NoBama we've already given.

According to CNN, Obama raised a staggering $750 million for the general election, Now President-elect Barack Obama is asking for more cash for his transition and inauguration.

There is about $9.74 million of taxpayer funds available to pay for the transition, but experts say that's not enough.

My Question is who is an expert at spending almost $10million in 60 days?

Gee his December filing shows he still has $30 million left why ask for more?

Where has Obama been?

Boraq Hussein Obama takes office in less than 60 days and the country is in a melt down. Where is he on the issues facing our country's immediate needs? I understand that he may not want to step on Bush's toes but for all the hype of hope and a new future one would have thought that Mr. Obama would at least keep the hope alive by having a few press conferences. Short and not specific just like during the campaign.

CDS's and Vulture Capital

If the swaps held to maturity are worth more than nil as the pundits proclaim why aren't the troubled banks selling them to vulture capital firms?

Goldman and AIG

John Paulson, Secretary of the Treasury bailed out AIG which lost 80% of its equity to the government and is paying close to 14% interest for the $85billion accommodation. The interest is about $1billion per month. The government gave the other banks billions at 5%. Of the $85billion money, all of it went to Wall Street firms including Goldman (John Paulson's old firm) and the rest to other firms to shore up the AIG guarantees that the other banks bought to package and invest in sub-prime loans. The new AIG CEO, Liddy, and appointed by Paulson, was on the board of Goldman. AIG took in the cash and then had to give it to Wall Street. None of the money really stayed in AIG. Was this really a way to soften the charge that the government was pandering to Wall Street and merely using AIG's position as a conduit? Could it be a bit of sharp practice by the Goldman, et. al. gang? Lets see what if any assets Goldman buys form AIG.

Financial Bailout

If congress had not played with the market using Fannie and Freddie to support policy the country would be better off today. The present situation in the credit market is a good example of what happens when efficient systems are left alone. Our highly efficient and extremely fluid capital market took advantage of the gamed system to speed the flow of money into sub-prime and low interest refinancing by highly motivated Wall Street players. The credit default market is not regulated per se and left to seek its own level developed into a $60 trillion asset base without even a single trading platform. Talk about efficiency. If the policy to replace jobs lost to foreign territories had not combined with the policy to throw money at America in the guise of affordable housing we would not be here today with a market melt down. New regulation will not prevent the inventiveness of an efficient market which will find the inevitable regulatory arbitrage to any solution congress will provide. Congress has a long history of putting reactionary band aids on the wounds it opens. This will leave gaps to be exploited and result in a another spiral to be fixed later.

The best policy is to leave the markets to do what they do best and keep artificial regulatory arbitrage opportunities to a minimum. This is painful but better than a series of crashes that will inevitably result from too much intervention. That is unless we do not want to be a free market any more and adopt some type of socialist system going forward.

AIG Party Time

AIG took top executives on a one week party parade to a luxury spa resort in California. Well not quit. This was a sales incentive trip for independent agents that sell insurance products for American General. Much in the same way that a salesmen who sells ten washing machines in a month may qualify for a manufacturers incentive trip, life insurance companies also incentivise their salesmen that sell insurance products. It takes a year to qualify so the event was planned and well promoted in advance of the recent public troubles. These were not employees except for the hosts but independent agents that have a number of products and companies to choose from when selling insurance. Each will receive a 1099 tax form from AIG for the value of the services and each will in turn need to report their part as income for tax purposes.

I think it was a poor (one of many) decision by the management of the company to continue with the plans for the event. These were however not employees but independent life agents. In the end they should have just canceled the event. It remains to be seen if AG could have sent the savings up as a dividend to the parent company where the toxic CDS's are housed since they are a separately regulated insurance entity. AG is now for sale so if they couldn't have sent to savings to the parent maybe the price (if sold) could have been reduced by $500k, although I think they are asking $18 billion.

Speaking of the bailout, the structure of the AIG "rescue", reminds me of the quote "with friends like these who needs enemies". According to the Treasury, the deal is a two-year loan, not a grant or a gift. It is costing AIG about $26.5 million per day (at the published current level of $61 billion, 12.5% on the borrowed funds and 8.5% on the un-borrowed amount). It should be noted that this money is being paid to the US government and if successful so will be the repayment of principal. If history plays out in a traditional fashion we the people will never see one red cent of the money. It will get stuck in wheels of the government and start leaking all over our congressmen. The earnings work out to about $200 per US household (110 million families earning $0.24 per day for two years at 12% interest). I know its not a lot but heck I'd take it if I were given a choice. Maybe Charlie Rangel (Dem Senator NY) could use his bit to let one of his three NYC rent controlled apartments go to a more needy family.

What should McCain do now?

McCain is a wacko and Obama is a fraud. What do they need to do now? Other than pull out because they are both above their pay grade there are a couple of things McCain can do at this point. McCain needs to shore up his very weak economic credentials. He needs to name his cabinet selections since neither he nor his neophyte VP have any creditability with the voters. He should also start talking about the supreme court not by name but he should start scaring the heck out of the population with the dire consequences of a BoIraq win. Maybe he could suggest that BoIraq would nominate a Muslim to the court so Hussein can round out the Christian domination.

US Bailout package, why it didn't pass?

It will be modified and passed. The problem is that there just wasn't time to get the right amount of pork in the law for the boys in Washington and the folks back home. My goodness they must have exclaimed "almost a trillion dollars going down and we aint got no bridge to no where in it!" The leadership will get them working. Then it will pass. There will be money to study water cress production in the desert, climate change, canals in Nevada, grants for pre-preschools, new stadiums for lawn bowling, everybody will get in on the action. For heavens sake this is the largest appropriation and monetary transfer in the history of mankind and by golly our congressmen are gonna get their share.

Poor old Martin Sullivan and AIG

AIG is primarily a collection of life and property and causality companies. They are highly regulated. The issues that took over AIG stemmed from providing what are called credit default swaps. These are like an insurance policy that guarantees to pay an agreed amount if a company or financial structure fails to perform as expected. AIG wrote a great deal of these guarantees supporting the housing market. There was tremendous amount money (trillions) that supported and provided the cash for all the US home equity loans and new home loans over the last 10 years that were packaged up and sold to investors. AIG wrote these guarantees or default swaps on a large number of mortgage backed loans so that investors would feel safer in buying them. Everything worked well.

Housing can't be outsourced to India and since a big portion of everything you and I buy now comes from China, it was about the only major commerce being done in the US. Everybody took cash out of their house (refi) or borrowed up to the hilt to buy all those nice things the Chinese wanted to ship over, (Aqua Dots). Financial institutions are like all companies and they wanted to grow so they started doing sub-prime lending when the market got saturated and the prime market didn’t grow as fast. The government saw this as good for the people and kept interest rates low to prime the pump. The Wall Street firms figured out a way to package these sub prime loans as well and AIG put a credit default wrapper around them and off they went to be sold to investor’s world wide. The rating agencies liked the fees so they bought off on some highly structured financial engineering and gave the bonds a AAA or AA rating. AIG was OK as long as there was secondary market for their guarantees. With out a secondary market AIG couldn't value the contracts they held on their books. When the government took over the extremely highly leveraged Fannie Mae and Freddy the world financial markets became very nervous and the flow of money between institutions dried up. This caused the secondary market for credit default swaps to halt. Proper accounting required AIG to write the value to zero. That caused a paper loss. It wasn't cash. When AIG took the write downs on their books the rating agencies down graded AIG which triggered a collateral call on all the guarantees AIG had issued to investors in the mortgage loans so that someone could put a pool in and buy a plasma TV made in China. AIG is a huge company with lots of cash flow from its business but the severity of the collateral calls out stripped their ability to continue to post the required collateral. They were about to file bankruptcy when the government agreed to loan them $85 billion for two years at 11.5% interest. If they had failed many other companies would have failed in a row just like a line of dominoes. As it is about 100,000 employees will probably lose their jobs at AIG and if it had failed it would have been 10 times this number.

So why did AIG take on so much risk? First the financial engineers thought they could out smart dumb lending decisions. The country was hungry for growth and refinancing home equity loans propelled consumer demand. The Fed kept interest rates low and every body was happy. But guess what, the financial engineers were wrong and defaults started percolating in the sub prime assets. The bonds starting having trouble. AIG was writing a great deal of this because they thought they could trade out the risks and the brilliant quants had it all figured out. They get bonuses on trades and they snookered poor old dumb Martin Sullivan. He was a property man and couldn’t tell a good trade from a bad one. He had no clue but he was determined to prove he could run AIG and make money like Greenberg. Traders need to be held on a tight rein and he didn’t get it. He let them do their magic so he could show profits. The problem with these financial market guys is given a free hand they will bet the house every time. The CFO was just a guilty and that is why they relieved him of his position but interestingly they didn’t let him go. I am only guessing but he probably tried to act like he knew what was going on and took the side of the quants against the auditors. I am still guessing but he probably needed to be removed because the auditors couldn’t work with such an inept and weak CFO in a cheap suit.

Entitlements and Gibson

BoIraq is a product of the entitlement quota system for victims. He is a farce; he is not a victim he had a white mother but he rode in on the coat tails of his nomadic black father. He could have made a choice to be seen as either but selected to be black so he could milk the system for all it's worth. Not trustworthy!

Financial Engineering

Bear Stearns, Washington Mutual, IndyMac, Lehman Brothers, AIG, Merrill Lynch. Arrogance and over confident management based on a work environment of a few chosen elitist managers are common for the preceding companies. About five years ago one of the companies above (that shall remain unnamed) sent one of their top executives to LA to tell the peons that all the stars were aligned for his division to begin making big profits and really matter to the bottom line for the group. He stressed strict allocation of resources and cost control. The entire three hours he was visiting and giving his lecture to the little people, his limousine was running outside on a main street waiting to take him two blocks away to a company sponsored reception with customers. Guess what he flew the private company jet from NYC to get to LA to boot. These so called executives get so enamored with their own vision of greatness they miss the point that financial services is about risk management. Risk management is boring; it is not financial engineering it is making hard decisions about not risking the firm. It's not based on some variation of a tri-nomial tree using the Hull-White model. Its about proportionality and reputation. Both need strong controls derived from an ethical core value to keep arrogance out of the system. The management of the above firms risked the livelihoods of all their constituencies by believing their own greatness and deserve to go down and go down hard.

Sarah's interview

I thought she did very well and will only improve.

Rangel, coloful crook or moron

It is reported that Representative Charles B. Rangel blamed “cultural and language barriers” on his forgetting about $75,000 in income on his tax returns. This minor income problem is apparently the result of an interest free mortgage he obtained from a big New York real estate developer and Rangel political donor. Rangle is allegedly to have said of his investment advisers at the resort "every time I thought I was getting somewhere, they’d start speaking Spanish”. Maybe he could have used a translator. For goodness sakes, this guy is Chairman of the House Ways and Means committee. Daily he oversees some of the most complex matters facing our Nation, taxes, Social Security, and trade agreements to name a few. Rangel is saying it was just incompetence that got him into this mess and he should continue to maintain his role as committee chair. If it is incompetence, he should lose his job; If it is stupidity, he should lose his job; if it is dishonesty, he should lose his job. The embodiment of politics as usual matriarch, Nancy Pesoli (or is it Posoli?) is supporting his retention but she wont be able to keep her finger in the dyke (or is it dike?) for long. Rangle is gone. It's a shame notwithstanding that he is either an idiot or a brigand he is always colorful and fun to watch.

McCain

Well he made the speech. He'd better get a specific road map out because the other side has more plans than Carter has pills. He needs to publish, publish, publish his top priorities and let Sarah keep banging away at the Dem's. He needs a full court information press communicating his economic vision and specific plans. He and Palin can get to work on the hearts and minds but the analysts need to have something to read while he pounds away.

McCain and Palin

Sarah Palin, Hockey Mom and VP candidate excelled with a brilliant speech. She effectively took on Boiraq with zingers and style. She is no push over. Her election against an incumbent Alaska long time politician will serve her well as she moves into the national spotlight. She made a very good impression. The heartland of America will support her candidacy and keep McCain in the running. The democrats are on the defensive and nervous about their own shallow presidential candidate.

Fake social secrity card gets mom with poor children deported

The Associated Press reported a story out of Carrollton, Texas with the question -- "Did a suburban Dallas employer (hospital) go too far when it told police about a job applicant who presented what turned out to be a counterfeit Social Security card?" It should be a requirement to report people that use fraudulent documents to cheat. If your child cheats in school is that OK, what about their friend? If you witness a crime should you just keep quiet? If someone uses a false voters registration card I wonder who they would be voting for?

NB. Is the reporting of such a minor matter related to the reporting of the mean hospital that deported the illegal auto accident victim?

Sarah Palin

I cant believe the hypocrisy of the BoIraq supporters that are claiming Sarah Palin has no experience. Talk about the pot (yes, Obama inhaled) calling the kettle black. I heard one mindless Obama supporter criticizing how small the population of Alaska is compared with other states. Well guess where Biden is from, Delaware. See how things work in Delaware below. Strong move by McCain. Choosing a driven competitive woman will pick off the enough Hillary supporters to make a difference. On the Republican side life long GOP supporters will vote for McCain no matter who he picked. This evens the score and shows McCain is not just a status quo GOP know nothing. He is what he has always been, a maverick. He still needs help domestically and her experience is limited notwithstanding not much less so than the other guy. The game is his now lets see how he rises to the job.

Democratic Convention and the Entitled

Obama is holding his convention this week in Denver. Never in the history of mankind has so much hot air gone so high as in the mile high city. Omama got here through crafty gamesmanship. The Michigan and Florida delegates were disqualified from participating in the selection of the party candidate. Hilary had more votes. Just as well for Boiraq, (sp) she won these highly populated states but gained no delegates. Sound familiar? It's the same way he won his first election. He used the corrupt Chicago political machine to disqualify all the other candidates petitions by systematically protesting each and every signature. Under the law each was eliminated. He sure seems to rely on tricks to get where he wants to go. Hillary made a good point tonight at the convention by stressing that she has been working in the trenches for thirty-five years for Boiraq's (sp) right to squirm his was to the top of his party. Give me a break how can anyone take this inexperienced opportunist seriously compared with Hillary or even the plagiarizer, Joe?

Boiraq is a product of the hard work done by those that came before him so he could lead a privileged life. No doubt he is smart and knows how to work the system. Why else would he have found comfort in such a bitter soul mate as his wife? She was earning $360,000 per year working for a charity after he became senator. She didn't start out that well paid but it sure seems funny she got a BIG raise after he was in office. He knows the system. He's entitled. If he is not elected he will blame race as the reason and try to indict the country. Forget that the junior senator has never introduced a bill, chaired a committee, made a payroll or most importantly fought the system because he is a product of and with the system. Never however will it be his fault as there is always someone to blame, that is the way the entitled work.

2008 Olympics

The USA men's basketball team was outstanding. They played as a team and won the gold as they should. Unlike some others US representatives that earned the top spot (woman's relay for example) they stood with pride on the podium as the national anthem was played with their hands over their hearts. Can you imagine? Each and every player showed pride in themselves and their country both on the court and off. We've come a long way. These guys are the type of role models that we need for the youth of today. They showed respect for the USA, respect for team play, and respect in themselves. I wonder if Michael Moore had a camera?

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Delaware

By the way how does an anti big-company democrat rationalize Biden with the fact that a majority of finance companies and estate trusts select Delaware as the domicile of choice? Is it by being hypocritical or do they just use a shot of old fashion moral selectivism (both common liberal traits)? What ever the answer is and both choices have a good deal of evidentiary documentation, the fact remains that Delaware is a good choice of residency for the big and wealthy. The best part is you don't even need to move there or even employ many people to take advantage.

Why do so many companies and the wealthy incorporate in Delaware? Is it because of Delaware's liberal lending laws and lazi faire regulations? Delaware is well known as a haven for companies desirous of circumventing home state rules. The laws are attractive especially for finance companies because they allow companies to charge what would otherwise be usurious interest rates and fees in their home states. Estate plans for the wealthy often select Delaware for their Trusts because they can get around laws that serve the voters and constituents of their home residence. It’s a great place to avoid state taxes elsewhere assessed and regulations otherwise set up to protect the citizenry.

Delaware has been called the "Corporate Capital" because so many corporations have incorporated in the state because of its business-friendly law[1]. Read tax avoidance for the rich, anti-consumer protection, and “asset protection” for the wealthy. According to the Delaware Division of Corporations (2002), more than 308,000 companies are incorporated in Delaware. This includes 60% of the Fortune 500 and 50% of the companies listed on the New York Stock Exchange[2]. Gee I wonder why? I also wonder who pays Joe Biden’s bills? With all that corporate power right there for the taking how does he do it, I mean keep getting elected since 1972? I doubt he is funded by the followers of the great new hope change artist, Hussein.

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[1] http://www.netstate.com/states/intro/de_intro.htm

[2] ibid.

Joe Biden? Your joking, right?

This is great! Now we're going to win! Flip flop Joe has been in Washington (not a place well known for it's meritocratic leadership promotion or longevity systems, see future post "How to Stay in Washington") politics so long he's forgotten he is from a small state of no consequence in terms of its voting base. Delaware is not exactly a cross section of America. The population of the whole state is a little more than that of Austin Texas. Joe is a comedian, he likes to tell jokes. Barack Hussein Obama II blew it and the joke is now on him.

Financial Melt down

H. Obama is losing today from what the new polls are showing. He was a flash in the pan without any real substance. Once the Chicago political machine connections and his dismal record gets wider press the polish will come of his shine. I predict that GOP candidate McCain will announce Condolizza Rice as his running mate and then the whole game will change for the better.

2008 Olympics

The Chinese teams are great. I have noticed however that they don't seem to win any medals in sports that have a real score. They don't do well in swimming, racing, rowing, basketball, volleyball, kayaking, shooting, archery, soccer, or fencing. They do seem to be superior where the winner is picked through a subjective process of measurement involving judges. They excel only in those sports where judgment is a factor. Arguably the judges have a spotty history and have been known to be prejudice and biased. Even so its their venue and I suppose they paid for it so it all may work out in the end.

Groups Weigh Boycott of 'Tropic Thunder'

Calling a spade a spade is not all that easy any more. By golly we'd better not offend anybody because they have rights you know. Let's mainstream every disruptive kid into our class rooms so the whole class gets dumbed down to the least common denominator. This way the normal children can learn first hand to be sensitive not withstanding they will be deprived of a good education.

Status quo

By the way this blog not intended to always be about illegal immigrants. My view is that immigration is good if assimilation is encouraged. Sometimes this takes a generation or two. It also takes leadership from within the affected community. For our part we need to concentrate on education and leadership building. Always with the target being assimilation and not "celebrating diversity".

If you think about it, the people that risk life and limb to get into this country are the ones that really do want to work hard, thrive, and contribute. I dare say that the ones that stay home and grind out a life under the status status quo of land ownership inequality and poverty don't have the drive to make it in the US. My sense is that we need to actively promote rule of law, a fair and equitable justice system and property ownership rights south of our boarders as a broader solution to what drives illegals here in the first place. The ones that make it here have what it takes to contribute; we need to make sure we encourage and provide systems that promote their assimilation to be full contributors to the USA.

This is not original but why does Starbucks have a begging cup up front where you pay for your coffee? My wife likes the stuff so I need to buy her one occasionally otherwise I would never enter the place. I feel that they put the tip jar right out front so Ill feel obligated to drop my change in. Why don't they have one for the poor Guatemalan farmers they rip off instead of asking me to subsidize their substandard pay scale?

At least the farmers could use the money to get a ride to the boarder so it will be easier for them to sneak across into the U.S.

NY Times

Today I spent $5 to purchase a copy of the New York Times at one of the numerous local Starbucks in my neighborhood (no I didn't buy any coffee but that is another story). I don't buy the Times very often but every time I do, I am lulled into a false sense of hope by their catchy by line, "All the News that's Fit to Print". Almost without exception, at least for my take it never turns out that way. Don't get me wrong the science and business sections are good but the politically correct one-sided editorial staff destroys the concept of even handiness every time. The selection for front page news today proves my point.

"Deported, by U.S. Hospitals" is about some poor illegal immigrant without health care insurance that was run over by a drunk driver in Florida (of course it was a drunk driver, soon we will be able to use "climate changer" with almost the same connotation). We are supposed to feel sorry for this guy because he was sent back to his own country by the hospital after treating him to the tune of $1.5mm. Unfortunately his country has no support for poor people in his condition so his toothless mother has to take care of him herself and he is going down hill. I'm sorry I don't feel compelled to want to fight for his right to stay here as a burden on society. He came, it didn't work out and he should go home, end of story.

The Times reports that Hospitals do this all the time. The way they sneak their view into the story is by stating it is "a little-known but apparently widespread practice". How could the mean hospitals do such a thing? The Times go on to report about the law suit (this is America after all) and describes the financial condition of the hospital trying to drag us into one of their typical populist arguments, "us against the large corporate villains".

Look no one wants people to get hurt but the guy was here illegally trying to make a go of it so he could send money back to his family, all the while skirting taxes and the other duties of citizenship on the way. It didn't work out, so too bad. I shiver to think that if I raped a woman with AIDS, the Times would come to my rescue by putting my sad fate on the front page as well. They could put forth the case that I must have had a troubled childhood and it really wasn't my fault and that the drug companies should have cured the woman before I raped her. Since this didn't happen they should give me free access to what ever I need to live a healthy better life than I had before being infected. Well so much for my $5 it didn't work out, again.