Tuesday, September 23, 2008


The questionable collapse on Wall Street of some of the largest players in the banking and mortgage industry, should raise a number of questions, and be a cause, not for panic, but of review, of our personal finances. It has been repeated over and over, that the devil’s is in the details. And it is these details, some glossed over, some buried, and some ignored, that every business, home owner and consumer, should make a concerted effort, to understand. Make no mistake, this bail out, whether you are for it or against it, is going to cost taxpayers for years to come. And if it does not work, it is quite possible, that we could go into a deep dark depression, that will take years to recover from.
There are those who believe we need to do something, if nothing more that to make sure, other countries are paid and paid in full. There are those, who believe, that government should take over the financial markets, and create another layer of government intrusion which would control the financial dealings of everyone.
Why is this happening now?
The money people, those that invest, lend and buy investments, have exceeded their ability, to control their debts. The timing has been off. And much of the money, everyone thought was going to be available, has not made it to the table. The financial markets are out of control, and getting ready to crash. The cause is poor planning, greed, poor timing, and manipulation of investments for the quickest return, with higher yields, which created the greatest risk. And now, things are out of control.
Why are we seeing the biggest of the biggest, now in financial ruin?
The greed factor, along with shaky loans, and housing down turns, caused these giants in the market, to borrow more and more, with the hope, that conditions would turn around, and the loans could be paid back. Such desirable conditions did not materialize, creating a problem of too much borrowing, and then robbing Peter to pay Paul, with promises of tomorrow. Many of the larger firms were left holding the sack, so to speak, and unable to capture the returns necessary, in real money to continue.
The firms were free and easy when the market was working and money was plentiful. And like the ant and the grasshopper story, when hard times hit, they were not prepared to weather the storm.
Will the Government do something? And what are they going to do?
Depending on who you want to listen too, there are some misguided souls, who believe the problem is government, or the lack of government involvement in Wall Street. But the truth, is, if the government would not have tried to be a banker, would not have inflated the currency, and drowned the market in printed money, so the money supply was too plentiful with out much backing, the whole mess would not have happen. What is the government going to do? They will do a fix. Temporary at best, short sighted, and with more political wrangling than necessary. Citizens will find, no end to attachments for the fix, by those whose job it is, to do something.
What started out as a simple agreement last year to lend money to the largest banks and brokerage houses, who were short of cash, turned into a money pit. The loans were not enough.
In March of this year, Bear Stearns, due to greed, poor practices, inside wrangling, found themselves out of options, and out of money. The Feds ( the Federal Reserve) stepped in and arranged a 30 billion loan, which made it possible for a buyer to step in. The Buyer was JP Morgan, the purchase was made with taxpayer dollars, at less than true value of the company and the stock. JP Morgan, made the sweetest deal of any business in 2008.
And now panic has set in, and we see Fannie Mae and Mac, Lehman Bros, Merrill Lynch and the insurance company, AIG. All facing cash short falls. The Federal Reserve, did not have the money necessary to bail out the problems, so they effectively went to the people (the actual Government) and borrowed more money from the treasury. What they borrowed, with what they had already put into this so called saving deal, will exceed one Trillion Dollars.
With this sweet, sweet deal, one must ask, where did all the money go, the companies had? The question is valid, the answer is hard. In truth, some was lost due to shaky loans, inflated home values that did not exist, and in many cases, the money never did exist.
Defaults on loans, foreclosures on homes, due to falling prices, and large unrealistic loans, thereby producing deals, in which home owners owed more on their house, than it was worth. People were falling behind for a myriad of reasons, on every loan from cars, credit cards, homes, business and the personal loan, which had no backing of product.
Now the government comes along with a 700 billion bail out, which will go to one trillion. There are those who believe home owners, should be bailed out of bad loans. And on the other side, are those who believe, home owners are the problem, and they should take the brunt of the financial collapse.
But the main player in all of this problem is greed. And to reward greed, is to go against common sense, and fair play. But the Government, is now in a position, that politically, they must do something. As to what, when and how, remains to be seen. But this is certain, taxpayers should pay attention to the details. They should view with skepticism anything that sounds to good to be true. And the last thing, which is the most important, taxpayers will pay, regardless of the fix. And we can count on seeing increases in taxes, a refusal to continue the Bush tax cuts, and blame from the misinformed on everything, from the War to Social Security, but no one will have the intestinal fortitude, to attack the greed factor, and allow those who are greedy, to lose.


Sunday, September 07, 2008


A recent article in the Deseret News, quotes Senator Howard Stephenson, on how he and other members of the legislature, are going on the attack, to challenge the media, to prove everything the media may say, which could be construed as negative, about the legislature and its members.
Perhaps, the good Senator and his fellow members of the legislature, have forgotten, that deeds in the past, have placed them in this ugly spot light and this jousting with the media, may turn into a run and hide exercise for the legislature.
Recent events in the Legislature by the leadership and others, have demonstrated, that in many cases, the Utah legislature, may be out of touch with the very citizens, they were elected to serve.
And the lack of connection, may be the reason, the Legislature feels picked on and disrespected.
Everyone realizes, that mistakes can be made . Some are by omission and confession on these indiscretions are soon forgotten. But the acts of co-mission, they are different. They should carry a heavy penalty. Those who participate in this activity, should not ask if, but how the media will expose them, along with all the participants. On this matter, the press should not leave any stone unturned in the exposure of who, when, what and how.
Instead of whipping up the members of the legislature to spend their time and energy in a cause that has been brought on by themselves, due to the lack of transparency, closed doors, and deals with lobbyists, there are much better pursuits. And one of those, would be to read the bills. And if the legislative process must go slower to accomplish this, and some of the pet projects do not get approval, then so be it.
A careful review of some of the actions in the past, with the resulting criticism, should offer to Senator Stephenson evidence, the plan to fight the press is ill conceived, and will just lead to more time wasting effort.
The press will do what the press does.
Here is a reminder of some bills passed, which have left a bad taste in the mouths of many and caused the media to snoop around in their microscopic review..
1. How can anyone forget, House Bill 466. Put together by a lobbyist and soul selling attorney.
Citizens in Garfield and Wasatch, have taken the brunt of this misstep. The town of Daniel, has and will be spending in the future, precious tax dollars to defend themselves, from fools, and legislative foolishness. With out going into detail, the biggest disappointment, is the Legislature, who are sworn to defend, to be honest, etc, etc., passed this bill without even a whimper. And when asked why, confessed they had not read it. But it passed unanimously. Enough said.
2. Senate Bill 81 a bill that would start a process of removing illegal activity. In reducing the financial pressures on citizens and the taxes they pay. The bill passed, but then panic set in. The legislature started to listen to some loud but obnoxious voices, who really were short on intelligence and long on words. The legislature decided to allow the bill not to become law until 2009. And in the mean time, a committee was selected to hold hearings through out the state. The Legislature instead of taking ownership, wanted to find excuses to make changes and modifications to placate the selected few. Towards this effort, a preponderance of groups opposed to the law, to start with, were allowed to wring their hands, and bleed their heart at hearings. Very little time was given to those who supported this bill. And in fact, experts, came to town to discuss the experiences in other areas, with similar problems, and they were given five to seven minutes to respond. It became obvious from the beginning, the legislature had no intention of allowing this bill to become law, until it could be changed and watered down.
Gee! Senator Stephenson, you are complaining about the press? What about the citizens, that will be left unprotected, from the horde of illegal’s, coming to our state and taking the benefits, that others have worked so hard to achieve. In this case, the press is your friend, and perhaps you should not bite the hand, that will give you support, from enforcing the important parts of this law.
3. There are many others, but this column would be remiss, if the subject of ethics was not mentioned. Ethic reforms have been on the mind of citizens for a number of years, but low and behold, not on the mind of the Legislature. The fact, that such a bill can not see the light of day, is telling. Gifts from lobbyists and others, seems to be the guiding light as to what laws are proposed. Influence from lobbyists seem to hold more sway than the feelings of the citizens.
So the legislature is unhappy with, what they believe are unfair attacks on their value as a whole, and the leadership? With what has taken place, could you expect anything less?
It seems that perhaps a house cleaning is in order in the next election.
Forget about the press. Represent the citizens. Return the gifts. Read the proposals before they are voted on. Become transparent. Stop the closed meetings. Do the right things for the right reasons. And remember, "just because you can, does not always translate," that you should"
So some still want to do battle with the press? Sometimes the best defense in dealing with the press is the silent treatment. Try it, before you spend too much time on the taxpayers nickle. The voters will be watching.