Tuesday, September 30, 2008

A Short-Lived Victory

I thought You said this was a Slam Dunk... Sorry Boss...

I would encourage all readers to
click this link about the behind the scenes arm twisting of this administration...

A Short-Lived Victory...

I encourage all readers to perform their Patriotic Duty as Americans and contact their Representatives immediately!

When Andrew Jackson threatened to end the Second Bank of the United States charter, the financiers threatened him with a Depression.

I had to pinch myself when the $700 Billion dollar bailout package failed. There was such certainty that this thing was a slam dunk. Evidently the Executive Branch felt as though it did not owe Main Street an explanation. Scare tactics? I don't know... and unfortunately, there is such a credibility deficit with our Chief Executive that people don't trust him. Whether it is Henry Paulson or Ben Bernanke delivering the message, if the message is connected with Bush it is now almost a certain loser. But the President's Administration has been filled with arrogance and double-talk... and while this could truly be a crisis, many think he could be crying wolf... and that ladies and gentlemen boils down to a lack of leadership!

So it appears that the Bailout will be revived in the Senate tomorrow. And, there will be a lot of pressure on the Senators to make something happen. Monday's 778 point decline was a message sent to Congress to pass this bill or else. Now, with only minor revisions, the largest spending package in U.S. history appears that it is in the process of being revived! Senator Dodd (CT)is in the hip pocket of the Banking Industry, and everyone knows it. His remarks to the House were typical... "See how the market reacted... Congress must pass this bill." Maybe just maybe Mr. Dodd, the bill should be revised and reviewed... I am certain this bill has been in the works for quite a while... evidently everyone knew it was coming... so honest money...if not smart money would beg this bill to be combed over. Instead, this was considered Treasury's gift to Wall Street all along... and no one did a thing to change that perception... Sure Main Street would benefit in some way shape or form, but everyone knew who this bill was designed to help. To call either one of the future Presidents of the United States elusive is an understatement.

Main Street wants to see the yo-yos who created this mess thrown out on their left ear. There is no moral compass on Wall Street... and it pains me as a tax payer to see another free ride given to these people. If the shoe was on the other foot, I think we all know where we would stand...

Brian's Bailout Plan
1. A company receiving bailout funds must make full financial disclosure of losses during a market's trading day. This must be done in order to receive any Federal Monies!

2. Remove all CEO's and Board of Directors from companies who are receiving bailout funds.

3. End lobbying by any company receiving bailout funds.

4. All firms receiving bailout monies must utilize STRICTER accounting standards...hell make this rule apply to any and every publicly traded company.

5. Companies must supply stock and warrants to the Federal government as collateral for any loans.

6. Treasury and Congress extend a line of credit to solvent banks... and allow these institutions to service the credit obligations of the insolvent banks.

This list could go on and on but I must make my final pleas to Congress to break-down and revise the bailout plan, looking for a fairer and more creative alternative!

Sources Referenced:

U.S. Constitution
Article I gives Congress... and only Congress the power to collect and appropriate monies.

Andrew Jackson

Bailout Defeated...for Now...

Main Street Turns Against Wall Street

This article by Nine Easton really seems to capture the sentiment on Main Street.
Nina Easton, you appear to have the pulse of Middle Class America. However, Main Street only won round one of this battle. This bill is sure to be revived tomorrow when the Seante is back in session...

Main Street turns against Wall Street
A populist backlash is changing America's political climate. Inflamed by the financial crisis and bailouts, a form of class warfare could haunt business leaders for years to come.
By Nina Easton, Washington bureau chief
Last Updated: September 28, 2008: 11:03 AM ET

NEW YORK (Fortune) -- In one frenzied month Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke remade Wall Street. Along the way they may also have recast American politics. A month of historic government interventions shows signs of triggering a political version of climate change - unleashing a new era of class fury that could hurt U.S. companies, business leaders, and wealthy investors for years.
Will a bailout backlash batter corporate America? Tell us what you think.

"A potential calamity," predicts Democratic pollster Doug Schoen. "If the reactions we're seeing hold, we could have real spasmodic anger directed at businesses and corporations." And the timing will have consequences, says financier and onetime GOP presidential candidate Mitt Romney: "Unfortunately, politicians have seized on the politics of envy," he told Fortune, "and they are stoking it this election year like I've never seen in my lifetime."

Compared to this, Enron was a warm-up exercise. For all the public outrage over accounting scandals seven years ago, the result in Washington was limited to a financial reporting rule that most Americans have never heard of (though many in the business community still consider Sarbanes-Oxley a destructive overreaction).

By contrast, the implosion of Wall Street, followed by Paulson's escalating series of multibillion-dollar rescues, has fired up populist sentiments that were already building in American politics, promising to reshape legislative battles over everything from tax and trade policies to federal regulation. Union leaders like the AFL-CIO's John Sweeney suddenly sound as if they're in the mainstream of public opinion with statements like this: "One thing is certain. No one - no politician, no investment banker, no television commentator, no economist - should be able to say again with a straight face that here in the United States we just let markets do whatever markets do and everything works out for the best."

Washington hath no fury like Middle America scorned - and there's reason to think it will only get uglier. The government's massive new financial commitments will severely tie the next President's hands in addressing middle-class concerns.

"The next President will have to temper expectations a lot," says Middlebury College economist David Colander, "far beyond what either of the candidates has been willing to talk about."

If that means Republican John McCain gives up on letting the upper middle class keep the Bush tax cuts, it also means that Democrats will have to stop promising ambitious spending programs. Barack Obama rightly says it would be "irresponsible" not to review his spending menu - which includes making health care universal - in light of this new fiscal reality. As for problems like Medicare and Social Security? They'll have to wait.


On the cool fall morning that Paulson, Bernanke, and Vice President Dick Cheney first trekked to Capitol Hill to persuade a skeptical Congress to pass an unprecedented $700 billion federal buyout of troubled bank debt, White House spokesman Tony Fratto tried valiantly to get his message out to reporters: "This is a rescue plan for the American economy," he insisted.
The crisis: A timeline

Despite the dire warnings of financial calamity from the White House and a few high-profile business leaders, much of Middle America wasn't buying the story that their own livelihoods were linked to the fate of the rescue package. Instead, average workers read the plan as the "big guys bailing out their friends," says former House Speaker Newt Gingrich, who commissioned a bipartisan survey on the subject. Gingrich's poll - conducted by Schoen and Republican Kellyanne Conway - found that a majority of Americans don't want Congress to use taxpayer dollars to bail out financial institutions, even if their collapse means a rocky ride for investors in the stock market.

The White House was knocked off-balance by potent blowback over the plan - not from the expected (read: liberal) quarters but from shopping-mall America. Morning talk-show hosts like Regis and Kelly shook their heads in disgust. Constituents in rural southern Illinois - a Republican district - phoned in their opposition to Congressman John Shimkus in a ratio of 200 to 1.

While Senators grilled Paulson and Bernanke on one side of the Capitol, House members on the other side were offering colorful translations of their constituent views, calling the plan "socialist" and accusing Paulson of handing over "the keys to the liquor cabinet," as Democratic Texan Lloyd Doggett put it. Within three days more than 2,000 people had logged their mostly angry opinions on CNNMoney.com.

During the unveiling of the plan, Paulson and Bernanke had exuded confidence that everyone would understand the urgency and that Congress would approve it quickly. "If it does not pass now," Paulson intoned, "then heaven help us all." They banked on public fear of a financial crash; instead, they ran into a fear from lawmakers who had to face down the folks back home angry at having to bail out Wall Street's masters of the universe.

Capitol Hill brimmed with calls for limits on pay for any executive who wanted taxpayer help. Warren Buffett, with his $5 billion bet on Goldman Sachs (GS, Fortune 500), emerged as an example of what the government could do for taxpayers if it drove a harder bargain with the banks to collect a piece of the upside. Bush's team was already facing criticism for playing the fear card, but to get his package through, the President had to take to the airwaves to make concessions and warn his nation of doubters. "We are in the midst of a serious financial crisis. Our entire economy is in danger."

Sunday, September 28, 2008

Figures Dont Lie... But Liars Figure...

We had a neighbor who was one of the sharpest people I have ever met. Street wise! He was the general manager of a Buick dealership for 25 years. Not only did he know how to sell himself, but also his ideas. He had an uncanny ability to read people's thoughts and emotions. He knew exactly which buttons to push in a sale, and when to say nothing. In the day, he had won GM's highest distinction "The Mr. Goodwrench Award" seven times! This award was given to the best GM dealerships throughout the country! I learned more in the two years he was my neighbor, than during any time of my formal education.

"Figures don't Lie... But Liars Figure."
One Thing Chuck told me was that "Figures don't Lie... But Liars Figure." And I could only apply this to the monkey business that has our Congress racking their brains, trying to figure a way to save Wall Street... and to a lesser extent save Main Street. Anytime Lobbyists are helping design a plan that works best for them, you know you are in trouble.!!!

How much is $700 Billion anyway?
This was a fun exercise. If one were to compare a every dollar in this bailout package to a second in time... How long ago was a billion seconds?

1. 3600 seconds in one hour.
2. 8,6400 seconds are in one day.
3. 604,800 seconds in a week.
4. 31,536,000 seconds in a year.
5. 311,536,000 seconds are in a decade. (A decade ago Clinton was still President.)
6. 3,153,600,000 seconds are in a century.(Model A Ford was going into production.)
7. 31,536,000,000 seconds are in a millennium. (The Middle Ages in Europe.)
8. 63,072,000,000 seconds ago Jesus walked the Earth...
9. 315,360,000,000 seconds are in a 10,000 year period...
(10,000 years ago we were in the Stone Age.)
10. 701,925,200,000 seconds equals... 22,575 years ago

Other interesting number to Digest
In his three year tenure as CEO of Goldman-Sachs Henry Paulson earned $110,000,000 million dollars. That equals $33,333,334.00 dollars a year. (This is well over the one dollar per second rate!)

Last Rites
WaMu CEO Alan Fishman looks to collect $18,000,000.00 for reading WaMu its last rites. Fishman was on the job for less than three weeks while WaMu finished its collapse. This equals out to an average of $6 million dollars per week, or roughly $750,000 dollars per day. Not bad for a company that went bankrupt!!!

Friday, September 26, 2008

The Biggest Fix ... and the D.C. Reverse

The 1919 World Series was a fix. The Chicago White Sox were clearly the better team. Everybody knew it. They knew it. The fans knew it. Cincinnati knew it. And the bookmakers knew it! That is why everyone except a chosen few few laid their money on the Black Sox. The bookmakers made a killing on this series. After all, when you are betting illegally, who are people going to tell when they are cheated, the cops? Even though the players were in on the fix, they never saw a dime of the fix money. Soon thereafter, most of the Sox team was suspended from baseball for life.
Wall Street could be much the same way. Under any other circumstance WaMu's failure would have cost the stock market over 500 points. The collapse of Lehman and the endless list of names like AIG, Merrill, etc. should have sent the market below 8000 points. Even though the last squeak from NCC may well have been heard as the stock was halved at one point today in trading. Wachovia has been racing it to the bottom. Yet, the bailout. The big, BIG , Bailout seems to be the lynch-pin for Wall Street... aside from a rate cut from Fed, everything is riding on this bailout plan. It is a chance to wipe out debt by simply placing it on the American taxpayer... and what more of an American thing can one do than that? Should this scheme come to fruition, I could well have missed my opportunity to play the surest thing since the Reds in the 1919 World Series!

The D.C. Reverse
If I didn't know any better, I would say that the Democrats have been had over the past couple of days. I would not normally say this, but I have become increasingly suspicious that the bailout plan has taken on a very political nature.
President Bush is the most up-popular President in recent history. He could well go down as even being more disliked than Jimmy Carter, and that is saying a lot! Bush's (and I used the possessive lightly) plan has brought on an onslaught of public outcry.

When Bush invited the two candidates to the White house for that useless photo op, something else happened as well. Obama finished rallying the Democrats to a quid pro quo. Passing some version of the bailout for Congressional oversight, limits to CEO pay, and a future stimulation package. It was a SLAM DUNK! Evidently, McCain and the Republicans had something else up their sleeve... a different plan. Not only was this plan different, it used less taxpayer money!

The irony is that Democrats are now supporting a watered down version of President Bush's Bailout, and the Republicans have left the Democrats and Bush holding the bag. If the bill passes, it will be the Democrats who supported Bush's plan... and the D.C. Republicans can stand back point fingers and say I told you so.

This could well be the breaking point of the bailout plan. More than likely, it will be an issue of contention tonight at the debate... and if it appears that each candidate is positioning themselves on this issue... the bailout plan could be in trouble! And if the Democrats are tagged with this bill, there will be hell to pay.

Consider the following:

1. Democrats are associated with a Bush Bailout?
2. Obama wanted to get this thing and focus on the Presidency...
3. McCain gets the White House...
4. The rich get their HUGE tax break.
5. And Wall Street gets their $700..I mean $1.4 Trillion dollar garbage can!

While I hope Congress takes their time and drafts a bill that is worthy, I am convinced there will be political fallout on this bill. And if things go down this way, we will all be witness to the D.C. Reverse Republican style!

P.S. I received a letter from McCain. It was so generic that it really wasn't worthy of publishing...sorry!

Wednesday, September 24, 2008

Let Them Eat Cake... And the $700 Billion Dollar Dumpster...FANTASY SPORTS SOURCE

Let Them Eat Cake...
As I watched the Senate Banking Committee tear into Paulson time and time again, I quickly realized that Democracy was at work. It was more than obvious that my fellow countrymen had raised their voices to be heard. An avalanche of phone calls, emails, and telegrams have flooded Congressional offices on Capitol Hill. The American people smell a rat... and while some of the people in Congress would gladly work with and feed the rat, it is obvious most would not! Or, at the bare minimum it was a great opportunity to show the world what a rat looks like!

We are reminded of the historic scene when Bread Riots took place in France prior to the French Revolution. Inside the castle walls, Marie Antionette asked a maidservant why the people in the streets were rioting. The servant responded that people were starving because there was no bread to feed their families. Marie was rumored to have said "If they don't have bread, let them eat cake." And we know where that kind of attitude got Louis and the Hapsburgs!

The Executive Branch of government clearly underestimated the American people, and their out-cry against the big BIG BAILOUT! Whether it is a COMPLETE DISCONNECT from the American people, or in-difference to the American people, Bush was too quiet for too long! His popularity has plummeted to an all-time low. More and more people have come to question his leadership. Maybe it is not the fact that a bailout of some kind may is a viable solution to this problem. Evidently, tax-payer monies will be used to "help" those who in many cases, are suffering from a massive case of financial over-indulgence. More importantly, it appears that the people do not trust the players who would carry out this plan. Think about it... Wall Street, the institution which represents some of the best minds this country has to offer has time and time again shown the U.S. taxpayer that they are not above reproach. The core of this problem is a flaw in human nature...our values as individuals and as a nation are on the line! Is this the type of America we hope to pass on to our children?

The 10 Commandments, are conveniently remembered and forgotten. Yet, people know right from wrong regardless of expediency or personal gain. Consider Commandments 8,9,and 10:

8. Do not steal! (From God, your nation, your neighbor, and the things of which you are supposed to be a steward.)

9. Do not lie or bare false witness against your neighbor! (The unfortunate fact is that some people lie so much, they do not know what the truth is...especially when it comes to saving their own skin or making a gain of some type.)

10. You should not covet! (Wanting better things in life is not a sin, but the obsession of wanting things is. It is safe to say that people wanted the good life and were willing to do anything to get it. And that dear readers is a sin!)

The violation of these Commandments could at the very core, be at the center of this Big, BIG, BAILOUT debate. While action may be needed, people do not want to reward those who have willingly broke these basic guidelines with no sense of remorse. What's to stop this whole fiasco from happening again when there seems to be no real punishment or even admittance of guilt? My family prays for this country every day... we need it!

The $700 Billion Trash Can...

The bailout plan, in its' most basic form establishes a giant garbage can for bad debts. The Executive Branch, Paulson, and Bernanke Bailout Bill NEED this garbage can to wipe out Wall Street's debt! Preferably, it is a garbage can that can hold $700 Billion dollars of debt. Sure, we are told that this publicly funded garbage can could well save the U.S. economy from collapse. But everyone is pretty convinced that law-makers could very easily create a bigger and deeper garbage can in the future. If we were to use the Resolution Trust Corp. as our model, we can make some basic assumptions. During the 80's S & L Crisis the RTC was a vehicle to store "inherited S&L " government debt. It had a $60 Billion dollar cap. When it was all said and done, the garbage can had over $120 Billion dollars of bad debt placed in it. In modern times, $1.4 Trillion is not out of the question!!! But remember, it is different this time... I want so badly to believe these people. But, I go back to the days when Andrew Jackson "Killed the Bank". Jackson...The President of the United States was threatened with an economic depression by those who controlled the bank. Whether you like Jackson or not, we can all appreciate someone who stood up to sinister forces in the face of economic loss. I wonder what Andrew Jackson would do about this mess?

Fantasy Sports Source
For those who are looking for my free college football selections, they can be found at: FANTASYSPORTSSOURCE.COM Currently I have a 12-3 record against the point spread. The complimentary selections will be updated this Thursday. Ideally, I will find a partner who is interested in helping me develop this site as it already gets a considerable amount of traffic.

Monday, September 22, 2008

Urgent Message from Senator Sherrod Brown!!!

Dear Mr. Davis:

Thank you for expressing your concern with the financial sector.

I agree that we need to be careful not to take steps that would reward the banking industry for taking risks. These institutions made unwise decisions, and the taxpayers should not be responsible for bailing them out.

This administration has danced to the drumbeat of deregulation for the past eight years, and now everybody is paying the price. The economic instability directly affects thousands of American jobs and the savings of countless middle class families.

In the days ahead, we need to focus on containing the damage as much as possible. In the months ahead, we need to take a fresh look at how we set limits on financial markets, not just to prevent damage from spilling over into the rest of the economy, but to protect financial markets from overheating.

As a member of the Senate Banking Committee, I will fully support efforts to investigate these institutions to determine what went wrong, so that we can begin to move forward in the right direction.

In addition, I will oppose any golden parachute severance payments to the CEOs of these companies, who should be held responsible for their mistakes. The Federal Housing Finance Agency recently barred these payments to the CEOs of Fannie Mae and Freddie Mac, and I will work to ensure that this pattern continues. Above all, I will work to protect the economic interests of the average American -- instead of the few who have been favored by this administration.

Thank you again for contacting me. I will certainly keep your views in mind as the Senate discusses ways to remedy the financial industry.

Sherrod Brown

Sherrod Brown once again responded to my letter of inquiry. With the high degree of uncertainty radiating throughout the nation, the Senator from the Great State of Ohio has come through. I agree with him on 80% of his platform...but I am certain I will have his campaign board in my front yard the next time he runs for office. To be quite frank with you, I had no idea that he was on the Senate Banking Committee. I will take Senator Brown at his word...as thus far he has proved himself a man of character and responsibility.

Fellow Democrat Barney Frank was on Bloomberg TV today stating "Henry Paulson can be as pushy as he wants to be, it does not matter what he thinks or wants...we make the laws!" I am also quite comfortable with Senator Richard Shelby from the Great State of Alabama. He appears to be a bit of a maverick (like McCain)to thumbing his nose at the Republican Party in general (when it is not in the best interests of the American people), and the President in particular. I am still gravely concerned about the corporate interests of Senator Christopher Dodd. Evidently Bank of America was instrumental in writing the "last Housing Bill... and Dodd is in the banking lobby's pocket! I will continue to believe this until I am proven wrong! In the meantime, we can only hope that corporate interests are squeezed in this deal. After all, they are not in position to call the shots...and we all know what happened the last time Congress was rushed into a decision!

$700,000,000,000.00 bailout... I don't believe it for a minute. Once the government's purse strings are open... these banks will really fess up to the amount of toxic paper they are holding...and it is a @#$% more than $700,000,000,000.00. My prediction is closer to 1.2 trillion.

I will also have you know that I have sent my original letter of concern to Senators McCain, Obama, Shelby, and even Dennis Kucinich... and I never thought I would send Representative Kucinich anything... However, he might be the best ally that middle class America has in this one.


1. Short the dollar long range.
2. Oil which is priced in dollars will look more expensive...but in reality, it is just that our dollar is a lot weaker and buying less.
3. Good as gold... keep an eye on the dip...
4. natural gas...
5. oil drilling equipment..to counter act the perceived increase in oil, off-shore drilling will not only be requested...it will be demanded!

Saturday, September 20, 2008

A Modest Proposal: re Bailout Plan

Dear Congressmen LaTourette, Brown, and Voinovich,

I've been doing a bit of thinking about this bailout plan that Congress and the EXECUTIVE branch of government is cooking up. I don't like it. However, it appears that it is not a matter as if it is going to pass, but more like when is it going to pass. Guesstimates range that this package will run the taxpayers anywhere between $700,000,000,000.00 and $1,500,000,000,000.00. Since Congress and Treasury/Fed (acting on behalf of the Executive Branch) are hatching out a plan, I thought it might be helpful to "bounce" a few ideas.

1. Jail anyone who was responsible for reckless financial behavior on Wall Street. This would apply to any company who will receive Federal monies. This would include: CEOs, Boards of Directors, and Company Officers.

2. CEO's and company officers in every financial institution where there is distressed debt should return all wages and salaries for the last 10 years. This will be seen as a act of good faith to the taxpayer.

3. Replace all standing boards of directors on any financial institution that would be insolvent without the government bailout.

4. Companies participating in the Bailout Plan should produce common shares payable to the U.S. government on a percent basis. (i.e. If Bank of America were to lay-off $70 billion in bad debt, then they would have to "give" the Federal government $70 billion in preferred shares.)

5. Distressed homeowners who receive help in this Bailout Package would preform 40 hours of community service for every $1,000.00 in "forgiven" debt.

6. Interest free loans for anyone who currently owns a home, and has not been late on any payments. There is a glut of expensive homes which need occupants. The government would greatly benefit by having RESPONSIBLE homeowners upgrade, and irresponsible homeowners downgrade to our old houses.

7. Limit the Fed. through regulation.

8. Re-organiztion of Department of Treasury...with additional Congressional oversight.

9. Balanced budget amendment.

10. A public apology from every member of Congress, Department of Treasury, the Fed , and the executive branch.

11. A new version of the Glass-Stegall Act.

12. Since this Bailout Plan is designed to save the richest 2%-3% of Americans, I propose increasing their tax rate back to the 70% level.

13. End lobbying of ANY institution that is subsidized by the taxpayer.

14. Financial institutions who receive help in the government BAILOUT should be forced to end all stock options, and utilize those funds to convert these financial institutions to acceptable accounting practices.

15. Only the losses claimed by financials and that were "marked to market" on the books can be claimed. Of course, these losses would have to be claimed before the short ban was put in place. Complete disclosure right?

While the negotiations are being considered, I hope you take the time to read these ideas as possible resolutions to this serious crisis.

Respectfully yours,

Friday, September 19, 2008

The Bush White House: Financiers Gone Wild

The Bush Presidency: Financiers Gone Wild

Those who are willing to sacrifice liberty for security shall have neither. –Ben Franklin

Throughout U.S. History, there have been several occasions where liberty has been sacrificed for security. The most notable are The Great Depression and Word War II. Today, we can add the Bush White House to the list. Under President Bush’s watch, a number of moves were made which have compromised the U.S. Constitution, and affected the liberty of all U.S. citizens. While many of these moves were made in an attempt to avoid financial panic, it is clear that two entities have increased their powerful role in the U.S. government. This essay will examine the increase of power and influence of the Department of Treasury and the Federal Reserve.

While being vigilant of a U.S. economic, there are several moves which have increased the power of his Executive Branch, and jeopardized the inner-workings of U.S. democracy. When Henry “Hank” Paulson was placed at the helm of the Department of Treasury, a true Wall Street insider was given the reigns of power. Paulson was appointed by the President, and confirmed by the Senate. Under no circumstances am I critiquing Paulson the man, however one must separate the man from the financial policies of his Treasury.

Likewise, his counter-part Ben Bernanke who once espoused “Fed transparency” has gone to great lengths to mask the Federal Reserve behind a heavily veiled curtain. Bernanke has willing admitted that Federal debts fall squarely within the powers of the executive and legislative branches. It appears that his tenure as Fed Chairman has been nothing short of reckless for the U.S. taxpayer, while beneficial to Wall Street. Today, the U.S. taxpayer is faced with a new TRILLION dollar debt. A sign of financers gone wild!

Moral Hazard and Malfeasance are the two most common themes that have been used during the tenure of the Bush administration. And, it becomes increasingly apparent that preservation of the U.S. financial engines have taken priority over the interests of the U.S. Constitution and its’ citizens. The following time-line demonstrates this case:

Initiative Date
1. Super SIV October 2007
2. Term Auction Facility December 2007
3. BCS/JPM bailouts March 2008
4. Primary Dealer Credit Facility March 2008
5. Reverse MVS Swaps April 2008
6. Investments and Collateral September 2008
7. Administrative Repeal of 23A September 2008
8. Nationalization of AIG September 2008
9. Expansion of Federal Debt
w/o Congressional Approval September 2008
10. Central Bank liquidity injection September 2008
11. Re-Invention of the RTC September 2008


Banks are considered the financial engines of growth and prosperity in the United States. Yet, all business should be tied to basic risk-reward formulas. The time-line suggests a recurrent theme of risk aversion and market manipulation on behalf of the executive branch of government, and big business. The executive branch has allowed Treasury and the Fed to increase their role, without specifying a limit to their powers. Every Fed and Treasury move on this time-line was designed to save the financial institutions of the United States. While the Bush’s Presidency has gone to great lengths to “improve” and “save” financial institutions from failure, American Democracy has clearly suffered. The fear of collapse has had the effect of near total capitulation from the U.S. government. There has been little to no Congressional opposition to the bailout of Wall Street on the taxpayer’s dime. Instead of widespread outcry about executive branch abuses, people have concerned themselves with fear from loss. Fear sells and the executive and legislative branches of government have bought into it. For many, they have scarified their liberty for temporary financial security.


Desperate times call for desperate measures. However, history clearly demonstrates that desperate times also allow more sinister forces to expand powers, and even seize absolute power. This best demonstrated with Julius Caesar and the Roman Republic as well as Hitler’s Rise to Power after the collapse of the Weimar Republic. Remember, Hitler came to power on the pre-tense of restoring order. Hyper-inflation had effected every German, but Hitler would save them. The names and dates change in history, however the themes hold true. While the executive branch of government has encouraged absolute behavior, and Congress has rubber-stamped these moves as “necessary and proper”, it is important to remain vigil of the long-term precedents established by such maneuvers. There has never been a greater time to become politically active and monitor the movements of our government.

Wednesday, September 17, 2008

Ye of Little Faith... Systemic Risk... GGP... Holdings...

Ye of Little Faith
In the book of Matthew, Jesus healed a man with leprosy, the centurion's servant, and countless others. Still, Jesus' disciples were still worried when a furious storm caused the waves to leap into their boat.

He (Jesus) replied, "You of little faith, why are you so afraid?" Then he got up and rebuked the winds and the waves, and it was completely calm.
Matthew 8:25-27

As Christians, we put faith in God and his son Jesus. Have faith when all things are uncertain. We know that nothing happens without God's will.

Systemic Risk

The financial storm on Wall Street continues to batter markets. The faith that people have put into governments, companies, chance, and wit are being tested as well. And those who have put their faith in the genius of Wall Street have been punished. The government has once again needed to bailout another business. This time it was AIG. I guess everyone knew that a collapse of AIG would have effected everything from LIBOR rates to personal retirement accounts. Literally, it was too big to fail! This was simply another one of Roosevelt's New Deal powers given to the Federal Reserve as a lender of last resort. In this case, AIG received an $85 billion dollar bridge loan to keep the ship floating. Once again, this loan helped "save" shareholder value, and the management who were in many ways responsible for this debacle. Now that the government effectively owns AIG, my question is are these now considered Federal employees? I think we all know the answer to that one...

I was able to take a 37% profit on GGP yesterday. While I still believe that the slope of this market will be heading down, not up, it only made sense to take some of my investments off of the table. Although GGP was trading at 4.40, I put a limit order in at 4.80...and was shocked that it actually went through! This might have been one of the few times I have sold at the spike up. The University of Wall Street has taught me several lessons over the years!

I am still holding BAC, COF, HBC, and a basket of SPDRS in consumer cyclicals and manufacturing. Almost all of these holding are in positive territory again. It is just a matter of finding the right time to take profits, while preserving a downward hedge in this market. While my true faith is in God, I have reason to believe this market has room to fall. Monday was just a taste of the volatility on Wall Street. More will follow.

Sunday, September 14, 2008

Response from Sherrod Brown... Another 3-0 Weekend!!! LEH... Am I a Patriot?

Dear Mr. Davis:

Thank you for contacting me regarding the recent government takeover of Fannie Mae and Freddie Mac.

The U.S. Government recently seized control of the mortgage companies, placing them into a government conservatorship under the Federal Housing Finance Agency (FHFA). Congress gave broad authority to the FHFA and the Secretary of Treasury in July because it anticipated that the two companies might be unable to recover on their own given the downturns in the housing and credit markets.

While I had hoped that further intervention would not be necessary, Fannie Mae and Freddie Mac play too big a role in our economy to allow them to fail. They own or back more than $5 trillion in mortgages, and play a vital role in keeping mortgages affordable, particularly in tough times like todays. But the particulars of the Administration's actions deserve close scrutiny.

Over the weeks and months ahead, we will need to consider how to restructure these companies for the long term so that they can fill the important function of maintaining mortgage lending at reasonable prices without putting taxpayer dollars at risk.

As this issue continues to be discussed, I will certainly keep your views in mind. Thank you again for writing.

Sherrod Brown

My Take
Sherrod Brown is 3 for 3 with me. I have written three letters and have received three responses from him. It just goes to show readers that at least somebody is working in D.C.. LaTourette has responded to me once, and that was to a hand written letter I delivered to him in the Capital Rotunda. Evidently, George Voinovich has lost my email address, my snail mail address, or just doesn't care to respond... Maybe that is a signal that he will not run again when his term expires.

I will send a follow-up letter to all three Congressmen suggesting that a formal investigation be made on the collateral that banks are using when they access the discount window. If... if Obama has any chance of winning this election, his camp will need to demonstrate a degree of collusion between the Treasury Department, Wall Street, and the big banks. Now that is a debate topic or an advertisement I would like to hear.

Another 3-0 Week
For those of you who are following the Tiger Coach's Picks, you were treated to another 3-0 sweep as Missouri made another case for a top five rating, Penn State whipped the hapless Orangemen of Syracuse, and the Wisconsin Badgers won outright over Fresno State. This brings my season total to a 7-2 mark. The dime better is up an easy 48 K!!!

This could well be the last call for LEH as traders prepare to push it right over the cliff into insolvency. If that were to happen, LEH is guilty of falling on their own sword. Nobody, and I do mean nobody caused this to happen except Fuld and friends. As mentioned in my previous post (The one that has the blond saying buy me), there have been way too many lookers and no takers. Three solid days of meetings this weekend with Treasury and the NY Fed, and still no takers. Either the books are CHERNOYBL level radioactive, or the street is getting one pulled over on them. Futures are down over 350 points as I write. However, I would not be surprised if an announcement is made before the market opens to save LEH... and give all the Asian traders a bath!!! If that happens, you heard it here first!

Friday, September 12, 2008

Heavy Metal... Options are Funny... and other Wall Street Observations

While some companies are interested in dating Lehman Brothers, no one wants to marry it! Could it be that there is too much baggage for a long-term relationship?

Heavy Metal
I moved 95% of my funds from the VGPMX fund, leaving only a a pittance to keep it open. I bought the lion's share of this at approximately 13.00 per share. I enjoyed a wonderful ride up to 40.00. Then I witnessed price deterioration to 24.00, where I took profits. Oil prices appear to be the culprit along with new found interest in the U.S. dollar. Today, I noted that the price went up 1.35 today... but it could have easily dropped another 1.35. And, there is no sense in second guessing that move. When the time is right, I will move funds back into VGPMX. (Please note that the top holding of this fund include nickel, aluminum, and some gold).

Options are Funny
Looking for Buyers could become the slogan of Lehman Brothers. One can only think that Lehman's books must be outright SCARY! Just like girls in high school and college that bad a bad reputation, everybody wanted a date... but no one wanted to marry them. This week the South Koreans walked... and we all know that South Korean Banks are always looking for quality for the cheapest price. Now there are rumors that Bank of America and an unnamed Chinese Bank are mulling over the remains of this once proud institution. Yet, in an uncanny move neither the Fed nor treasury have anted up incentives for BAC to make a move. It is a take it, or leave it scenario. We are reminded that Bank of America has already swallowed Countywide. It has yet to announce loses on the Alt-A portfolio... and at the bare minimum is facing over a billion dollars in write-down from commercial lines! It sounds like a round of hemlock for all!

Stock Market Commentary
Word is that AIG will announce their turn-around plan on September 25th. Down almost 30% alone today, it may be prudent for AIG to move up their announcement. At this rate, there may be no share value of AIG left by the 25th. With share prices dropping so low (Merrill Lynch is now considered a bargain as well) it is fascinating that no buyers are lining up. It makes you think that whatever debt problems that are buried on the books of these companies, it must be UGLY! The latest Market Watch story quote a source in AIG claiming that "It's all on the table." An observer might conlude that it was on the table, now AIG is in the toilet just waiting the flush.

P.S. No word for any of the representatives from Ohio. However, Sherrod Brown has had the best track record of correspondence.

Tuesday, September 9, 2008

Could Machavelli have worked on Wall Street... College Football preview...

Man looks in the abyss, there's nothing staring back at him. At that moment, man finds his character. And that is what keeps him out of the abyss.
- Lou Mannheim, Wall Street, 1987

Several years ago, my barber made small talk about the World Com collapse. He told me that a lot of average everyday people lost every cent they had. He went on to tell me that the same thing happened at Enron. I told him that I don't know how people can sleep at night knowing that they are bilking billions of dollars. His response was simple. "Don't you realize it, the people on Wall Street don't worry about stealing, as a matter of fact they lie awake at night thinking of ways to do the stealing."

During the Renaissance patrons encouraged enlightened thinkers. After all, it was a time not only to see the world as it should be, but more importantly it viewed the world as it really was... Nicollo Machavelli understood how the world really worked. He had been involved in public service for a good portion of his life. After working for a variety of rulers, he wrote the treatise The Prince. While it is surely over-simplification, one could argue that the premise behind the novel would be that the ends always justify the means. Or as long as the goal is achieved, then it makes no difference as to how the goal was accomplished. That information is secondary and useless.

It has become increasingly apparent that Machavelli could have easily ascended to the upper echelons of public and private service if he were alive today. Where can a person get paid $150,000,000 for running a company into the ground...pushing it to the verge of bankruptcy. Note that the CEO's of Fannie and Freddie do not face criminal charges. The board of directors from both companies are still sitting! Taxpayer dollars are now being utilized as the backstop. Wall Street is currently suffering from a credibility crisis. It will continue to worsen until self-policing and ethics are rediscovered. Until then, hang on to your portfolios, it is going to be a wild ride!

College Football Preview
Year record 4-2

Games I like...

1. Missouri -25 to Nevada
2. Penn State -26 Syracuse
4. Wisconsin +2 Fresno State

Sunday, September 7, 2008

Open Letter to the Representatvies from Ohio... Other Comments... College Football

Dear Rep. LaTourette, Senator Voinovich, and Senator Brown,

The deed is done. The U.S. government has finally taken over Fannie and Freddie. The tax payer is now on the hook for billions if not a trillion dollars. Most of those who write to you about this subject, will have had little or nothing to do with the collapse of Fannie and Freddie. Yet, we are now on the hook for financial obligations. I will pay this debt for the rest of my life. My children will pay this debt for the rest of their lives. And there is a strong chance that our grandchildren will inherit these debts as well.

Come Monday morning, my American History students will ask what is going on with the financial system. Most of them come from upper middle class to lower middle class families. I will do my best to let these students know that this bailout was necessary… that our government has the flexibility to address major financial turmoil, especially if it will disrupt our entire economy...the Elastic Clause in the Constitution covers that much. But, students will want to know how it happened… why it happened… and where did all of that money go? How will it effect the value of the U.S. dollar? Why are the tax payers paying the tab? Does this type of stuff impact the American Dream? Those will be the tricky questions!

I hope, at the bare minimum there is an investigation into the crooks who are robbing this country blind! These characters make Jesse James and Billy the Kid look like amatures. The FDIC is now in the midst of seeking a line of credit from the Department of Treasury… hopefully they are not anticipating a rash of bank failures. The discount window has been opened to a number of banks where the Federal government is receiving suspect collateral. Ben “Bailout” Bernanke refuses to do anything except fire up the printing press and print more money. Facing a period where hyper-inflation, or worse deflation can literally wipe out the savings of millions of Americans, Bernanke should be raising interest rates. I’ll be curious to see how SEC Chairman Cox decides to handle his new requirements on equity trading. It is my concern that the oligarchic forces have more of an influence than anyone really knows. Remember, the Bank of America actually wrote the Housing Bailout legislation! That’s just CRAZY!

Rep. LaTourette, it is my sincere hope that formal investigations and hearings are brought forth on these issues. If and when criminal wrong doing is found, then it should be prosecuted to the fullest extent of the law. Furthermore, as in Enron… World Com, and Tyco, monies should be returned from the vicious predators that prey on our citizenry. The aforementioned names maybe dime store robberies in relation to the theft that is taking place right now. Many of these characters do not know, or do not care about the perceived social contract that exists in the United States.

Thank you for taking the time to read this letter. It is written in the best interests of the American people, and the citizenry from the Great State of Ohio.

Your Respectful Constituent,

Brian A. Davis

Other Comments
If we are to have faith in the Federal government, then it is important to maintain a degree of transparency. It is Congress' job to appropriate, regulate, and when needed tax the citizenry. The government then needs complete faith in the U.S. dollar, our institutions, and our debts. The market will react wildly to the news of the bailout... at least at first. However, there will be a higher degree of soul-searching on this one. This will lead to DOW 13,000 or DOW 9,000. The overt efforts to solve a financial crisis may in the en be the roots of a more systemic issue. We'll know by the end of the week!

College Football
Ole Miss was the only winner this weekend as Pitt. and Navy came up just short of the point spreads. This puts the current season record at 4-2 v. the Las Vegas Line.

Thursday, September 4, 2008

College Football Selections... Market Commentary... Is this Guy for Real?

College Football September 6, 2008

1. We like Ole Miss plus the points against Wake Forest. The Rebels are an 8 point dog to Wake. However, we are confident that Ole Miss will come to play. Pick Ole Miss.

2. The Naval Academy always puts together a great team, even with the rigorous requirements of this institution. The MAC (Mid American Conference) has a tendency to under-estimate the academy teams including Akron v. Army, and a beating by the Midshipmen of Bowling Green several years ago. We like the Middies plus the points.

3. Our final pick is Pitt. -13 to Buffalo. Word is that Pitt. has had one heck of a week practicing since the Bowling Green loss last week. Bowling Green is better than they appear, and Pitt. is not as bad as they played last week. We like Pitt. minus the points to a team that still seems to be adjusting to D I style football.

For our weekly news letter contact us by submitting an email address to our post section. You will have our complimentary picks sent right to your email address free of charge!

Market Commentary
I have to admit it, after seeing the retail numbers this morning followed by an employment report that would make Ebenezer Scrooge's toenails curl I thought we would see another 300 plus point move to the upside. Why you may ask? It is quite simple, it would be just one more irrational move in this stock market. After all, we have seen up ticks for the past six weeks on headlines such as "FDIC seeks line of Credit from Treasury", "Banks show record borrowing from the Discount Window", "List of Banks in Jeopardy of Failing Rises to 117", and "Lehman still shopping for a Buyer."

I am an optimist by nature. I have never been one to see doom and gloom in the world. But, I do know a bad market when I see one. And this market qualifies as the perfect storm. This is not to say that the U.S. and world economies are not going to pull through this economic mess they have created. Quite simply, it is the acknowledgment that 1. there is a financial crisis... 2. that the financial crisis will be better weathered when companies and governments come clean as to the amount of damage that has been done. That is where the real confidence in the economic markets come from. Not digging holes and burying bad news like it is not there. Rather, owning up to the truth and believing that transparency is the best thing a company let alone a market place like Wall Street can have. With the onset of emerging markets Wall Street needs to separate itself through honesty. Let the rest of the world be the liars.

Is this Guy for Real?
Jim Cramer might as well run for political office with some of the information he is feeding his viewers.

1. For instance, the claimed that the housing bottom would hit sometime in the next 300 days. Tell that to the people who were part of the unemployment statistics today. They may beg to differ with you Jim.

2. The FDIC has a plan to buy the "bad assets" of companies. Not at this point in the election cycle Jim. The government is supposed to look out for the best interests of the citizens, not the doe-does who created this mess.
3. Gasoline prices are coming down which will be like a tax cut. Jim, don't you get it? There is a complete disconnect between your world and the average person on main street. Let me know when it hits 2.50

I guess it is Jim Cramer's job to instill confidence in the market. But I simply want to remind listeners that this guy is right sometimes, and wrong sometimes. Just like the rest of us. Jim, you would better serve your viewers with a plea to Wall Street to simply tell the truth as opposed to prolonging the agony. Keeping Wall Street the world's premier market place is in the best interests of everybody in the United States.

Don't worry folks Ben "Bailout" Bernanke will probably make himself available sometime tomorrow to tell us everything is o.k.. Who knows, maybe Hank "Homer" Paulson will make special arrangements for the credit cards companies to have access to the discount window. Remember, it that happens you heard it here first!






Monday, September 1, 2008

I Killed the Bank... Economic Commentary... College Football

Old Hickory, that's what people called him. But most of us know him as Andrew Jackson; the seventh President of the United States. The last President to have served in the American Revolution, he actually received a scar on his face for refusing to shine a British officer's boots. Talk about paying the price, Jackson's entire family died of war related issues. Having no political connections, Jackson went on to study law. He served in the Indian War, but really got his claim to fame for defeating the British in the Battle of New Orleans. One thing was for certain, Jackson was a man of high moral standing. Once he was President of the United States, he took on the interests which which appeared to be oligarchical in nature... you guessed it, the National Bank. Feel free to watch the following video on Jackson's role in destroying the bank.
I Killed the Bank

Economic Commentary

Speaking of Banks, the following map will show locations where banks have failed in the United States. Disturbing... yes... but what is more interesting is the fact that FDIC, a mono-line insurer is currently in the works of establishing a "line of credit" with Treasury should its' funds be exhausted in a rash of bank failures.


Maybe a more telling sign of trouble in River City was the latest report from the Bank of International Settlements which demonstrates a net cash flow out of U.S. banks. Only one year early, the trend was exactly the opposite. Fueling the fire are increasing spreads on credit default swaps, a downward trajectory in equity prices, and continued funding pressures in inter-bank exchange rates.

College Football...
3-0 is not a bad way to start the season as I gave readers three complimentary picks. BC over Kent minus the points, S. Miss minus the points, and the knock out punch of the day was Alabama as an outright winner over #9 Clemson. Like I mentioned in my original commentary, Clemson has a tendency to stumble out of the gates.

While I have not made any picks this week, I am looking at five games:
1. Ole Mississippi +8.5 to Wake
2. Pitt. -13 to Buffalo
3. S. Miss +19 to Auburn
4. Akron +5 to Syracuse
5. Navy +8 to Ball State.

I will have my complimentary college selections in by Friday.