside lest they complicate the work at hand by implicating hand-picked surrogates or even worse -- generate negative domestic media coverage.

The story of a courageous man...

This is a story about Judge Radhi Hamza al-Radhi, who is, by almost all accounts, a dedicated hard-working attorney who was recruited to ferret out the misappropriation of United States supplied Iraq reconstruction funds -- often at the personal risk of death for himself, his family and colleagues.

The man who blew the whistle on at least 18 BILLION dollars worth of missing United States funds that were seemingly siphoned off by our own contractors, enemy combatants who used our own money against us, and apparently by the corrupt surrogates to whom we handed the reins of power in Iraq.

A man who has been brought to the United States where he testified before Congress. A man and his family who seem to have been abandoned by our State Department who refuses to aid his request for asylum or provide any means of support to this courageous individual who apparently shunned large bribes to diligently perform his duties to the best of his ability. A man who must now live on the charitable contributions of others while he waits for some form of official recognition. 

According to a story in Portfolio.com...

"Before he fled Iraq, Radhi was the head of Iraq's Commission on Public Integrity, where he policed the country's government and investigated its biggest cases of bribery and financial chicanery.

"Stuart Bowen, the U.S. special inspector general for Iraq reconstruction, described Radhi as his 'most reliable partner...in Iraq,' and Chuck Grinnell, a senior C.P.I. adviser, remembers, 'He was one of the good guys, one of the few in Iraq.'"

"The judge was appointed to the post by Ambassador Paul Bremer in the summer of 2004, almost a year after the U.S.-led invasion. At the time, Iraq was a free-for-all, with competing gangs and criminals gunning for a seemingly endless flow of reconstruction cash."

"The prevailing view held that the C.P.I. was vital to the advancement of the near-broke country, a sentiment reflected by President Bush in a 2005 speech to the Council on Foreign Relations. 'Listen,' he told a crowded ballroom at the Omni Shoreham Hotel in Washington, 'the Iraqi people expect money to be spent openly and honestly, and so do the American people.' He would tout the C.P.I. again a month later, in a speech to the Veterans of Foreign Wars."

Did we really want to know where the money was going?

"The judge's job was, simply put, to figure out where the money was going. Billions of dollars were being wasted or stolen outright in Iraq, including $8.8 billion that went unaccounted for in 2003 and 2004. Many of Iraq's leaders were either directly participating in the thievery or quietly supporting it through hired guns, who later waged sectarian wars in the streets. Radhi was supposed to track down the criminals, stanch the hemorrhaging of money, and put an end to the corruption that was dubbed the 'second insurgency' by Bowen and considered a principal source of funding for the terrorist groups that the U.S. military was trying to crush."

"The Ministry of Interior, for instance, resembled a Mafia organization. Instead of working to guarantee the country's security, many of its officials, the judge discovered, were engaged in bribery, contract killing, and kidnapping. Hundreds of ghost workers collected wages that totaled more than $1 million a month. Meanwhile, the Mahdi Army, a Shiite militia devoted to cleric Moktada al-Sadr, had fully commandeered the ministries of health, trade, and transportation. Its soldiers, with the tacit approval of ministry employees, stole food and medical supplies, among other things, and resold them to fund the insurgency against the Americans and the Sunnis, the minority that still held power after Saddam Hussein's ouster. Over time, ambulances ferried weapons and mercenaries, while hospitals became integral to the militia's sectarian killing machine. Shiite soldiers executed Sunni patients and then killed family members listed in their medical files."

"The Oil Ministry had many of the same problems. After the invasion, President Bush claimed that oil revenues would pay for most of Iraq's reconstruction. But even with the U.S. investing huge sums in oil projects, revenues weren't and still aren't covering costs, though $3 billion has been spent to date. Aging infrastructure and insurgents' attacks on pipelines were part of the trouble. But the biggest challenge was that criminal groups were stealing from depots and hijacking transport trucks, sometimes in collusion with ministry officials. Monthly, the state oil industry lost up to $90 million, and the judge claims that more than half of the smuggling profits went straight into local terrorism."

"So far, the U.S. has spent about $48 billion on Iraq reconstruction, with a notable chunk of that money passing through the agencies Radhi was investigating."

The United States is being played ...

Chris King, a former adviser to the judge at the State Department, says, 'The worst elements in Iraq smile at us and take our money, but we're getting played. I went to the Justice Department guys and said, 'You are funding and training death squads. You can't say no one told you. I told you. You are funding death squads.' I have no doubt that U.S. reconstruction cash is funding militias.'"

Those death squads eventually targeted the judge. As his team built cases against some of the country's most powerful people—businessmen, clerics, politicians, warlords—threats came back. Grim voices muttered over cell phones, 'Stop your investigations now' and 'Do you know who you are messing with?' Soon his investigators and their families were dying: one body full of bullets, another hung on a meat hook, another disfigured with a power drill. There were sniper attacks and suicide bombers. Government officials blocked his investigations."

Left twisting in the wind...

"The U.S., strangely enough, did not step in. Some said the U.S. was afraid to take sides, wary of alienating its allies in the Shiite-dominated government. Others suggested that Radhi's probes were becoming an embarrassment to the Bush administration, highlighting yet more trouble for a U.S. war effort that was already under siege. 'There was a lack of due attention, political will, and support in the senior levels of the U.S. government,' King says."

"Still, the judge didn't waver. He worked through the interim and transitional Iraqi governments and through the rise of a newly sovereign Iraq. By the summer of 2007, even as his close advisers 'focused solely on his survival,' as one says, Radhi had launched almost 3,000 corruption cases. The accused included shady American companies and entrepreneurs, Iraqi ministers, and at least one member of Prime Minister Nuri al-Maliki's family. The total haul: $18 billion—a number as mind-boggling and damning to Iraqi politicians as it was to the Bush administration."

One-way ticket or death?

He decided he couldn't go back. He had a family—a wife and a daughter, who was eight months pregnant. The idea of being driven away by his enemies ate at him, but he felt he had no choice. 'Radhi didn't leave for himself,' Grinnell, the C.P.I. adviser, says. 'He would have died in Iraq. But it became too much, and he left so that his family could survive.'
After a trip to Washington last summer, Radhi resigned his C.P.I. job and asked the U.S. government for asylum. He had a couple of bags, a small amount of cash, and no idea where he would go."

Appearing before the House Committee on Oversight and Government Reform on Capitol Hill, he testified about his findings of corruption that reached all the way to the prime minister's office.

In his own words...

Listen to the mealy-mouth State Department representative...

The State Department's disgrace...

"It was a huge story. Many people called the judge a hero, but others—particularly officials in the State Department, which had helped create him—distanced themselves. Documents detailing Iraqi corruption were retroactively classified, and staff members were instructed not to talk about the judge's allegations against the Maliki government. According to people involved in his case, the administration didn't know what to do with a man who was painting a negative picture of its efforts in Iraq, where it wanted people to believe that the situation was improving."

Is this is the way we treat those who have rendered good and valuable service to our nation?

"Things only got worse for Radhi. Soon after his arrival in the U.S., the Iraqi government called for his arrest and prosecution, citing smuggled documents, corruption, and libel, and his pension was cut off. He shacked up in a budget hotel in a Virginia suburb but ran out of money after two weeks. An acquaintance kindly lent him an unfurnished townhouse. After his family and that of his security chief—11 people in all—were evacuated from Iraq, they joined him in Virginia. They shared three queen-size mattresses on the floor and coexisted amid a sad shipwreck scene of plastic lawn furniture, TV tables, pillows that served as couches, secondhand clothes, and donated food, most of which was shipped in by local Quakers, who had taken an interest in the refugees."

A man without a country... forced to live like an illegal alien

"His asylum proceedings stalled as the State Department instructed employees not to support the judge in his flight from Iraq. 'Team, I have ordered our current C.P.I. staff not to write any letters in support of Judge Radhi,' one email read. When I called the State Department, no one wanted to comment on the judge. Once a key U.S. partner in rebuilding Iraq, Radhi had implausibly become both a wanted man and a castaway.
At night, he lay awake next to his wife on a mattress on the floor wondering what had gone wrong. He had suddenly become a man without a country."

What can YOU do?

Read the full story about the Judge, his early life, torture at the hands of the Hussein government, his recruitment by the U.S., the job he performed, results he achieved and his sudden plunge into the State Department's black hole. The link to the Portfolio.com story can be found at the end of this blog entry.

If you feel strongly, as I do, that the Judge has been treated poorly, I suggest that you drop a note to Representative Henry Waxman (D-CA) and another to the Secretary of State, Condoleezza Rice. You might point out that the United States has a duty to support the Judge's application for asylum as well as providing some form of pension income for his lost Iraq pension and back wages. It is a matter of fairness and decency.

Condemn any government policy that is more conditioned on programs to generate positive press than they are on generating true and lasting results.

Do not vote for any candidate or current politician who is willing to subvert the safety, security, sovereignty and economic strength of the United States or limit an individual's right of self-defense for their personal philosophy, power, prestige or profits.

-- steve


A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Reference Links:

Iraq Top Fraud Cop Judge Radhi - International Business News - Portfolio.com


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



FOUR REASONS WHY I WOULD NOT VOTE FOR OBAMA -- FIVE IF YOU COUNT BEING A FAR-LEFT DEMOCRAT

Other than the fact that he is a liberal democrat, here are four fundamental reasons why I would not vote for Barack Obama. 

One, in spite of his protestations to the contrary, Barack Obama is a polished Chicago political operative who seems totally familiar with those special interests who often lead to the chaos and corruption in government affairs.

According to Wikipedia...

"Antoin "Tony" Rezko (born 1955 in Aleppo, Syria) is an American restaurateur and real estate developer in Chicago, Illinois."

"In October 2006, Rezko was indicted for extortion of businesses seeking to do business with the Illinois Teachers Retirement System Board and the Illinois Health Facilities Planning Board. In addition, he has been charged with wire fraud for staging false transactions of his pizza stores in order to secure $10 million in loans from GE Capital."

"Rezko recommended many of his business associates and their relatives for positions within the state government, three of which were appointed to the state board that oversees hospital projects and the state's development board was run by a former Rezko business associate. In federal indictment charges, Rezko and an Illinois power broker  are accused of using Rezko's influence with public officials to demand millions of dollars in kickbacks from companies that want to do business with the state."

In November 2006, it came to light that in 2005, he had purchased his house on the South Side of Chicago for $1,650,000, $300,000 below the asking price, on the same day that Rezko's wife, Rita, purchased the adjoining empty lot for the full asking price. 

"According to Obama and others close to the sale of the properties, while the properties had originally been a single property, the previous owners decided to sell the land as two separate lots, the properties had been on the market for four months, with Obama's offer being the higher of two bids and Rita's bid beating another offer of $625,000, and the owners had made it a condition of the sales that they be closed on the same date. Obama subsequently bought a 10 foot (3.0 m) wide strip of Rita's property for $104,500, $60,000 above the assessed value. According to Chicago Sun-Times columnist, Mark Brown, 'Rezko definitely did Obama a favor by selling him the 10-foot strip of land, making his own parcel less attractive for development.'"

"In October 2007, the new owners put the still vacant land up for sale again, this time for $1.5 million."

"In June 2007, the Sun-Times published a story about letters Obama had written in 1997 to city and state officials in support of a low-income senior citizen development project headed by Rezko and partner Allison Davis. The project received more than $14 million in taxpayer funds, including $885,000 in development fees for Rezko and Davis."

"In an interview with the Sun-Times editorial board, Obama said that Rezko has raised $250,000 in campaign donations for him, of which, Obama has returned or donated to charity more than $84,000."

While these may just be coincidental experiences with a constituent who happens to be an influential real estate developer, it smacks of Chicago-style politics as usual. Something that reminds me of the Clinton Administration -- something I much rather would not reoccur on a national level. 

Two, Obama says absolutely nothing. He is an empty suit, well-spoken, telegenic and has a country preacher's fervor when he speaks. So while he continually speaks of uniting America, fostering  "hope" for the future and being an agent of "change." He avoids any critical examination of his core beliefs by adopting the Hillary Clinton tactic of  tightly controlled media opportunities. Whether or not he is hiding his true beliefs, does not like to explain or defend the nuances of his proposals or simply wants to avoid making a glaring mistake on the world stage, he only speaks in generalities and among friendly constituents. This plays well on the potential voters who see this blank slate and project their hopes, dreams, wants and needs upon its surface. Possibly to be greatly disappointed when Obama starts, if ever, speaking of the details of his proposed Administration.

Three, being one of the farthest left (socialistic) members of Congress, Obama's agenda is similar to that of Hillary Clintons in that it greatly enlarges government, raises taxes, promotes costly and inefficient social welfare programs and will result in the increasing loss of personal freedoms as individuals are made to obey and conform to the needs of the "collective." In my opinion a definite hard turn towards socialism.

Four, but most disturbing of all is Obama's association and acknowledgement of racist, virulent anti-Semite and anti-America, Louis Farrakhan as well as his long-time association with his minister and spiritual guidance counselor, the Reverend Jeremiah Wright, who is in my opinion a racist and anti-America bigot. Do not take my word for it, just view the following clip of his rantings.

(Note: E-mail readers must view this video on web site)

I do not care whether or not Barack Obama used his church connections to enhance his street creditability as an "authentically" black politicians, as some have suggested, or that he semantically repudiates, disavows or disassociates himself with Reverend Wright. I do not care that Obama's wife has only been "proud of America" once in her life or more... or that she wrote a thesis about black experience in a white "yuppy" school. What I do not want is for the President of the United States to view domestic and foreign policy through the eyes of an hyphenated Afro-American. I demand that anybody who serves as the President view the country and the world through the eyes of an AMERICAN ... with no predisposition to color his actions based upon gender, sexuality, race, religion, ethnicity, education, background or any other criteria which has been used by the democrat party to separate us into factions, to be managed as fragile coalitions, rather than unite us as citizens in the greatest country in the world.

What can YOU do?

There is no black perspective anymore than there is a white perspective, a Hispanic perspective, a Jewish perspective or a gender perspective. There are wide differences of opinions within each grouping or community. However, we all know the difference between right and wrong and between supporting America and not supporting America. It is on these "right and wrong" issues Barack Obama fails my test.

Just the two issues of immigration and healthcare are too important to be left to a hyper-partisan inexperienced politician with a history of being involved with special interests and corruption. And that's not even considering our foreign policy.

I am truly afraid for the survival of the United States of American in these politically uncertain days. We should not hasten our demise by electing a politically unknown quantity. We need to learn from the Carter and Clinton history in order to avoid repeating it.

Do not vote for any candidate or current politician who is willing to subvert the safety, security, sovereignty and economic strength of the United States or limit an individual's right of self-defense for their personal philosophy, power, prestige or profits.

-- steve

Quote of the day:  "The most erroneous stories are those we think we know best - and therefore never scrutinize or question." -- Stephen Jay Gould

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



ILLEGAL ALIENS AND THE HIDDEN IMPLICATIONS OF THE TAX REBATE

Am I the only one who sees an additional hidden benefit of the tax rebates (formally, the economic stimulus payment) when it comes to illegal aliens with bogus social security numbers?

First, the rebate or "economic stimulus payment" is available ONLY to those filing a federal tax return for 2007 or, if you would not normally file a tax return, by filing an incomplete federal income tax return.

And second, since the IRS must electronically match the names, addresses and social security numbers in such a manner as to prevent duplicate payments, they in fact have a great fraud protection tool that will spotlight inappropriate "multiple uses" of a single social security number as well as being provided with the filing name and address of the person making the claim. In this manner, the IRS can assist Social Security in cleaning up their files in preparation for an onslaught of retiring "baby-boomer" claims and assist ICE in detecting and deporting illegal aliens who have committed multiple crimes: illegally crossing the border, overstaying their visa, using a forged or stolen identity (social security) document, defrauding the government of monies for which non-citizens are not eligible; even if they file a tax return using an ITIN (Individual Taxpayer Identification Number) which is often used by migrant workers in lieu of a social security number.

All through the wonders of data processing. Now, if ICE could get its systems on line (remember their promise to process all of the illegal alien background checks in 24 hours), this might be of great benefit for reducing the state deficits due to illegal aliens.   

-- steve

FYI: According to an IRS press release published on March 17th...

"The Internal Revenue Service announced today that it will begin sending more than 130 million economic stimulus payments starting May 2. The initial round of weekly payments will be completed by early July."

"The IRS also announced the availability of a new online calculator on www.IRS.gov to help people determine the amount of their stimulus payments."

"Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check."

“To receive an economic stimulus payment, people just need to file their tax returns as they usually do,” said IRS Acting Commissioner Linda E. Stiff. 'The payments will be automatic for the vast majority of taxpayers. Some lower-income workers and recipients of certain Social Security and veterans benefits who don’t normally need to file a tax return will need to do so in order to receive a stimulus payment. www.IRS.gov has all the information people need to help them obtain a stimulus payment.'”

"Stimulus payments will be sent out in the order of the last two digits of the Social Security number used on the tax return."

"Because the IRS will use the Social Security number to determine when checks are mailed, taxpayers may receive their checks at different times than their neighbors or other family members. On a jointly filed return, the first Social Security number listed will determine the mail-out time."

"The IRS expects to make about 34 million payments within the first three weeks after the payment schedule begins May 2. With more than 130 million households expected to receive stimulus payments, more than 25 percent of the payments will be made in the first three weeks."

"Taxpayers who choose direct deposit on their federal income tax returns can expect to receive their economic stimulus payments between May 2 and May 16 provided their returns were received and processed by April 15, 2008. For taxpayers who did not choose direct deposit on their tax return but whose returns were processed by April 15, the paper checks will be in the mail starting May 16, with the initial mailings completed by around July 11."

"The IRS is also announcing today the availability of an on-line calculator on IRS.gov to help taxpayers determine if they are eligible to receive an economic stimulus payment and if they are, how much they can expect."

"Anyone who has prepared a 2007 income tax return can use the calculator. It will ask taxpayers a series of questions, so they should have their 2007 tax returns handy. After answering the questions, the calculator will provide the projected dollar value of the payment."

Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008.

Stimulus Payment Schedule for Tax Returns Received and Processed by April 15

Direct Deposit Payments: If the last two digits of your Social Security number are: Your economic stimulus payment deposit should be sent to your bank account by: 00 – 20 May 2nd; 21 – 75 May 9th; 76 – 99 May 16th

Paper Check: If the last two digits of your Social Security number are: Your check should be in the mail by: 00 – 09 May 16th, 10 – 18 May 23rd; 19 – 25 May 30th; 26 – 38 June 6th; 39 – 51 June 13th; 52 – 63 June 20th; 64 – 75 June 27th; 76 – 87 July 4th; 88 – 99 July 11th.

A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15.

We get ours first...

All or part of an economic stimulus payment may be applied to back taxes or certain other debts of the taxpayer, such as delinquent child support and student loans. In such cases, the IRS will send a letter to the taxpayer explaining the offset.

To accommodate people whose tax returns are processed after April 15, the IRS will continue sending weekly payments. People who file tax returns after April 15 and receive a refund can expect to receive their economic stimulus payments in about two weeks after receiving their tax refunds, but not before the date they would have received their payment if the return had been processed by April 15. To ensure taxpayers receive their stimulus payment this year, they must file a tax return by Oct. 15.

Two bureaus of the Treasury Department are involved in making the payments. The IRS will calculate the amount of each economic stimulus payment based on the tax year 2007 income tax returns it receives. The IRS will then forward the information to the Financial Management Service (FMS), which is the bureau of the Treasury Department that makes federal payments such as Social Security benefits, federal income tax refunds and, now, economic stimulus payments.

The IRS reminds taxpayers that they can get their stimulus payments faster by using direct deposit when they file their tax return.

In addition, the IRS urges taxpayers to file electronically. For people who normally don’t need to file a tax return, the IRS and Free File Alliance have a special program set up to allow for free electronic filing.


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



OBAMA: DEFENDING (OR) EXPLAINING REVEREND WRONG

Defending or explaining the indefensible...

Why would any political candidate feel the need to defend their spiritual mentor in a major speech if they did not believe, in their heart, that the position that was espoused was not significantly damaging to their campaign -- and felt the need to distance themselves from the hateful and anti-American statements that were made in and out of their presence. 

Judge for yourself...

It is what it is, it was what it was...

In his own words, the Reverend spews his anti-American hate. And in his speech Barack Obama tries to explain racial problems in America, why the Reverend Wright might feel as he does; but does not leave the orbit of Wright's teachings by walking away...

"I can no more disown him than I can disown the black community. I can no more disown him than I can my white grandmother – a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed by her on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe."

Comparing what your grandmother said in private and what the Reverend said in public is not only abhorrent but amazingly disrespectful in subjecting her memory to public ridicule for political purposes.

"Given my background, my politics, and my professed values and ideals, there will no doubt be those for whom my statements of condemnation are not enough. Why associate myself with Reverend Wright in the first place, they may ask? Why not join another church? And I confess that if all that I knew of Reverend Wright were the snippets of those sermons that have run in an endless loop on the television and You Tube, or if Trinity United Church of Christ conformed to the caricatures being peddled by some commentators, there is no doubt that I would react in much the same way.

"But the truth is, that isn’t all that I know of the man. The man I met more than twenty years ago is a man who helped introduce me to my Christian faith, a man who spoke to me about our obligations to love one another; to care for the sick and lift up the poor."

This is disingenuous... as you saw, year-after-year, for more than 20 years what this man was about. And if you didn't recognize it for what it really was, how can we trust you to nominate Supreme Court Justices? And, if you said nothing about it, privately or publicly, to Reverend Wright, how can we trust your judgement and leadership?

Is this the same man?

"He is a man who served his country as a U.S. Marine; who has studied and lectured at some of the finest universities and seminaries in the country, and who for over thirty years led a church that serves the community by doing God’s work here on Earth – by housing the homeless, ministering to the needy, providing day care services and scholarships and prison ministries, and reaching out to those suffering from HIV/AIDS."

No matter how many layers of rhetoric Obama weaves around Reverend Wright's racist and anti-American speech, it will not hide the fact that Obama, a man who claims to honor his country, sat there and watched this hate-monger spew his anti-American venom over and over -- without taking action. 

There are many black churches that do not spew this level of venomous hate to their congregations. There are many black churches that help bring uplifting comfort to their parishioners without inculcating them into the culture of victimhood where the only answer to the lack of personal pride, performance and achievement must be institutional white racism. And to cite a comparison with other clergy is misleading. The only clergy espousing these beliefs and engaging in this level of hatred are openly disavowed as racist and marginalizes as bigots.

Obama's error...

In my humble opinion, Obama made a glaring error in logic -- that of confusing "anger" with "hate."

Don't lecture me...

I know that everything is not perfect in America and that their are hate-mongers on both sides. But to attempt an explanation with a recitation of problems on both sides is not as much a disavowal of hate as it is an attempt to spin an unfavorable political position.

We vote with our feet...

If we do not agree with the position of another person or institution, we walk away or try to change the institution. Does he want his children exposed to this hateful, bigoted and anti-American rhetoric. 

The acid test...

Ask yourself, if Barack Obama had been white and attended a church with a racist such as David Duke, what would the chances of this candidate to move into the mainstream?

In the final analysis...

"I am the son of a black man from Kenya and a white woman from Kansas. I was raised with the help of a white grandfather who survived a Depression to serve in Patton’s Army during World War II and a white grandmother who worked on a bomber assembly line at Fort Leavenworth while he was overseas. I’ve gone to some of the best schools in America and lived in one of the world’s poorest nations. I am married to a black American who carries within her the blood of slaves and slaveowners – an inheritance we pass on to our two precious daughters. I have brothers, sisters, nieces, nephews, uncles and cousins, of every race and every hue, scattered across three continents, and for as long as I live, I will never forget that in no other country on Earth is my story even possible."

A country that was clearly under attack by his own Pastor, a man who honored anti-Semitic and racist Louis Farrakhan and who traveled to meet our enemy Muammar Abu Minyar al-Gaddafi in Libya. And Obama did not step-up to defend it against slanderous, hateful comments that were not only insulting, but demonstrably wrong.

Illustrating the difference between a politician and a leader...

I have two "Colin Powell for President"  buttons in my drawer. So let us look at the difference between the two men.

There is no doubt in my mind that Colin Powell is a man of character and deeply-held core beliefs.

There is no doubt in my mind that Colin Powell is a patriot that put it all on the line to defend his country... and will continue to do until the day he dies. I cannot believe that Colin Powell, under any circumstances, would allow others to defame his country in his presence without reacting.

There is no doubt that Colin Powell is an accomplished politician -- having served as both the Chairman of the Joint Chiefs of Staff and as Secretary of State.

There is no doubt in my mind that Colin Powell would always place Country above race, religion and the need to pander to those who do.

I cannot say the same of Barack Obama. In short, Colin Power is the portrait of a true leader. And when I compare the two men I find that Barack Obama comes up short... a person who I do not want representing me or my beloved country in these historically difficult times.

What can YOU do?

Watch Reverend Wright's hate-filled speech and visit his Trinity United Church of Christ  web site.

I suggest that you read Barack Obama's speech in full to get a contextual feel for its message. A copy can be found on the Obama campaign  website.

Decide for yourself if the Reverend is a hateful, anti-American bigot.

Consider that Barack Obama is a junior Senator with very little political experience at the national and international level and is simply the wrong man at the wrong time for the Presidency of the United States.

Ask yourself why is Obama lecturing us on racial politics in America when it is his Pastor that said egregious and hatful things?

Question why Obama continues to call an avowed terrorist, William Ayers a friends. A man who bombed American domestic targets and wishes that he had done more.

Do not vote for any candidate or current politician who is willing to subvert the safety, security, sovereignty and economic strength of the United States or limit an individual's right of self-defense for their personal philosophy, power, prestige or profits.

-- steve

Quote of the day:  "A lot of people mistake a short memory for a clear conscience." -- Doug Larson

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



BLAMING GREENSPAN FOR THE MELTDOWN OF THE FINANCIAL SYSTEM

I am somewhat dismayed to see Alan Greenspan being singled out as a major cause of today's financial troubles.

While reading the March 24th issue of Business Week, I came across a paid McGraw-Hill advertisement for a book titled, "Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve," by William A. Fleckenstein (with Frederick Sheehan). Which is neither here nor there as everybody has a right to express their opinions in a book.,

But it was the "blurbs" that caught my attention...

"It's about time someone set the record straight." -- Bloomberg News

"A Flaying of Greenspan's 19 years as chairman." -- Fortune magazine

"Convincing Evidence that the former Fed Chief got us into this mess." MarketWatch.com

And not because they were pandering to McGraw Hill for more full-page advertising dollars, but because each and every one of these "media" sources has, within its own staff and commissioned authors, a great diversity of opinion regarding Alan Greenspan's role as the Chairman of the Federal Reserve. But here they were, lending the full weight and prestige of their individual titles to something that remains somewhat speculative conjecture at this time.

We do not know if these comments are simply the view of one person who is attempting to characterize the content of the book or whether or not it represents a "consensus" review of the material contained within the book. Of course, I believe it to be simply advertising hyperbole and do not really believe that the editor-in-chief  was reviewing the book or Alan Greenspan's performance. At least I hope not. 

The only place where you are guaranteed to make progress by looking backward is in a rowboat...

The 20-20 hindsight that Greenspan should have done this or taken that action to avoid the mess is disingenuous.

While Greenspan was the head of the Fed, he certainly affected, but did not control the Treasury Department. He certainly affected, but did not control Congress and the individual states with their ever-growing patchwork quilt of overlapping, conflicting and confusing regulations with regard to mortgage lending practices. And he certainly did not control the OTS (Office of Thrift Supervision) when they refused to cede regulatory control of federally chartered financial institutions to the states when the state regulators were calling for tightened lending controls. And he most certainly did not control the Securities and Exchange Commission when they allowed the almost unregulated ratings agencies to sell their opinion of their client's various offerings as "investment grade" securities when they were little more than dodgy paper with various buy-back and insurance provision. Far from an arm's length opinion.

If Greenspan is guilty of anything...

If we must assign a portion of the blame, from the systemic failure of good banking policy to the  loosening of common-sense accounting controls, to an individual... Let us blame Greenspan for adhering to the needs of Wall Street, and by extension the general economy, for allowing the banking system to provide a source of "cheap money" which could be used for  investments of all type -- including the profanely profitable and the dismal failures. For the Fed's adherence to the promotion of the Administration's dream of providing equal opportunity housing to first-time homebuyers with exotic mortgages such as the 2/28s and 3/27s with their teaser rates and features like "no doc" and "payment options" which led to disastrous financial consequences in a down market. Let us blame Greenspan, Treasury and the Securities and Exchange Commission for not regulating the use of financial derivatives and not imposing greater controls on "margin requirements" to make it more difficult for the speculators to manipulate the financial markets with minimal amounts of capital at risk.

But the guilty party really is Wall Street...

Wall Street Wizards whose naked GREED put their multi-million dollar bonuses before good banking practice. GREED which drove mortgage originators to falsify documents, appraisals and do whatever necessary to create paper that could be securitized into mortgage backed securities -- and then further sliced-and-diced into tranches of other securities with varying risks. Securities which were illiquid and could not be priced without the aid of a sophisticated computer system. A repeat of history. Long Term Capital with all of their rocket scientists making money hand-over-fist until they hit that rare "Black Swan" event which crashed their models and their very business. The very people who leveraged an acceptable 5% loss into an unacceptable (to the investors) 35% with their borrowed funds.

and the regulators!

Document fraud, appraisal fraud, owner occupancy fraud and misrepresentation of mortgage terms and conditions are all illegal and were rampant during an almost unsupervised  origination process. The originators knew that the risk was being shifted elsewhere and did not adhere to good banking or accounting practices. This was not Greenspan's fault. It was a failure of the regulatory system to enforce the existing law.

Aided and abetted by the SEC and FASB...

After Enron, you would have thought that the SEC and FASB (Financial Accounting Standards Board) would have sought more transparency in financial transactions and quit using SPE (Special Purpose Entities) to hide the true extent of the risk assumed by financial and other institutions from both the public and the regulators. Perhaps, if one wants to play with 20-20 hindsight, the regulators should have noticed that the combined assumed risk of some of these financial institutions greatly outweighed their balance sheet reserves in such a manner as to corkscrew them into the ground should they experience an adverse event. Likewise, nobody compared the reserves of insurance companies who were insuring a portion of these financial funny papers or examined the underlying collateral to note the character and sufficiency to support the "computed" valuations.

Business cycles, global climate change and gravity...

That is, what goes up must surely come down at some point. Any market watcher will note that there is a similarity between market activitiy and global climate change. We know that the market is going to go up-and-down as it regresses to some unknown mean -- and we are somewhat unclear and uncertain exactly where we are in the present business cycle.

The one thing that we do know  is that it appears that we are coming down from record highs in real estate, just as we retreated from the excesses of the dot-com bust. Business is cyclical and the number of assumptions and domestic and foreign inputs into an econometric model is almost as complex as those going into computerized global weather projections. 

The worst that I can say about Alan Greenspan...

Perhaps the worst thing that can be said of Alan Greenspan is that he is a professional economist, with all of the warts and uncertainty that implies. A policy wonk who believes that the numbers of the past, to some degree,  may dictate the economy of the future and whose policy decisions are based on the collective opinions of some super-bright colleagues, both in and out of government, and tempered by the political considerations of our times. And while he remained vague and inarticulate by design, he was not a malicious man or someone with malevolent intent. He did play to Wall Street, but considering that much of our economy runs through Street institutions, that was to be expected.

But, again, I am bothered that any media source which fairly and accurately presents the financial news would lend the weight and prestige of their "brand names" to an unrestricted and enthusiastic support of a seemingly one-sided proposition... at least without some disclaimer.

What can YOU do?

Realize that Gordon Gecko's theory that "GREED IS GOOD" may be valid in an age where regulatory compliance and transactional transparency levels the playing field. But "GREED & CORRUPTION" does not fly in a modern society where one is unable to verify the facts for themselves and must rely on such devices as ratings agencies and the regulators to keep the game honest.

Also realize that the problem is not limited to the mortgage industry. Had the entire industry collapsed in a predictable way, the losses would have totaled between $1.5 to $1.8 TRILLION dollars. But the situation was compounded, again by the Wall Street Wizards, who were also securitizing  credit card debt, leasing debt, credit card debt and buyout/merger debt into similar securities known as CDOs (Collateralized Debt Obligations) which pushed the problem far beyond the failings of the mortgage industry to the economy-threatening financial disaster we face today.

You may want to reconsider the journalistic integrity of some of the more prominent financial media as they openly espouse a particular point of view without any offsetting caveats and disclaimers.

Hold your elected officials responsible as they are just as complicit in this financial debacle as anyone else.

Order the book, as I have done, to see if the book's authors have done justice to Greenspan and provided additional insight into today's financial meltdown.

-- steve

Quote of the day: "The greatest challenge to any thinker is stating the problem in a way that will allow a solution."   -- Bertrand Russell

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



Tomorrow and the Fed: Dealing with Extraordinary Times

There is no doubt that Federal Reserve Chairman Bernanke and Treasury Secretary Paulson are desperately trying to restore confidence in the United States economy. However, these efforts are not being aimed at the individual citizen/investor as they are being aimed at the shell-shocked Wall Street Wizards who have seen their vaunted derivatives "money machine" spiral into an economy-threatening debacle 0n an almost unimaginable scale.

Lessons of the past...

Clearly, the lessons of the past were not learned as Wall Street, once again, flirted with disastrous computer-modeled portfolios.

According to Wikipedia...

"Long-Term Capital Management (LTCM) was a hedge fund founded in 1994 by John Meriwether (the former vice-chairman and head of bond trading at Salomon Brothers). On its board of directors were Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economics. Initially enormously successful with annualized returns of over 40% in its first years, in 1998 it lost $4.6 billion in less than four months and became a prominent example of the risk potential in the hedge fund industry. The fund folded in early 2000."

Mathematical models...

"The company had developed complex mathematical models to take advantage of fixed income arbitrage deals (termed convergence trades) usually with U.S., Japanese, and European government bonds. The basic idea was that over time the value of long-dated bonds issued a short time apart would tend to become identical. However, the rate at which these bonds approached this price would be different, and more heavily traded bonds such as US Treasury bonds would approach the long term price more quickly than less heavily traded and less liquid bonds."

Moving beyond their expertise...

As LTCM's capital base grew, they felt pressed to invest that capital somewhere and had run out of good bond-arbitrage bets. This led LTCM to undertake trading strategies outside their expertise. Although these trading strategies were non-market directional, i.e. they were not dependent on overall interest rates or stock prices going up (or down), they were not convergence trades as such. By 1998, LTCM had extremely large positions in areas such as merger arbitrage and S&P 500 options (net short long-term S&P volatility). In fact, some market participants believed that LTCM had been the primary supplier of S&P 500 gamma, which had been in demand by US insurance companies selling equity indexed annuities products for the prior two years.

Leveraging... (To the Moon, Alice)

Because these differences in value were minute—especially for the convergence trades—the fund needed to take highly-leveraged positions to make a significant profit. At the beginning of 1998, the firm had equity of $4.72 billion and had borrowed over $124.5 billion with assets of around $129 billion. It had off-balance sheet derivative positions with a notional value of approximately $1.25 trillion, most of which were in interest rate derivatives such as interest rate swaps. The fund also invested in other derivatives such as equity options.

Liquidity problems surface...

"The company, which was providing annual returns of almost 40% up to this point, experienced a Flight-to-Liquidity. In the first three weeks of September, LTCM's equity tumbled from $2.3 billion to $600 million without shrinking the portfolio, leading to a significant elevation of the already high leverage."

"A flight-to-liquidity, is a stock market phenomenon occurring when investors sell what they perceive to be less liquid or higher risk investments and purchase more liquid investments instead, such as US Treasuries. Usually, flight-to-liquidity quickly results in panic leading to a crisis."

Fed bailout...

"Goldman Sachs, AIG and Berkshire Hathaway offered then to buy out the fund's partners for $250 million, to inject $4 billion and to operate LTCM within Goldman Sachs's own trading. The offer was rejected and the same day the Federal Reserve Bank of New York organized a bail out of $3.625 billion by the major creditors to avoid a wider collapse in the financial markets."

"The fear was that there would be a chain reaction as the company liquidated its securities to cover its debt, leading to a drop in prices, which would force other companies to liquidate their own debt creating a vicious cycle."

Subsequent analysis of the LTCM computer models revealed that the models assumptions did not adequately account for a rare "black swan" event which is what actually precipitated the crisis.

Moving beyond sound mortgages...

Hence, when the Wizards of Wall Street ran out of traditional prime mortgages, they accepted riskier subprime mortgages backed by the fiction of "buy-back agreements," supplementary mortgage insurance and hedging schemes which the ratings agencies assumed would make these suspect loans into "investment grade" securities.

Risk, what risk? We've got you covered!

However, what the ratings agencies failed to understand is that the "buy-back" agreements with loan originators far exceeded both their working capital and total net worth as they originated loans with the "wink-wink" understanding that the buy-back risk would be shifted in one- to six-months to someone else in the secondary market. The originators were concerned only about first payment and early payment defaults which triggered the "buy-back" provisions. There was little consideration of the stability of loan pools as the originators sought to continually re-finance the same loans at cheaper rates, some believe occasioned by the cheaper money that resulted from the  Federal Reserve's monetary policy.

Nobody foresaw the black swan event of a real estate valuation crisis stemming from the loss of speculative buying pressures.

The feeding frenzy for product...

The Wall Street frenzy for buying riskier loans pushed many originators into coercing their loan originators into openly tolerating what amounted to blatant fraud as they pushed "no income verification" stated loans and engaged in document fraud, appraisal fraud, and the fiction of owner-occupied primary residences for multiple speculative properties. Many, myself included, believe that some originators simply overlooked their automated fraud detection systems in order to meet pooling quotas.

In fact, Wall Street was so in love with the origination process, that Merrill-Lynch purchased subprime originator First Franklin for approximately $1.3 Billion and then invested another 100 million for 20% of now-bankrupt Ownit Mortgage Solutions.

Moving beyond mortgages (mortgage backed securities) to CDOs (collateralized debt obligations)...

Not content to securitize only mortgages, the Wizards turned to the securitization of credit card debt, auto loans, leasing contracts, merger/buyout debt and anything else that seemed to generate a revenue stream from the underlying collateral.

The assumptions of the ratings agencies that permitted crappy loans (a technical term) to be sold as investment grade securities aided and abetted the whole process.

Failure of the regulators...

Not only did the state and federal regulators fail to enforce good banking policy:

  • never borrow short and lend long; and
  • never disregard the 5 c's of banking: Character, Capacity, Conditions, Collateral and Capital

but they allowed the use of SPE (Special Purpose Entities) to hold these riskier loan pools off the parent's balance sheet where the true risk that was being assumed by a company was "inherently hidden in plain sight." In spite of previous examples of Enron-style off-balance sheet accounting, FASB (Financial Accounting Standards Board) modified their rule 125 into rule 140 which allowed much of the SPE abuse without incurring legal penalties for inappropriate accounting practices. Thus many companies had leveraged and booked partially-performing or  non-performing securities that would far outweigh the company's capital reserves -- and in some cases, the entire value of the company.

Too big to fail?

In spite of protests to the contrary, but openly acknowledged to Wall Street's "Money Honey" Maria Bartiromo by former-Fed Vice Chairman Alan Blinder, there are firms that are considered "too big to fail," especially when such firms would induce a wider market panic leading to disastrous consequences.

Thus we see the Federal Reserve pulling out all of the stops in investing a major portion of its total capital in providing BILLIONS of dollars of loans that are capitalized by questionable collateral. And taking an active role in providing financing to JPMorgan Chase for their buyout of Bear Stearns.

Bear Stearns, where the perception of problems were enough to precipitate a liquidity crisis (when their normal business and trading partners withdrew deposit accounts and would not clear their securities without cash) -- and provide JPMorgan Chase with an excellent purchase at an almost no-risk discounted price.

Tomorrow...

In their continuing effort to buoy investor confidence, both here and abroad, it is widely believed that the Federal Reserve will once again reduce both the Federal Funds Target Rate and the Discount rate.   

This follows a continued program of rate reductions and a Sunday (3/16/08) emergency 25-basis point cut in the discount rate.

In the normal course of events, a rate cut of 50-basis points can be easily justified as it would take a cut of 62-basis points (as of 3/14) to return the federal funds rate to a neutral  inflationary stance based on a five-year outlook. To extend the outlook to ten years, the Fed would need to raise rates by 45-basis points to achieve a neutral inflationary stance.

However, due to political considerations, a cut of 75- or 100-basis points is not out of the question given the somewhat dire circumstances surrounding today's economy.

President Bush weighs in...

The President is urging investors to remain calm and is cautioning the regulatory agencies, as well as Congress, that there is a great danger in over-stimulating a recovering economy. While being derided by democrats and the left-biased press, the President is correct on this matter. Since the Fed's actions will need 12- to 18- months to work their way into the economy and most recessions are short-lived (18-24 months) ... and we are in a depression by at least six months  before the lagging numbers make it official, his words of caution are well worth acknowledging.

For the policy wonks...

For those of you who wonder what I base my numbers on... here is the spreadsheet that I use to transform the data which is publicly available on the Federal Reserves H.15 Report (Selected Interest Rates) into meaningful information. The formulas for each of the items can be found in the right-hand column. This methodology has a high degree of stability and it should be noted that most of the anticipated rate maneuvers have already been priced into the markets. Thus, only extraordinary and unanticipated moves will actually affect the market to move beyond its normal boundaries.

The bond market appears to have already priced-in a cut of up to 100-basis points (1%)

fed0314

What can YOU do?

Obviously, you should secure your income stream by concentrating on your job. You should reduce your unnecessary expenditures to not only live within your means, but also to build a capital reserve. This is exactly what the government hopes you will not do -- as they want you to spend, spend and even spend more to circulate more money and thus help improving the economic situation.

If you have investments based on the prime, you may want to ladder them to take advantage of the lowered prime rates that will result from any cuts in the federal funds rate.

You should capitalize on lower interest rates on credit cards, by reducing your balance rather than increasing your spending. Perhaps it is now time to switch to a card with better benefits.

Now may be a time to consider investing as most stocks approach their yearly or historical lows. Make sure the company is sound before investing.

Consult professional legal, accounting and investment advisers whenever possible.

Enjoy your tomorrow -- as you will still be alive and financial wounds are never fatal.

-- steve

Quote of the Day: "Confidence and enthusiasm are the greatest sales producers in any kind of economy." -- O. B. Smith

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



SPITZER: "SET-UP" OR CAREFULLY ORCHESTRATED PUBLIC RELATIONS CAMPAIGN?

UPDATE: 03-21-08 REPUBLICAN OPERATIVE TOLD FBI OF SPITZER SEXUAL ACTIVITIES MONTHS BEFORE THE EX-GOVERNOR WAS CONFRONTED WITH THE SCANDAL

It is beginning to look like that the original "cover story" about IRS agents in a warehouse routinely discovering evidence of potential financial impropriety which then led to the discovery of Spitzer's involvment in a prostitution ring may be false. Considering that, at this late date, Spitzer has yet to be formally charged, leads one to speculate that there may have been other undisclosed factors in this case... and which may work to Spitzer's advantage.

According to MiamiHerald.com...

"Almost four months before Gov. Eliot Spitzer resigned in a sex scandal, a lawyer for Republican political operative Roger Stone sent a letter to the FBI alleging that Spitzer ''used the services of high-priced call girls' while in Florida."

"The letter, dated Nov. 19, said Miami Beach resident Stone learned the information from 'a social contact in an adult-themed club.' It offered one potentially identifying detail: the man in question hadn't taken off his calf-length black socks 'during the sex act.'''

"Stone, known for shutting down the 2000 presidential election recount effort in Miami-Dade County, is a longtime Spitzer nemesis whose political experience ranges from the Nixon White House to Al Sharpton's presidential campaign. His lawyer wrote the letter containing the call-girl allegations after FBI agents had asked to speak to Stone, though he says the FBI did not specify why he was contacted."

''Mr. Stone respectfully declines to meet with you at this time,'' the letter states, before going on to offer ''certain information'' about Spitzer.

'''The governor has paid literally tens of thousands of dollars for these services. It is Mr. Stone's understanding that the governor paid not with credit cards or cash but through some pre-arranged transfer,' the letter said."

'''It is also my client's understanding from the same source that Governor Spitzer did not remove his mid-calf length black socks during the sex act. Perhaps you can use this detail to corroborate Mr. Stone's information,'' the letter said, signed by attorney Paul Rolf Jensen of Costa Mesa, Calif."

"The letter was written several months after allegations were leveled at Stone that he had left a threatening phone message at the office of Bernard Spitzer, the ex-governor's father, regarding ''phony'' campaign loans involving his son's unsuccessful 1994 bid for attorney general. Stone denied making the call but resigned as a consultant for state Senate Republicans in Albany."

While Spitzer is allegedly guilty of the charges, this article hints not only of selective enforcement, but also the massive, and potentially inappropriate, resources of the government for "political purposes." 

UPDATE(01): 03-17-08 NEW  "NEW YORK STATE GOVERNOR ADMITS TO AFFAIR"

It gives new meaning to the words "full disclosure" and sets the tone for the New Governor's tenure. We applaud his honesty.

According to the New York Daily News...

"The thunderous applause was still ringing in his ears when the state's new governor, David Paterson, told the Daily News that he and his wife had extramarital affairs."

"In a stunning revelation, both Paterson, 53, and his wife, Michelle, 46, acknowledged in a joint interview they each had intimate relationships with others during a rocky period in their marriage several years ago."

"In the course of several interviews in the past few days, Paterson said he maintained a relationship for two or three years with 'a woman other than my wife,' beginning in 1999."

"As part of that relationship, Paterson said, he and the other woman sometimes stayed at an upper West Side hotel — the Days Inn at Broadway and W. 94th St."

"He said members of his Albany legislative staff often used the same hotel when they visit the city."

Original blog entry...

Eliot Spitzer is, by all accounts, a brilliant guy, a knowledgeable prosecutor,  somewhat self-absorbed and fearless, plus is wealthy enough to hire the very best defense attorneys and spin doctors in the country.

Considering that neither Spitzer nor the government prosecutors have announced the specific charges or a negotiated settlement, I am wondering if there is something else in play.

A public relations campaign to set the stage for counter charges of prosecutorial misconduct which, if proven, might reduce or eliminate Spitzer's eventual charges or minimize his penalties.

An article in London's TimesOnLine has some of the elements of a carefully orchestrated public relations campaign which illustrate the possibility of background manuevering.

According to the TimesOnLine...

"Toppling of the Luv Guv is ‘Wall Street revenge’"

"Eliot Spitzer’s downfall as governor last week may have roots in pursuit of wealthy bankers while state attorney-general."

Powerful enemies will millions of dollars at stake...

"In early 2004 Eliot Spitzer was at the height of his powers as the sheriff of Wall Street, the highflying New York prosecutor who had set his sights on the cozy corporate kleptocracy that was pocketing millions from insider deals while ordinary investors went bankrupt."

"His latest victim was Richard Grasso, the chief executive of the New York Stock Exchange, who had made headlines around the world by negotiating himself a $140m (£69m) retirement package that Spitzer alleged was illegal."

"Grasso claimed he had done nothing wrong and when it became clear he was prepared for a fight, Spitzer’s investigators went to work. What happened next helps to explain why much of Wall Street cheered – and the rest of America gasped – when Spitzer, who was later elected governor of New York state, became enmeshed in a call-girl scandal that cost him his political career last week."

Anonymous reports set the stage...

"There are intriguing reports in New York that the man who was once dubbed Eliot Ness – after the “untouchable” FBI crime-buster – may have owed his fall at least in part to the bankers he once pursued with ruthless moral zeal. "

"Was the governor a victim of Wall Street’s revenge? 'Only one thing is certain – it’s an Eliot mess,' declared one former prosecutor."

Spitzer methodology: everything, even the leaks of sexual peccadilloes to the press were apparently fair game to weaken opponents and make them more likely to settle "out of court."

"As the Grasso investigation unfolded in the summer of 2004, it became clear to reporters following the case that Spitzer’s team was interested in more than financial matters. Aides in the attorney-general’s office hinted that Grasso was having an affair with his secretary, SooJee Lee; Grasso was also questioned about whether he had fathered an illegitimate child."

Had Grasso lied about these matters to investigators, there would be additional, and more easily provable charges added to the charge list. 

"Charles Gasparino, a television reporter who wrote a book on the Grasso case, claims he was told by a Spitzer adviser: 'Everyone knows Grasso was boning SooJee.' Grasso vehemently denied both allegations, but the message was clear to all of Wall Street: Spitzer would stop at nothing once he had taken on a case. He even described himself as “a f****** bulldozer”.

"While many outside Wall Street applauded Spitzer for tackling murky insider trading, his readiness to delve into his targets’ private lives magnified the hostility towards him. Last week there was no doubting the financial world’s glee at his fall."

"Yet not even a hoard of saucy Dupré [Kristen] photographs unearthed by the New York Post on Friday could distract Wall Street lawyers and bankers from intriguing anomalies in the small print of the prosecution case against Spitzer, who announced his resignation as governor on Wednesday and will formally yield power to his deputy, David Paterson, tomorrow."

"While there was little sympathy, there were plenty of questions about how a handful of outwardly innocuous payments from his bank account came to trigger a federal investigation into his sexual activities."

Enter the name of a major attorney, famous for being a "fixer" of a variety of litigation problems...

“'The movement of the amounts of cash required to pay prostitutes, even high-priced prostitutes over a long period of time, does not commonly generate a full-scale investigation,' noted Alan Dershowitz, the Harvard law professor and former member of OJ Simpson’s legal team. Others on Wall Street were wondering whether Spitzer’s financial dealings had been singled out for scrutiny as revenge for his past prosecutions."

The implied question: Did someone tip the bank to watch Spitzer's account?

"The beginning of Spitzer’s end can be traced to three banking transfers that left his personal account at the North Fork Bank in New York last spring and summer. For reasons that have not been satisfactorily explained, these payments totaling $15,000 attracted the attention of bank employees who monitor accounts for signs of suspicious activity."

"After the terrorist attacks of 2001 on New York and Washington, laws relating to money-laundering were significantly tightened, requiring banks to file so-called 'suspicious activity reports' whenever there is evidence that clients might be trying to sidestep routine regulations."

Was it the "Q" that caught the investigators eye since a number of companies with ties to Islamic nations start with "Q?"

"Spitzer’s transfers to a company called QAT International Inc – later revealed to be a front for the Emperors Club – were reportedly considered by the bank to be an attempt to avoid another law that requires all transactions over $10,000 to be reported to the US Treasury. Breaking down payments with intent to avoid reporting is an offence known as 'structuring'."

Is Dershowitz on Spitzer's legal team?

"Yet Spitzer is the son of a multi-millionaire property tycoon and has substantial assets of his own. The notion that as few as three payments from his account of less than $10,000 might be considered suspiciousraises as many questions as answers”, said Dershowitz."

Raising freedom and privacy issues...

“'We are talking about a man who is a multi-millionaire with numerous investments and purchases,' he said. 'It’s simply none of the federal government’s business that a man may have been moving his own money around in order to keep his wife in the dark about his private sexual peccadilloes.'”

Happenstance, circumstance or enemy action?

Prosecution sources said last week they had no idea at first that the money was related to prostitution. Even after a second bank, HSBC, reported suspicious activity at QAT’s account – and a link was found to Spitzer – it was at first assumed that the money might be related to corruption or improper use of political campaign funds.

"The case was initially turned over to the section of the Manhattan prosecutor’s office that deals with political corruption. The ensuing investigation duly established QAT was banking payments to a prostitution network and that Spitzer was a client."

When the case against the one man and three women accused of running the international network reached court earlier this month, it was the presence of a federal prosecutor from the political corruption squad that first alerted New York Times reporters to the possibility that a politician might be involved.

Motive?

"It has since been established that both North Fork and HSBC were on the receiving end of Spitzer investigations in his days as attorney-general. In 2003 North Fork was obliged to refund $20,000 to dozens of home-owners after Spitzer claimed that the bank had been charging illegal fees."

Financial institutions often regard such fines and disclosures as a cost of doing business and are usually pleased that even greater sanctions were not imposed.

Raising doubt...

"No evidence has been produced that the bank reporting of Spitzer’s transactions was maliciously intended, yet Dershowitz and other commentators have noted that the system was designed to ferret out drug dealers, the mafia, terrorists and major financial fraud."

“'Once federal authorities concluded that the ‘suspicious financial transactions’ attributed to Mr Spitzer did not fit any of [these categories], they should have closed the investigation,' said Dershowitz."

There is a logic error here. One, the authorities did not know exact what they were dealing with at the time of the preliminary analysis of banking records and two, the authorities are not wont to turn a blind eye to illegal activities once they are discovered. Nowhere in Dershowitz's  list is anything about bribery of public officials or the extortion of public officials to secure some advantage -- which are also legitimate concerns of law enforcement personnel and prosecutors.

"Instead, they went after Spitzer with the raw, relentless enthusiasm that the governor had so often displayed towards his own targets in the past."

Relentless or the diligence required by their official duties is a semantic question. I want relentless diligence as these agents protect us from our enemies, both foreign and domestic. I do not want them shutting down an instigation based on a narrow list of target types. As for enthusiasm, we should ask the people who sift through millions of pieces of data to find that proverbial "needle in a haystack" is they are having fun. Peering bleery-eyed at spreadsheets trying to discern patterns does not encourage enthusiasm.

"The soon-to-be ex-governor still faces possible financial charges, and investigators are checking whether public money may have been used to further his sexual activities. There are also security questions about the whereabouts of his bodyguards while he was secretly meeting prostitutes."

And the story continues to evolve. I am sure that there will be more revelations as time goes on... it is in Spitzer's best interest to settle this sooner rather than later. Whether or not he can negotiate the "slap on the wrist" that preserves his law license remains to be seen.

What can YOU do?

Watch the public machinations of the Spitzer defense team as they try to minimize the charges against Spitzer and arrange the lightest possible tap on the wrist for a career of unpleasantness and outright malfeasance.

Read each Spitzer story with a critical eye and wonder, as I do, if there was a public relations (i.e. damage control) expert behind the curtain.

Instead of rejoicing over Spitzer's very public downfall and personal tragedy, consider what a sad day it really is as we discover yet another elected official has inappropriately used the full weight of the government to coerce the innocent (they were never tried in court) into paying fines and agreeing to settlements in order to protect their families, friends and associates from being charged by an overzealous prosecutor. Or that a trusted member of the government felt compelled to leak anything (false, misleading or true) to the media to exert more pressure on the accused.

Elect honest individuals to office. Do not elect career politicians as they become acclimated to more and more power until they believe they are "royalty" with the perks and privileges not available to the common citizen.

Do not vote for any candidate or current politician who is willing to subvert the safety, security, sovereignty and economic strength of the United States or limit an individual's right of self-defense for their personal philosophy, power, prestige or profits.

-- steve

Quote of the day: "We've seen the hubris. And now we're seeing the scandals." -- David R. Gergen

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Reference Links:

Toppling of the Luv Guv is ‘Wall Street revenge’ - Times Online


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS



FEDERAL RESERVE: RARE SUNDAY ANNOUNCEMENT OF RATE CUT IN PRIMARY CREDIT RATE (DISCOUNT RATE) -- BEAR STEARNS BOUGHT FOR BARGAIN PRICE $2/SHARE

In an unusual press release, issued Sunday, March 16th, the Federal Reserve has announced that they are implementing what can be considered "emergency" actions in order to make funds available to JPMorgan Chase which will serve as a conduit for funds to Bear Stearns. Thus leading me to believe that the Bear Stearns situation is extremely serious and may have implications for the broader market when it opens on Monday.

It is believed that third-parties (counter-parties) are withdrawing funds from custody accounts held in their favor and placing their continuing securities execution business elsewhere -- thus precipitating a loss of confidence in Bear Stearns as a going concern. It seems that these counter-parties would rather cease doing business with Bear Stearns than explain to their own shareholders and partners why they were ignoring market rumors and placing their capital at an undue risk.

Whoops ... Had to cancel Monday's order -- I also believe that JPMorgan Chase may be considering the acquisition of an otherwise profitable Bear Stearns and I have placed a small order for JPM for Monday's opening. <--- inoperative, who knew you needed to work on Sunday?

According to Monday's Wall Street Journal...

'The deal calls for J.P. Morgan to pay $2 a share in a stock-swap transaction, with J.P. Morgan Chase exchanging 0.05473 share of its common stock for each Bear Stearns share. Both companies' boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday's close, Bear Stearns's stock-market value was about $3.54 billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday."

"Effective immediately, J.P. Morgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. The deal isn't subject to any conditions, except shareholder approval. It is expected to close before the end of the second quarter."

"Government regulators, including the Federal Reserve and the Office of the Comptroller of the Currency, have given their blessing to the transaction."

What a deal... in an no-lose scenario where the working capital may be supplied by the Fed, JPMorgan Chase acquires a profitable, on-going business for approximately $2/share in "paper" transaction.

The lowering of the spread on the primary rate may signal a potential cut of 75-basis points or more in the Federal Funds Target Rate -- with a corresponding cut in the Discount rate in order to restore the previous 50-basis points margin.

As with everything FED, they will take action as conditions warrant.

In their own words...

March 16, 2008 Federal Reserve

The Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.

The Board also approved the financing arrangement announced by JPMorgan Chase & Co. and The Bear Stearns Companies Inc.

March 14, 2008 Bear Sterns

NEW YORK – New York – March 14, 2008 – The Bear Stearns Companies Inc. announced today it reached an agreement with JPMorgan Chase & Co. (JPMC) to provide a secured loan facility for an initial period of up to 28 days allowing Bear Stearns to access liquidity as needed. Bear Stearns also announced that it is talking with JPMorgan Chase & Co., regarding permanent financing or other alternatives.

Alan Schwartz, president and chief executive officer of The Bear Stearns Companies Inc., said, "Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity. We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

The company can make no assurance that any strategic alternatives will be successfully completed.

NEW YORK – New York – March 14, 2008 – The Bear Stearns Companies Inc. (NYSE: BSC) plans to announce its first quarter 2008 financial results on Monday, March 17, 2008, in a press release that will be issued after the close of the New York Stock Exchange. The press release will also be available on the firm's Web site at http://www.bearstearns.com. The call was previously scheduled for Thursday, March 20, 2008. 

March 11, 2008 Federal Reserve

Release Date: March 11, 2008 - Federal Reserve Actions
The Federal Reserve announced today an expansion of its securities lending program.  Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS.  The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally.  As is the case with the current securities lending program, securities will be made available through an auction process.  Auctions will be held on a weekly basis, beginning on March 27, 2008.  The Federal Reserve will consult with primary dealers on technical design features of the TSLF. 

March 10, 2008 Bear Stearns

NEW YORK – New York – March 10, 2008 — The Bear Stearns Companies Inc. today denied market rumors regarding the firm's liquidity. The company stated that there is absolutely no truth to the rumors of liquidity problems that circulated today in the market.

Alan Schwartz, President and CEO of The Bear Stearns Companies Inc., said, "Bear Stearns' balance sheet, liquidity and capital remain strong."

Bear Stearns will announce its first quarter 2008 financial results on Thursday, March 20, 2008, in a press release that will be issued prior to the opening of the New York Stock Exchange.  The press release will also be available on the firm’s Web site at http://www.bearstearns.com.


“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS