TAX LIEN SALES, Take 2

Gotta check out this blog if you're interested in tax lien sales!

http://taxlienconsulting.blogspot.com/

v/r,
FMC

TAX LIEN SALES - An Alternative Investment Strategy

In the midst of the current economic climate, it seems reasonable to believe that it will be more difficult for folks to pay their tax bills in the years ahead. Putting my investor's hat on for a moment, I've been wondering if there is money to be made in tax lien auctions.

Here's the scenario:

People don’t pay their property tax

The county publicly advertises who did NOT pay their property taxes...ouch.

Before the tax lien sale, investors put down a deposit ahead of time with the county in order to take part in the auction.

Investors then go to the tax lien sale

Preferably go IN PERSON to a small town’s tax lien sale, if this is even possible anymore. While online sales are more the norm, there are more bidders in internet auctions; as such, you'll likely experience higher bidding prices online

Everybody gets together in person or online on a particular day and bids
Example: You may pay 8% upfront on $1,000 tax owed by a homeowner ($80 upfront cost...this is non-refundable...basically, the bid amt. is the risk you must accept to take part in the auction)

If you win the bid, you'd then have the right to pay that person’s tax obligation for future years. This is an important legal requirement, as it gives you the ability to receive additional compensation (investment returns) from the homeowner when they ultimately pay their tax bill + penalties for paying late. Also, paying someone else's property taxes upfront can POSSIBLY result in you owning the property outright!! Read on...

Basically, you'd hold the tax lien certificate until the property owner pays the tax they owe

When time passes and the homeowner eventually pays their tax bill, you get a return on your investment…you usually have a high rate of return each year (could be a 14% return on your $1,000 investment)

First year you could get one rate of return (let's say, a 6% return)….the next year you could possible get a higher 14% return, etc.

After 3 years, let's say, you can potentially be awarded a “quiet title” (this grand prize is not likely, cuz' most folks end up paying their tax bill when push comes to shove); if you were awarded the quiet title, though, you’d want to advertise in the paper that the owner needs to pay their taxes (this ad serves as legal notice to all interested parties like the owner, bank, etc.) that you, the holder of the tax lien certificate, could purchase the property for $3,000 ($1,000 each year), plus the original $80, and thus take ownership of the entire property for a mere $3,080...these numbers are just used for illustration purposes...again, this grand prize scenario typically doesn't happen. With that said, you're STILL more likely to get a return on your investment from holding the tax lien certificate for a while, which is a good thing!!

Potential pitfalls:
If you pay the $1,080 upfront and the owner pays all of their tax liability the next day, you’re out $80...oh well, you have to accept some risk...however, the longer it takes the homeowner to pay his or her taxes,the more money you can potentially make on your investment when they finally make a payment...this return on investment is likely higher than anything you can get in the stock market at the moment.

You need to know what type of land/house you want to buy a tax lien on and what you can do with the property...do the homework...this stuff is not for amateurs!


Bottom line:
Folks who are breaking the law by not paying their taxes put their own assets at risk

It appears to me that savvy investors who can find in-person auctions may fare better than tax lien auctions held online.

This type of investing seeems like a reasonable alternative to the stock market; however, invest at your own risk…most folks eventually pay the tax they owe.

I haven’t decided whether or not to implement this investment strategy. On one hand, it seems kinda cruel to punish someone down on their luck; however, if folks are breaking the law by not paying their taxes, their local government is going to make them pay more no matter what...investors who agree to pay someone else's tax bill RIGHT NOW should be compensated for bailing these folks out on a temporary basis.

While I remain conflicted on this topic, I’m curious if this type of investment strategy will grow in popularity over the next couple of years, given the current economic crisis. If folks can't pay their mortgages, why should we believe they'd be able to pay their property taxes?

http://en.wikipedia.org/wiki/Tax_lien_sale

FMC

Random Thoughts from a Conservative Mind

‘Market Pricing’
It’s amazing to see that the same ideologues who formed the policies that created the economic crisis are now in charge of 'fixing' it. Most Americans are do not understand HOW we got here; however, everyone seems to be more interested in all of the new, creative ways to artificially keep home prices and stock prices high. This mindset is what got us into the problem in the first place! The market knows better and is pricing in all of the future tax hikes, government intervention, isolationist policies, and asset devaluations that are coming our way.

‘Class Warfare & Investing’
Since we're going to a Chicago-style approach to governing the country, expect the duck and weave from investors in an effort to save their money and more cautiously invest. What the class warfare-types out there don't understand is that you need the 'rich folks' to invest their dollars in the market before the 'poor folk’s' 401K balances can go up…if you punish the ‘rich’, as Obama wants to do, you get the results we've seen over the past few months: an uncertain market that is pricing in higher expected costs of doing business. The trickle down is that everyone suffers more in a socialist-driven environment.

Admittedly, certain industries the government deems acceptable will benefit, at least in the very short term...the market will pounce on these industries fast, so it’s helpful to know just what Obamasan is going to do if you want to make money in this market going forward. Expect a lot of volatility…right now, we’ve got lower than average volume coupled with a derivatives market that can drive stock prices violently one way or another…proceed with caution if you proceed at all. Personally, I’d look at maxing out tax-deferred instruments, look closely at municipal bonds, and do a lot of praying.

‘Obama’s Motives’
The way I see it, an Obama administration will be more concerned with picking specific winners and losers in the market, while at the same time punishing some of the most successful industries in an effort to further specific social and economic agendas. Obama himself said that the Constitution does not go far enough with providing the Courts the authority to redistribute income (this is a social agenda, right?? The ‘tax cut’ for 95% of Americans clearly ties into this agenda). This message may have helped to win votes, but it has NOTHING to do with helping the overall economy whatsoever. I predict that Obama will have to rescind his tax cut proposal, citing the economy as the primary reason. Hey, it worked for Clinton.

Other Dems like Pelosi have said that they can't worry about offshore drilling because they're trying to “Save the planet” (if this isn't putting ideology before the people, I don't know what is). These policies, in my view, are driven primarily by guilt and go far beyond the tenets of even socialism...this stuff borders on sheer delusion.

Even though crazy people have elected crazy people to some of the highest offices in the land, certain industries in our economy will nevertheless bounce back under an Obama administration (yes, it's possible). When they do, they’ll bounce back hard, even violently in some cases. When will this happen and what are the industries? I dunno, and neither does the market at the moment. There's too much uncertainty right now to figure this out...this is why everyone is running for the exits.

To make everyone feel better, everything will likely get better at some point...wow, that was easy...pointless & completely arbitary. Here's another one: by the time the new Obama puppy is completely potty-trained, we'll see a stabilization in the markets. Wow, that was easy too...I should be an analyst.

‘Emotional Election’
The American people may have voted on emotion for this election; however, it doesn't take a rocket scientist to know that if you take enough money from hardworking Americans, they'll eventually vote you out of office. Americans have already shown that their support of environmentalism has its limits...I estimate the support threshold of environmentalist-waco policies is around $4.00/gallon, unleaded.

Let’s face it…environmental agendas cost a lot of money...I don't believe the average American family is willing to pay much more than they're paying now to implement these agendas, no matter how guilty they feel. The race guilt has been assuaged for many liberals with the election of Obama, so why should they do much more in the future to promote environmental policies? If supporting these policies means higher taxes, lost jobs, or lower wages, then wait just a dog-gone minute...they didn't sign up for this much pain...they thought they were getting a check. The bottom line is that everyone has their limits...the Dumb and the Ignorant are no exception.

‘The Misled & Misinformed’
It’s amazing to see that the same ideologues who formed the policies that created the economic crisis are now in charge of 'fixing' it. Currently, most Americans are not talking about WHY we got here or even understand HOW we got here, but everyone is definitely concerned about all of the new, creative ways to artificially keep prices high so that they can keep all of the stuff that they shouldn't have bought in the first place. This backwards mindset is what got us into the problem in the first place! The market knows this and is pricing in all of the future tax hikes, inevitable government intervention, and general uncertainty surrounding a President who believes that reparations for slavery should be paid by today's taxpayers.

“Recommendations”
1) Pray often for the country
2) Find every ounce of humor within every pound of stupidity on display
3) Turn off the television for four years
4) Buy a puppy…you’ll be happier

FMC

CHANGE IS COMING: HIGHER TAXES

Here are some of the confiscatory tax increases Obama has thrown around (I feel like I’m in the twilight zone while writing this):

1) Foreign Income Tax Credit: I saw on the news today that Obama wants to eliminate the foreign income tax credit for multi-national businesses…doing away with this credit is essentially a tax increase on multi-national corporations…currently, if an American business has income from foreign-based operations, a tax credit in the amount of the overseas income tax paid can be taken on the U.S. tax return…the current practice is good for business, as companies currently don't pay tax twice on revenues earned overseas.

To my knowledge, under Obama, foreign income tax would be paid to the foreign country AND the foreign income would be taxed AGAIN in the U.S. when the income is reported on the U.S. tax return...this sucks! This is a HUGE deal for multi-national firms…being taxed twice on foreign income means less incentive to expand international operations, less money to hire new employees, and lower overall corporate profits. It’s just another example of how Obama's tax plan will kill American jobs by increasing the cost of doing business.

Just wait, I predict Obama will publicly say that he will not increase federal corporate income taxes…”Keep ‘em at 35%”, he’ll say. This will be the headline in the liberal media. However, most folks will not understand the effect of repealing the foreign income tax credit. Keeping the corporate income tax the same will pacify the uninformed…the Dems love to keep their own constituents in the dark on the facts, so it's wise to keep the repeal of the foreign tax credit in mind when the Dems come out w/ their 'gracious' 35% corporate income tax non-decision. And yes, they'll expect thanks from all of us for not raising this corporate income tax rate...just wait and see.


2) Cap & Trade Penalty – this is basically penalizing industries that create carbon emissions (i.e., coal industry and the like). Obama has said he would essentially institute penalties on the coal industry (in his own words, he said he’d bankrupt these companies!!) in an effort to pump more money into other more favorable energy industries of his choosing, such as solar…I’m not making this stuff up...Obama’s on the record w/ a San Francisco newspaper. In my view, Obama wants to penalize one industry in order to create an entirely new industry…this is government picking winners and losers again…we saw how well this worked with Lehman Brothers.

How is Obama going to pick winners and losers in different industries with our trading partners? Is this even possible?? China is causing more global pollution problems than anyone else with its coal plants…is Obama going to penalize China as well? Where does his approach stop? The markets have no idea, and we can see them price in the uncertainty on this issue and other issues as well.

Since coal is the #1 resource that provides electricity in America, expect energy bills to go up A LOT for most Americans if the coal industry is penalized to the max as Obama has suggested.

But, hey, if you believe that global temperatures will go down by .7 degrees over the next 100 years (maybe) if we punish the coal industry, then you’ll appreciate this selfish approach to government intervention. This is just one example of how the environmentalists are ruining the country. These folks are completely brainwashed and will stop at nothing to get what they want.
Meanwhile, folks who disagree with this approach will have to pay higher taxes to make the dream a reality. When are the majority of folks going to get a clue?

3) Obama wants to increase cap gains tax to 20%

Gee, this will help investment, won’t it? Not at all. In a tough market, this additional 5% means a lot to an individual investor, particularly when there aren't a lot of stocks moving to the upside.


4) Obama wants to increase taxes for single folks making over $200K and increase taxes for couples making over $250K…the upper cap on these federal income tax increases are close to 40%...of course, this % does not include Obama’s increases in payroll taxes and social security taxes…we could see effective tax rates at over 60% for the ‘rich’.

Why increase taxes on anyone right now? If you tax rich people more, they’ll simply hold on to their money, find more creative ways to save, or simply won’t invest as much. Also, you'll have more under-the-table illegal activity increase as a result of the new tax climate.

Chicago-style politics, here we come...

v/r,
FMC

A GAME OF EXPECTATIONS

Even though we’ve heard sweeping rhetoric and platitudes from Obama over the past two years and expectations have been set very high, expect the Dems to dial it back a notch (okay, twenty notches) in the coming months. If you listen to Obama carefully, he has already begun to set lower expectations for the months and years ahead…expect Obama to give himself a number of ‘outs’ over the next six months that will artfully allow him to retreat from his campaign promises.

These ‘outs’ will likely be billed by Obama as accepting the brutal realities of the current economic climate. It’s actually quite humorous to watch this happen so quickly after the election. I have no doubt that most Americans don’t have a clue as to how these lowered expectations will influence them...these folks are sheep.

I predict that the rosy outlook for Obama will change for many after the sunshine period of the next few months is over. If the economy gets worse over the next few years (and it likely will), don’t be surprised if Obama gets thrown under the bus by many voters as quickly as he has been embraced.

On some level, I believe that many on the left have assuaged their guilt by electing a minority President who is, in reality, the least qualified candidate for the Presidency in the history of our country. If someone doesn't believe that race didn't play a big part in this election, they're crazy. Don't be surprised if the majority of American's self-professed altriusm quickly comes into conflict with the realities of higher prices and higher taxes they must now pay to achieve that warm, squishy feeling they so adamantly desired.

Oh, the market is down another 300 points today on the Obama decision. Perhaps the market keeps pricing in the expected tax increases, as it has done for weeks now...duh. Perhaps Obama supporters who have 401Ks thought that their retirement plans were based on something other than stock prices...

v/r,
FMC

What is Obama Hiding?

Here is a fascinating phone conversation with Phil Berg on the Obama citizenship issue:

http://www.myfoxtoledo.com/myfox/MyFox/pages/sidebar_video.jsp?contentId=7637919&version=1&locale=EN-US

v/r,
FMC

Quote of the Week

"A person with a new idea is a crank until the idea succeeds."

-Mark Twain

Basic Requirements to be President

3 Things are Required to be President:

1) Minimum 35 years old
2) Must have resided in the United States for the past 14 years
3) Must have natural born citizenship status

Why isn't Obama presenting proof that shows he's a natural born citizen? My guess is that Obama does not currently have natural born citizenship status, or else he'd simply provide the documents...c'mon, this isn't rocket science.

This video sums it all up:

http://www.obamacrimes.com/


*Obama should have never screwed with Hillary (remember that Berg was one of Hillary's lawyers).

Does anybody wonder where the Clintons are right now? They're nowhere to be seen. They're likely sitting in the wings and waiting to witness all the carnage that's about to ensue for the Democrat party.

If the DNC nominated an ineligible candidate, roughly half of the country's voters will have been disenfranchised.

Unbelievable.

FMC

CAN OBAMA PROVE HIS CITIZENSHIP?

Obama’s ability to prove his citizenship is at the core of whether or not he’s eligible to be President of the United States.

The fact that Obama claims to have been born in Hawaii and has dual U.S./Kenyan citizenship may ultimately prove irrelevant to the eligibility argument. This is probably why the Obama camp recently made the dual citizenship info available to the public. It’s merely a distraction. Dual citizenship does NOT disqualify Obama for President…dual allegiance, lack of ‘natural born’ status, and/or age are some legitmate disqualifiers. As such, the dual U.S./Kenyan citizenship issue that has been brought up recently does not, by itself, disqualify Obama for the Presidency.

HOWEVER, if it is found that Obama was born in Kenya, he would simply not be eligible for President of the United States. Also, if Obama was an Indonesian citizen at ANY POINT in his life, he would NOT be eligible for President. Until 2007, Indonesia did not accept dual citizenship for their people. As such, U.S. policy did not recognize dual American/Indonesian citizenship either. The United States has historically mirrored the citizenship rules of the foreign country (in this case, Indonesia). Said another way, if someone before 2007 was an Indonesian citizen they could NOT also be an American citizen at the same time.

When Obama’s mother married an Indonesian man, that man adopted Obama at age five. Since Obama was only five years old, Indonesian law likely deemed Obama a ‘natural’ Indonesian citizen at that time. This fact seems to be supported by local school documents that cite Obama’s citizenship status as Indonesian.

Upon Obama’s return to the United States five years later at age 10, he could have either signed a Certificate of Citizenship upon his return, thus making him a ‘naturalized’ citizen (i.e., not a ‘natural born’ citizen, which is a requirement to be President); OR he could simply come back to the states and not file his citizenship paperwork at all (in which case he'd be an illegal alien)…currently, we don’t know which choice was made because Obama won’t tell us.

Let’s make an important point here…a ‘natural born’ citizen (i.e., a minimum requirement for President) means that you have NEVER ceased to be a citizen of the U.S. You could remain a natural born citizen if you maintained dual citizenship. However, Obama ceased being a ‘natural born’ citizen if & when he became an Indonesian citizen at any point.

Keep in mind that if it is proven that Obama was once an Indonesian citizen but later renounced his Indonesian citizenship (perhaps before running for Illinois Senate, let's say), I don't believe he would be stripped of his senator seat. Senators only have to be naturalized citizens…these yahoos don’t have to meet the higher standard of ‘natural born’ citizen that the President must meet. The founding fathers were very smart in doing this, as they did not want to risk electing a President that had dual allegiances with enemy countries.

Another thing that throws a wrench into the mix is that Obama traveled to Pakistan in 1981 when he was 20 years old. This was when Pakistan was on the Do-Not-Travel list of the U.S. State Department, making it very difficult to travel to Pakistan at that time on a U.S. passport. Sources have indicated that Obama perhaps traveled on his Indonesian passport during this time. If this is true, this is bad news for the Messiah. It would prove in another way that Obama was in fact an Indonesian citizen (i.e., you have to be Indonesian to have an Indonesian passport…duh). Obama should be asked: 'When you traveled to Pakistan, did you travel on a U.S. passport or Indonesian passport?' His answer to this question would determine his eligibility.

Confusing?

Bottom line: If it is proven that Obama was an Indonesian citizen at any point in his life, he would not maintain his ‘natural born’ status upon regaining U.S. citizenship and thus would not be eligible for President of the United States.

Hold on to your birth certificates!! The documents (or lack thereof) provided by Obama to the Penn. District Court will hopefully shed some new light on this situation. Things are going to get interesting in the next few weeks!

FMC

A Good Read

Sometimes I wish I didn't know the facts surrounding the credit crisis...life would be a lot easier.

Here's a good article by Thomas Sowell entitled 'Do Facts Matter?':

http://townhall.com/columnists/ThomasSowell/2008/10/03/do_facts_matter

If you know the facts regarding the current situation, I know it's tough on you. Don't despair! America WILL bounce back.

If Obama gets elected, this blog will begin to address how to make money in the market when Dems are in office...surprisingly, it can be done! More on this later...

FMC

Obama is the Poster Child for 'Affordable Housing'

Cut & paste into your address bar:

http://iusbvision.wordpress.com/2008/09/30/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/

v/r,
FMC

How Do Liberals Think? Part II

The leadership of the Democrat party is more agenda-driven than most of us can imagine. These thugs know exactly how to get what they want and what buttons to push to reach their goals. Just look at the housing crisis and the techniques employed by Congress and leftist organizations such as ACORN to increase the % of sub-prime loans on bank's portfolios. Deliberate attempts to force banks to offer more loans to low-income demographics was an agenda-driven strategy carried out by some on the far-left.

Increasing the number of sub-prime loans is exactly what Democrats Schumer, Dodd, Obama and Frank desired. The money that flowed into Fannie as a result of the explosion in the sub-prime market paved the way for huge bonuses for Fannie Mae executives, as well as larger campaign contributions for Democrats...again, all of this stemmed from an agenda-driven approach to provide low-income families with 'affordable housing' at the grass roots level.

If banks did not comply with quotas, they were threatened with litigation by thugs such as ACORN and yes, Barack Obama. Obama actually sued Citibank early in his career to push for more affirmative-action home loan policies...these are the same policies that led to the current economic crisis...Obama is the poster-child for these types of strong-arm tactics. To me, this entire strategy is like Robin Hood economics administered in gangster-like fashion.



Lets be clear...the Democratic Party of Kennedy is NOT the same Democrat Party of today. The Democrat party of today is a party of special interests. All you have to do is follow the money trail to realize this.


Far-left socialist liberal policies are ruining the fabric of America. If the trend toward liberal thought continues to grow in our country, we’ll see more American businesses move to places like Ireland where the corporate income tax rates are around 11%. If we continue to accept socialist tenets as mainstream public policy (the bailout is just a 1st step), an environment of more governmental intervention is inevitable.

If the Dems are allowed to increase the costs of doing business (higher taxes), how can we expect American businesses to magically increase their productivity? If you increase a manager's costs, they'll either 1) increase their prices if they can (not likely), or they'll 2) cut costs in other areas (jobs are usually the 1st thing to go). ECONOMIC GROWTH is needed to increase productivity...you create economic growth by providing incentives in the marketplace. You simply cannot increase companies' taxes in a recession and expect to increase the rate of growth in the GDP. It doesn’t work.

In my view, the Dems are wishful thinkers...their policies don't work in the real world. They can get away with failed policies because they've 1) perfected the blame game in Washington; and 2) they have such a strong sense of denial that, in their minds, abdicates them from taking any responsibility for the results of their own actions. This second point can be traced back to the very core of a liberal's belief system...you can NEVER question a liberal's motives and you can NEVER hold them accountable...they won't allow this to happen, at least in their own minds. This type of attitude was clearly on display on O’Reilly’s show last week when Barney Frank freaked out and would not accept any responsibility for the crisis. Liberals will NEVER take responsibility for their actions because they have no core belief system from which to judge themselves. Folks like this would rather talk about what the meaning of "is" is rather than accept responsibility for what they've done.

The moral compass of a far-left liberal (not necessarily a Reagan-Democrat) is always shifting...there's a consistent moving line of what's acceptable or unacceptable...it all depends on the situation. I believe that this is the root cause of why so many liberals on the far left are so miserable in their personal lives...this moving line of what's right or wrong is entirely dependent on the moment at hand. This view of the world says that whatever is convenient for the situation (i.e., whatever supports the agenda) is what's right. Deep down many of these folks know something is wrong with this belief system...they know they're miserable, but they don't know WHY. These folks are the ones who need to read my blog.


Final Thoughts:
You've got to hand it to the Dems. The class warfare and entitlement message have served them well in the past and this tactic seems to be working again. The Dems are great at creating disasters, placing the blame on others, denying any responsibility, and claiming to be the solution to the problem. Seen it a hundred times...

To believe any of the left’s claims, you have to be either incredibly gullible or just misinformed. I suspect that most of the Reagan Democrat-types simply don't know all of the facts.

FMC

How Do Liberals Think? Part I

Part of the liberal mindset dictates that 1) results aren’t important; and 2) a liberal's motives should never be questioned, period.

Regarding the 1st point, 'Results Aren’t Important'…we can clearly see the dire economic results of the Democrat’s failed affordable-housing program…the country’s economy is now on the brink of disaster. However, these results apparently don’t matter to Democrats…in their mind, all of the current economic failures are someone else’s fault…anyone presented with the facts knows otherwise.

Regarding the 2nd point, 'Motives Should Never be Questioned'…have you noticed that whenever Obama is questioned in any way whatsoever, the questioner is viciously attacked, sometimes even accused of being a racist? An AP reporter accused Governor Palin of being a racist a couple of days ago...you've got be kidding me. Bottom line: you simply cannot question a liberal’s motives without these folks completely freaking out...

When you think about it, a far-left liberal’s motives change like the wind…in their mind, this ‘flexibility’ is part of what makes their thinking ‘progressive’…a liberal does not understand or embrace the concept of principle-centered decision-making. Anything principle-centered is too restrictive for these folks. Liberals believe that their own beliefs and values are continually evolving...as such, it becomes easier for them to shift their positions, shift blame, shift reasoning, and shift public policy to support the popular belief of the day or to support their underlying social agenda. In using this flexible approach, liberals honestly believe they’re being ‘objective’ and that their ‘progressive’ outlook on life somehow ‘advances the human race’. Realizing that a liberal views his or herself as objective provides some insight into the liberal way of thinking.

Liberals prefer to develop belief systems based on wishful social theories rather than economic realities. I believe that liberals view the world in this way because it's 1) more gratifying for them on an intellectual level to develop social theories of what America could be; and 2) they believe in their hearts that they're doing society a favor in implementing these social programs (remember, a Liberal's actions are often narrowly focused & primarily agenda-driven...these folks do NOT take into account the potential negative effects of their actions). As we're now seeing, the taxpayers who will be hurt by the 'affordable housing' program seem far less important to the left.

The Dems care about keeping their constituents happy, which means supporting specific agendas. Why else would Dems have attempted to funnel $20 billion of the orginal $700 billion bailot package to ACORN, an activist group found guilty of voter fraud? Appeasing groups like ACORN got us into this economic mess in the first place(remember that ACORN strong-armed banks to offer more sub-prime loans). When you're dealing with die-hard liberals, you have to realize that it's all about social action and social justice (i.e., agendas & bullying). What the libs don't tell you is that in their 'Ideal Utopia', all Americans will have to pay higher taxes to make this vision a reality.

It’s pretty sad when you think about how a die-hard leftist liberal views the world. They’re beliefs are always in flux…there's no core from which to base decisions. It must be a miserable existence emotionally for many people who view the world in this fashion. From Obama, we've heard what a horrible country America is...of course, he has cut back the rhetoric, but this is the exact same type of message that Reverend Wright has espoused from the beginning. From my perspective, it’s next to impossible to reason with someone who views the world in such an extreme manner. I realize that not all Democrats are like Obama...many honest, hardworking Democrats are simply being misled as to what their party truly represents.

Let's face it...the Dem platform is based on a 'Hate Bush' message. It's sad that this is apparently the type of representative leadership most Americans are looking for...only a person filled with a certain degree of hate could view our nation in such a way.

PLEASE don't vote for Obama...to do so would simply be rewarding the behavior and ideology that led to the current economic crisis.

v/r,
FMC

Which Came First, the Crisis or the Cause?

It’s staggering just how much Americans have been misled regarding the credit crisis. I’ve heard commentators make arguments that confuse and confound the public.

Utter chaos is a liberal’s delight. As such, the current economic environment is a perfect opportunity for the left to ‘save the day’, at least in their own minds. Sadly, it appears that most Americans are drinking this Kool-Aid, buying into biased versions of what actually transpired.

If I hear the “plenty of blame to go around” argument one more time, I’m gonna puke. While it is technically true that individuals from both parties are to blame to some extent, the MASS MAJORITY of culpability (99%) rests squarely on the shoulders of the Democrats in Congress. Fannie wasn’t run by Republicans. It was run by Democrats, protected by Democrats, and it contributed primarily to Democrats.

If there are any folks out there that believe Obama can ‘fix’ all of the problems in our economy, do a favor and ask yourself the following:

Would the crisis have occurred if affirmative-action housing programs were NOT pushed by Democrats and liberal special interest groups?

Answer: No. Absolutely not.

It’s really this simple. If Republicans had gotten their way and more regulatory oversight of Fannie was allowed, the affirmative-action housing program that led to the crisis would NOT have happened to such a large extent.

Consider what could have been prevented if John McCain’s bill for more oversight of Fannie had passed a few years ago:

1) Banks would NOT have been encouraged to engage in as many questionable lending practices for low-income borrowers

2) The sub-prime market would NOT have grown over 2,700% over the past two years (the Bush administration warned about this excessive growth in the OFHEO hearings, but this claim was shot down by senators Schumer, Frank, and Dodd)

3) Banks would NOT have been pressured by special interest groups to offer as many bad loans

4) Banks would NOT have been compelled to offer kickbacks to special interest groups (i.e., ACORN) to avoid potential lawsuits by these radical community groups

5) Rating agencies would NOT have had a chance to collude with investment banks to such a large extent; said another way, there would have been less sub-prime mortgage securities on the market and thus less collusion overall

6) The Ponzi scheme would have never had an opportunity to flourish if artificial demand for sub-prime had not been initially encouraged. Think about it…if gov had not pushed affordable housing, Fannie and Freddie would NOT have purchased these worthless loans, packaged these worthless loans and sold these worthless assets to investment banks. As such, investment banks would NOT have later packaged these worthless loans from Fannie and later sold these worthless instruments to investors…all roads point back to Fannie in this scheme…who ran Fannie? The Dems ran Fannie.


In a nutshell, the current crisis would have NOT happened to such a large extent if leftist special interest groups and liberal politicians had been stopped a few years ago with the proposed McCain bill. This entire crisis could have been prevented.

It’s easy for the liberal media to confuse voters on this issue. They purposefully get their audiences mired in one of the six points outlined above and never get to the root cause of the crisis. Anyone who dares criticize the true culprits is often called a racist…this is typical and par for the course. When you observe the beliefs of the left closely, the same themes pop up repeatedly…class warfare, higher taxes, income redistribution, & bigger government…these folks claim that government can solve all problems. If this is true, why should anyone accept any personal responsibility?

Liberalism…it’s not really as ‘fair’ and ‘neighborly’ as the Democrats would have you think. If Obama gets elected, God help our country.

FMC

Quote of the Week

“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”

-Albert Einstein

SARAH BARRACUDA!!!

I'm so proud of Sarah...she did an awesome job! We love her!

Whenever I get inspired by Sarah, I like to play the Barracuda song:

http://www.youtube.com/watch?v=hpkitLUbeEg


v/r,
FMC

Broken Trust

Here are a few legitimate reasons Americans should NOT trust some of the nut-jobs in Congress:

1) Democrats lied about having a deal sewn up before John McCain arrived in Washington…completely untrue

2) Democrats stating that John McCain’s arrival sabotaged the bill that they had already had a consensus on…this is a lie on top of another lie

3) Partisan grand-standing by Pelosi in front of cameras and on the House floor…these attacks were vicious and completely unnecessary

4) Barney Frank lying on camera, claiming no responsibility for the current credit crisis whatsoever…he’s on the record to the contrary

5) Barney Frank calls Bill O’Reilly a far-right lunatic. It takes someone extremely far left to call someone that plays it down the center a far-right loon.

6) The initial version of the bailout bill had Democrats giving 20% of the $700 billion to Acorn, an Obama-supported group convicted of voter fraud

7) Democrats attempted to put the blame solely on the Republicans for the credit crisis when the evidence strongly suggests otherwise…one simply has to view the OFEO hearings to see this…it’s all on the record

8) Version 2 of the bill shows approximately $800 billion in total spending…Congress just couldn't help themselves...they had to add another $100 billion.

9) Senator Dodd, one of the people chiefly responsible for the current crisis, praises himself on television, stating that we were lucky to have him as part of the solution to this crisis…unbelievable.

10) Senator Dodd, along with Barney Frank, said that they would hold hearings to get to the bottom of the crisis…what a joke…these two ring-leaders were a central cause of the entire problem…how could these hearings possibly be taken seriously?

11) Pelosi took a vote to the House floor when she didn’t even have enough votes for the bill to pass. This was pure stupidity on display. She had no idea what was going on in the House whatsoever.

12) Barney Frank gets in front of TV cameras and sarcastically states that he wants to know the names of the Republicans who voted against the bill, claiming these ‘no-votes’ by Republicans meant that these conservatives didn’t care about their country. The REALITY is that 12 of Barney Frank’s own senior Democrat committee members voted against the bill as well…why didn’t Barney question his own folk’s patriotism? Answer: double-standard.

13) Pelosi called House Republicans unpatriotic on television

14) Bernanke and Paulson have repeatedly been wrong on the economy throughout this entire year

15) Anecdotal evidence keeps surfacing that many creditworthy individuals are not having any trouble securing loans

16) Prominent CEOs appearing on television stating that banks shouldn’t be allowed to loan the same amount of funds as has been done in the past

17) McCain completely blew an opportunity handed to him by the President to side with the American people and oppose the bill

18) Obama says he’ll lower taxes, yet his voting record screams otherwise

19) Democrats forced corporations to meet demographic quotas on mortgage loans, which directly led to the crisis

20) Neil Cavuto was on the air the other day stating that loans among corporations have actually increased over the past 3 months…go figure

Why is John McCain down in the polls and getting blamed for the economic crisis? I believe people don’t know who to trust and they’re unwilling to do any effort to search for the facts…the Democrats are lying their butts off to a degree that’s unprecedented. As such, it looks like most folks are buying into the lies and the tripe the liberal media is dishing out every day.

All roads lead back to Fannie & Freddie…the facts don’t lie. I attribute most of the reactions listed above to the Dems panicking… they know they’re guilty.

If the current polls are accurate, it goes to show that most Americans are not only uninformed, they’re deliberately misinformed.

FMC

Blaming Accounting Rules for the Crisis? Whatever…

Wow…I thought that the Democrats who forced companies to peddle questionable loans were guilty of the credit crisis. Apparently, there are some who blame a relatively new accounting rule, FAS 157. This argument seems, at best, far-fetched. FAS 157 refers to the ‘Mark to Market’ rule that’s getting tossed around the news.

Under this relatively new accounting rule, companies classify their assets into 3 categories (Level 1, 2, and 3). Simple, right?

Level 1 Assets are the easiest to value…these would include stocks & bonds (i.e. any asset with a readily determinable market value). Riskier Level 3 assets don’t have a readily known market value and are thus more difficult to determine a price. You guessed it, mortgage-backed securities based on sub-prime mortgages are Level 3…nobody knows what these suckers are worth! Level 2 Assets are somewhere in the middle.

Guess what…management gets to decide the value of Level 3 assets! Good for them, right? Maybe, maybe not. At the moment, this rule doesn’t seem to be helping the financials one bit…many of these entities are burdened with bad sub-prime paper and there’s no current market in which to sell this stuff. As such, management at banks who hold this toxic paper have recently taken massive write-downs on these assets…these write-downs are magnified with FAS 157, as many institutions have written down their subprime to a level WAY BELOW what some believe this paper will be worth in the future. These write-downs cause all kinds of problems for banks (increased losses and asset devaluation)…as such, bank’s debt/asset ratios get screwed up, which lowers their credit rating and limits their ability to borrow from other banks. To make things worse, investors jump ship when things like this occur, magnifying the bank’s problems further.

Some believe that the dollar values of these questionable Level 3 assets have been written down so much by management that these losses have been over-done. Folks in this camp would argue that the sub-prime slime WILL be worth something some day...maybe they’re right. This is the type of argument Paulson has been trying to make all along (i.e., the taxpayer will eventually make some money on these undervalued mortgage securities, EVEN IF we pay above current market price). By purchasing a ton of sub-prime securities, the government would essentially create a new market for this paper, with the hope that other buyers would eventually jump in once the paper had more concrete value.

All of this may not seem important at first glance, but the different methods of valuing assets is EXTREMELY important, especially for banks…as you know, bank’s credit ratings are determined by the soundness of their financial statements. As such, the credit ratings banks receive are a direct reflection of the entities’ overall financial health. Bottom line: a bank’s credit rating helps to determine how much one bank is willing to lend to another bank…this is pretty straightforward stuff when you think about it.

While the means in which a bank’s assets are valued is important, I’m not sure how suspending the ‘Mark to Market’ rule would remedy the current crisis. Investment bankers don’t enter into stupid transactions unless they're forced to do so by the government (this is why the crisis happened, btw). If we suspended FAS 157 and the values of sub-prime securities suddenly shot up on paper, wouldn’t rating agencies have to adjust their models to reflect these higher valuations? In a nutshell, wouldn’t credit rating agencies have to take these higher valuations post-FAS 157 with a grain of salt?? Not every bank will be able to unload their sub-prime and take advantage of Paulson's higher asking price.

Even with a sudden improvement to some bank’s financial statements through the suspension of the mark-to-market rule, I don’t believe most banks would start lending more money to one another. It seems like credit rating agencies would STILL have to take into account the fact that there’s NO MARKET for subprime...duh.

Do you believe that banks will magically start lending more money to one another simply because an accounting rule has changed and sub-prime mortgages are suddenly recorded at higher valuations? Maybe some banks will…I honestly don’t know. It probably depends on an individual bank’s overall financial health, and how the financial industry collectively views the rule change.

At first blush, it seems that changing this accounting rule might (and I stress, might) positively impact a few banks, but most banks would still be in big doo-doo.

FMC

I'm Really Fuming Now...You've Got to See This

http://www.americanthinker.com/blog/2008/09/memory_lane_lynching_franklin.html

What Caused the Loan Crisis?

This is a wonderful editorial series on the crisis:

http://www.ibdeditorials.com/series11.aspx


v/r,
FMC

The Biggest Affirmative-Action Play in US History

I’ve already seen traitors like Barney Franke and Chris Dodd go on the offensive, claiming they’re going to “hold hearings” to get to the bottom of this credit crisis…what a joke. These guys and others who supported ‘affordable housing’ programs took advantage of the regulatory environment to meet their specific objectives. These objectives included, among other things, punishing banks by imposing government penalties if specific quotas for sub-prime mortgages were not met. Dems like Franke, Dodd, and Schumer effectively achieved their vision…more homes for poor folks…look where it got us…a socialist-type of environment where wealth must now be distributed among all Americans in order to keep the economy afloat.

Dems took advantage of the regulatory environment to promote their own agenda. All of these guys are on the record in recent years defending Freddie and Fannie, claiming these institutions were in solid financial shape. How could Fannie be in such great shape when they’ve been restating their financial statements for several years? This is insanity.

Think about it…if the government told you that they would impose fines on your business if you didn’t sell specific products, would you sell these products to avoid paying the fine? This is exactly what happened. Liberals coerced banks to offer loans that supported the Dem’s ‘affordable housing’ agenda. The trickle-down effects of this strong-arm approach eventually led to predatory lending among mortgage brokers to meet artificial demand, and rating agency/investment bank collusion to package worthless securities products. Of course, there’s more to this story (pls read Glass Steagall Act post on this website)

I realize that it’s convenient for many Americans to ignore the fact that President Bush, along with John McCain and Alan Greenspan, REPEATEDLY called for more regulation of Fannie & Freddie as early as 2001 while the Dems opposed these controls (this is all on the record and undeniable). If we would have listened to the President early on, we wouldn’t be in this mess. The facts don’t lie. I realize this belief doesn’t fit the popular template that permeates our society, but who the hell cares. I care more about the country…we need to look at the facts.

John McCain has an opportunity here…he has the TRUTH about how the crisis unfolded. All roads point to Fannie &Freddie, and senators like Franke, Schumer, Dodd, Clinton, and Obama. If McCain doesn’t expose specific individual’s actions, he probably won’t win.

The Dems are already slamming the Republicans on this, and it’s all a slew of lies…why don’t Republicans fight back?? We’ve got the truth on our side regarding this entire thing…if the McCain camp doesn’t fight back on this issue, they don’t deserve to win.

FMC

A Must-See for Undecided Voters

The Democrats chose not to adopt new regulations proposed by Republicans that would have prevented the housing crisis altogether.

http://www.youtube.com/watch?v=cMnSp4qEXNM&feature=related


http://www.youtube.com/watch?v=H5tZc8oH--o

PLEASE forward these links to anyone who may be an undecided voter. They need to see this.

FMC

Quote of the Week

"Never let your dog watch your food, and never let Congress watch your money."

- Barry Goldwater, Jr.

INVESTMENT TROUBLES? DON’T PANIC

For those of you who have temporarily taken a big hit to your retirement account, PLEASE don’t sell right now! I know that this goes against every human instinct you may be feeling at the moment, but you simply CANNOT sell at a loss.

Contrary to popular belief, Wall Street is full of liberals who love government intervention when it benefits them. After some form of the bailout is implemented, we WILL SEE A RALLY in the markets.

Luckily, I sold all of my stocks a month ago...the market was just too difficult.

If I still had money in the market now and was sitting on a 25% loss, I’d wait for a short-term rally following the bailout package. I actually believe folks will recoup much of their investment, if not all of it, after the package is implemented. HOWEVER, I believe this rally will be short-lived. If it were me, I’d sell into strength on the rally and begin increasing my cash position. I’d even stay out of bonds for a while. Things are too uncertain at the moment.

Cash is king for the next couple of years...at the moment, capital preservation is more important than going for gains. Again, wait for the impending rally and sell into strength…if you end up being down 5% for the year, consider yourself lucky.

This strategy does not apply to investments in tax-incentive instruments (ex. Roth or Traditional IRA)...I'd leave these alone.

FMC

WE’RE IN A QUANDARY

The government is trying to figure out how to get the toxic paper off bank’s financial statements; the banks are trying to figure out how to sell their bad paper without becoming insolvent; the American people are trying to figure out how a plan can be implemented that doesn’t hit their pocketbook; and Congress is trying to solve the problem quickly so they can go campaign over the weekend. It’s really a mess. The only people who are going to benefit from this mess are those who made shady deals early on and got out of this business a year ago...the rest of us will have to pay in some form or another.

All of this can be traced back to housing. Shady lending practices and government corruption veiled in ‘affordable housing’ programs are among the things that got us here.

It appears to me that the correction is going to come, no matter what we do. The losses will have to be taken at some point by the banks, and many of the weaker banks will simply go under & get bought by bigger, stronger banks like JP Morgan Chase, USBank, and others. We’ll see massive consolidation going forward …only the big fish will survive.

To my knowledge, though, consolidations don’t solve the lending liquidity issue. This problem stems from the faulty paper…this paper has to go on somebody’s books…so get ready, we're gonna pay!

FMC

THIS IS A TOUGH SITUATION

I get the fact that we’re in a bad situation. Banks aren’t making as many loans to one another because the assets of many banks cannot be easily valued…so, the liquidity freeze in lending among banks makes it more difficult for farms, small businesses, and consumers to get loans. This freeze in lending is just as psychological as it is rooted in numbers. Think about it…the businesses that have the toxic paper on their books haven’t taken their losses on this paper, so their bottom line (net income) has not been negatively impacted yet. Bank A says ‘I’m not lending to Bank B cuz’ I don’t know how much their assets are really worth!’ If banks don’t lend to each other, they don’t lend to us. Would you lend money to a friend in trouble if you weren’t sure that friend could pay you back? (in this scenario, your friend needs the money to make a loan to another person)

I understand that something has to be done here to flush the toxic waste and bring the losses onto the bank’s books…if Paulson’s goal is to buy as much of this paper as possible, I just don’t see how we’ll pay rock-bottom prices for the junk (see GOOD IDEAS, BAD IDEAS blog for my thoughts on the reverse auction)

If banks sell their paper at too low of a price, they run the risk of recording too much loss. When this happens, they run a higher risk of becoming insolvent. So…my argument is that banks will try & get the highest price they can for their mortgage security paper, which means a higher price tag you and I must pay as taxpayers.

Paulson's argument must be that the gov & the banks are more concerned with simply getting the bad paper off bank's books so that lending can resume...fair enough. I just see that there are limits as to what banks will be able to sell...also, with this plan, there are NO LIMITS to how much the taxpayer will have to ultimately pay. I understand the short-term thinking behind the deal...it'll probably work in the short-term; however, the plan doesn't take into account the inherent Washington tendency to turn a deal like this into something worse a few years down the line.

I prefer open market mechanisms be used to the greatest extent possible if we’re going to tinker with the bank system. There has to be a plan that will have the desired effect of giving banks an opportunity to slowly unload their mortgage securities over time, while at the same time borrowing funds from the government at low rates that these banks would have to pay back.

I don’t know what all of the mechanisms would be, but I don’t like Paulson’s blank check idea with the reverse auction…this approach puts the banks in the driver’s seat. Yeah, this would get banks moving again quickly, but it would put strain on the taxpayer and lay the groundwork for more government programs. Larger government programs are what I fear the most…Paulson’s plan would work in the short-term, but can you imagine the types of federal programs that could easily be inspired by such a massive bailout?

Sure, more banks would fail under a slower moving approach to the bailout, but as a taxpayer I’m not as concerned with helping every bank. If you’ve read my previous posts, you know that I’m of the mindset to let the weakest banks go under; many of these will get bought up anyway by the likes of JP Morgan, USBank, etc.

The massive banks have more capital and are big enough to handle the losses of the banks they’ve just acquired….this is why JP Morgan just bought a failed WaMu! The big boys like JPM have enough capital to buy distressed banks and are in a better position to wait things out until home values stabilize.

v/r,
FMC

SO WHAT HAPPENS NEXT?

So what happens after we throw a whopping $700 billion into the financial markets, assuming this amount of money can even be effectively distributed?

My guess is that Wall Street will get back to business as usual. Things will likely look better in the short term…folks will blindly say, ‘I guess we did the right thing…look at how well the markets are doing!’

If Wall Street-types believe that a second bailout is a real possibility four to six months from now, do you think that they’ll be more or less aggressive with their lending practices? As far as I know, the regulatory environment will not change one bit immediately following the bailout package. Why should we think that Wall Street will change at all in the short term? I’m afraid that the American people are being sold a bill of goods.

There’s no way we can stop this economic slowdown...as such, I’d prefer to implement market incentives rather than government intervention any day of the week.

FMC

PAULSON’S WAY OR THE HIGHWAY

I think the bailout sets a dangerous precedent and is a huge mistake. Let’s consider some other alternatives:

0) Eliminate the capital gains tax for a couple of years…this would flood money into our markets…

1) Borrowing is not the only way to raise money; companies can issue more stock as well. This is already happening…look at Warren Buffet’s recent deal with Goldman Sachs...hmmm, the market is already adjusting...imagine that.

2) Cut corporate taxes dramatically, at least in the short-term

3) Include a plan to balance the budget…this sounds obvious, but the concept is foreign to most politicians; cutting spending would increase market confidence a great deal ;however, no one is speaking this language (lobbyist corruption in Washington doesn’t promote reductions in spending, so this is wishful thinking, I know)

4) Offer up lower interest loans backed by the government to troubled entities and let these folks slowly work through their troubles over the next five years

5) Do one more rate cut of 50 basis points

6) Simply let more banks fail…they got themselves into this mess in the 1st place


I don't trust government to become landlord for an additional 5% of all U.S. mortgages (this is what the $700 billion represents, I believe). We won’t pay market prices for any of this junk paper...as taxpayers, we’ll pay ABOVE MARKET for this toxic waste.

If the companies with worthless paper are allowed to sell these bogus securities, they'll effectively take big losses...as such, these companies could become insolvent anyway due to the large losses taken on the books. How does the bailout help these companies? Let's get more capital infusion via stock issuances and offer up incentives instead.

If taxes are raised post-bailout, we’ll be in even worse shape. Let’s do ourselves a favor and vote the big spenders out of Congress. We need reform and we need it now in the form of effective (not more) government and investor incentives.

FMC

GOOD IDEAS, BAD IDEAS

Good idea: Some folks in Washington are toying around with an idea that would give bankruptcy court judges the authority to renegotiate someone’s mortgage terms if that person were to declare bankruptcy. This seems like a logical way to keep more people in their homes. A renegotiated mortgage could lower monthly payments and possibly prevent foreclosure. To my knowledge, bankruptcy court judges have not previously held this authority.


Bad idea: Paulson stays in his current job…come on, Mr. Treasury Secretary, quit getting kicked around by the talking heads in Congress and take that high-paying CEO job that you know you want!


Good idea: Implement a staged approach to putting money into the market at set increments going forward...this way, the market could gauge the impact of the cash infusions & we could reduce the risk of overspending. This would also allow us to STOP spending if the market stabilizes to an acceptable level.


Bad Idea: Allowing the dishonest folks who originally created the exotic mortgage securities to determine the price that the U.S. government must pay for these securities …this is the ‘reverse-auction’ that has been proposed.

This is how I understand the reverse auction mechanism: banks would compete to unload their worthless paper, naming the price they’re willing to sell…this competition among banks theoretically drives the price down. Technically, this means lowers prices paid by the taxpayer. The only problem with this scenario is that no one really knows how much their paper is worth in the first place. You & I are buying this stuff and trusting the government to pay the best (lowest) price. Do you trust that the brainiacs who got us into this in the first place (the deal-makers who securitized the mortgages) will set a fair price?? This puts them in the driver’s seat a 2nd time…I know where these people’s priorities are…they want to make money, which means getting the highest price they can obtain. Paulson seems all too eager to buy this stuff up as quickly as possible, so do you think that we'll really get the lowest possible price?

I say let the taxpayer set the price….have the government throw out EXTREMELY LOW-BALL OFFERS on these pieces of junk and see who takes the bait. Shouldn’t we ensure that we (the taxpayer) get the lowest possible price on this paper? I don’t know about you, but I just don’t trust the deal-makers who got us into this mess in the first place to name their price. Since it’s my money going out the door here, I WANT TO NAME THE PRICE!

The taxpayer should pay pennies on the dollar for this junk. Those investments banks who do not want to accept OUR low-ball offers can go under….screw ‘em!


Good Idea: Not fretting about the crisis…it’ll all be over in a couple of years.

NO BIAS, NO BULL…YEAH, RIGHT

Last night, I saw a reporter on CNN who compared McCain and Obama’s economic plans. I believe his name was Ali.

Ali began his shtick by saying that both McCain and Obama’s economic plans are unrealistic. He also said that that neither candidate would be able to implement their existing economic policies. Fair enough…I tend to agree with this statement, especially in lieu of recent events.

Ali then proceeded to show how much both McCain and Obama’s plans would impact the deficit if either candidate’s plan was implemented.

The result for McCain’s plan showed an increase in the deficit of $302 billion (shame on McCain!), while the net result for Obama increased the deficit by a mere $14 billion (all hail the Messiah!). Accounting is my profession, so I was amused at how these numbers were brazenly presented by CNN under the guise of ‘No Bias, No Bull’.

It is IMPOSSIBLE to determine the end result on the deficit for either candidate’s proposal. One can come up with countless arguments for debunking the figures that were shown (unknown variations in economic growth, risk of terrorist attacks, increased inflation, impact of taxes on company profits, etc.).

Let’s look at one example: payroll taxes. To my knowledge, Obama’s proposed payroll taxes have no upper limit, so the payroll tax can technically go to 100%. How in the heck can a net impact on the deficit be determined if there are no limits on how much payroll tax can be increased under Obama? This shoot-from-the-hip journalism on CNN doesn’t pass the smell test for me...I guess they got their intended message out there, though.

In my view, it’s perfectly fine to declare yourself a conservative, liberal, libertarian, vegetarian, librarian, or whatever. What really gets under my skin is when networks claim to operate fairly but present information in a biased fashion.

To me, bias veiled in objectivity is offensive. Some reporters at CNN operate on a level of hypocrisy that's on par with some nasty things I don't care to mention. Of course the left's ability to rationalize their behavior is legendary, so I don't expect a change in approach.

If CNN and the other networks just admit ON AIR that they’re in the tank for Obama or another candidate, I could accept their arguments at face value. I’d actually respect them more if they did this...this approach would be honest; but let’s cut the $#%#…feigning objectivity when you’re really supporting a candidate undermines any credibility or journalistic integrity. These folks just don’t get it, and probably never will.

FMC

IS BAILOUT A BUSH HEAD-FAKE?

The $700 billion bailout could be a huge opportunity for John McCain.

The bailout is so radically far-left of center in its approach that it doesn’t pass the smell test for most conservatives. The plan is so far-reaching for Republicans (and most taxpayers) that Democrats can’t help but to intuitively embrace it.

Don’t underestimate the Republican’s ability to drive Democrats crazy and send them into a frenzy…Republicans have been doing this for years; it’s actually pretty easy to do…look at what’s happening now.

Could this whole thing have been crafted by design to a certain extent? Could the bailout be the biggest political head-fake in the history of our country? The left would say ‘Absolutely not…Bush is too dumb to think of such a thing’. One of Bush’s greatest strengths, though, is that he’s still a very skilled politician and is continually underestimated.

We probably need a bailout of some type, but to suggest a bailout so large with so few strings attached seems to scream 'politics'. Why couldn’t the bailout have waited a few months? Why not try a bailout of $300 billion and let a few more banks fail before doing something so drastic?? Bernanke and Paulson have been continually wrong over the past year on the economy...this leads me to believe that this move is as much political than anything else.

The bailout by Bush allows McCain a political opportunity to: 1) disagree with the President’s bailout plan (further distancing himself from Bush policies), 2) demonstrate his Maverick qualities by developing a bi-partisan approach to solve the issue, and 3) catch Obama in supporting Bush’s bailout on some level (yes, this is a real possibility!).

Wouldn’t it be ironic if later this week the Obama camp did not disapprove of the Bush bailout?? This is as good as supporting Bush! This is not a position the Obama camp wants to be in…perhaps this is why Obama is proceeding with caution (i.e., inaction for political reasons as McCain's camp has suggested). Obama has to be extra careful on this issue due to his direct associations with Fannie & Freddie, both of which are at the heart of the entire debacle.

I just can't see Obama getting elected if this bailout continues to send a Democrat-led Congress into a tailspin. McCain should be hoping for a Congress divided all the way to November 4th. This gridlock would continue to highlight the ineptitude of Congress, building on the Republican's platform of reform.

FMC

October Surprise Came Early

It baffles me that our government presented a plan that would not implement ONE PENNY worth of budget cuts to help with this crisis. Let’s go ahead and spend $700 billion, but let’s not do a corresponding budget cut in any area to offset this new cost…incredible.

Corruption in Washington is so deep (on both sides) that to even consider a federal budget cut is seemingly beyond comprehension. NOT ONE PENNY IN CUTS. Doesn’t this bother anyone? I haven’t seen talk of a massive budget cut proposal to accompany this new emergency outlay anywhere in the news.

Governor Palin is perhaps the only one who has even alluded to trimming unnecessary spending in our government (aside from McCain’s earmark stance). This reduction in spending approach gets some folks on the left so angry (it limits their power with constituents and special interests...let's face it, there are a lot of folks to keep happy). With that said, I believe Palin is actually right on the money concerning limited spending….if a government spends frivolously beyond its means, how can this benefit the people?

Going forward, both Presidential candidates will likely have to completely revamp their economic plans. If Obama implements his current spending plan, the U.S. would add roughly $500 billion in additional costs to the deficit. I don’t feel comfy with the prospect of increasing our national debt this much, especially in the current environment.

On the other hand, if McCain doesn’t reduce U.S. presence in the Middle East AND cut domestic spending dramatically, I’m not sure we will be able to turn the economic crisis around over the next four years. McCain’s approach to cutting earmarks is great, but earmarks alone won’t do it. We need massive budget cuts and we need them now.

I was very disturbed to hear that some in Congress wanted to add additional mortgage bailout initiatives to the $700 billion plan. Whoa…this is exactly the approach that got us into this pickle in the first place (i.e., the belief that every American deserves a home whether or not they can afford it). This goes to show that certain folks in Congress will spend more if they can, even if our country is on the potential brink of disaster. The spending culture in Washington is very disturbing to me…we can’t keep throwing money at every problem we see.

While some may believe that it’s every American’s patriotic duty to pay more in taxes, I disagree with this premise. Any politician who goes down this road will likely end up with egg on their face. Americans are (rightfully) angry about the current situation and do NOT want to pay higher taxes to bail out CEOs and to keep people in thier homes...this is pure distribution of wealth.


Final thought:
For decades, many of us have lived beyond our means as individuals at one point or another. The problem I see now is that when people cannot sustain their desired standard of living, they begin looking to government for answers...this way of thinking is extending beyond party lines.

The scary thing is that many Americans may get exactly what they’re looking for…more government in our lives.

v/r,
FMC

Walk Softly & Carry a Big Bazooka

I can’t help but remember Paulson’s testimony to Congress where he used the (very cool) bazooka metaphor (i.e., if the market believes the government can step in & utilize a back-stop to save Fannie & Freddie, there will be more confidence in the markets). This approach worked for a while, then things reversed again in the stock market a few months later.

The $700 billion bailout seems like Round 2 of the Paulsonesque-thinking of economics…there are no specifics presented to justify such a large bailout, yet by providing a big $ number, this sends a strong message intended to calm the markets and prevent a run on certain banks.

The bazooka thing only worked for a short time. Perhaps Round 2 of Paulson’s psychological game will last a bit longer, but I’m not optimistic. Somebody’s gonna have to pay for this (you & me!).

Paulson needs to provide another pithy comment for this bailout...something like, "Walk Softly & Carry a Big Howitzer".

Blog's 1st Day - Final thoughts

Okay, my previous posts were a bit pointed, but I felt a need to speak my mind on the bailout issue.

btw, I'm a supporter of a free market approach, and I'm a conservative at heart. I'm voting for McCain/Palin.

I believe in the trickle-down approach to economics in that the ONLY real tax is a tax on the taxpayer herself. Kinda deep, huh? Not really...I just believe that businesses pass on increased costs (higher taxes, etc.) to consumers...in my mind, this is a real world approach.

Thanks to those of you who sent me an email today...pls dive in and provide comments on the blog!

Peace,
FMC

Glass Steagall Act

It looks like the Glass Steagall Act was originally in place for good reason. The Clinton administration and lobbyists worked to repeal this legislation, which created enough deregulation of the credit environment that led to the real estate boom from the early 1990s to now. Throw in Greenspan's low interest rates & no limits on how much investment banks could borrow, and yippee...everybody gets a home...now we're feeling the pain of this overblown growth that happened for nearly two decades. Credit companies levered up way too much. The approach worked as long as there were buyers of homes and mortgage-backed securities.

http://en.wikipedia.org/wiki/Glass-Steagall_Act

Everybody's talking about whether or not we should bail out these credit & insurance companies....of course we shouldn't, but this is again the wrong choice and only focuses on the resulting symptom rather than the underlying problem...the real problem behind this issue is how BOTH Democrats & Republicans were complicit in this whole debacle w/ lobbysists since the 1990s. Once the legislation was repealed, credit companies and investment banks ran w/ this new loose lending environment & began packaging worthless securities products (and the rating agencies began writing up bogus ratings to support these practices).

I hate to say it, but Washington AND Wall Street are both corrupt, and both Rep. & Dem. are still too afraid of losing power to say no to lobbyist requests. I don't see things changing any time soon. Politicians want the campaign dollars that these large companies provide...why else would Glass Steagal have been repealed?? It was obviously working to some extent.

I've just realized, for the 1st time in my life, how truly corrupt our government and financial system are. My prediction is that we'll create another gigantic piece of legislation like Sarbanes-Oxley that only drives more business to England and other countries and doesn't solve the heart of the issue (government & Wall Street lobbyist & campaign corruption).

We just needed to keep Glass Steagal in place (and modify it along the way)...it's that simple...now the resulting actions fo 'fix' the problem will likely be overblown, sort of like Sarbanes-Oxley...when will we ever learn that we only need 'just enough' regulation to get the job done, no more.

Also, this whole bailout mentality that the Bush administration now supports is very disturbing (and surprising) to me. I've been a Bush supporter through thick & thin, but I just can't support the extent of the bailouts. I can see saving GSAs Fannie & Freddie, but the other companies??

It's wishful thinking, but the leadership of these gigantic credit institutions should be prosecuted and forced to pay back at least part of the money they took to the bank. I don't believe this will happen...by attempting to prosecute the real offenders, the politicians would reveal their own dishonesty...by prosecuting the CEOs, politician's relationships to the lobbyists and others would be revealed.

v/r,
FMC (Free Mkt Capitalist)

Palin Gets It

Here's some good info on the 'Ponzi Scheme' we're experiencing:

http://www.bergenjerseyforeclosures.com/blog/info/entry/repeal_of_glass_steagall_act

http://en.wikipedia.org/wiki/Ponzi_scheme

Palin actually framed this issue perfectly yesterday in the Hannity interview without naming names (politically smart since both parties are guilty here).

Based on her words, I believe she completely understands the corruption side of the issue and the regulation side of the issue.

She seems to be the only trustworthy one out of the bunch.

v/r,
FMC (Free Mkt Capitalist)

Acceptance of Socialism in America?

We're now officially on the road toward becoming a Socialist country. How are these bailouts Constitutional? The taxpayers will bear the burden for decades...if Stalin were alive, he would be laughing at us. I wouldn't be surprised if these bailouts get challenged and go all the way to the Supreme Court.

The gov. has taken over private businesses and now the taxpayer has to pay the debt. Another $1 trillion dollars that all Americans will have to pay...unbelievable. Politicians covet their jobs to such an extent that they're ignoring economics altogether. Why not let some economic failure happen? What's wrong with a little short-term failure?...seems like as a country we may need this. We'd bounce back as a country economically...we always do. Some short-term 'failure' might afford some more taxpayers an opportunity to buy a home at a lower price (provided they can get the loan, I know). At any rate, taxpayers will have to pay more across the board to keep home prices artificially high and to keep people in their homes...markets are being buoyed up artificially...this is what France does...yuk!

In this day and age, there's an attitude that living in an apartment is somehow a complete failure and that living in a house is a Constitutional right. Apartments aren't so bad...come on!

We need a serious change in Washington, and we need it fast. Government handouts got us into this mess, and all we're doing is giving out handouts again (this time in the form of a subsidized mortgage market).

The way i see it, we've privatized the gains and socialized the losses of the mortgage market. Our government has completely failed us, and it all started back in the 1990s.

Would there really be a complete collapse of the financial system if we allowed more banks to fail?? I don't know the answer to this question, but why is everyone is taking what Paulson says as gospel...why not wait and see what happens to liquidity in the market with these bank failures? Only fools rush in...there are no facts presented by these two men...at least I haven't heard anything specific from Bernanke and Paulson that I can sink my teeth into.

How do we know that we would TRULY be better off with these massive bailouts? I believe that fewer people are questioning the bailouts because they're afraid. I seriously question this approach by the Treasury and Fed, despite the greedy market apparently agreeing with this knee-jerk decision today by the government.

How does this bailout approach help the next generation? Americans need to suck it up and feel some financial pain NOW so that their children and grandchildren don't have to shoulder this burden. $1,000,000,000,000 is a lot of money to add to our existing deficit.

v/r,
FMC (Free Mkt Capitalist)