Tuesday, October 28, 2008


We are about to witness more plundering of the American taxpayer. The 700 billion dollar bailout so quickly rushed through Congress under the threat of complete collapse of the U.S. economy, was slipped by American taxpayers who in majority were against the bailout. Democrats jumped in first, Republicans were slower to rush in. Both parties acted while drenched in fear and anxiety. The taxpayers were right. Obama and McCain were not, nor did they do the right thing right.

Taxpayers were threatened that with credit market paralysis, their jobs would be at risk, they would not be able to keep their businesses afloat, and they would not get loans to finance their lives. Without the passing of the Emergency Economic Stabilization Act, taxpayers would find their whole way of life turned upside down, and the specter of finding solace on a park bench would be just around the corner.

Neither Paulson, nor Congress, provided any real details on some of the critical concerns surrounding the bailout. Even expert analysts didn’t raise objection as to how some of the potentially explosive finer points might in practical terms find implementation. Taxpayers assumed that in such a world shattering moment, on such a historically critical decision, Congress would finally be diligent. Congress, filled with resident and elected lawyers, would understand the fine-print on the legislation. Taxpayers accepted or assumed that someone, somewhere, hopefully someone with talent, would do the right thing, and make sure that the legislation would in turn be subject to industrious and careful execution. Wrong on all counts.

The coming weeks will deliver further anxiety from wildly fluctuating markets, and distressing news that the bailout will finance hundreds of millions of dollars worth of salaries and bonuses. These millions will be paid to incompetent individuals who mismanaged their institutions into becoming beggars standing at the bailout wicket crying for taxpayer handouts. We can expect agreements between executives and their employers to surface, that Congress did not consider during the passing of the legislation. Don't think for a moment that those agreements won't stand. Paulson and his friends at the Treasury and the Fed will not be able to withhold money from those institutions. And that’s just the beginning of the abuse. Lawyers will rush to the trough, and taxpayers will stand-by, helpless, as large amounts of their added debt burden continues to be abused by many responsible for creating this disaster in the first place.

It will also surprise taxpayers that the lending institutions that will receive handouts, will be under no obligation to “lend.” Oops, sorry. Congress also failed on that one. Senators and House Members who rushed this rescue package through, will escape unscathed and untarnished, and one of them will even be rewarded with the Presidency next week. While government cannot be expected to solve all problems that face a nation, it is expected to act with prescience and prudence. Why Congress isn’t, is the real question. Is the mainstream media watching?

Oh, and hiding behind the skirts of PricewaterhouseCoopers and Ernst & Young to “help” in the administration of the bailout should not be accepted as a veil shrouding incompetence, and sanctioning abuse of power.

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Monday, October 27, 2008


Like it or not, taxation redistributes wealth. Somewhat. The term socialism has a malodorous aroma, but so too does over-concentration of wealth. The current wealth imbalance between the top 1% of the population and the rest of society creates tangible resentment. It is therefore not surprising that statements from Obama that he will “spread the wealth,” appear to get favorable approval from a majority, if his support polls are to be believed. What is surprising is the lack of analysis in the fourth estate, as to what that really means, and what methodology might deliver on such a promise. Greater taxation on the wealthy few buys votes, but will not make any difference to the vast majority of the population. On the other hand, additional taxes on businesses will.

Those who have depended on others for income, particularly those working for organizations dependent on governments or foundations for income, have difficulty empathizing with entrepreneurs whose lives are engrossed in building successful businesses. There is also absolutely no chance that they will feel any affinity or sympathy for those at the top of financial food chain. Being responsible for covering and issuing a payroll presents its own unique lessons.

When abuse of benefits and power in the corporate executive office seems rampant, the public perceptions become further skewed toward supporting higher taxes for the rich trough progressive taxation. It can be argued that the rich can and should bear a greater percentage of the burden, although the impact on the nation’s majority would be minimal. The picture changes when the increase in taxes spreads to businesses, and impacts the day-to-day reality for business owners and employees.

Most businesses in America are small and medium companies, employing one to a hundred or so employees. They are the economic engines that keep the economy thriving. Imposing further burden on businesses, and penalizing them for government excesses, mismanagement and debt, would deepen the current recession. It would also stretch the process of recovery into a multi-year reminder that accumulating debt and possessions is no way to manage personal affairs or run a government. Deal with abuse at the top of the corporate ladder through other means, not taxes.

“Redistribution of wealth” should be re-defined to intend and encompass the distribution of knowledge through education. Allowing the educational system to disintegrate and inadvertently limiting its access, as we have witnessed through the past generation, restrains the majority from achieving educational objectives, and smothers most personal and financial aspirations. Ensuring that all who want to be educated actually receive the education to the full extent of their capabilities will enrich the country. Education should take precedence over other government programs currently siphoning hundreds of billions but not serving to ensure a healthy future for the country.

As for the next administration cutting anyone’s taxes, the staggering debt says that one won’t fly. It won’t fly for McCain or for Obama. Taxpayers can expect more taxation, and they can expect little, if any, reduction in government spending from the next President.

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Tuesday, October 21, 2008


Capitalism is the heart of the American economic engine, and really the core the whole of American society, but capitalism regularly gets pummeled as a provenance of the nation’s moral disintegration. There are, of course, ample specimens selfishly pursuing purposes to the exclusion of other more lofty ideals, however, such are not the majority of individuals and businesses, which provide the sweat that builds a country. The elements in a society that blame the profit motive are those who leach from its successes directly or indirectly, either out of incapacity, laziness or from jealousy. Going after abusers of responsibility, including CEOs whose incomes vastly overreach their real value, or elected politicians who take bribes such as those who took cash from Fannie Mae, is necessary, just like jail terms are necessary for any criminal behavior in a society that seeks some level of security.

Capitalism and the business culture of all societies, it seems, are easy targets for the venting of frustrations that surface during financial crises, such as the current unstable state of affairs. It is abundantly obvious the general media has done its best to fuel these fires, while leaving the legislators to continue along their paths, unscathed, unrepentant, and unpunished. Defaming the business environment and disparaging corporate America may serve the campaign trail to the White House with moral bait for votes. It won’t serve the future well-being of American society, and its systems if such sentiments find their way through the legislative process stifling trade and asphyxiating the entrepreneurial spirit.

At stake is the freedom that was promised upon the founding of America. With all of its strength, America remains a fragile social experiment that requires, and will always require, care, attention and nurturing. While the current administration curtailed some of the assumed freedoms, the nation should not allow the political pendulum to swing so far in the other direction that a greater degradation of freedoms is instituted in plain sight while attention is being diverted to the “straw man” of corruption, the businessman or businesswoman, being pilloried.

Laws provide a country with ample guidelines that pertain to accepted behavior. Today we find ourselves with countries around the world rushing to seek new convoluted systems of “oversight and regulation” in efforts to reign-in capitalism. Some are even proposing the creation of international regulations and ruling bodies. Such efforts should instead focus on setting legal parameters establishing acceptable rules of conduct within America. Doing so, and setting severe punitive retribution for breaking the laws, as well as providing the courts with real teeth will minimize future abuse and corruption. Specific laws emanating from this economic debacle will retain the freedom required for a flourishing capitalistic system while protecting individual rights to pursue personal and corporate financial objectives. Global problem solving is impossible if your own house is not in order.

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Wednesday, October 15, 2008


American taxpayers are watching their leadership take a stake in the financial engines of their economy, supposedly on their behalf and for their own good. The State is taking equity stakes in banks, healthy banks, solvent banks in need of cash, as well as not so solvent ones. And, as if it matters, Paulson and company are earnestly pointing out that participating companies will have to accept executive compensation limits. Taxpayers have no choice and the compensation limits won’t make the pill go down any more easily. Taxpayers, nevertheless, have front row seats to the biggest show on Earth, and to the historic changes that are shaking the American style of capitalism to its roots.

For taxpayers to be provided the kind of government that will be effective in its supervision and oversight of corporate investments, or general corporate behavior, as well as continued tendencies toward free trade that have built the country and its economy, they will need to demand change in the electoral process. Honest dissection of root problems that enabled the economic turmoil currently being endured by most taxpayers, should lead to an elimination of the organizational, corporate, and special interest funding of elected officials.

How, for example, could Congress, the house Financial Services Committee and the Senate Banking Committee, conduct themselves in a manner befitting the public’s interest when all of them received millions from the financial services industry, including Fannie Mae and Freddie Mac? Independence of thought and deed becomes difficult if not impossible when powerful, almost unlimited forces oil the machine that keeps you elected.

Labor unions, political action committees, corporations, associations and other such bodies, should be prevented from providing dollar contributions, or gifts, to political parties, their representatives running for office or those already in office. Along with changes in corporate governance, there is a need for change in electoral governance.

If this is a government By The People and FOR The People, then the people should demand that the financial clout of special interests be taken out of the equation. It is NOT time to look to Europe for a better form of governance of very much, particularly the economy, as some would suggest. Europe was only remained an envious bystander to America’s technological and entrepreneurial advances achieved over the past thirty years. Don’t turn the clock back a century. Allow as much freedom for innovation as possible, but give teeth to oversight. Get meddling interests out of the electoral process, and allow creativity of get the country out of its current difficulties. Legislators will resist such changes. Don’t let them.

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Thursday, October 9, 2008


The unfathomable complexity of the current financial crisis has political campaigns pointing fingers of accusations. Not a finger in sight is pointing to a path out of the toxic mess. Neither of the Presidential candidates has a clue, and Congress is busy with the business of creating a new perception – that of smoking out culpability. They will do nothing, since the controlling side of Congress was on the receiving end of much financial support distributed by individuals and organizations Congressmen should have been conducting oversight on. Congress will be pained to dispense any punishment or censure onto anyone in any way affiliated with its own benefactors.

We expect supposed experts or leaders to engineer a path out of the confusion and panic. They have none. Adding to the long-term borrowing that will squarely fit on the backs of present and future taxpayers is not an answer, and is absurd. The members of the financial community that remain standing and who went along with the abuse of the system which was fuelled by Federal demands for easy money, should be required to bear half the burden rather than be able to pick-off the bargains. Unfortunately the lender of last resort is being forced by Congress to bear the whole load, fully subsidizing irresponsible institutions, no matter what is pretended.

In the face of the current international financial crisis, any Presidential candidate pretending that middle class taxes will be reduced is purchasing votes with empty promises. It is surprising that few in the media are questioning such obvious but very fallacious pandering. It also underscores a disturbing dearth of understanding. Not only will the government not be able to lower taxes, it will have to raise them.

Although very few predicted this crisis, all are surprised at the speed with which the unraveling has occurred. Accelerating the printing of dollars will be necessary to provide amongst other things, enough liquidity for banks to prevent collapses on Main Street, and such liquidity will also have to be provided to other financial institutions, and might even have to be extended to businesses. This will unfortunately impact the value of the dollar, and therefore will require a magician’s hands to find balance on the levels of intervention.

Responsibility for the evolution of the volatile liquidity crisis lies with a coalition of disparate participants, mortals and organizations. From the White House of the late ‘90s, to Congress, banks, non-bank lenders, brokers, money market funds and borrowers, the abuse spread through all levels of society. Although we may relish witnessing the spectacle of some of the most egregiously offensive abusers parading in front of Congress, we should remember that trillions of dollars were made, spent or put away throughout the period of the bubble’s creation. Whether such dollars found their way to political campaigns, oceanfront mansions in the Hamptons, or Senators’ homes purchased with favorable mortgage rates, or to Toshiba for wide screen TVs, all who participated ate from the feast. That some ate more, much more than others, is basic common human nature where egos often serve the self first and best.

Human nature also being what it is, the creativity tapped for structuring the complex financial instruments that provided energy to the economic boom, and extended its life, will in time find similarly innovative answers to solve the wreckage that it has wrought.

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Thursday, October 2, 2008


In the midst of frustration resulting from the stress of a protracted war in Iraq, and financial panic sweeping across all of its markets, America prepares to take a momentous action in the privacy of voting booths. Could there be a worst time to be making such a decision?

Events of the recent past have radiated traumatic beams of toxicity onto the psyche of American taxpayers. Some undeniably powerful forces are impacting the population:

• The misguided actions by the White House have resulted in casting a negative perception from international communities that Americans are now tiring of.
• American prolonged presence in Iraq has become physically and financially too expensive, and is contributing a large portion of the national financial hemorrhaging.
• Implosion of the housing bubble, and subsequent home foreclosures have created a maelstrom of uncertainty that has broadly radiated to infect the health of American commerce.
• Animosity toward Republican President Bush has reached an extreme, rendering his Presidency irrelevant in its waning days.
• American capitalism appears to have developed cracks in its foundations as abusive greed and self-serving lack of integrity on the part of some executives, have shaken confidence in its fabric.
• Congress has failed to represent the wishes and best interests of taxpayers, and even in some cases, it has abused power and influence.

America finds itself rapidly dissolving into anxiety as the eye of this vortex crystallizes emotions and apprehension for the future. These forces coming together are reaching a crescendo just in time for a momentous Presidential election. There is concern that this state of fear further dissolves into take-care-of-me, it’s-not-my-fault, please solve-my-problems, make-me-feel-better .

This Presidential election should not disintegrate into a reaction to an existing President. Voters should vote for a ticket that will clean up the corruption that stimulated the current conditions, and allowed a Congress to decompose. This is no time for reflexive voting. Voters must rely on knowledge and track record, rather than sanguine or auspicious enthusiasm.

Integrity is alive and well in the vast majority of American businesses. Voters should support positive stimulation of American ingenuity and not allow nee-jerk reaction that might lead government to bring about measures that can destroy entrepreneurialism. American voters should not support Herbert Hoover type reactions to trade policies, investment and business taxes. Taxpayers should also resist talk of raising general taxes, and should demand cuts in Federal outlays.

Much blame can be assigned to both sides of the political isle for the current state of affairs. It is time for thoughtful decision making on which leader will energize America’s return to confidence, not through rhetoric, but through decisive action.

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