Last Build Date: Tue, 17 Mar 2009 04:45:00 -0600Copyright: Copyright 2009
Tue, 17 Mar 2009 04:45:00 -0600Remember the phrase from the Nixon years and Watergate - follow the money. Well, it still applies. Prior to the release of the partial list of names, the Secretary of the Treasury and the Chairman of the Federal Reserve, who knew where the money was going, told us that it is "proprietary information" and not publicly available. Only the proprietor - the owner - should have that information. When banks lend money to you, the consumer, they can and do put restrictions on what you can do with it. What is worse, in this case, is that as a result of our pushing money into the coffers of institutions like A.I.G., we, the American public, have become the real owners of those companies, and we have a right to know. We were promised transparency by the Obama administration. The New York Times this week reported on another outrage relating to A.I.G. That company which has now, according to the Times of March 15, "received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to 400 executives in the same business unit that brought the company to the brink of collapse last year." Treasury Secretary Tim Geithner "told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them." Adding to the insult to the public is the revelation that "The payments to A.I.G.'s troubled financial products division are in addition to $121 million in previously scheduled bonuses for the company's senior executives and 6,400 employees across the sprawling corporation." These are the very reasons A.I.G. should have been forced into bankruptcy before the bailout. No bankruptcy court would have permitted the bonuses to be paid or those granted bailout payments protected with anonymity. Remember who now owns A.I.G. According to the Times "A.I.G., nearly 80 percent of which is now owned by the government..." and the new chairman, Edward M. Liddy, is "government-appointed" In effect, a government owned and operated private sector company is giving out government tax dollars like there is no tomorrow, while trying to bar transparency. The Times editorial of March 15 on the subject points out, "The bailouts of American International Group are also rescues of its trading partners - banks and other financial firms - that would have lost out if the insurer had been allowed to fail. But even after four bailouts between last September and this March, no one knows with certainty who those partners are or how much of the bailout money, now totaling $160 billion, has gone to make them whole." As a result of that editorial, we now have been given a partial list by A.I.G. The Watchmen - Geithner and Bernanke - have sought to prevent transparency. President Obama trumpets transparency, even promising that the wonders of the Internet will be available for taxpayers to follow all government transactions involving the expenditure of taxpayer money. Congresswoman Carolyn Maloney plaintively expressed taxpayer concerns when, in response to being told that information concerning the identity of TARP recipients is proprietary information and not available to the Congress, she said, "They have told others it is proprietary information. But we are the proprietors now. Taxpayers own the store, and we should be able to see the books." Indeed. Where are all the blowhards in Congress who tell us they are protecting the public? Why don't we have a committee comparable to the committee that examined and publicly reported on 9-11? The devastation to the U.S. economy and individual Americans is enormous. Surely this self-inflicted debacle requires an honest reporting on how it happened and who was and is responsible in public office and in the private sector. A non-Congressional blue ribbon panel should be appointed by the president f[...]
Wed, 11 Feb 2009 00:00:00 -0600
A little history: We were told by Bush's Treasury Secretary Hank Paulson that liquidity - the availability of credit - was our greatest financial problem and our greatest failing. He terrified Congress into voting for his plan, which the House first rejected, by telling us that unless the plan was accepted, we would have an economic debacle comparable to the Great Depression of the 1930s.
Six weeks later, after his $700 billion bailout plan was approved, Paulson told us that his original plan to buy up "toxic assets" was no longer the way to go, and he simply shoveled out money to the extent of nearly half of the appropriated funds -- $350 billion -- which Congress authorized him to do, leaving the balance for the new Obama administration to dispense. Those lending institutions have not resumed lending. Instead, they have used the tax dollars they received to increase their capitalization, to buy up other lending institutions, provide dividends to stockholders and pay excessive compensation and bonuses to their officers and senior employees, notwithstanding their past failures.
On February 10th, The New York Times, undoubtedly having the Geithner speech before it was delivered, analyzed the forthcoming remarks. On the issue of mandating liquidity and requiring the banks to lend appropriately, The Times' reporters, Stephen Labaton and Edmund L. Andrews, wrote: "Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money."
I hope the reporters are wrong. I fear they are right.
By letter dated October 9, 2008, I asked both Secretary Paulson and Chairman of the Federal Reserve Ben Bernanke why they didn't require banks receiving federal bailout funds to lend money to creditworthy applicants. Secretary Paulson did not respond to my inquiry. As for Chairman Bernanke, I found his response unconvincing. He wrote, "requiring directly that banks extend specified amounts of credit to creditworthy borrowers would entail many complications...In addition, because of the very large number of banking institutions in the country - more than 8,000 - administering such a program would be extremely resource intensive."
I had hoped Secretary Geithner would have told the American people that he was, at the very least, going to mandate that banks lining up to receive the additional $350 billion in federal bailout would be required to make those and other monies available for lending. He did not, and we will have to wait for future pronouncements from him on this subject.
This country is reeling and writhing in great pain. All that people want to talk about is their lost savings, e.g., in the stock market, 401ks, pensions, and their fear of losing their jobs, or their having been laid off.
Fear is everywhere. Remember what FDR said in his first inaugural address, "The only thing we have to fear is fear itself." President Obama will have to address that issue.
The President is entitled to the support of those Americans who voted for him and those who did not, but want him to succeed, it being in the interest of all of us that he do so. When he was campaigning for president, he used words to the effect that there is no Democratic America; there is no Republican America; there is only the United States of America. Recognizing that we are in great peril economically, it is clearly in the best interests of all of us that we work together.
The reaction of the stock market to the Geithner speech, hopefully not also to the President's, was a 355-point drop at the end of the day.
Wed, 04 Feb 2009 00:00:00 -0600The new team under President Obama has asked the Congress for an additional so-called stimulus bill, now at about $800 billion and still growing - with about $350 billion remaining and available to the Obama administration for use from the prior stimulus package. The administration has the power now or through laws that Congress could pass to make the banks lend and provide the needed liquidity. When I wrote to Federal Reserve Chairman Ben Bernanke on October 9, 2008 and asked why he didn't impose a requirement that the banks do their job to lend for which they were licensed - and only to those applicants who were creditworthy and at the same rate as the prior year, his response was, "...requiring directly that banks extend specified amounts of credit to creditworthy borrowers would entail many complications. For example, bank regulators would need to create an objective definition for determining which borrowers were creditworthy. Moreover, because the volume of banks' credit activities can fluctuate over time for a variety of reasons, including those over which they have no control (such as the rate of economic growth in their geographical regions), determining appropriate targets for individual banks' lending activities would be complex and potentially arbitrary. In addition, because of the very large number of banking institutions in the country - more than 8,000 - administering such a program would be extremely resource intensive." Do Bernanke's objections make sense? Aren't those 8,000 banks monitored now? Let me suggest to the Obama administration how they should react to the current economic crisis: 1. Impose by executive order a requirement that all banks fulfill their obligations and lend money to creditworthy applicants. If the Obama administration does not believe it has the power to impose that requirement, then ask Congress for that power and in the interim, make it a condition of any loan program entered into by the banks under future bailouts. 2. Create a new court or use existing bankruptcy courts with the power to change the terms of mortgages. I suggest new courts as well as using the existing bankruptcy structure in order to avoid the need for bankruptcy on the part of the mortgagor because of the predatory lending practices used in the original mortgage. The New York Times editorial of February 2, 2009 states, the Obama administration has rejected the "bankruptcy fix" now "out of fear it would cause Republicans to delay or reject the package." If true, this is unbelievably foolish on the part of the administration. Finally, I am fearful that radicals in the Democratic Party who support programs such as healthcare and education reform that I have supported over the years will seek to impose those programs by fiat without Congressional hearings and laws, by inserting them in the stimulus legislation. On what do I base that fear? Here are two news reports. A January 28, 2009 New York Times article by Robert Pear stated, "The stimulus bill working its way through Congress is not just a package of spending increases and tax cuts intended to jolt the nation out of recession. For Democrats, it is also a tool for rewriting the social contract with the poor, the uninsured and the unemployed, in ways they have long yearned to do. With little notice and no public hearings, House Democrats would create a temporary new entitlement allowing workers getting unemployment checks to qualify for Medicaid, the heath program for low-income people. Spouses and children could also receive benefits, no matter how much money the family had. In addition, the stimulus package would offer a hefty subsidy to help laid-off workers retain the same health plans they had from their former employers. Altogether, the economic recovery bill would speed $127 billion over the next two and a half years to individuals and states for health care alone, a fact that has Republicans fuming that the[...]
Tue, 27 Jan 2009 00:15:00 -0600Obama is moving quickly as he said he would to implement foreign and domestic policy changes, e.g., appointing a special representative -- Richard C. Holbrooke -- for Afghan and Pakistani issues and another - George Mitchell - for Israeli-Palestinian affairs. Domestically, he is moving quickly on the economic front with his stimulus package, requiring tighter Wall Street regulations and higher car pollution standards. We have the bizarre situation that the presidential candidate of the left, Barack Obama, who astonishingly won the election with a near landslide against all expectations, ends up as the clear moderate next to the Congressional Democratic leaders. Speaker of the House Nancy Pelosi is substantially to the left of the president and Senate Majority Leader Harry Reid is also, but to a lesser extent. The American middle class, Democrat and Republican, white and black, are overwhelmingly moderate in their political views and for reasons not comprehended by political observers recognized Barack Obama early on as a moderate and voted for him. Based on his appointments and actions to date, the public found their instincts in picking him were right on target. While I don't really know Barack Obama, having spoken to him once on the telephone during the campaign and having met and talked briefly with him at the Alfred E. Smith Dinner at the Waldorf Astoria Hotel, I, like so many others, sensed his moderate stance and decided to support and campaign for him in the general election. When I announced publicly that I would be deciding who I would be supporting, I received a call from candidate Senator Barack Obama whose opening sentence was, "I'm here to answer any questions you may have." I responded, "Senator, I appreciate your calling me, but you don't have to worry about me." His immediate reply was, "Will you campaign for me?" My response was, "Yes." And, of course, I did. I campaigned for him in Florida, Pennsylvania and New Jersey. New York was his overwhelmingly, and was exporting its campaign workers to other states to work for him. When I saw then Senator Obama at the Alfred E. Smith Dinner and had a few minutes to chat as I went through the receiving line, I told him of the wonderful reception I had had in Florida as I campaigned - as requested by his campaign people - in the Jewish areas just north of Miami. I told him I did not have to convince anybody; they were all for him before I got there. Recently, I saw a figure mentioned in the media that he got 78 percent of the Jewish vote nationally. He graciously said to me, "They believed in you and followed you." I know they were for him long before I got there, but believe me, praise and a thank you go a long way in making friends, and got even more activity and effort out of a then 83-year-old campaign worker. I hope and pray that President Obama succeeds. His opinions, as he is alleged to have to told the Republican leadership questioning his solutions, will now carry because, as he said to the Republican leadership, "I won." While I will support him, even if I disagree with some of his policies, I offer the following suggestions. 1. Get out of Afghanistan now. It is not stable, but a corrupt alliance of tribes that depend on the drug business for their livelihood and apparently like living in a medieval warlord society. Leading their government is a man -- Hamid Karzai -- whose writ barely extends throughout the capital, Kabul, with the Taliban being as strong or stronger in the rest of the country. 2. Have Secretary of Health and Human Services Tom Daschle appoint a committee to recommend a new law to be voted up or down by the Congress creating universal medical insurance for all Americans. Don't wait for our economic problems to be solved. Simply provide that the annual national expenditure for medical care not exceed the portion of our gross domest[...]
Tue, 20 Jan 2009 00:15:44 -0600What a great and extraordinary outcome. What a great country. What a great people. And what a great man who won. He also surprised many of us all in his post election political comments and governmental decisions. He conveyed his humility and intelligence with his statements and appointments. He took as his model Abraham Lincoln, the Great Emancipator who, 145 years ago, kept the nation together through leadership exhibited in personality and policies. How true it was when said by Lincoln's Secretary of War, Edwin Stanton, "Now he belongs to the ages." We who line the streets of Washington D.C. or are watching the swearing-in on television are participating in the crowning achievement of the Lincoln legacy: the swearing in of an African-American as President of the United States. Every president, including every new chief executive in government, whether it be mayor, governor or president, is entitled, after the election, to and generally receives support of the electorate across party lines and is deemed entitled to a reasonable time of generous political support to settle in and get the city, state or national government off to a good start. This is particularly essential when the city, state or central government is, as is now the case, in a precarious state. The U.S. is hovering at the edge of what we once experienced about 80 years ago - the Great Depression. Once in that economic state, it took nearly ten years and World War II for us to come out of that economic collapse. Thank God we have not yet and hopefully never will enter that state of economic calamity, but we must never forget the danger is there. We have chosen our leader to lead us across the desert and now we must help him with our political support and for those who believe in the Almighty, our prayers as well and for those who don't, their good wishes. The Obama presidency in its first two years at least should not be burdened in fighting battles because of simple partisan political opposition. Of course, the Republican Party has the right and obligation to seek to mold with the majority Democratic Party the legislation that will be offered by the Obama administration to deal with the economic crisis and have input into the many proposals that will now be offered to reform Social Security, Medicare, taxes, foreign policies, e.g., withdrawing troops from Iraq and, I hope, from Afghanistan as well. The Left Wing of the Democratic Party, primarily responsible for Obama's election, should keep their support strong during these days of economic difficulties requiring a moderate course of action. It is important that President Obama retain his connection with the people of this country. He thinks he can do it through his Blackberry which his close advisers appear to want to take away from him, so that no one can contact him directly, and thereby deprive him of the opportunity on his own to keep contact with the outside world on the world wide web. Such access, he and we are told, threatens security. They should find a way to deal with the security issue without cutting his ties with the world by limiting all access to ideas and requiring that everyone and everything come through a gatekeeper, the chief of staff. I recall how when I said I waited to go to my inaugural as Mayor of New York from my home in Greenwich Village by getting on a public bus, I was told, no, it's too dangerous. I overruled the security forces and boarded a bus. I was surprised to see only one person on it who appeared to be a homeless man. I later learned it was a special bus prepared for me to take and that the "homeless person" was a NYPD detective. During my three terms as mayor, I frustrated the well-meaning security operatives by taking many walking tours into neighborhoods, holding town hall meetings all over the city and holding up to seven news conferences a day for reporters, all to[...]
Tue, 13 Jan 2009 00:30:00 -0600The governments of the United States, Great Britain, Egypt, as well as the Palestinian Authority led by Mahmoud Abbas, all acknowledge that Hamas began the latest hostilities by declaring the cease-fire that was agreed to in June 2008 to be at an end in mid-December 2008. The position of the United States, as expressed by a White House spokesman, is that "Hamas, the group that controls Gaza, was responsible for the outbreak of violence and called its rocket attacks 'completely unacceptable.' The people are nothing but thugs.and Israel is going to defend its people against terrorists like Hamas." British Prime Minister Gordon Brown called on Hamas "to cease all rocket attacks on Israel immediately" and said he could "understand the Israeli government's sense of obligation to its population." According to the New York Times of January 3, 2009, ".government officials including Mr. Mubarak and Foreign Minister Ahmed Aboul Gheit have blamed Hamas for abandoning the cease-fire with Israel and seeming to seek Israeli retaliation." The New York Post reported on January 3rd that Nimr Hammad, an adviser to Palestinian President Manmoud Abbas told the Lebanese newspaper Al-Akhbar that "The one responsible for the massacres is Hamas, and not the Zionist entity, which in its own view reacted to the firing of Palestinian missiles." Israel's stated goal in Gaza has been and continues to be stopping and preventing in the future the raining of rockets on the State of Israel, terrorizing 750,000 Israelis who live and work within the current range of the rockets. Israel is also determined to prevent Hamas from smuggling rockets and other weapons through tunnels that run beneath the border between Egypt and the Gaza Strip. The cease-fire, which was approved by the Security Council, does not address how to accomplish those two objectives. That is why Israel has rejected the Resolution and continues its battle to defend its people from current and future attacks. Hamas continues to fire rockets into Israel, disrupting the lives of hundreds of thousands of Israelis, as well as maiming and killing Israelis. Because of the inaccuracy of the missiles, which are intentionally aimed at civilian areas, the attacks do not always accomplish their mission, which is to kill as many Israelis as possible. That Hamas has rejected the United Nations' cease-fire Resolution is an indication of how extremist it is. Hamas is saying in effect that it hopes to wipe Israel off the face of the earth, aided by other terrorist states like Iran, whose President, Mahmoud Ahmadinejad, has stated that the destruction of Israel is his goal. Some American media outlets have contributed to the incitement of violence against Israel by publishing false reports on the conduct of the Israeli Defense Forces. On January 7, 2009, a misleading headline in The New York Times reported, "Israeli Shells Kill 40 at Gaza U.N. School." The article does mention that the casualties took place "outside [italics added] a United Nations' school in Gaza." Nicholas Kristoff, Times columnist, was even more outrageous in his recent column, urging President-elect Barack Obama to punish Israel. On January 8th, The Times again reported, "The Israeli mortar rounds killed as many as 40 people outside the school. Palestinian hospital officials said Tuesday that 10 of the dead were children and 5 were women. Residents of the neighborhood said two brothers who were Hamas fighters were in the area at the time of the attack." As the incident at the U.N. school demonstrates, Hamas attacks and then uses civilians as shields when Israel fires back in self defense. Obviously, Hamas is responsible for the resulting civilian deaths. The Associated Press was even more detailed on the Hamas attack that provoked the I[...]
Tue, 06 Jan 2009 00:00:00 -0600Every day during the bombing of Gaza, Hamas proudly announced that it was keeping up its rocketing of Israel. Never did the number of rockets fall below 20 per day, and on some days it reached 70. On one day, one of the rockets landed in an Israeli classroom which, had it been occupied at the time, would have injured or killed dozens of Israeli children. There is a difference between the injuries and deaths of Palestinian civilians and in particular, children in Gaza - which everyone, including the Israelis deplore -- and the deaths of Israeli civilians and children in Israel, which apparently no one in Gaza regrets. Hamas wants to deliberately kill every Israeli Jew it can, and they say so, while the Israelis regret any Palestinian civilian casualties that occur as the Israelis direct their fire at Hamas terrorists who maintain their installations in civilian occupied areas, using those civilians as human shields. The governments of Egypt and Jordan, as well as the Palestinian Authority led by Mahmoud Abbas, all acknowledge that Hamas began the latest hostilities by declaring the existing ceasefire agreed to in June 2008 at an end in mid-December 2008. The New York Times of January 3rd reported, ".government officials including Mr. Mubarak and Foreign Minister Ahmed Aboul Gheit have blamed Hamas for abandoning the cease-fire with Israel and seeming to seek Israeli retaliation." The New York Post of January 3rd reported, "The so-called moderate Arab regimes - Egypt, Jordan and Saudi Arabia, as well as the Palestinian Authority - have limited their response to what can best be called lip-service condemnations of the Israeli attack. And nothing more. 'The one responsible for the massacres is Hamas, and not the Zionist entity, which in its own view reacted to the firing of Palestinian missiles,' Nimr Hammad, an adviser to Palestinian President Mahmoud Abbas, told the Lebanese newspaper Al-Akhbar. Similar remarks have been voiced in Cairo, Amman and Riyadh." Since it declared a unilateral end to the cease-fire in December, 2008, Hamas has never stopped firing rockets at Israel, which have numbered over 1,000 just in the last six months. Since Hamas gained power in Gaza seven years ago, it has fired over 10,000 rockets. Hamas has not only been raining down rockets on Israel, it also has been steadily widening the range and accuracy of its rockets. While originally Hamas used more primitive rockets which went six miles before landing and exploding, now it launches rockets that are capable of going 24 miles before exploding, bringing 750,000 Israelis living in southern Israel within the rocket danger zone. Hamas has also smuggled into Gaza from Egypt through a vast network of tunnels tremendous quantities of weapons for use against Israel. So what is a reasonable definition of "proportionality?" Since the rockets have never stopped and are fired at Israel every day, it is clear that the force used to date has not been adequate to achieve the goal: ending the daily rocket attacks on Israel. Logic and rationality require that Israel increase the force used to achieve its goal. The civilian residents of Gaza are not entirely innocent. They voted to make Hamas their government in a free election, just as the Germans voted for Hitler in a democratic election. The Times reports on January 5th two different responses by citizens of Gaza. In one case, a woman whose family was decimated after Israel began its ground invasion, said, "May God exterminate Hamas." She understood who was responsible for the carnage. Another woman quoted by The Times, whose family was cowering during the invasion without electricity or water, said about Hamas, "God bless these fighters. They are throwing themselves to death to protect us." It is those fighters who send rockets into Israel to kill civilians [...]
Tue, 30 Dec 2008 04:30:09 -0600
To put a stop to this rocket bombardment, Israel has now taken the offensive. The Wall Street Journal in its editorial of December 29, summed up the facts: "The chronology of this latest violence is important to understand. Israel withdrew both its soldiers and all of its settlers from Gaza in August 2005. Hamas won its internal power struggle with Mr. Abbas' Fatah organization to control Gaza in 2006. Since 2005, Hamas has fired some 6,300 rockets at Israeli civilians from Gaza, killing 10 and wounding more than 780." More than 200 rockets have been fired into Israel since the ceasefire ended.
The Israelis, according to The New York Times of December 28, have responded to Hamas provocations with "waves of Israeli air strikes destroyed Hamas security facilities in Gaza on Saturday in a crushing response to the group's rocket fire, killing more than 225." The same Times article reported that, "Palestinian officials said that most of the dead were security officers for Hamas including two senior commanders, and that at least 600 people had been wounded in the attacks." Palestinians in Gaza have it within their power to end the rule of Hamas, or at least change its stance, by engaging in public demonstrations demanding that the Hamas government they elected end all violence against Israel. They know if Israel is not attacked, it will not attack them.
The position of the United States, as expressed by a White House spokesman, is that "Hamas, the group that controls Gaza, was responsible for the outbreak of violence and called its rocket attacks 'completely unacceptable.' The people are nothing but thugs...and Israel is going to defend its people against terrorists like Hamas."
British Prime Minister Gordon Brown called on Hamas "to cease all rocket attacks on Israel immediately" and said he could "understand the Israeli government's sense of obligation to its population."
What should the Israeli government do at this point? I believe it should announce that it will cease its military activities directed at Hamas in Gaza for 24 hours. If Hamas pledges within that period to extend the truce for at least a year under the same conditions that s applied to the original truce, including ceasing all acts of violence against Israel, then Israel will pledge it will end its current military activity in Gaza. If Hamas refuses to make such commitments or fails to carry them out, Israel should reserve the right to recommence military action against Hamas in Gaza.
Wed, 17 Dec 2008 09:30:00 -0600Now we are learning of individuals in the private financial sector who have stolen billions in so-called Ponzi schemes. Charles Ponzi was a con man who promised large profits to investors, but who in reality was using the money of later investors to pay huge profits to earlier investors, while stealing some of the money for himself. The swindle works for a while, but when there are no new investors and existing investors begin asking for their money back, the scheme collapses quickly. The public is frightened about the future and has every reason and right to be. Retired people worry how they will pay their current expenses, with their savings depleted. Those about to retire have in many cases concluded they can't, but must continue working to replenish their now reduced retirement savings. Even kids are becoming fearful about the future. A friend told me of a recent conversation between him and his six year old daughter. The child said to her father with anxiety on her face, "Daddy, are you losing your job?" Her father replied, "No, sweetheart, why are you asking that question?" The daughter responded, "Two of my friends at school told me their dads had been fired." Said daddy, "No, sweetheart, don't worry. I am not losing my job." President Bush has not provided the confidence we need to reduce the anxiety level. Indeed, he and his appointees over the last eight years are responsible in great part for the financial mess we are in. They refused to adequately monitor through federal regulatory agencies such as the SEC, the Federal Reserve, Freddie Mac and Fannie Mae, the very industries which have contributed to the country's enormous economic distress. Alan Greenspan, former chairman of the Federal Reserve, who had no hesitation in taking bows when the bubbles were producing profits, commenting "excess extraordinaire," but offering no regulations, has provided a very modest apology for his role in failing to regulate. According to The New York Times of November 2, 2008, Greenspan "acknowledged in a Congressional hearing last month that he had made an 'error' in assuming that the markets would properly regulate themselves, and added that he had no idea a financial disaster was in the making. What's more, he said the Fed's own computer models and economic experts simply 'did not forecast' the current financial crisis." Christopher Cox, Chairman of the S.E.C., has lots to apologize for, including deregulation. But his latest vulnerability relates to the $50 billion debacle engineered by Bernard L. Madoff. The Times of December 16th reports, "The latest black eye for the commission came when inspectors and agency lawyers missed a series of red flags at Bernard L. Madoff Investment Securities. If it had checked out the warnings, the commission might well have discovered years ago that the firm was concealing its losses by using billions of dollars from some investors to pay others." "Similarly," reports The Times, "the agency's chairman, Christopher Cox, assured investors nine months ago that all was well at Bear Stearns. It collapsed three days later." Some members of Congress, such as Congressman Barney Frank and Senator Chris Dodd, who bullied Freddie Mac and Fannie Mae to relax and change their elementary rules on creditworthiness, the ability to make mortgage payments, have not accepted any blame for the sub-prime mortgage crisis. They undoubtedly wanted to extend the American dream of home ownership , but foolishly or dogmatically sought to do so to those unable to afford the mortgage payments. President-elect Barack Obama, by his appointments to date, has conveyed to the country that he is a person of moderate political views and has been applauded for his appointmen[...]
Tue, 09 Dec 2008 05:00:00 -0600
Congress only authorized Paulson to spend half of the $700 billion bailout fund and to come back to Congress for permission to spend the balance. However, with all of the publicly announced Treasury actions, including the recent bailout deals made with Citibank, it seems to me the Treasury Secretary may have invaded the second pot of bailout funds. Secretary Paulson is apparently not subject to FOIL requests, so attempts by the media to ascertain the amounts and conditions of loans made have been rejected. According to a recent press statement, the Secretary still has $15 billion uncommitted, and he said he wanted to leave the balance of $350 billion for the incoming Obama administration to disperse.
I have lost total faith in the Secretary of the Treasury, his boss, President Bush, and the Congress, on their capacity to handle the economic crisis we are in. Interestingly, Congress -- that is the House of Representatives -- and the public opposed and then supported bailout legislation, because we were warned by Paulson and the country's foremost economic experts that if the Congress did not pass it, the country would be headed for a crisis not seen since the Great Depression. And here we are having passed the bailout still staring the Great Depression in the face.
It was madness to pass the bailout: proving the point that decisions made out of panic rarely, if ever, result in responsible outcomes. It has also been established, at least to my satisfaction, that the so-called experts don't know what they are doing and they are the same experts who were in charge when we got into this mess. Interestingly, according to the New York Times of November 26th, "In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation's entire economy and far eclipses the $700 billion that Congress authorized for the Treasury's financial rescue plan."
We are apparently going to repeat the same error we committed when we authorized the first bailout of financial institutions. This time, we will be bailing out the three automobile companies - GM, Ford and Chrysler. The people to whom we are requested to give the additional billions - they first asked for $25 billion and are now asking for $34 billion -- are the same people who ran these companies into the ground. I have absolutely no confidence in their ability to turn things around. All should remember Chrysler is a private company, whose owners thought they bought the company cheap from Daimler, and now want the taxpayers to bail them out. Instead of bailing the automobile companies out, let them go into bankruptcy and either work their way out in Chapter 11 or be sold off in bankruptcy.
There is no shortage of solutions proposed for our financial troubles. One is to let the judges in bankruptcy redesign the terms of the mortgages before them - which currently they are not permitted to do -- allowing for lesser interest and longer total terms, and in the meanwhile, enact whatever laws are constitutional that would bar foreclosures from proceeding for at least a year so as to give the government the time needed to work out whatever other remedies are needed.
With respect to the car industry, someone has suggested we give any taxpayer who buys a totally American-made car - allegedly the Big 3 make cars that are deemed to be more American than those manufactured by Toyota in the U.S. which imports more parts -- a $5,000 or more tax credit on their tax return in the upcoming year, 2009. If this proposal sounds whacky - I wish I had thought of it - it is less improvident than the proposals of the so-called experts.
Tue, 18 Nov 2008 05:15:00 -0600Our economy does not grow, indeed quickly diminishes, when businesses, large and small, are unable to obtain short and long term loans to deal with payrolls, purchases and expansion measures. Congress was not convinced but Paulson assured the House and Senate that if the bailout bill did not pass, Congress would be responsible for driving the U.S. economy into another Great Depression like the one that almost destroyed America in the 1930s. In 1933, President Franklin Delano Roosevelt, who inherited a devastated economy from Herbert Hoover, took heroic measures to get America going again. At age 83 I remember that era well. Nevertheless, even with FDR's New Deal reforms, the U.S. did not come out of the Depression until 1941, when World War II and the war-driven economy put the entire country back to work. At the height of the Great Depression, unemployment reached 25 percent. Today, according to The New York Times on November 17th, "The unemployment rate was likely to peak at 7.5 percent by the third quarter of 2009...The unemployment rate rose to a 14-year peak of 6.5 percent in October." Even with the threat of another Great Depression hanging over their heads, the House of Representatives refused to vote for a bill that gave the Secretary of the Treasury unlimited power to spend as he saw fit $700 billion dollars. This money was intended to secure liquidity in the country's financial institutions by buying their so-called "toxic assets." The bill gave the Secretary stunning powers, which could not be appealed to any court. He was to be immune from any oversight whatsoever. A sufficient number of House members, to their great credit, refused to go along and the legislation was defeated by a vote of 228 to 205. Paulson and Bernanke, joined by all of the major economic leaders of our country, went to work and got the Senate to pass a slightly improved bill, providing among other things, that while the Secretary would continue to administer the fund with enormous unilateral power, he could only disperse half of the fund, $350 billion, after which he would have to seek to get the Congress to release the balance. This would give Congress the opportunity to add additional conditions, if they were needed. To date, Paulson has committed all but $60 billion of the $350 billion fund under his control. This extraordinary legislation passed the House by a vote of 263 to 171, having passed the Senate earlier by a vote of 74 to 25, and was immediately signed into law by President Bush on October 3rd. Six weeks later, Paulson announced he had made a mistake in his approach to correcting the liquidity problem and wants now to modify his future strategy. He will no longer buy "toxic assets," but take an equity position in financial firms. It is not clear to me if he is seeking Congressional approval for that, but probably so, because Congress must agree to allow him to expend the balance of $350 billion. In the meanwhile, liquidity has not been achieved. What the Treasury Secretary has done is expand the categories of applicants seeking to obtain money from the $700 billion spigot. He has approved loans to banks, also to General Motors, Chrysler and Ford for $25 billion with an endorsement of their request for another $25 billion to the automakers coming from TARP, and he has dispensed or agreed to dispense, a total of $150 billion to the gigantic insurance company, A.I.G. The name of the program, TARP (Troubled Asset Relief Program), is an apt one, since tarp is a nautical term for cover, and we now have, in addition to all our other problems, a cover-up engaged in by Secretary Paulson who refuses to provide details of the loans[...]
Wed, 12 Nov 2008 09:15:00 -0600At first, some members of Congress -- both Republicans and Democrats -- balked at the huge bailout package. They said at the very least there should be some minimal safeguards since the legislation was drawn to give the Secretary of the Treasury what appeared to be total power to determine how the bailout would be structured. These concerns were addressed to some extent in the revised bailout bill which, among other things, staggered the bailout payments and provided for some Congressional lending oversight for half of the $700 billion rescue package. Congress apparently assured that having waited and then passing the legislation on the second time it was presented to the House, it was in fact improved and would prevent our being ripped off by Wall Street for a second time. We were told over and over by the experts in the news media and government that the real problem was in fact liquidity - banks were just not willing to lend, even to creditworthy applicants. I decided to write a letter to both Treasury Secretary Paulson and Federal Reserve Chairman Bernanke stating my concerns about the use of the federal guarantees and loans. The letters follow: "October 9, 2008 Henry M. Paulson, Jr. Secretary Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Ben S. Bernanke Chairman Federal Reserve System 20th & Constitution Avenue, N.W. Washington, D.C. 20551 Gentlemen: "As you have pointed out, the meltdown occurring in the United States is taking place in large part because of a lack of available liquidity, meaning that lenders - commercial banks in the lead - are not lending to applicants seeking to borrow in order to purchase housing, cars and other big ticket items that the economy relies on to flourish, as well as denying loans to small businesses and local governments seeking to borrow to pay their bills with municipal bond markets largely closed to them. "One of the purposes of the $700 billion recently made available as a result of legislation enacted by the Congress is to give additional liquidity to commercial banking institutions so that they can once again perform their leading raison d'etre - lending money. The major reason for lack of liquidity - availability of loans - is fear, as you have stated, fear that the money will not be repaid either by individuals, governments or institutions, e.g., other banks. "Again, as you have stated, another reason offered by the banks for not lending monies is that much of their assets are now labeled "toxic." It is these assets which, as a result of your efforts, the newly-enacted legislation addresses, freeing the banks of them by having the federal government buy them at a price below their original value, substituting cash to the banks. "If I have accurately stated the facts, why not by order of the United States Treasury and Federal Reserve direct the commercial banks to immediately commence loaning money to "creditworthy" applicants and at a scale comparable to loans individual banks entered into last year? If the banks refuse to abide by such order, they would not be eligible among other punitive measures to sell their "toxic" securities to the Treasury. If the banks require a definition of "creditworthy," your offices will supply it for the various situations that apply. "If the proposal makes sense, it can immediately be implemented and provide the credit needed. If it does not, I would appreciate knowing the reasons why. "All the best. Sincerely, Edward I. Koch" [...]
Wed, 29 Oct 2008 00:29:30 -0600I pretend no special expertise on how to deal with terror suspects, but I do believe there is a vast difference between criminal acts generally involving individuals or a small group engaged in a conspiracy to commit a crime, as opposed to terrorist acts. Criminals are attempting to make an illegal buck or engage in random or premeditated acts of violence. Terrorists, on the other hand, are seeking to impose their will on government and affect its foreign policy. In the case of Islamic terrorists, they are part of a worldwide conspiracy aimed at bringing the West to its knees. For example, the 19 Muslim terrorists on 9/11 were really enemy soldiers on a mission to inflict terrible damage on America. In my view, terrorist suspects should not be afforded the same rights as ordinary criminals. But what about terror suspects who are U.S. citizens? The several Americans charged with terrorist acts have sought in various federal courts, including the United States Supreme Court, to be treated differently than non-Americans held under similar charges. To date, so far as I know, those attempts have not been successful. In the case of Jose Padilla, the Supreme Court refused to hear his appeal and made a decision that upheld the President's authority to designate him and detain him as an "enemy combatant." Padilla was subsequently convicted. In the case of John Walker Lindh, he pleaded guilty and did not pursue appeals, accepting a plea bargain. So the net affect is to keep open these constitutional issues. I have great confidence that the United States Supreme Court will try to apply common sense and justice when and if it takes up these matters. The fanatical Islamists take as part of their religious obligation the forced conversion of the infidel. Christians and Jews who refuse to convert or pay tribute and recognize the superiority of Islam are to be killed. Last week, there were reports in both Iraq and India of attacks on Christians in both of those countries -- in Iraq by Muslims and in India apparently by fanatical Hindus. I fear a lessening of support in the war on terror worldwide. We in the Western world, particularly in the U.S., lead a good life in comparison to much of the rest of the world. But many are unwilling to pay the price for protecting that freedom. The Islamic terrorists look forward to death as martyrs as a result of their killing infidels, entitling them to be taken to heaven, where they will enjoy the services of 72 virgins. It was shocking when Rowan Williams, the Archbishop of Canterbury and head of the Anglican Church said that adoption of parts of sharia law were "unavoidable," and "certain conditions of sharia are already recognized in our society." The two British experts say they are concerned about the way we pursue terrorists, endangering American rights of privacy. Yet, as The Times points out, "the intrusion on individual privacy here [Great Britain] is greater than in America. Surveillance cameras are ubiquitous - in subway stations, in residential neighborhoods, on highways - and their pervasiveness is one reason that the police were able to track within 24 hours the travels of the cars used in the failed bombing attempts in London and on the Glasgow airport in 2007. The surveillance has probably made the British citizenry the most watched in the world, outside of Singapore." Our very lives and the survival of our civilization in the war against Islamic terrorism are at stake. This war will go on for many years. Do we have the intestinal fortitude and sufficient belief in our Western civilization to fight for it no matter how long the battle, I frankly am no longer sure. In Great Britain, there have been many more terror[...]
Tue, 21 Oct 2008 09:30:00 -0600Azizabad is in an area where, according to The Times, "Taliban forces have been battling NATO forces." Guerrillas make it their business to infiltrate civilian areas to provoke civilian casualties caused by the coalition and American forces, while fighting to fend off the Taliban and the forces of al-Qaeda led by bin-Laden. President Karzai apparently does not inspire his own people. His brother is rumored to be a drug lord in charge of the poppy fields of Afghanistan. The Times in an editorial of October 15th, reported that his brother "may be involved in the heroin trade that is pouring $100 million annually into the Taliban's coffers." We are not capable of responding to Taliban war crimes. The Times reported on October 20th, "Taliban insurgents pulled some 50 passengers off a bus in southern Afghanistan and beheaded as many as 30 of them after accusing them of being soldiers traveling in civilian clothes, Afghan officials in the region announced on Sunday. The police chief of Kandahar Province, where the attack occurred on Thursday, said that of six bodies retrieved so far, all had been beheaded, mutilated and dumped. The police had received information that 24 other people had been killed but had yet to find their bodies, the police chief, Gen. Matiullah Qati, said." If Afghan soldiers are forced to defend themselves against the Taliban, they are likely to find ways to deal with Taliban cruelty, ways which American soldiers could not and should not use. Were we simply to bomb Taliban hideouts, we would be denounced by Karzai and others around the world for killing innocent civilians as well. In the meanwhile, our soldiers and our allies are suffering casualties. The Russians, then Soviets, left Afghanistan in 1989 admitting they were unable to bring it under control. Before they withdrew, they sacrificed the lives of 13,500 of their soldiers. The Russians are far more willing than others to offer up the lives of their soldiers. They lost 10 million soldiers fighting and defeating the Nazis in World War II, losing 300,000 soldiers in the taking of Berlin alone. If the Russians could not win in Afghanistan, neither can we. We should get out now, leaving Karzai with the arms and tanks to equip Afghanis to fight for their democratic state against the Taliban. Our NATO ally, Germany, while willing to send "another 1,000 troops" is unwilling "to deploy them in southern Afghanistan where the fighting is heaviest." Are we the only country required to expose our soldiers to danger everywhere to protect the free world? Is there no limit to the blood we must spill of our own people and the treasure we must spend? ################### The United Federation of Teachers (UFT) is one of the most politically powerful municipal unions in the country. It is led by Randi Weingarten who is now also president of the American Federation of Teachers, the UFT's national parent. Recently the UFT filed a lawsuit in the United States District Court demanding that teachers should be allowed to wear political buttons in the classrooms of the public schools. The lawsuit was initiated because the Department of Education, according to The New York Times of October 11, "sent a memo to principals directing them to enforce the longstanding regulation which requires that all school staff members show 'complete neutrality' while on duty." Randi Weingarten defended the UFT demand. The Times, quoted her as saying "she had watched teachers balance their obligations as professionals and their responsibilities as citizens." She add[...]
Mon, 13 Oct 2008 23:15:00 -0600The absence of protests now when our economy has been driven into the ground by greed on Wall Street and in Washington is a mystery. We saw some of that greed uncovered when the CEO of Lehman Brothers, Richard Fuld, Jr., was interrogated before the House Oversight Committee chaired by Henry Waxman. I served with Waxman when I was in the Congress from 1969 to 1977, and there could be no better legislator to make public what happened. According to Fox News, "Richard S. Fuld Jr., chief executive officer of Lehman Brothers, declared to the committee 'I take full responsibility for the decisions that I made and for the actions that I took.' He defended his actions as "prudent and appropriate" based on information he had at the time. 'I feel horrible about what happened,' he said." The New York Times reported that "in response to a question from Dennis J. Kucinich, who wanted to know how Mr. Fuld's public statements could be valid in light of efforts by JPMorgan Chase to secure $5 billion in extra collateral from Lehman in the final days," Mr. Fuld stated, "'No, sir, we did not mislead our investors. To the best of my ability at the time, given the information I had, we made disclosures that we fully believed were accurate." Really? The Times also reported, "At one point on Monday, Mr. Fuld was confronted with an internal memo dated June 8 that included warnings about Lehman's condition and asked the question, 'Why did we allow ourselves to be so exposed?' Mr. Fuld, after a long scan of the memo, said, 'This document does not look familiar to me.'" Does anyone believe him? I think few, if any, do. Will he be punished? Some say he had an estimated fortune of $3 billion which has been reduced to $30 million, and that is punishment enough. I do not agree. I believe that if Fuld deliberately misled the investing public, he should be pursued criminally and civilly, and is only one of many who should be held accountable. I don't know whether Fuld is criminally responsible for the debacle. But all of us are aware of the financial void into which we have fallen. According to CNN, "the Dow ended its worst week ever Friday, capping a staggering eight-session sell-off that resulted in a 2,400-point loss. It's not just the size of the loss keeping investors on edge, it's also the gyrations. On Friday, the Dow whipsawed, falling as much as 697 points in the first minutes of trading before quickly climbing back into positive territory, only to turn lower shortly after." What bothers people, in addition to the pain of seeing their hard earned retirement funds disappear, is not to see those who caused it identified and, where grounds exist, criminally pursued. Surely, some of those CEOs, CFOs and directors committed fraudulent acts. What the public demands is that those who engaged in crimes be punished. In all likelihood, nothing will happen to them. It is reminiscent of the cigarette company CEOs who testified under oath before Congress that they did not believe there was any connection between cigarette smoking and cancer. Millions of smokers died from cancer, but none of those CEOs were charged with perjury. I am surprised that no civic leaders or political parties have been able to stir the public to take to the streets in peaceful protest. Ought there not be a public rally in every city, particularly New York, Chicago, Los Angeles and Washington, D.C., led by respected, responsible civic leaders who will convey the anger and fears of the electorate to the Washington lawmakers and demand the kind of leadership provided by FDR back in the days of the Great Depr[...]