Bailouts – Changing the Variables of Business

Before the Government goes bailing everyone out, they should consider the guys they don’t have to bailout and the impact it will have on their businesses. 

Note:  forgive this simplistic scenario but you’ll get the overall point.  Let’s say you own a bank and you chose not to give out risky mortgages.  And let’s say you also chose not to buy up other banks risky mortgages.  You also choose not to invest your profits into mortgage bonds because you don’t know which are risky and which aren’t. 

If you were a bank and you chose not to do those three things then you would be called an “idiot” by nearly everyone in the industry between say 2003 – 2007.  Most of the other banks you were competing against were making millions of dollars on loans you refused to make.  But, let’s say you managed to keep your bank open and were still turning a profit, not at the levels of other banks but still a profit.

Now, it’s 2008 and you look pretty smart.  You are still turning a profit while your competitors are hurting and even going out of business which means their customers are coming to your bank.  Great you are set!  Wait, your competitors have hired lobbyist to fly to Washington to try and get the government to help them out.  The government is broke so they say no but your lobbyists are smart.  They start scaring everyone into thinking that if their clients fail then the whole system will fail and everyone (meaning voters) will suffer and blame those in congress.   They also get newspaper columnists to write articles scaring the public into believing this scenario.  Pointing out that “Joe Blah Blah” is at risk of losing his job and his money.

So Congress jumps on board.  Now, the government is pouring money into your competitors even though they made bad business decisions.   Your competitors survive and the bailout makes potential customers and investors more likely to actually throw their money into your competitors instead of your bank.  Guess what?  The Variables just changed and you were penalized for not being an “idiot”. 

You go out of business and your competitors gobble up your bank only to make the same mistake again in 5 years.  The executive boards and managers of those banks avoid any real damage and go on to repeat their mistake once again.  After all, they made millions and when they started to face losses…government bailed them out.  What’s the downside? 

Or take that scenario and say you are an automaker or a builder or an airline.

Republicans or Democrats…Who is to Blame?

I decided to actually watch CNN tonight to hear what all the pundits had to say about the bailout failing to pass.  Let’s just say my head hurts now.  Before I even get into the Dems and Repubs, it’s amazing to me that we only hear one side of this argument.  Everything on the news is how the bailout just has to be passed and it was a major mistake not to pass it.  What about the other side?  

I even heard these morons say that yes the bailout is horrible but we just have to pass it.  We do?  Can’t we pass something else?  Don’t we have the power to rewrite bills or make new bills that may work better?  I seem to remember reading that in Government Class.  CNN completely ignored the other side of the argument in all their newscasts tonight.   It’s like I’m listening to the state run news network just repeating the talking points handed to them by the administration…strange feeling.  This is the United States of America, right?

Ok, now on to Congress…Now let me see, I’ll start with the Repubs blaming Pelosi’s speech (her Speech!) for the bill not passing. Seriously? 

• Did your feelings get hurt?  How old are you idiots? 
• Just once, just once, I would love to hear the Republicans take responsibility for their actions.  Guys you failed to get the votes to pass this bill.  End of story. 
• They BLAMED THE SPEECH!  They continue to just amaze me.

Ok now I’m going to rip the Dems…so any Democrats out there who can’t take it then you better look away.

• Pelosi why do you still have a job?  Every day that you wake up do you look in the mirror and just ask yourself if you can screw up as bad as you did the day before?
• Did the Dems blame the Repubs for not getting enough votes?  They said that they got their fair share and the Republicans didn’t get theirs.  Are your legs broken?  Get off your asses and go get more votes if you believe in this thing so much.  WTF?  That’s the weakest argument I’ve ever heard…oh wait.  They blamed THE SPEECH!

So CNN went on to say that the house Republicans who voted against the bill were putting their re-elections ahead of the country.  But, then they went on to say that 90% of the calls into those same Repubs offices have been against the bailout.  Don’t they work for those people?  Aren’t they supposed to represent them?  I’m so sick of this crap about putting the country ahead of everything else…this is not the Soviet Union!  You are free to have differing views here in this country.  In fact, it’s healthy and natural. 

The majority of American people do not support this bill and the congress who represents them voted it down. So what’s the problem?  If it’s so important then explain it to the people of this country and stop trying to scare them into supporting it.  I mean, I know that’s Bush’s only motivational tactic but someone in congress should be able to do something.  How about those two idiots running for President?  Maybe they could explain it to the American people.  I’m pretty sure that’s how this whole thing called government was supposed to work.

And does anyone, anyone have a problem with the Democrats in Congress lining up behind President Bush on this? 

I know this post is long but I got one more thing to say.  Where is Dick Cheney?  Where do you think his money is?  Dubai?

Russian Propaganda

At least the BBC understands that everything the Bush Administration and Saakashvili spit out is far from the truth. 

The Bush administration appears to be trying to turn a failed military operation by Georgia into a successful diplomatic operation against Russia.

It is doing so by presenting the Russian actions as aggression and playing down the Georgian attack into South Ossetia on 7 August, which triggered the Russian operation.

I would guess that at least 90% of Americans think that Russia started this whole thing.  And John McCain is a moron if he truly believes the crap he says.

The Republican presidential hopeful Senator John McCain also sees in this conflict an opportunity to put Russia in the dock, declaring: “We are all Georgians now.”

We are not Georgians you fool.  We are Americans.  Most of our population has no idea where Georgia is and have no idea about the history of this conflict.  And isn’t it interesting that one country who has a long painful history with Russia finds very little fault in the Russians. 

Germany, at least, has been notably reluctant to find fault with Russia

Obama if you truly want to bring about change in this country, this would be a good opportunity.  Help wake people up in this country. 

The Georgia Fallout

You just can’t make things like this up:

The United States and Poland reached a long-stalled deal on Thursday to place an American missile defense base on Polish territory, in the strongest reaction so far to Russia’s military operation in Georgia.

What the hell is the US doing?  They couldn’t be more obvious.  Let’s see a deal that has been stalled for 18 months is all of a sudden agreed to after Georgia attacks the breakaway provinces and Russia responds. 

Why are we picking a fight with Russia?  And if you think this isn’t a big deal then let this soak in:

But the deal reflected growing alarm in countries like Poland, once a conquered Soviet client state, about a newly rich and powerful Russia’s intentions in its former cold war sphere of power. In fact, negotiations dragged on for 18 months — but were completed only as old memories and new fears surfaced in recent days.

Those fears were codified to some degree in what Polish and American officials characterized as unusual aspects of the final deal: that at least temporarily American soldiers would staff air defense sites in Poland oriented toward Russia, and that the United States would be obliged to defend Poland in case of an attack with greater speed than required under NATO, of which Poland is a member.

We are agreeing to protect Poland even moreso than our NATO allies???  What???  Who cares about Poland?   And who created those old Cold War fears?  Russia did not roll their tanks into Georgia unprovoked. 

How long before Russia sets up their own missile defense system in Cuba or Venezuela?  It wouldn’t be any different than what we are doing over there?  This is really maddening.  And the people of this country are just sitting and watching Bush drive us back into an arms race and worst case, another Cold War.

Condoleezza Rice and Georgia

What did she tell Saakashvili when she was there on July 9th? 

Did she tell him that if he gained control over his entire country that we would ensure Georgia would get into NATO?

Did she tell him that if he attacked South Ossetia the US would back him?

And what about this:

About 1,000 US soldiers are training alongside an equal number of Georgian troops and an unspecified number of men from Azerbaijan, Armenia and Ukraine — all of which are members of the Partnership for Peace.

 

EUCOM called Georgia a key ally in the global “war on terrorism” and regional anti-terror operations. It is currently the third largest contributor of foreign troops in Iraq.

 

“Georgia’s geographic location also allows other allies and partners in the region to see the benefits of working with the United States,” it said.

So Condoleezza Rice was in Georgia a month before they tried to take back South Ossetia and on top of that the US was participating in joint military exercises with Georgian Troops.  So why doesn’t the US media ask our government if they knew that Saakashvili was goig to attack South Ossetia?  We need to find out how much responsibility we share in this.  And I’m talking about deaths of civilians on both sides of this conflict.

Saakashvili gambled on a surprise attack late Thursday to regain control over South Ossetia. Instead, Georgia – a former Soviet state and current U.S. ally that wants to join NATO – suffered a punishing beating from Russian tanks and aircraft that has left the country with even less control over territory than before.

Why is our government provoking Russia?  Don’t they work for us?  Of course, the democrats are silent on this as well.  Think how much damage has been done over the last 8 years in Russia/US relations.   What a disaster George Bush has been.

Obama is lost

I had hopes for him but he continues to disappoint me with his short-sightedness.  He appears to be caving on offshore drilling and now he wants to tap into the strategic oil reserves.  

Obama, who as recently as last month argued against tapping into the petroleum reserve located in caverns in Texas and Louisiana, proposed that the government sell 70 million barrels of oil from its stockpiles and said that releases from the reserve in the past have lowered gas prices within two weeks.

Someone please explain to these idiots that this is a terrible way to deal with high oil prices.  This will only offer short term relief and will only leave the country in worse shape when those 70 million barrels are exhausted.  The strategic reserves are there for a reason.  How do you think the military functions without gas?  You think those tanks and planes work well without fuel?  What happens if we attack Iran and then they respond by blocking the sea lanes of the gulf?  Or maybe there’s unrest in Saudi Arabia or Pakistan?  Or Venezuela sells all their oil to China?   Let’s just say oil will be hard to come by. 

I love how the AP hides this in the article….The last sentence of that story is the following:

Elgie Holstein, an Obama energy adviser, said that, while fewer refineries now are capable of refining the heavier stuff into gasoline, in the future that won’t be the case.

So the oil that will be replaced will be even tougher to turn into gasoline.  Great!  That’s just makes the idea even worse.  You know, because if you really are in need of tapping the strategic oil reservers you probably don’t need the stuff quickly or anything.  And “in the future”? What kind of timeframe are you talking about?  When are these new refineries going up?

I suggest whenever you read an AP story that you make sure you read the last paragraph as that’s where they hide the good stuff.  Don’t overlook it.  And my message to Obama:

 If you want to be so much like McCain then just quit the race and vote for him.

How much longer John McCain?

How are you going to back up the 100 year statement now:

The killings of three U.S. soldiers in separate attacks in Baghdad pushed the American death toll for April up to 47, making it the deadliest month since September, the military said Wednesday.

How much longer do we have to continue before someone is strong enough to say enough is enough? 

In all, at least 4,059 members of the U.S. military have died since the Iraq war started in March 2003, according to an Associated Press count.

That doesn’t include the wounded, the seriously wounded, and the emotional impact on the soldiers and their families.  How many years do we continue down this path?  Please tell us again how the “surge” is working?  McCain basically said he judges success on the basis of how many of our soldiers are dying or getting hurt…well this has been the bloodiest month since September so doesn’t that mean the “surge” has failed? 

I don’t think Republicans are going to stick this war out with McCain.  They aren’t blind and they realize that it’s negative impacts far outweigh any positives.  The Democrats know this but are too weak to do anything about it.  Obama should seize on this but he’s too scared to do anything bold right now. 

Similar Posts:

1. Stop Bashing Patraeus
2. Is McCain Crazy?

Stop Bashing Patraeus – Here’s How to Get Out of Iraq

So we got to see the big Patraeus show this week.  We’ve got democrats all up in arms because he didn’t answer their questions how they wanted and we have republicans treating him like a god.  Look, it doesn’t matter what he says.  His job is to win the war and he’s not going to look at anything that falls outside of that goal.  It’s not his job.  He’s a General. 

Think of him like the head coach.  He wants every player he can get but it’s the general manager’s job to make sure the team makes money and plans for the future of the franchise.  If you want the US out of Iraq, then bash Bush and bash the congress for continuing to fund it and finally bash anyone who didn’t stand up against the war from the beginning (some of you will be bashing yourselves at that point).  But, I do offer the answer for getting out of Iraq. 

Are you ready?  Take a seat.  In fact, the answer starts at the UN.  Our president must stand in front of the UN general assembly and say the following:

1. How many of you care about the Iraqi People?
2. How many of you are worried about global terrorism?
3. The US will not sustain its current troop levels in Iraq, we have done our job and we will be leaving.  Now, we believe there will be widespread bloodshed in Iraq if we leave.  Many Iraqi’s will die and there is a good possibility that extremist will take power following a civil war.  Regardless of how you felt about the Iraq War in the beginning, I am now putting it on your shoulders to protect the Iraqi People.  The US is not mistake free and we take responsibility for our actions but after 5 years we cannot continue.  The blood will be on all of our hands, not just the US, if you choose not to act.
4. We need 150K troops and 12 Billion a month from the world to continue.  We will provide 30K troops and 2 billion a month in additional support.  That will bring the troop levels to 180K plus the approximately 100K security contractors and the Iraqi army and police.  This will be an 18 month commitment.  Iraqis will know that the entire world is supporting them and their quest towards a democratic country. 
5. You have 30 days to decide.  We will take money and troops from every country including Venezuela, China, Turkey, Israel, Egypt, Russia and Cuba.   If the world cannot meet the 150K in troops or the 10 Billion in funding then the US will begin pulling out of Iraq immediately.  The effects on the world economy, oil, and terrorist levels will be felt by everyone in this room and we will all be held accountable.   When you see innocent people dying in Iraq, you will only have the mirror to look into for the blame. 

If the world doesn’t want to send troops or money then why should we continue?  Obviously, they don’t think it’s important enough to actively participate in stabilizing and protecting the Iraqi population.  No reason we should have to continue this on our own.  So we leave. 

Patraeus probably knows that continuing the Iraq War is not good for the future of the US, but he can’t say that…he’s there to win it.  The US has to put some pressure on the world by using public sentiment…it’s basic politics.  But, you have to go before the UN and admit your mistakes and be honest, then ask for help.  And at the same time be strong enough to say that if you don’t get it…then you’re gone.  Let’s be honest:

• we can’t continue these troop levels and rotations
• we can’t afford the costs and the costs to replace all of this equipment
• it’s not worth losing our troops over

The Very Rich are Hurting

The economy is tanking from the top down.  We may be headed to a “ZIRP” similar to what japan did, the stock market gains aren’t holding at all.  Google ZIRP (zero interest rate policy) for more info and the debate.  I think many average people haven’t really felt the effects of this downturn but you can bet that people at the top are getting nervous.  Here are a couple of stories and they all have one thing in common…the very rich are losing millions. 

• The Carlyle group created a hedge fund that is collapsing…now the Carlyle Group itself is not in trouble with the likes of Jim Baker, Bush SR. and a number of Saudi’s but at least one arm of this group is hurting. 
• A new football league was ready to begin up until a few weeks ago…until one of the guys bank rolling it lost millions.  Now, they are pulling the league this year.
• Joseph Lewis wants some of his money back that he lost with Bear Stearns collapse.  This huge company collapsed basically overnight. 
• More on Bear Stearns:  this is a personal story but a friend of mine actually bought 100K worth about 2 weeks ago…saw it’s worth drop to 80K.  At that time their CEO was on TV saying they were fine and had plenty of money…my friend decided to take the loss and sell immediately and 24 hours that same CEO was telling everyone they were bankrupt.  so instead of losing basically everything my friend salvaged the 80K.  What is interesting or scary is that everyone in his office was telling him not to sell. 
• This next one is pure speculation by me.  The Denver Broncos are making budget cuts and letting people go.  Now, the NFL itself is very popular and they have a salary cap so why would a team need to do this?  Could it possibly be because Pat Bowlen (Denver’s owner) has lost millions in investments over the past month? 

 Somewhat related…I ran across an article by Ron Paul back in 2006.  It’s pretty long and talks a lot about Gold..which many are turning to.  He has a lot of interesting points (rather you agree or not) but a few of them:

• the buying of gold is really a bet against the currency…not really an investment
• inflation hurts the poor and the only way to pay for many social programs is to print more money…leading to inflation
• there should have been a “war tax” to pay for Iraq…by doing this you really make it clear to the people that you have to actually pay for the war…instead they just printed more money so the emotion of a war tax is gone.  If we had been paying a war tax the last 5 years, I’m sure this thing would be over by now. 

Anyways, I think it’s interesting whether you agree or not.  It’s not often we see a congressman go into this much detail on the economy. 

Democrats are Embarrassing

I’m watching Meet the Press and the whole discussion about Florida and Michigan is really embarrassing.  I never could figure out why the democratic party decided to make those two primaries irrelevant in the first place.  Let’s throw out what’s happening now and voters should ask how it got to this point?  What kind of idiotic party leadership makes two of the most important states in a general election irrelevant?   I have to think that when the Dems made this decision…the Republicans were laughing in their war room, knowing that this would come back to hurt them.

If the primaries hadn’t been this close then this issue would have never come up now…and it should have been a huge issue in the first place.  It’s scary to think that the Democrats let it come to this.  Their leadership should have never allowed those two states to become irrelevant during the primary season.  You really have to ask yourself if this kind of thinking is an indication of decisions they will make in the future.  I would think the Republicans will seize on this decision and make a case for votes in the fall.   You combine that decision and the failures of the Dems in Congress and this election may be a lot tougher than the Democrats expect.

They can bash Bush over everything imaginable and they will be right but at some point they have to begin to sell their abilities and not just the failures of the Bush Administration.  The more I think about the failures of the Democratic Congress to stand up to Bush over every issue from domestic spying to Iraq to the Economy then you take this stupid primary strategy and it’s just flat out embarrassing.  I can’t see it any other way. 

And then if you get into the entire Super Delegate issue….I think it leaves many people wanting an alternative to the 2 parties.