Posts Tagged ‘Economy



12
Jan
09

Why Are Oil Prices So Volatile?

Hint: It ain’t supply and demand.

Last night, 60 Minutes aired an invaluable report explaining the roller coaster oil prices – a must-watch (or must-read, if you prefer the trascript) for anyone confuzzed by the inanity of the energy market.

Spoiler: those manipulative bastards from Enron make a comeback.

Video and transcript here. Really, watch it or read it.

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21
Nov
08

First Golden Parachute of the Bailout

At least, I think it’s the first. Pro Publica reports South Financial Group, a bank in South Carolina, has been approved to receive $347 million as part of the federal government bailout of the financial sector. Founder and double-decade CEO Mack Whittle retired two months early (coincidence?) and walked away with an $18 million severance package. His retirement comes before restrictions on golden parachutes will affect SFG’s receipt of taxpayer money.

Certainly $18 million pales in comparison to the parachutes rampant in big business’ golden showers. Still, Whittle oversaw the poor decision-making that has brought the SFG to the brink of failure, dependent on government money to stay afloat. Why he’s entitled to a $133,920 auto allowance and $75,000 for financial planning, only Beelzebub knows.

The delicious silver lining? Apparently, South Carolina Gov. Mark Sanford (R) is calling for an investigation into Whittle’s early retirement, accusing him of “gaming the system.” According to Talking Points Memo, Whittle had grown dissatisfied with Sanford’s treatment of the business sector and backed another cat’s effort to unseat the governor in 2006.

These corporate executives who are looking for the huge pay-day as unemployment numbers grow into the millions better watch out. Their greed and mismanagement has brought the world to a global meltdown – to radiate a “let them eat cake” attitude will surely earn them an “off with their heads” response. The electorate is growing tired of the hoarding of wealth at the top of the economic totem pole and surely our representatives are on the receiving end of their rightful earful.

Whittle, like the rest of us, should have saved for retirement and faded into the sunset full of self-doubt over his leadership spanning the housing boom. There’s enough blame to go around and he should grow up, exit Neverland stage left and eat his fair share of the shit pie he helped cook.

28
Oct
08

Financial Meltdown Puzzle – Another Piece

There are a myriad of reasons out national economy has hit the skids (and is taking down the global economy with it). While Fannie Mae and Freddie Mac are on the receiving end of partisan finger-pointing, they aren’t the entire story. Not even close. They were a symptom, not the cause.

In my quest for knowledge regarding this financial bailout, a main theme keeps emerging: lack of regulation. I’m sure you’ve heard the term.

Well, this weekend, 60 Minutes’ “The Bet that Blew Up Wall Street” gave a very comprehensive explanation of yet another piece of the meltdown puzzle: the legalization of the derivative markets, which basically “allows you to wager on financial outcomes without ever having to actually buy the stocks and bonds and mortgages.” Side bets.

The rocket fuel was the trillions of dollars in side bets on those mortgage securities, called ‘credit default swaps.’ They were essentially private insurance contracts that paid off if the investment went bad, but you didn’t have to actually own the investment to collect on the insurance.

Dinallo (Eric Dinallo, insurance superintendent for New York) says credit default swaps were totally unregulated and that the big banks and investment houses that sold them didn’t have to set aside any money to cover their potential losses and pay off their bets.

‘As the market began to seize up and as the market for the underlying obligations began to perform poorly, everybody wanted to get paid, had a right to get paid on those credit default swaps. And there was no ‘there’ there. There was no money behind the commitments. And people came up short. And so that’s to a large extent what happened to Bear Sterns, Lehman Brothers, and the holding company of AIG,’ he explains.

The derivative market, basically gambling, was illegal for most of the 20th Century. A few lobbyists and campaign contributions later and the lame duck Congress in 2000 – when Bill Clinton was president – signed the bill that reopened the markets for these side bets. Without regulation, there was no body to even track how many of these bets were made or for how much.

I wonder if this next Congress will allow the law to stand, thus continuing to weaken our fragile Wall Street.

In any case, it’s worth having the knowledge and understanding of the role these derivative markets played in the meltdown, so I’m including Steve Kroft’s piece because it truly was an eyeopener. Very much worth the watch:

You can view the video here or read the transcript here.

07
Oct
08

Go Negative, McCain! And Then Go Home!

With only 28 days left in the election, I’m hearing a lot of people saying they can’t wait until this is all over. Granted, these people are all anti-Obama. But, all politics all the time can be hard on people who are not political junkies. Unlike me.

I’m reveling in this constant political news stream. Even all the mud-slinging can’t rain on my parade. I suppose this is because the person I do not want to win will have to pull a rainbow with a pot of gold out of his ass to take home first place. After constant analysis of the men before us, I have to admit that I’m more ANTI-MCCAIN than PRO-OBAMA and really wish the left wouldn’t romanticize Obama because he’s going to have such a cesspool of crap leftover from Bush to be an extremely transcendent president – at least in his first term. Obama does have less experience than other viable Democratic candidates, his FISA vote pissed me off, he’s against gay marriage, he supports faith-based initiatives and has other “issues” which have garnered my disappointment. But as we say every four years about our respective candidates, “He’s a helluva lot better than the other guy.”

Also, this is the first time it looks like I’ll be on the winning side of a presidential election. I’ll admit it – I voted Dole in ’96, would have voted Bush in 2000 (was out of the country and didn’t get my shit together for an absentee ballot), and voted Kerry in ’04. After growing up in Texas, I was originally a Republican, but naturally moved to the left as I grew more informed – first as a social liberal/fiscal conservative, then even more to the left as I realized the lack of financial regulation results in the United Corporatocracy of America.

I’m not a straight-ticket voter by any means and support the multi-party system more than the Democratic Party, which is why I still may vote Nader in the general election as Texas is almost guaranteed to fall into McCain’s pocket despite the switch of Hispanic voters to the Democratic side. If Texas were a toss-up, I would by all means vote for Obama. Either way, I support a McCain loss above all.

Which is why I love his negative attacks. And Palin’s for that matter.

If they want to load their stump speeches with tales of domestic unrest during the turbulent 60’s – ahem, FORDEE years ago – while the U.S. is embroiled in two wars and the major financial crisis of our times, that is peachy with me. It only ensures a greater loss for them come November. There are legitimate economic policy disputes between McCain and Obama. McCain has every opportunity to present to voters a forward-looking, encouraging picture of where he wants to take the country.

Instead, he calls Obama a liar and dishonestly claims Obama wants to avoid answering questions about his record.

It’s not working. And it won’t work.

The ridiculous charade of McCain’s campaign has found their credibility on a downward slope that has paid little attention to the poll numbers. Instead of a plausible campaign on policies, McCain has given us infamous cannon fodder of stunts: the ads linking Obama to Paris and Britney, naming Palin his running mate, one dishonest ad after another – including an ad that claimed Obama wanted to teach comprehensive sex education to kindergartners, repeating the lie that the surge was responsible for the decrease in violence in Iraq, once again trying to win an election on his POW experience, the fake suspension of his campaign and attempt to take credit for a bailout legislation that failed to materialize according to McCain’s timetable, and – most recently – linking Obama to William Ayers’ activities decades ago. His campaign isn’t legitimate, it’s a joke.

The problem for McCain? The internet has provided voters quick and easy access to fact-based information, allowing people to call bullshit much earlier on lies for the sake of political expediency. Stunts are far more transparent than they were just four years ago. Would the Swiftboaters have succeeded under the current umbrella of the proliferation of information? I don’t want to give American voters too much credit, but I don’t think so.

McCain never gave his policies a chance to shine. He never gave his stance on the issues an opportunity to appeal to voters. He went Hillary on Obama way too early and the stubborn refusal of his campaign to see the error in this tactic is their death knell. Regardless of my disagreement with their policy proposals, they don’t deserve to win it. They tried generalities about his experience and his “maverick” record, but they forgot the specifics about what they are promising the American people. Basic chants about “cleaning up Washington” and “rooting out ineffeciencies” (though Palin forgot the “in” in “inefficiency” a bit too many times in interviews) and “Obama’s the most liberal Senator” don’t work. People want to know what you are GOING TO DO. Future tense, McFly.

From a politically scientific level, it’s been suicide again and again. From a leftie level, it’s been glorious.

Every time another speech by Palin or McCain is carried live on television and they are talking Ayers and calling Obama a liar, I giggle – then press the mute button. Each day they waste with these failed distractions is just another nail in the coffin of their campaign.

So, go negative, McCain! Go negative all the way! Because that road leads to second place. And when you’re looking for bozos to blame, don’t just hurl your spittle towards all the former Bushies you hired, remember that you sold your soul and with it any chance you had to win. I’m looking forward to see you do well, but not good enough, in tonight’s debate. We’ll finally get to see that Town Hall you’ve been clamoring for. Enjoy it. Maybe Bush will meet you afterward by your jet with a cake.

30
Sep
08

Blogging About the Bailout From the Netherworlds of Anti-Obama Territory

I was on the road all day yesterday driving from Houston to Pensacola to visit my parental types with my sister. Besides all the damn convoys of electricity and tree-trimming trucks heading back home after helping get Houston power back up following Hurricane Ike (my sister says thank you) driving in the left lane trying to give me an aneurysm, the ride went pretty well. All I’m saying is that I don’t know what South Texas and South Louisiana did to make baby jesus mad. Who knew hurricanes were such a useful tool of divine justice?

As I’m playing Highway Commando and trying to make good time, we get a call that the House voted against the bailout. Against the bailout! We immediately turned my new XM radio (which rocks hard) to the news stations – which was fun because the first thing we heard was Boehner and his fellow boners blaming Pelosi for the failure of Republicans to vote for the bailout package. Apparently, Pelosi gave some partisan speech, which pissed off quite a few of the Repubs so much, they forgot their vote would affect the entire U.S. economy and that of the rest of the world and decided to use their vote for political gamesmanship and spit in Pelosi’s glossy eye with a “Nay.” What word am I thinking of? It’s another word for donkeys… Oh, yeah – Jackasses!!

Who gives a shit about people’s retirement packages? Who gives a shit about companies being able to meet payroll? Mortgages, car loans, grocery bills…who cares, who cares, who cares? The American people have been fed a lot of baloney about the free market and American capitalism and decided to call their representatives, instructing them NOT to vote for the bailout. And the House reps actually claim they listened to these people – these people who have not one iota of understanding about how the markets work and what a catastrophe it will be if the bailout fails and allows the markets to wallow, freezing credit and large portion of the exchange of monies. Even my Republican family – who is watching the retirement upon which they currently live head toward the drain – was astounded at the stratospheric stupidity of these politicians.

Just real quick – the House Repubs are LYING when they said they’re voting no because of their constituents. They’re voting no because of lobbyists. As we speak, K Street is in a tizzy over golden parachutes and regulation and anything that might redistribute wealth in this country and is threatening all those little Congresspeople up for reelection. Three words: constituents my ass. Don’t insult me. I’m mean, I’m a blogger, for chrissakes.

I don’t think this current situation is altogether a bad thing.

Pick your jaw up off the ground and take a breath.

First of all, the level of education of the American public in the areas of economics, finance, credit, etc. has increased immensely. If we have to feel pain now so that our entire country operates with a few more smarts and a tad more responsibility, it is worth it. The people of this country have been told that their monthly income should not determine their standard of living. Credit was the answer to everything, and was easy to access, encouraging every Tom, Dick, Harriet, Rumor, Tallulah and Scout to spend those george washingtons without any attention to budgets and saving. Economic retards, as it were. I used to be one. These are my people.

Well, I’ve moved on – slapped in the face by a low FICO score, and it’s time for the American people to do so as well. Hopefully, this economic crisis will move us in that direction.

So, have a margarita, a mojito, a martini, a miller lite or whatever it takes to get your blood pressure down; then save money, diversify your investments, purchase cars and homes  beneath the amount you are approved for, stop trying to keep up with the Joneses, learn the language of finance and grow old, fat and happy (well, not fat).

That’s silver lining numero uno. The next, OBVIOUSLY, is the political fallout.

How fun! How tickling! How fucking hysterical!

The Democrats are about to take over the majority of the House and the Senate and get the Executive branch. And what happens? The House Repubs group together to collectively shoot themselves in the foot and take McCain down with them. Well, yeee-fucking–haw! I didn’t think this election season could get better AFTER McCain’s fake suspension, but I was gloriously mistaken. If I wasn’t in my parents’ Republican household, I’d be cranking up all the angry liberal commentary on the boob tube I could and just enjoy watching the conservative avalanche. God, it’s like Festivus came early this year. I don’t have anything else on my wishlist.

And it only gets better. The icing this week will be the Biden-Palin debate. Even if Palin does well – and I hope she does – Biden will be drowning our little sassy Republican VP candidate in facts, names, dates, details of overseas trips. And I love Gwen Ifill. Seriously, I think we would be friends in real life.

Ultimate conclusion 09.30.08: Keep yer panties on, because the economy will do much better under Obama than McCain – so get out there and make sure your vote is on the right side of future prosperity.

And wish me well as I try to keep my angry, foul liberal mouth in check just a little bit. Because my mom (who is not crazy conversative) still hits. Backhands, to be more specific. (As my sister will testify.)

25
Sep
08

Top Ten Anti-McCain Slogans II

Since my first Top Ten Anti-McCain Slogans has received so many views, as has my Anti-McCain Funnies, I’ve decided to add ten more slogan-things (they might be a little too long for slogans) plus 1 and will try to continue to do so until the election. Enjoy and laugh cause this whole election is getting my blood pressure way too high. At this point, there ain’t enough alcohol in the hemisphere to put me in the mood to party like it’s 1999.

BONUS: Is it just me or is John McCain channeling Jack Nicholson in a few good men, “You can’t handle the truth!…My existence, while grotesque and incomprehensible to you, saves lives… I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide, and then questions the manner in which I provide it.”  Jeez, that is so 1992.

10. McCain: With all due respect, when I was a POW, I couldn’t debate. My captors didn’t allow rebuttal periods. Also, POW, POW, POW. And POW.

9. Baby jesus, all I want for Christmas is for John McCain not to be president. If you make someone – anyone – else president, I swear to god I will not watch any soft porn on skinemax for, like, the whole rest of the year. Or a whole month or something like that.

8. If Obama were white, he’d be 15 points ahead, you fecking feckers.

7. McCain: The fundamentals of the economy are strong. And by “fundamentals” I mean “robber barons.”  Yeah. I’m bringing that phrase back.

6. Sarah what? I can’t hear you over the po-po kicking me out of my house.

5. Watching Obama’s daily increase of gray hair is more interesting than watching McCain read from a teleprompter.  “blah…blah..boring shit…blah.”  SHUT UP!! You’re killing me slowly……ack.

4. McCain: Doesn’t holier-than-thou, smug sonofabitch look good on me? I’ve ordered it in five different colors. They all include a prominent lower mandible.

3. Religious Right: Hey – once they’re out of the womb, fuck ’em!

2. Obama: I wasn’t a member of the Keating 5; I haven’t had aggressive cancer 4 times and refuse to release my health records; I didn’t choose a candy striper as my running mate; And I DON’T have a comb-over. What more do you people need?!

1. McCain: If this campaign suspension stunt doesn’t work, I’m hiring that OxyClean guy.

UPDATE: Anti-McCain Slogans III (McCain Fantasy Cabinet Included)

15
Sep
08

Common-Sense Regulation is a Good Policy

Republican philosophies colliding with reality: Fannie Mae, Freddie Mac and, now, Lehman Brothers.

You hear it all the time from fiscal conservatives: limited government, free market, no corporate regulation. It sounds good. Hey, if these policies actually worked, I’d be all for them. Why would anyone want an unnecessarily large government? They wouldn’t. So, it’s time to acknowledge that Republican policies, when put into practice, do not materialize in a healthy economy. Today is Black Monday, but there will be many more black days to follow because of the George W. Bush economic policies (which McDumbass will continue).

The Nation, a leftie publication, offers a brief, but good synopsis of the evolution that lead to our current economic shitstorm. It’s an informative read, even if you hate italics:

The housing bubble was the result of the Ponzi-scheme antics of those other financial entities: commercial banks, stockbrokers and hedge funds, which were allowed in a GOP-deregulated market to get into the “swap” business. Through the rampant reselling of loans, the obligation to collect on a loan was divorced from the act of selling it in the first place, so who cared if the recipient of the loan was not at all qualified or the appraisal of the property value was inflated, as long as the paper was traded away, or insured, before the moment of foreclosure?

As with any Ponzi scheme, the perps, who included the legislators as well as the bankers who exploited the loopholes they provided, expected to bail long before the bubble burst. The role of the legislators, Republican-led but with far too many Democratic running dogs, was critical to the success of the scam.

The mortgage swaps distancing the originator of the loan from the ultimate collector were made legal only as a result of the Commodity Futures Modernization Act, which former Senator Phil Gramm, R-Texas, pushed through Congress just hours before the 2000 Christmas recess. Gramm, until recently co-chair of the McCain campaign, also had co-authored the Gramm-Leach-Bliley Act, which became law in 1999 with President Bill Clinton’s signature. That gem, which Gramm had pushed for years with massive financial industry lobbying, destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies. Those two acts effectively ended significant regulation of the financial community, and no wonder we have witnessed an even more rapid and severe meltdown in housing values than during the Great Depression.

Not surprisingly, Gramm was rewarded for his service upon retirement as a senator and as head of the Senate Banking Committee with a top position at the Swiss-based UBS bank, which is close to drowning in the subprime mortgage nightmare he helped create. These folks have no shame, as was evidenced when the senator’s wife, Wendy, was named a director of Enron, whose roiling of the energy market had been made possible only through yet another provision of Gramm’s Commodity Futures Modernization Act.

Appropriate regulation is key to a healthy business sector that benefits the entire country, not just just the peeps running the show. Even the Democrats won’t tell you that because they are in big-business pockets as well and uninformed Americans have been duped into thinking that regulation inhibits growth. Not so, as proven by the fact that our economy grows more per capita under Democratic presidents.

Republican candidates and fiscal conservatives repeat the myth of trickle-down economics and oppose regulation, increasing the minimum wage and essentially “looking out for the little guy.” What they don’t share is that unregulated corporations collude, allow greed to motivate business decisions, lack transparency and horde wealth at the top, giving CEO’s outragous wages while the same companies’ bottom-level workers cannot even afford health insurance. These policies increase the wealth gap and weaken the middle-class.

Regulation needs to stop being a bad word. Common sense regulation protects the U.S. economy and Americans themselves. It is not bad for a corporation to profit. It is bad for a corporation to profit at the expense of employees and consumers.




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