Sunday, March 08, 2009


It is time to stop the music and quit dancing around the earmark (some call pork) and spending bill now being considered in Washington. President Obama committed to all of us that he would not allow "earmark spending". Well, it should not matter how or why or when the "earmarks" got into the current spending bills they should not be allowed if President Obama truly wants to keep his promise. Having said that, the term earmark has been demonized to mean "pork" or "wasteful" and this distortion drives the media and other critics to "show that our Government leaders are totally irresponsible. The whole concept of listing spending for specific projects in specific States and requested by specific legislators is supposed to make them all accountable and provide "we the people" to know where and how our money is being spent. This is a good thing in theory. The problem is that there will always be someone that can and will attack virtually any spending on anything if they feel they can score political points.

The minority party screams about close to 8 billion dollars of "earmarks" and "pork" and "wasteful spending" (out of a 417 billion dollar spending package) and somehow do not seem to acknowledge or recognize that 40% (or close to 3.2 billion dollars) of these earmarks are being requested by their own party. Sorry, but you cannot make an argument about the 8 billion dollars unless and until you remove your 40%. Until the minority party is willing to do this they will not gain the high ground.

The majority party cannot talk about being responsible "moving forward" or "next time". They are the Party in power NOW. Unnecessary "earmarks" or other spending should be removed from this or any other legislation. If not, the credibility of the message of change simply drifts away with the breeze.

So, the challenge with this spending bill or any future spending will (as always) come down to defining "wasteful spending" and further the definition of "earmarks". Are all earmarks wasteful spending? Are all earmarks "pork"? If our leaders want to insure the acceptance of the spending of our money they need to convince "we the people" that the spending is, in fact, necessary and not wasteful and will be a productive use of public funds.

The members of BOTH political parties need to stop dancing around (the music has stopped) and be willing to justify their own spending requests. If they cannot individually do this, the President must insist or refuse to sign the bill(s). That is his responsibility.

Is President Obama going to show the political courage to take on the members of not only the minority party but his own Party?

Is the majority Party going to live up to their collective promise to bring change and responsibility to this process?

Is the minority Party going to prove that their criticism is correct by removing, at least their own requests for what they condemn as "wasteful spending"?

Is anyone going to do the correct thing or after all the "spin" and all the talking will it just be business as usual?


Friday, March 06, 2009


Is the dream over? The American dream that so many millions have grown up believing in appears to be nothing more than a frightful nightmare as we have been forced to wake up from our slumber.

The "book" on the American dream has been revealed has a work of fiction after being accepted as truthful by so many for so long is a difficult reality to face.

For well over 200 years our country has grown and developed through countless trials and challenges. This has all been done with (or despite) a vast growth of Federal, State and local Government. At times the Government has over reached and at times was irrelevant. American commerce grew and expanded because of the efforts of her people and the reward for those efforts was supposed to be our ability to live a fruitful live and be protected from our enemies from within and outside our borders. In good times we all want Government to go away and leave us alone. In bad times we want Government to come to our rescue. What do we actually want?

How did the country get into this mess? The simple answer is greed. Historically, the economy of business and individuals has grown at a moderate (if not slow) pace. This was true for most of our history until insanity set in about 25 years ago. My parents purchased their house in 1953 for $19,000. In 1970 the house was "worth" about $45,000. This showed an increased "worth" of $26,000 in 17 years or just under 5.5% per year. That rate of "worth" increase stayed pretty much the same throughout the 1970's and into the 1980's until the insanity began to show itself. The perception of "worth" began to escalate so that between 1970 and 1994 (24 years) this modest house that my parents bought in 1953 (built in 1940) was supposedly "worth" $230,000 or a rate or "worth" increase of over 7.5% per year. The real insanity set in during the years from 1999 to the end of 2006. In 1999 my parents home was supposedly "worth" $253,000 and in just 7 years this house was supposedly "worth" a staggering $900,000 or an increased "worth" of 355%!! The actual belief that a 1450 square foot home (granted with a pool) built in 1940 could possibly be "worth" $900,000 is truly an example of a delusional mindset. Since reaching that lofty "worth" level the most recent "worth" estimate is down to about $650,000 which in one way could be considered a "loss" of $250,000 to my 90 year old Mother (who still lives in that house) and her heirs. In another and more realistic way even the $650,000 "worth" estimate is stunning and still represents a "worth" increase of $400,000 just during the past 9 years. The questions must be; "has my Mother actually "lost" $250,000 since the end of 2006 or was the $900,000 "worth" attached to her home at the end of 2006 a completely insane number?" Is a 69 year old, 1450 square foot house (granted with a poll) actually "worth" even the $650,000 that estimates currently show?"

The point of the above example is that it can be multiplied by millions of homes across the country and the roots of our current financial collapse become very clear. National insanity affected virtually everyone and every sector. Homeowners (those who like my Mother) who already owned their homes before "worth" became so unreal suddenly found themselves living in a pot of gold. For my mother and many others the "worth" doesn't really mean much because she has always intended to live out her days in her home so she will never see the financial benefit of any amount or perceived "worth" (real or not). The effects of the unreal "worth" on so many people who have always intended to simply live in their homes has been a massive increase in property taxes and homeowner insurance premiums which has lead to greater revenue for the States and insurance industry at the expense of the homeowner. No surprise there, right? So, the government basically turned their backs and encouraged the insanity by promoting home ownership to virtually everyone, whether they could afford it or not. This, in turn "created" the supply and demand factor to kick in and led to an insane amount of building to accommodate this growing demand. All of this appeared great for the economy because people were working and the "worth" of homes kept exploding so why think about the reality, right? Well, the banks and investment firms wanted in on the action as well so they created a massive pyramid of mortgage loan packages (based on unreal worth of homes) and then sold them to anyone who was willingly to blindly buy them. There was plenty of profit to be made and greed took over as it usually does. Lenders relaxed virtually all reasonable qualification requirements to bring as many loans into the loop as possible. The result was that millions of people got mortgages they simply could not afford. Some now feel they were somehow "tricked" because they did not understand the interest and payment structure that was in the contract they signed. Well, that, sadly cannot be used as an excuse or a reason for a rescue by the taxpayers. Some (like my brother) took a different route. He purchased his home about 1980 for about $48,000. When the "worth" insanity set in my brother chose to begin a series of refinances and equity loans beginning in the mid 1990's in order to take advantage of the exploding value of his house. He took almost $600,000 from his house during the past 15 years through this process and was allowed to do this by lenders who continued to perpetuate the "worth" insanity. It became a computer program game and as long as the "worth" entered into the computer continued to be within the programmed relationship of debt to value my brother continued to get refinancing. Of course, throughout all of this, his monthly payment kept increasing (to a current payment of $4560 per month not counting property tax or insurance) and worse is the fact that the policy of not verifying income or other ability to repay was still being ignored. Multiple this situation by tens or hundreds of thousands and you find a whole group of homeowners who have created current loan balances from a low starting point to an insane number now. When the housing bubble began leaking in 2007 and has now burst, the ability to subsidize lifestyles through the equity refinance process went away. The equally insane credit card limits were quickly used up to try and cover this problem and of course that has led to an inability to make the mountain of payments due each and every month. In the end, many, many people (including my brother) find themselves with a mountain of debt and little ability to repay it. Should these people be able to receive taxpayer dollars to fix their careless decisions? I think not. The fact the "worth" insanity showed that my brother's house increased in "worth" from $48000 in 1980 to $875,000 (almost 1800%!) in early 2007) should be a perfect example of why this segment of homeowners is now is deep trouble. Now multiple this by tens of thousands.

As the "worth" insanity exploded the need for new borrowers grew as well and lenders (with the support of Government) disregarded most qualification guidelines in order to keep the system moving. After all, if people were unable to get loans simply because they couldn't afford them the whole process would be slowed down and collective greed would not allow that to happen. I bought my first home in 1972 in West Covina, California for $24,000. It was brand new and had four bedrooms and 1600 square feet which I needed for my wife and four young children. I earned about $13,000 a year back then as a manager in an envelope company. I qualified for that home because I put 20% down and did not (at the time) have any other major debt. My payment was just over $200 per month and that stretched the budget when trying to also raise four kids. Well, life happened. My wife began a lifelong series of illnesses which ate into the family budget for many years. Those were the days where insurance coverage was the 80/20 plan. I would end up with close to $200,000 in out of pocket medical bills during the next 14 years aside from everything else. So, I began working at second night jobs, and other ways to generate cash. I relocated several times (first in 1974 after selling my house) for the opportunity to make the needed money (at the emotional expense of my kids) and it would be 24 years before I was able to buy another home and well after my children were grown and gone and my wfie had become my ex-wife and after a triple bypass surgery and two heart attacks in the mid 1990's as my "reward" for a lifetime of stress. Throughout all of it, no bailouts, no whining. Life reveals itself it ways we do not always expect. I worked. I struggled. I paid everyone every cent I ever owed and I did it with a refusal to give up or rely on the Government to come to my rescue. Many people have similiar stories I am sure. Since my "medically forced" retirement I still survive. I have "given" my own children virtually all I had to try and assist them in their struggles with daily life but that's been my assignment all along. The message is, if you cannot afford the bills you have, then you must get rid of the bills and that means your house, your boat, or whatever. The only thing to do is to look in the reality mirror, face it and do what you have to do for yourself and your family. No one said life would be easy or that anyone would be passing out relief to any of us. That is just a fact.

For those who bought homes within the past five years I would ask; "Could you afford the house and the resulting payments?" "Did you buy the home to live in and raise your family for the long term?" Are you still able to make your mortgage payments or are you in trouble because of "other" debt?" If you are upset because the current "worth" of your house has decreased over the past 18 to 24 months you must accept that reality as well and realize that the inflated number was never real anyway. If you are still able to stay in your home and your original intention was always to live in it and raise your family then, in the end, the current "worth" does mean your dream has been destroyed.

For those who purchased homes simply for the investment and potential of profits the current "worth" decline is nothing more than the basic risk of any investment. The shock to you is that the insanity finally began turning around and the thought that this could happen rarely occurs to us as long as things are on the upswing. Reality sometimes makes an appearance. Bailout for you? I think not.

For those who purchased homes that had they really looked into that "reality mirror" knew they actually could not afford the commitment and did it anyway, while unfortunate, is in the end, a poor decision and if you now cannot continue to make the payments you should and you must give up the house and start your quest of the American dream again. Bailout for you? I think not.

For the of you who played the game correctly, meaning you worked hard, saved your money, did not get into mindless debt and invested in your new home (15 or 20%) down and got a proper loan without all the fancy inclusions that lenders had been offering, but now find yourselves unable to make your payments simply because you have lost your job or have experienced some personal calamity, the most sympathy for assistance goes to you. If temporary Government and or lender assistance should be made available it should be to this group. The main reason is that this group is the most likely to work their way out of their current situation if they can just get back to work. This group has not been the ones who continually seek taxpayer help but truly need it on a temporary basis. But, even this group must face the possibility that whatever has happened (even through no direct fault of theirs) is still not, utlimatelt the responsibility of the Government and the taxpayers. For the people to commit to keeping people in their homes (without direct intervention and authority over their entire budget) can be a slippery slope indeed.

For the banks and lenders who issued all the mortgage loans (both proper and improper) these loans were always a matter of choice and your own business model and have always had inherrant risks. The interest earned on these loans are the reward for taking the risk. The fact that so many loans have gone into default or are about to is basically not the publics business and since the public (all the public) did not receive a monthly portion of the interest earned during the time payments were being made the banks and lenders should not expect the people (through Government taxpayer dollars) to bail them out now. Like any other business if you cannot survive because of business decisions or market conditions then the business must fail.

The main problem with this, of course, is that the people are deeply involved with the results of bank and lender decisions because of stock investments and other funds which have a direct bearing on individual retirement plans or other forms of measuring "worth". The people are deeply involved because our Government (approved by our elected officials) have made assurances of Government backing to banks and lenders and (in our names) assumed a porion of the loan risk and thus lessoned the risk to the banks. To make matters worse and because of the business and certainly the poltical rewards the Government allowed regulations to either expire or to be ignored as the whole financial system joined in the insanity to make the "house of cards" much too high to survive. In other words, everyone is at fault and now everyone will suffer as the country and the world faces the grim reality of our greed.

If there are those who might actually read this piece who might be saying; "But wait, I didn't do anything wrong, why should I have to pay because someone else made a poor decision?" The quick answer is that everyone allowed this "worth" insanity to expand and those with "no problem" now (still a majority) certainly have had no complaints as they reaped the fianancial rewards for many years with at least one blind eye and in the end the fact that the "worth" is now reduced for so many is just the end result of greed and trying to get to the American dream by taking unsafe shortcuts.

The question now is whether or not the collective "we" are going to take responsibility as a whole nation and work together to bring ourselves out of this mess or are "we" going to continue to bicker and divide ourselves even further for the sake of our selfishness and greed for power.

If nothing is done as it relates to efforts to "bailout" banks, businesses and individuals (and I basically do not agree with that tactic either), then America and its people must be willing to endure an even deeper collapse of our economy that we have already seen. There may, in fact, be no complete solution at this point but doing nothing and walking away from the problem just doesn't seem to be the American way that I grew up in and if you're not part of a possible solution you're just part of the problem.

If you believe in saving America and whether you agree with current proposals or not, dig in (hold your nose if necessary) and let's get this nation moving again. Opponents can always come back later and change things. We have certainly done that throughout our history.

Good luck, America.

Monday, March 02, 2009


"We the People" are certainly receiving a rash of confusing messages these days. I, for one, am trying to grasp just a piece of truth and reality from the onslaught of negativity and partainship that just will not subside.

During the entire administrations of George W, Bush the message from the Republican Party was "trust us we know what we are doing and we will protect and defend the United States of America". We were asked to ignore many assaults on what we had assumed were protected "rights" enjoyed by American citizens with respect to privacy and our right to question and object. We were told that if "we" didn't fully support the "Bush Doctrine" as it related to pre-emptive invasions of sovereign nations, then "we" were anti-American. "We" were told that virtually any dissent was unacceptable and possibly even a basis for arrest or at the least aggressive monitoring by our Government. "We" were assured over and over again that the "most important goal of the Bush Administration was the protection and security of America and yet throughout most of the past 8 years our nation's borders and ports remained basically unprotected while hundreds of billions of taxpayer dollars and ten of thousands of American lives were lost or ruined in foreign lands waging a futile "war on terror" against a basically invisible enemy. I will not diminish the (hopefully) positive effect our military actions have had on millions of Iraqi and Afghan citizens but at some point we must view the results through the "reality mirror" and make truthful conclusions about the effect these engagements have had on reducing the number of groups or individuals throughout the world that wish America harm. The point is, for the most part, the majority of Americans went along with the foreign policy program of the Bush Administration mainly because the administration was always able to use the "support the troops" as a successful political tool. To oppose the policy was to oppose the troops, right? I disagree completely with that logic as I believe supporting the troops would have been to NOT place them in imminent danger for over seven years without ever having a clear cut, obtainable mission to fulfill.

"We the People" must also not simply overlook or downplay the economic facts of these past eight years. The fact is that our National Debt that is suddenly such a concern for the Republican Party INCREASED from 5.7 TRILLION dollars at the end of fiscal year 2000 to just over 10 TRILLION dollars by the end of fiscal year 2008. This astounding increase occurred under the Republican President (G.W. Bush) and for six of the past eight years, a Republican controlled Congress. One should consider this while listening to the suddenly born again fiscally responsible Republicans now flooding the airwaves. Quite the confusing message!

The Democrats should not be let off the hook either. In the usual process that is Government accounting, our National Debt under the Clinton Administration increased from 4 TRILLION dollars to 5.7 TRILLION dollars while toward the end of that administration the annual budgets had begun operating in a surplus of billions of dollars.

It must be noted also that the proclaimed King of fiscal responsibility and modern conservatism, Ronald Reagan, was the man in charge of an 8 year period (actually a 12 year period when the George H.W. Bush Administration is included) saw an increase in the National Debt of almost 450 PERCENT from ONE TRILLION dollars to 4 TRILLION dollars! A review would also show that the extent of Government involvement in the lives of Americans and American business was every bit as much under Reagan as is being proposed now under President Obama. I suppose it is (as always) a matter of opinion.

Feeding from the "spending trough" is not, not has it ever been limited to any one political Party and any claims by either main Party to the contrary is just a partisan lie that continues to be told to "we the people". The spending philosophy of our Government has certainly not been ignored by American citizens. The collective "We" have managed to spend ourselves into near financial ruin during the past two decades. Our financial institutions and retailers have been more than willing to relax the rules (with the blessing of our Government) and create an irresistable candy dish of irrational spending and borrowing that inflated the value of homes and stocks to almost silly levels. This has not been the private playground of Democrats or Replublicans but rather the actions of a greedy and irresponsible society. WE need to stop trying to blame the Government or the Banks or our employer and focus on individual responsibility.

The message that the new Administration continues to deliver about the critical need to "stimulate" the economy by encouraging us to go back to spending money and for the Banks to hurry up and start lending again appears (at least to me) to be confusing at best and destructive at worst. I cannot understand how it make sense for American citizens who are currently in deep trouble to keep digging their financial hole they have dug for themselves. I should note here that not everyone or every family is in financial distress. With a national unemployment rate approaching 8% it still means that 92% of American workers ARE employed and that means that there should still be an abundance of spending throughout the country. If an approximately 3% of mortgages are in jeopardy that means that 97% ARE NOT. The negative effect on home valuation on the homes not currently in mortgage difficulty is certainly real and potentially very harmful to homeowners who purchased their homes during the past 2 to 3 years when home prices were at their most inflated levels, but as with any investment, there was always that risk. For the homeowners who bought their homes to actually live in over the long term and who are able to continue to make their payemnts (which is still the vast majority) the "reduced" valuation of their homes should actually have little effect on their day to day lives. History has shown that, at some point, home values will rebound (though hopefully not to monopoly money levels), so just be patient and live your lives responsibly. For those who made the decision to "buy" homes that they MUST have known were more expensive than their means (no matter what the real estate agent ot lender told them), sadly, the price for those decisions must be to give up the home, start over and hopefully not make the same mistakes again. For those who purchased homes (at inflated prices) strictly for the investment and now find themselves on the losing side of that investment but face the reality that when it comes to investments, sometimes you profit from them and sometimes you do not. For the banks and lending institutions who created the "candy dish" for borrowers and home buyers must also now bear the responsibilty of their actions. Whatever loss they now face (even if it means losing their business altogether) must be faced and it must be done without further damage to "we the people" in the form of Government subsidies. Capitalism was not designed to be a one way street.

So, my "message" for the Republican Party is;

Stop whining!
Stop perpetuating the image of the imminent collapse of the United States of America because you are not "in power" at the moment. It is an especially weak position when one considers the Republican controlled results of most of the past 28 years.
Stop being "anti American" (yes, I said it!) and leave your insane partisanship behind during our current national crisis. We have always tried to have the policy that politics are left at the shore when it comes to our foreign policy and it now critical that you leave your partisanship in the closet during this extreme domestic crisis.
Stop distorting the facts and cherry picking everything that is proposed in your attempt for ratings or votes and for once do the right thing for the citizens of the United States. As more and more people become educated and aware of the facts, these distorations are being exposed. There are simply too many ways to verify your lies and spin to keep passing them off as facts. Just because you say it doesn't make it true.
Stop the hate speech! You are only inflaming desperate people and causing them to be more desperate. The result will most likely be even more hatred between American citizens and an unnecessary increase in violence and mistrust of everything and everyone. This is not only destructive to our country but just plain wrong.

My message for the Democrats and President Obama is;

Stop trying to move too quickly. The American people, although they are looking for change and better days, may not be able to absorb too much too fast and the negativity being projected by the opposing Party appears to be confusing too many people. Keep it simple.
Stop giving the impression to the American people that you are fully able to correct all the ills of our economy and make all our dreams come true. You must know that cannot happen and the message (that was given at last weeks speech by President Obama) needs to be expanded and promoted by all those in the Administration and Congress and leaders of the individual States. It is very dangerous to give too many people the impression that the people themselves are going to be rescued and that all they have to do is wait.
Stop the bailouts! In spite of the amounts already allocated and in spite of the pontential effects on large firms, these bailouts have just become too much. Again, Capitalism was not designed to do this. We cannot get to the bottom of our problem until we let the bottom develop. Only then, will everyone know the real situation and begin to rebuild this great country. The real pain involved is a sad necessity but we must endure it in order to get well.
Stop engaging in "sound bite" politics and offer more substance. You must stop over reacting to all the critisms and be committed to your plans by allowing them to be implemented and then live with the results. You have a major advantage now in that your opposition seems only prepared to be totally negative and can only spew out the words; "tax cuts" as their only idea while offering no alternative plans of their own.
Stop making the suggestion that our economy will recover only through a return to spending without making the clear distinction that those in severe financial distress should not be part of that spending until and unless they get their financial houses back in order. For the majority of Americans (yes, it's still the majority) who are not in severe financial distress, the message should still call for prudent spending. I have no doubt that the economy will find its proper level and be successful if the spending is real and not falsely inflated by credit card debt and home equity loans that have driven our economy for far too long.

The popular campaign message of "YES WE CAN" needs to be changed to "YES WE WILL". This is, after all, America, and I still believe that "we the people" can and will overcome any obstacle, even the unnatural actions of too many of our fellow citizens that have refused to join in the effort.