700 BILLION DOLLAR BAILOUT!

I cannot fathom how we could possibly see giving the Treasury unilateral power to control our financial markets as a plausible solution to this crisis.

The plan contains three sections that are particularly concerning to me, an average Joe, who does not spend more money than I have available and is held accountable for my actions. See Sections 6, 7 & 8 below:

Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Wow! Authority to spend up to $700 billion at a time. Now that's a pretty nice credit limit on Daddy's credit card! Hey if the spending spree turns out to have been a bad decision after a night of too much bourbon, no worries, a get out of jail free clause has been written into the bill covering any fraud, ineptness, or just plain bad decisions not even being eligible for legal review.

I have already written about my suspicions of Secretary Paulson's motives on Bob's Blog. See http://bob4bristol.blogspot.com/2008/07/ron-paul-asking-right-questions.html . I don't see Secretary Paulson, former CEO of Goldman Sachs, as being forthright with his statements to the American people. I do not believe that he has the collective interests of most Americans in mind based on the corporate bailouts packages he has devised to save his reckless financial friends at the expense of the American taxpayers.

The REAL SOLUTION contains the following:

• Tightened regulatory oversight of sketchy lending practices and "exotic" loan products.
• Prosecution of the players that fraudulently abused the system.
• Hold homeowners that took out the loans accountable by making them own up to their financial responsibilities. For homeowners with interest-only loans, negative equity positions, and artificially-low ARMs that are readjusting, deals could be worked out that phase in a graduated increase in interest rates to a fixed, market-rate mortgage with a 30 or 40 year duration. This loan could contain pre-payment incentives to help reduce long term interest-rate exposure to lending institutions.

Washington are you listening?

The Fed and the Treasury - Bad Parenting?

Well the best way I can relate the actions of the Fed and the Treasury last night is to relate it to a parent disciplining a child that has misbehaved.

First comes the harsh sentence.

Parent: Johnny, you're grounded for six months!
Fed/Treasury: AIG, we're not going to bail you out no matter what!

Parent: We'll don't do it again. I guess you can go to the movies with your friends this weekend. Do you need money?.
Fed/Treasury: Okay, how about $85 billion dollars to tie you over for awhile. Will that be enough?

Just like the inconsistent parent and the naughty child the inconsistent federal officials and the naughty businesses will continue with the undesirable behavior.

Bear, Fannie, Freddie, and now AIG. It's time to come clean. Lay it all out for all to see and figure out exactly how we're all going to take care of it.

One thing's for certain. The rock star CEOs, CFOs, senior management teams and their congressmen and senator puppets should be sent packing. I want to see some blood with some of these characters going to prison. That would be a good start!

No Where to Go But Down

We are in a real quandry. With the Federal Funds rate currently at 2% there is not much opportunity left to move it down. Yet with housing values continuing to drop monthly there is no room to move it up. Given the inverse relationship of higher interest rates to lower home prices the move up would add fuel to the fire at this time. However, moving the rates up is exactly what we need to do.

As I wrote in back in January on this blog, http://newenglandopinion.blogspot.com/2008/01/imminent-probability-of-recession.html, a transparent, plan of Fed funds rates is needed to stimulate investment and build stability. If the Fed were to announce that they were taking down the Fed funds rate to encourage business investment for solid business loans and potential homeowners with solid credit then we might see a softening of the downward spiral. The rate should be set for a specific time period with the announcement that 1/4 quarterly adjustments upward would follow until the rate met the risk-adjusted 10-year average rate of inflation.

Back in July, I wrote a piece titled "The Fed should start moving the Fed Funds Rate up to 5%." At the time oil was peaking at $147 a barrel so some of the conditions have changed but longterm I still believe this is the only way to truly build wealth in our US economy. The following is reprint of this piece:

Attention Federal Reserve: It's time to start moving the Fed Funds Rate up to 5%. That should translate into an 8% Prime rate.

Here's the rationale:

Real companies with real products and real earnings do not need cheap money they can borrow in order to stay in business. Companies like General Electric, United Technologies, Exxon, Kellogg, Walmart, McDonalds, etc. have traditionally done just fine with higher costs of capital.

Savers, like myself, are sick of our substantially less than the real rate of inflation returns that we have been stuck with as money has been passed out like candy by the banks to sketchy businesses, borrowers, and profiteers. I think worthy financial institutions will agree that this scam has not added longterm value to their organizations as witnessed by the 70% decline in the value of financials and the "sitting-on-the-edge-of-ruin" financial condition of some of our largest and oldest financial institutions like Citibank, Bank of America, Bear Stearns (RIP), etc.

Other important reasons for higher rates:

The higher rates will attract greater foreign investment in our country's banks.

The higher rates will increase the value of our dollar against other currencies.

The higher rates will slow down the level of imports reducing the trade deficit

The higher rates will significantly reduce the speculative price inceases in crude reducing the cost to consumers.

The higher rates will fend off inflationary pressures.

The higher rates translated to higher yields on savings instruments and bonds will encourage greater saving rates by consumers.

The higher rates and resulting yields will improve the supplemental income of retired Americans.

Mr. Bernanke are you listening or are you too busy playing with your academic models and other toys you are unwilling to share?

I still feel strongly that higher rates is the proper solution for a strong economy. Time will tell.

Time for America to Reach for the Skies

The Dubai Tower (Burj Dubai) located in Dubai, United Arab Emirates, when completed, will be the tallest habitable building in the world with a height of 2087 ft on the highest floor and an overall height of 2684 ft. Interestingly, the Dubai Tower was designed by American architects Skidmore, Owings, and Merrill.

Taipei 101 located in Taipei, Taiwan, had been the tallest building in the world since 2004. This was prior to the Dubai Tower surpassing its height of habitable floors in July of 2007.

We lost our World Trade Center towers to middle eastern terrorists. Yet Dubai, a middle eastern country, is not fearing a similar fate and instead has chosen to build the tallest building in the world shattering old records by a comfortable margin.

It's time for America to reach for the skies. We need to show the world that we remain a relevant force and an source of innovation in the world space. The Freedom Towers being built at 1 Trade Center in New York does not do the job. In my opinion we should rebuild the World Trade Center towers and make them taller than before!

The 21st Century will prove to be a defining century for the United States. Our country's infrastructure is in dire need of serious repairs and upgrades as well as substantial capital investment in new technologies for transportation systems and power generation. We, as a nation, must invest in America's future. These projects will not come cheap but the cost of not participating in a meaningful way will prove to be far more devastating to our country's financial future and our citizens prosperity.

Abraham Maslow’s Hierarchy of Needs and Contemporary America

By Robert Merrick

Ever since I was a freshman in college and first studied Abraham Maslow’s theory on humans' hierarchy of needs I have been moved by his concepts and mindful of his theories in my personal observations and experiences.

I first was exposed to this theory in an introductory sociology course that I took at the University of Connecticut with Dr. Sanders. I later encountered this theory in other courses that involved human behavior especially the management and marketing courses I took in business as an upper classman and in graduate school. The hierarchy of needs resurfaced in some of my educational courses as well.

The basic premise of Maslow’s hierarchy of needs is that there are groups of needs that he relates to levels in a pyramid that move one from an instinctual state of animal behavior toward needs that are clearly unique to humans that focus on self-actualization and spirituality.

The lower the level of the unfulfilled needs in the pyramid, the stronger the individual’s motivation to fulfill that need. The levels Maslow identified were modified but the 5 basic levels were as follows:

Physiological – food, water, sex, sleep, bodily functions
Safety – security of body, place, work, family, health, property
Love/Belonging – friendship, family, sexual intimacy
Esteem – self esteem, confidence, achievement, respect of others, respect of self
Self Actualization – morality, creativity, spontaneity, problem solving, understanding of purpose. (Spirituality was recognized by Maslow as being at higher level than self actualization and he published separate works shortly before his death in 1970).

I have found Maslow’s Hierarchy of Needs to be very valid in my personal experiences and observations since I was first exposed to them over 25 years ago. For instance in my role as a teacher I have witnessed the difficulty of a child trying to learn when their most basic (level 1) needs for food and sleep are not satisfied. No matter how motivating the educational experience a child cannot concentrate if they are hungry and tired.

In fact, education largely depends on a child being at the esteem level (level 4) to derive true understanding of the concepts and exercises taking place in the classroom and move to a higher level. Many of the children struggling in school today have been unable to fulfill their level 2 or 3 needs. Overwhelmingly these children are being raised in “family” situations where the adult caregiver has never fulfilled their level 2 or 3 needs. Alarmingly many of these adult caregivers, mostly women, are living a level 1 existence latching on to any “boyfriend” offering the enticement of fulfilling level 2 and 3 needs. Since level 1 needs are the strongest caregivers in that situation will often act instinctively and hope for the best. This is often done to the detriment of the child or children they are responsible for raising since the “boyfriend” often has no interest in the needs of anyone other than himself and has even less interest in fulfilling the needs of his “girlfriend’s” kids.

It is no surprise that the problem of basic needs of family members not being met has deteriorated since the dismantling of the family unit began in the late 1960s and early 1970s. Prior to those periods it was possible to be poor and have your most basic needs met because the strength of the family unit raised all the members up the hierarchy of needs. Safety came from the security of a father seen as the protector of the family and a mother providing comfort and reassurance. The children developed a sense of belonging as they witnessed their parents’ commitment to them and each other through good times and in bad.

As long as marriage is viewed as an unnecessary and even unfashionable alternative in the decision process of whether or not to have children in popular culture, and the media preys on the vulnerable by luring them with illusions of quick solutions that meet their basic needs, the modern American “civilization” will operate more like the instinctive animal world than a sapient society.

Interesting, yet not surprising, recent studies have shown that the role of a father in a family has been underestimated in a child’s physical and emotional development. According to Ronald Rohner, director of the Center for the Study of Parental Acceptance and Rejection in the School of Family Studies at the University of Connecticut, “What we find surprising and new is that a father’s love is turning out to be just as important as, and sometimes more important than, a mother’s love,” Rohner says. (See AScribe Newswire Fathers’ Role in Raising Children: Misunderstood)

The solution lies in a reawakening of the value of marriage and family. A strong cultural and societal message that communicates the decision to have children is not to be taken lightly and is best suited to the strength of two parents who are in a loving and committed relationship.

Hartford Connecticut, The Modern-day Wild West?

This past weekend Hartford reached the dubious milestone of 100 shooting victims so far this year.

One dead and six injured following a parade in Hartford's North End on Saturday. See 1 Dead, 6 Injured in Hartford shootings

In response a teen curfew will start on Thursday with penalties for teens under 18 found on the streets of Dodge, um Hartford, after 9 pm. Not surprisingly our illustrious friend of criminals, the ACLU, is complaining that this curfew is unfair to all the young upstanding members of the community that roam the streets after 9 pm. See ACLU angered by Hartford's planned teen curfew imposed after shootings leave 1 dead, 6 wounded

If you listen to the response of Eziekel Robert's regarding the death of her 21 year-old son you get an understanding of the problem:

"He wasn't a bad kid. OK, he might have got into the wrong crowd, hung with the wrong people," she said. "But ain't none of them perfect. My son, he was bad in his way, too. But he wasn't the baddest."

According to the Courant, Ezekiel Roberts was found guilty on March 3 of accessory to first-degree assault in the fatal stabbing of 17-year-old Hiram David Colon in East Hartford in 2006, court records show. Roberts was one of six who played a role in the stabbing, but police could not determine who delivered the fatal wound.And Ezekiel Roberts had been arrested four times this summer already — twice for criminal trespass, once for possessing a small amount of marijuana, and once for violating his probation.

It is understandable that a mother would be in grief over the loss of her son. However, it is disconcerting that she doesn't see accessory to murder and continued incidents of lawlessness as being all that bad. This is clearly a problem.

It is also troubling that Eziekel fathered a child at 17. I can only hope that that child has been placed with a decent family so that he has a chance of a future as opposed to many of the children being brought into this violent environment by lawless gangbangers and drug addicts. The cards are stacked 999 to 1 against them as long as they live among criminals.

This behavior is totally unacceptable in American society. It is not a "culture" it is lawlessness. If we need more prisons to handle the mass inflow of low lifes then we should build them. I'm sure we can find a couple of available large, (northern) islands to house the criminals.

John Edwards, Living a Lie.

Back on December 30, 2007 I posted the following to generate discussion about John Edward's candidacy for president:

John Edwards - Champion of the Working Class or Limousine Liberal ?
Is John Edwards the champion for working-class Americans or is he a limousine liberal, whose extreme wealth and expensive taste and indulgences make his promise for "One America" seem disingenuous?You decide. Make your case one way or the other. Be fair!

To be honest the one thing that I found appealing about Edwards at the time I wrote this was his celebrated commitment to his marriage and family and his visible support of his wife who was suffering from inoperable cancer.

Needless to say I was completely floored by his admission to having an affair with Rielle Hunter, a 42-year old film maker, who worked on his campaign.

Answering my own question I guess that his extreme wealth, expensive tastes and indulgences went beyond the marital promises he made to his wife when the two become one before God.
Obviously, he was being disingenuous as he stood before the American people with a straight face calling for his promise of "One America."

Sadly, the story isn't all that different from the one John McCain has in his past with his previous wife before divorcing and marrying Cindy McCain. Only time will tell what lurks in Barack's past that will be launched on the American people for us to stomach before the election.

Are there any candidates of character and principle anymore or are they all living a lie that even they believe is true?