Looney Tune America

1) Government will mandate more walking to avoid putting pressure on auto dealers.
 
2) A fashion designer will make millions by designing a laptop that looks like a handbag. A special version of Photoshop will be included that shows you what you look like in different makeup combinations.
 
3) MySpace will continue to not make money.
 
4) A new form of advertising will supplant Google's market share.
 
5) Ray Ozzie will get frustrated with Microsoft and leave.
 
6) HP will challenge Apple for design dominance.
 
7) Individuals will ask banks to apply for their business.
 
8) There will be only one government-operated bank, and they will have really crappy online banking.
 
9) Someone will introduce the term "Private Cloud 2.0".
 
10) More services will be introduced using Twitter as a utility.

By the way, this is a joint effort with Mike Manzano, CTO of Topia Technology.  This is what we do on long plane rides.

My apologies for the break in my posts. Perhaps I have been overwhelmed by the prospect of the centralization of our once free and prospering economy. Enough of that, let’s discuss more exciting aspirations, inspirations and good old fashion hallucinations. Let’s start with Maiden Lane III. Some of you may confuse this name with a street sign, business address or clever name for the latest corporate hydroplane. Well, my friends, it is none of the above. It has much more intrigue and dare I say deception? Oops, almost forgot that I live in the land of the free. I digress.
 
Hang on to your festive hats, my Looney friends. Santa Bernanke has been a busy little saint. Christmas came early in November for a number of US and European banks. They found $20 billion stuffed carefully in their stockings. They must have been good little banks. Strange and true, it wasn’t identified with any clarity on Santa’s famous list. No! It showed up on the Fed’s balance sheet as a single entry called “Maiden Lane III.” The entry was accompanied by a few cryptic regulatory documents. How magical! Santa is real and he doesn’t want us to find where he lives!
 
There seems to be a little problem with Santa’s generosity, however. The feds have outstanding loans of $2.2 trillion, up form $900 billion in September ’08. In addition, the “you have been nice” list has expanded from short-term loans to banks, to now include buying securities, some that include those “been naughty” mortgages. Well, the risk is great and if the “secret gifts” don’t pay us (you know, the tax payer, silly) back, we get stuck with the loss. Hmmm, I wonder what is for next Christmas?
 
If we don’t get paid back, I guess we will need some more green ink and increased power for the ol’ printing press. After all, it’s just money. What really matters is the spirit of giving. At any rate, I would sure like to know more about this November Christmas list. Call me demanding, but it is our money after all. And where is the press on this? I am happy Brittany is having a come back, but is this not news worthy? Maybe it isn’t. Maybe it is just ho ho hum.

Well, it is true America, we have fallen down a rabbit hole. It just keeps getting weirder and weirder. First, we get a full court press from the President, his administration and his beloved party to pass The Bailout Bill. Yet, on the floor of congress, it is the Democrats that support it and the Republicans break rank in an effort to defeat it. So, at this point, I don't know who believes what anymore. I am grateful that the house defeated the bill and have crossed my fingers that the senate will follow suite.

The Bill will NOT work for us little guys. Just so you know, it is masterminded by Paulson. Oh by the way, he has over $500 MILLION of personal wealth tied up on Wall Street. Oh, waite!  He actually sold his stock with no capital gains (A little perk for going to work for the feds.  An actual tax "loophole"  I think they call it). One other little point that should be cause for reflection. Tucked within the extensive, lengthy, complicated, wordy, dry (you get the point) language of the bill sits this little cherry; the 'suspension of the Mark to Market rule'. For those of you who don't know what this is, allow me to explain.

Mark to Market: (Let's not use my words, let's refer to the financial dictionary)
To revalue (an asset, liability, financial instrument, etc) to the current market price, as distinct from historical cost. Marking to market is an important risk-management procedure in financial sectors such as derivatives, where small price movements can result in large exposures to loss. Marking a portfolio of derivatives to market shows the value of the portfolio and the market risk attached to it, and enables decisions about what hedging strategy should be adopted. It enables traders to react quickly to adjust their positions. The Group of Thirty report recommended that derivatives dealers mark their portfolios to market at least daily. Some accounting practices also require marking to market to represent balance-sheet items at their current, rather than historic, values.

So, that means that under the current Bill, we, the taxpayer, accept the risk of these institutions marking to book value. In other words, it is better for the large institutions. The taxpayers buy the mortgage securities, which has no viable market, at the book value. Gee, do ya think they will inflate the value?! So, how is it we will "make our money back"? Cause in my world of reality, if you pay way more than something is worth and try to resell it, ya usually don't 'make your money back," Maybe in the fantasy land of politicians, big banks and crooks it's a piece of cake!

Let's not forget that this debt that we are buying with debt, which means that we have to print more money, will drive down the value of the dollar and drive up the price of food, gas. The price of pretty much everything we average folks buy will skyrocket. Ah yes, but I must have it wrong as the King has made it quite clear why this is necessary, a gift of magnanimous generosity and concern. So, happy un-birthday America! This is the gift that keeps on giving.

I say "off with their heads."

Regarding last nights' speech, I am speechless! All this time I thought the financial "crisis" was a result of a derivative lending strategery that was most advantages to financial institutions. But no! This was all about the little guy, "struggling to put food on his family." This was about everybody having a house to call their own. How could I have missed this?!
 
So, let us consider the logic of the proposed fix. According to King George, we need to 'unclog the mortgage backed securities from the financial system.' OK...not sure what that means, but let's continue. It is important to allow people to borrow money; entrepreneurs, parents sending children to college, people wanting > cars and homes. (I have a tear in my eye.) The spice must flow! Sorry, I am off track. You get the point; everybody needs more money.

And now for the good part, the taxpayer, AKA entrepreneur, parent,  person, is going to assume a $700 BILLION DEBT. (Here is where I  really get lost.) And the money will go to an international  collection of financial institutions. Huh?! Why won't the government give it to the US taxpayer? According to George, we are the ones that need it. So, if all the homeowners with a mortgage  were given, say $100,000, and everybody met their mortgage obligation, wouldn't that 'unclog' the system?
 
So, I calculated this alternative, and what do you know? Gimme some spice, baby. Just an idea.
 
 
 
 

I admit it! I am obsessed with the bailout as proposed by the Bush administration and the nonsense around this presidential campaign. I just don’t understand why people are not absolutely outraged by it all. How and when did these private business/government conversations take place, and why is our first exposure to “the financial crisis” in the form of a public burden? And I am sorry, but the rhetoric isn’t working for me.

Here is how I see it. The financial sector creates a derivative scheme (yes, I use the word deliberately). The money supply is artificially expanded in hopes that appreciation will protect their speculation. The plan fails, they are left holding paper that has no value and no one left to buy it. The Bush administration says, “I know, let’s get the tax payers to buy it! And let’s not just bail out our own financial sector, let’s help out the world’s other banks that are involved. Let’s make the public burden $700 BILLION!”

So, our budget is 3 TRILLION. We now add another TRILLION. But wait! There is no increase in productivity and the Republicans promise not to raise taxes. Hmmm, I think I am missing something. Doesn’t this make the ‘bad Democrat’s tax increase’ pretty much pale in comparison? Can’t you boys and pit bulls find something more believable to run against?

Ah yes, let’s talk about the conservative way. It’s all about the constitution, free market and civil liberties. Freedom, prosperity, smaller government. Excuse me, but I just blew a giant bubble out my nose! Are you kidding me?! Ever heard of the Patriot Act, the new and bloated Homeland Security Agency, Fannie Mae, Freddie Mac, and now $700 BILLION Bailout? Let’s not forget seizure of Telco customer records, the discussion of what type of torture is acceptable, and lying to the Congress and the American people about the Iraq War.

What is it going to take for people to get it?! Maybe a new reality TV show that exposes its viewers to the REALITY of this party. I don’t mean to sound cynical, but these are cynical times. We have got to look beyond the rhetoric and find the facts.

Please, wake up America!