Monthly Archives: September 2008

(Community Matters) Paul Krugman on the bailout:

(Community Matters) The polls are showing a definite move to a tie in Florida, from McCain plus 6.3% just last week. The St. Petersburg Time says Palin driving even Republicans away from McCain.

(Community Matters) New York Senator Charles Schumber, “I have told him [Paulson]… we need changes related to housing, we need to put the taxpayer first ahead of bondholders, shareholders.”

I sent a note on Friday to Obama economic advisor Jason Furman saying the same about taxpayers first. My note about requiring banks to give taxpayers an appropriate amount of equity (warrants) to ensure we’d have the majority of upside in this bailout as well as only purchasing the debt at an appropriate discount. These are our only hope in coming out whole, quite possibly even a gain – assuming this bailout is even enough.

Intuitively, I don’t know that I’d mix taxpayer bankruptcy law revisioin or foreclosure bailouts with this legislation, but I can’t help admiring Democrats in Congress for insisting.

(Community Matters) I don’t understand the psychology of a woman who gives to the poor, even launching a medical nonprofit, and so resolutely denies siblings and a nephew. Doesn’t bode well for potential stewardship of a first lady. AAS article

(Community Matters) Extraordinary times these are. Whenever we are headed into an economic slowdown, I’m reminded what a few of my old banking clients use to tell me, “you make your money when you buy, not when you sell.” George Sandlin and Johnny Gannt especially come to mind. They’d build up liquidity and buy when the market turned south, or appeared dangerous and they could buy at the right price. So, I’ve always thought when we had some liquidity, that’s what we’d do. Well, we blinked.

We’ve had our eyes on three investment properties for sometime. Even negotiated over one of these earlier this year but the seller wouldn’t blink and we had a ceiling. This week, that seller called and was ready to negotiate. We kicked into gear – our favorite former MBA student/realtor, Jason Heffron such a good sport, revived the financial projections and updated rates and rents. Not 100% sure the seller would accept our price, but he called knowing unambiguously what it was worth to us 8 months ago.

Nevertheless, we can’t pull the trigger. I don’t believe anyone knows what exposure exists in our financial system. Warren Buffett’s time bomb, aka weapons of mass destruction, are still out there. A $1 trillion fix doesn’t completely impress me against a potential $65 trillion exposure (estimated value of outstanding derivatives). My totally out-of-the-ass intuition is that the probability is good we’ll be fixed. But, who the hell knows? Steven sleeps like a baby when we have liquidity. He works too hard and frets too much when we don’t. What the hell good will additional retirement assets do me if he’s not around to share my life?

I take solace in Zogby’s forecast that Americans are entering an era when we’ll curb material needs, value diversity, practice retrospection and demand authenticity. Probably a good thing the former, because we’ll either be paying for our twenty-eight year binge or suffering decreased standards of living at least in the near future.

(Community Matters) WHEN Warren Buffett said that derivatives were “financial weapons of mass destruction”, this was just the kind of crisis the investment seer had in mind. full Economist article

(Community Matters) Wow, now that the press appears to be coming out of some starry-eyed daze with McCain, his campaign is throwing out lies faster than candies on that conveyer belt in I Love Lucy, and we’re learning that McCain can lie to our face without breaking a grin.

He certainly spoke like a maverick all those years, but he appears to have voted like someone bought and paid for. A bit reminiscent of his Keating 5 support and excursions to luxury villas on private planes as a member of Charles Keating’s entourage – red carpets, Dom Perignon and extravagant luxuries all along the way (paid for by taxpayers at the last financial meltdown).

Talked about reform and regulation of Fannie & Freddie in 2005, even co-sponsored legislation to “regulate & reform” the two organizations. Now we’re learning the legislation was a trojan horse to exempt the organizations from certain securities regulation and that his own party (which controlled the Senate) wouldn’t even pass this bad bill out of its committee. It was so bad even George Bush’s White House objected – no surprise Tom Delay’s House passed the bill. And lo and behold his current campaign manager, Rick Davis, was the major lobbyist in charge of ensuring no new regulations were imposed on Freddie or Fannie (that’ll cost us another $1 Trillion).

So, this week McCain (after Monday’s gafe that the economy is fundamentally strong) has been saying we need more regulation. But, in an article just published in a recently released health care journal, he cites financial deregulation as a good thing, even saying he’d do the same for health care. Until recently he also boasted about his passion for further deregulating all industries (hmm, more financial deregulation, consumer products deregulation, food & drug safety deregulation, that’s turned out well).

I don’t know if this last bit is true or political mudracking, but in light of all the straight faced lies, it’s hard to know what to believe. We’re hearing disturbing reports from other soldiers and POW’s about his time in the service and as a POW. Talk about his recklessness and temper, reports that he was nicknamed SongBird by other Hanoi Hilton POWs and anger from other former soliders and POW’s who haven’t forgiven his “obstruciton of investigations” as a member of the Senate Select committee on POW/MIAs. I hadn’t heard these allegations before. Not sure what to think.

I’ve long given McCain the benefit of the doubt, but these last two weeks have shown unequivocally that he’ll say anything and keep saying it even in the face of irrefutable, contradictory evidence.

I’ll still consider him a one time war hero but, frankly, even that is hanging by a thread.

(Community Matters)  Worth watching

(Community Matters) forwarded by my good friend Kirk Rudy

(Community Matters) Our friend Nancy Graves forwarded an inspiring email which included the following message from the folks at Cabot Wealth Advisory (I doubt they say “folks” there). Anyhow, it certainly holds implications for futuristic investment decisions, as well as hope for our society.

The pollster, John Zogby has written a book, The Way We’ll Be. Zogby does far more than political polls. His organization, Zogby International, will do any kind of poll for a fee. He asks about religion, shopping habits, reading habits, travel, sexuality, parenting, values and more. And after a poll has been completed, he keeps the data around, as reference for future polls on the same subject.

The book, which I stumbled on in a bookstore recently, is mainly an analysis of trends he has detected through polling and his analysis/guess of where those trends will lead America in the years and decades ahead.

One disclaimer: Zogby is a fervent Democrat, and though he attempts to analyze data objectively, I sense that in some of his projections he has not been successful in suppressing his personal values.

Having said that, the future according to Zogby will bring a world characterized by the following:

Living Within Limits

Embracing Diversity

Looking Inward

Demanding Authenticity

The first idea, Living Within Limits, stems from surveys that show “we are in the middle of a fundamental reorientation of the American character away from wanton consumption and toward a new global citizenry in an age of limited resources.” That’s why people buy Toyota Priuses when they can afford BMWs.

The second idea, Embracing Diversity, reflects the fact that, while “young people are less knowledgeable about facts and events than ever before … members of this generation are more networked and globally engaged than members of any similar age cohort in American history.” Going on, “[They] want a foreign policy as inclusive and embracive as they are. They expect impediments to trade to be removed so they can shop anywhere.” Finally, Zogby found (in a survey in late 2004) solid majorities of all Americans expressing favorable views of China and Chinese products … with one exception. “Of all the many subsets we broke our results into, the only genuinely negative responses we found to both China and its products came from the members of Congress and their staffs. That’s cultural disconnect in stark relief.”

The third idea, Looking Inward, comes from surveys that show a growing appetite for satisfaction from the spiritual side of life, though not specifically from organized religion. It reflects the fact that “total household Christmas holiday spending has been in sharp decline since the mid-1990s, according to the Department of Labor’s Bureau of Labor Statistics.” Zogby explains it up this way. “People are hungry to address the nonmaterial side of their lives. They’re worn out with getting and
spending; in some cases they are broken by it. They want an America that looks to the spirit as well as the pocketbook, and they want to move beyond specifically religious nostrums to get there, including specifically Christian nostrums.”

And the fourth idea, Demanding Authenticity, builds on the fact that our connected world in general–and the Internet in particular–have made it easy to find the truth about most things. As a result, anything that is not authentic–from a political leader to an advertising campaign to a TV reality show to an Olympic performer–is quickly exposed. Similarly, for every person who has a public profile on a social network site, the best policy is to be real … because the truth will very quickly be known. Says Zogby, “There’s a longing … a deep-felt need to reconnect with the truth of our lives and to disconnect from the illusions that everyone from advertisers to politicians tries to make us believe are real.” Also, “[consumers] have figured out what is false and real, what is ephemeral and what deeply matters, and now they are starting to demand that same authenticity in the products they buy, the companies they buy from, the institutions they frequent, and the people they vote for.”

Going on, Zogby predicts that the red state-blue state shorthand of political analysis will fade in the years ahead, replaced by increasingly precise tools that segment “sports fans, pet owners, international travelers, early risers, cancer survivors, heart-bypass veterans, Catholic school alumni, science majors compared to humanities majors, Mac users compared to PC users, American-car owners compared to foreign-car owners, Yahoo! browsers compared to Google browsers, single moms compared to married moms, and on and on.”

Zogby also writes:

That support is waning for America‘s role in Israel as a “fair and honest broker.”

That globalization will continue, not just because of competitive, capitalistic forces but also because of genuine understanding and empathy for the citizens of foreign lands.

That Americans are growing increasingly dissatisfied with their federal government.

That the baby-boom generation “will finally force Congress to pass meaningful health care reform.”

That environmentalism, cutting down on waste, and making do with less will grow increasingly relevant in the years ahead.

That demand for alternative energy solutions will “eventually translate itself into funding, research, exploration, and with a little luck, reality.”

(Community Matters) hmm, I’m still thinking about the young man the other day who told me he sent a couple of his workers to Houston to help remove fallen trees and limbs. Immediately I thought, wow, that’s quite admirable.  Then a friend asked if they were charging. He answered, “of course” and that he was taking a cut.  I sat on that for a bit, then couldn’t help it.  Even though he was a guest at my table, I told him I felt there was something wrong with that.  His friend concurred.  

(Community Matters) They celebrated the opening of the Obama volunteer headquarters at the Texas Coordinated Campaign today. It’s not that they haven’t been doing lots out of that office already, but it was a great way to celebrate and engage even more volunteers. The headquarters is in the old Safeway at the southeast corner of I-35 and 12th street, next door to the CVS.  You can find Obama stickers, t-shirts, yard signs, pins and much more there too.  These aren’t from the campaign; however, they are being produced & sold by Glen Maxey.