Paul$on is Lo$t, Confu$ed, and $pending Our Money Fooli$hly!

Every day or so, Henry Paulson realizes he has made a big mistake and then attempts to fix it by making an even bigger mistake. Every episode of this ongoing farce costs the American taxpayers hundreds of billions of dollars. Why doesn’t President Bush fire him? A vacancy would be much cheaper than Henry Paulson for the next two months.

For example, he first gave AIG an $85 billion loan that was “protected” by warrants that gave the government in the event of a default, the right to purchase a controlling interest in the insurance giant. Why he did not take all of their legitimate assets as collateral instead demands a federal investigation. After taking their notoriously extravagant $400,000 vacation, the bigwigs at AIG returned and told uncle Henry that they wanted another $40 billion. Because he had structured such an incredibly stupid initial deal, he was forced to give them another $40 billion. He dug the hole deeper.

Surprise! Edward Liddy of AIG found that the extra $40 billion was so nice that he informed uncle Henry that AIG wants another $27 billion of U.S. taxpayer funds. Of course now that Paulson had already dug us into a $123 billion hole, he dug even deeper to $150 billion! If AIG comes back next week and wants another $50 billion, we all know what uncle Henry will do. Some of these companies need to be allowed to fail. Remember Penn Central Railroad, Eastern Airlines and Pan Am? The world got along without Nash Rambler and Studebaker.

Until the Clinton/Rubin phony loan factor is purged from the financial system, it will remain clogged. In October 2007, over $50 billion of bundled loans were sold as securities and the $50 billion was then able to be loaned again. One year later AFTER THE $700 BILLION BAILOUT AUTHORIZATION, less than 1$ billion was pumped back through the financial network. That is because all of the institutions are still carrying the Clinton/Rubin baloney loans as assets on their balance sheets, and no one else will lend against those “assets.”

Unfortunately, uncle Henry has become quite popular. Now the auto industry wants tens of billions, and other industries also are elbowing their way into the federal hand out line. When was capitalism voted out of existence? Paulson needs to be fired immediately – and investigated!

Will President Obama Be A Leader Or A Loser?

Recent presidential history provides the answer.

• Like the last four Democratic presidents, Barack Obama was elected along with a Democratically controlled House and Senate.
• Presidents Kennedy and Johnson capitalized on their good fortune and passed their legislative center pieces (Kennedy - funding the Apollo moon launch) and (Johnson – The Great Society Program).
• On the other hand, despite the huge Democratic majorities Jimmy Carter failed to secure a comprehensive energy plan, and Bill Clinton failed to secure a comprehensive healthcare plan.

WILL OBAMA SUCCEED
LIKE KENNEDY AND JOHNSON?
OR
FAIL LIKE CARTER AND CLINTON?

Leadership expert, Bill Porter’s new book Presidential Lessons Learned – Follow The Leader provides an informative, fascinating and insightful review of the major legislative attempts by Obama’s four Democratic predecessors. There were 10 significant factors present in each case.

• Why did Kennedy and Johnson handle all ten factors one way - AND Carter and Clinton just the opposite way – with just the opposite results?
• MORE IMPORTANTLY, HOW WILL OBAMA HANDLE THESE TEN FACTORS?

The future of our country may depend on the answer to that question!

YOUR LISTENERS (VIEWERS) NEED TO KNOW!

What is Necessary To Rejuvenate the American Economy?

Bush, Pelosi, Reid, & Paulson Accelerate Corporate Socialism!
.....Obama vows to accelerate personal socialism!
..........McCain has a difficult time trying to clearly explain what
..........needs to be done!

THE BOTTOM LINE

Until the U.S. economy can regain its footing, it is going to be an ugly chapter of American history. Until American companies can successfully compete on an international basis, our economy will not reignite. People who are losing their jobs are not going to purchase a new house. Until people are finding jobs, buying cars, and purchasing new houses, the economy will remain in the tank. The government is sucking huge amounts of money out of the economy to bailout the Wall Street money meisters and the investment bank barons. Those hundreds of $billions will not create jobs. Instead, by removing the enormous weight of corporate taxes and healthcare costs from our corporations we could immediately change the dynamics of this financial stranglehold.

A GOLDEN OPPORTUNITY

Other countries have also stumbled because of lax lending standards, excessively low interest rates and unchecked greed. When a big country sneezes, many other countries catch a cold. While the rest of the world is also trying to revive their own economies, we need to make quick, intelligent and bold moves and take advantage of this moment of opportunity. Obama has a big box of band aids and McCain has a giant roll of duct tape. WHERE IS A REAL LEADER?

WHAT IS NECESSARY
TO REJUVINATE THE AMERICAN ECONOMY?

First and foremost, corporate and personal socialism, while sounding wonderful, have never been successful in practice – EVER - ANYWHERE! Why try something that has a 100% failure rate? This is not rocket science. The solutions are simple, obvious and necessary. While there are numerous items that need attention, there are three major issues that collectively can make a huge positive impact on our beleaguered economy and promote job creation:

1. REDUCE OR ELIMINATE CORPORATE TAXES. The U.S. has the 2nd highest corporate tax rate of all of the major developed countries. Companies pursue profits – not patriotism! If expenses (including taxes) are significantly less in another country, companies will build or relocate facilities in those countries. Companies do not pay taxes – they simply collect them for the government. The cost of the taxes is merely added to the price of the product that we purchase. We can not afford to ignore the fact that our companies are at a severe disadvantage because of our tax structure. Millions of American jobs are now in China, India, Korea and many other countries whose corporate taxes are much lower than ours. THAT MUST CHANGE IMMEDIATELY!
2. HEALTH CARE COSTS – same points as above on corporate taxes. America is the only major developed country that does not pay for healthcare through the government (that does not mean that the government has to take over healthcare – just provide the funding) WHY? Again, our companies are at a severe competitive disadvantage because none of their international competitors have that additional expense. General Motors and Ford each have more than $2,000 of extra costs (healthcare) that must be included in the price of a car – costs that their competitors do not have. That means Mercedes, BMW, and Honda etc. are selling more cars – and thus employing more workers! Hello!!!!
3. PURGE THE CLINTON/RUBIN FACTOR (OVER A $TRILLION OF FRAUDULENT LOANS) OUT OF THE ECONOMIC SYSTEM + REDIRECT THE BAILOUT $$$. Corporate bailouts + federal government partnership with American companies - are you kidding? Now even the worst run companies will not be allowed to fail – the very essence of capitalism (Remember Penn Central Railroad, Nash Rambler, Eastern Airlines and Pan Am?). The worst CEOs will be propped up with our taxes. All of the incompetent, greedy, big risk takers, who contributed to the financial meltdown, are being rescued with our money (corporate socialism). Mike and Mary Main Street (you and me), who had no potential upside in the financial orgy that ended up an economic disaster, are being robbed in order to cover the losses of the people who did have upside potential. That is immoral, probably unconstitutional and defies common sense.

Jimmy Carter cut the kindling wood (Community Reinvestment Act of 1977 – no need for a down payment, credit or a job – if you are still breathing you are qualified).

Bill Clinton and Robert Rubin lit the fire (manipulation of Fannie Mae and Freddie Mac in order to process enormous quantities of “sub prime loans”).

Alan Greenspan poured gas on a raging inferno of senseless and shameless borrowing (lowered interest rates and kept them low even when there was virtually no reason to do so).

Bush, Pelosi, Reid and Paulson are throwing our furniture, economic framework and our futures into the financial flames. They have arranged a taxpayer heist that makes Al Capone, Bonnie and Clyde, and Jesse James look like choir boys (and girls). Bush, still suffering from the “Katrina effect – afraid of being accused of not taking action quick enough – is quite willing to sign off on anything – even total stupidity.

The money for corporate bailouts should be redirected to laying the foundation of new alternative energy industries. These new industries can employ millions of U.S. workers and help our country become energy independent. If the government is going to put our money in the private economy (first, the very concept should be debated vigorously) then at least put it where it would do the most good.

The pain that will be suffered because of the stupidity of lenders and borrowers should be borne by the people who acted foolishly – not everyone else! Let those companies sell, merge or fail! Their stronger competitors will buy their assets – just not at the price that the “gambled but lost” want to get. As long as there is over a $trillion of fraudulent assets occupying space on corporate balance sheets, the credit markets will not function properly. Fire Henry Paulson and let’s get on with realistically solving the problem.

THE FUTURE WILL HAPPEN TO US -
OR WE WILL CREATE IT.
THE CHOICE IS OURS!

Healthcare Is Bankrupting America AND Sending Our Jobs Overseas!

BAND AIDS & DUCT TAPE ARE NOT AN RX FOR HEALTHCARE!

The largest hole in our country’s financial bucket is our convoluted healthcare “system”. Of course it is not a system, but instead a conglomeration of an untold number of different programs that overlap, leave large gaps, cost double the worldwide rate, deliver below average healthcare, and that are the leading single cause of millions of American jobs moving overseas.

Six former U.S. presidents, both Republicans and Democrats, have attempted to solve this most critical political issue. All failed! Barrack Obama has a giant box of band aids and John McCain has a giant roll of duct tape. Both tell us that they are going to fix the system. Right!

A large portion of the $2 trillion (plus) a year that we spend on “healthcare” is siphoned off by special interest groups that have nothing to do with actual healthcare. For example, the hundreds of billions of “healthcare” dollars that go to trial lawyers and insurance companies every year do not provide even one aspirin of medical care.

The New England Journal of Medicine, the most respected source of information in America for healthcare reported in 2006, that U.S. patients receive proper medical care from doctors and nurses only 55% of the time! That is downright scary and it is nothing to cling to!

In 2004, The Commonwealth Fund compiled the first international report that compared the healthcare quality in 29 advanced countries, including the U.S. Two major findings demand our attention. First, numerous countries provide their citizens with much better healthcare. Second, they accomplish that with about half as much money as we spend per citizen. For those that argue vehemently that they don’t want the healthcare arrangements that exist in other countries, I ask “Why not?” If I can get better healthcare and cut my premiums in half, I want to explore that option. No plan is perfect, but theirs is a lot closer to perfect than ours! Let’s talk about it.

For those whose door to their mind is locked and they cannot find the key, perhaps knowing that we are losing millions of American jobs to the same countries that offer better healthcare will motivate them to look for the key. Our American companies are needlessly at a huge financial disadvantage in international competition. Our companies like General Motors have to add an extra $2,000+ to the cost of every automobile and truck that their international competitors do not have to include. In other countries, their government pays the cost of healthcare. In America we make our companies add it to the price of a car, washing machine or lawn mower. As a result, our products cost more than theirs. Is this a good strategy?

Because of the extra healthcare cost and the fact that America has the second highest corporate tax rate in the world, many companies logically elect to locate some or all of their facilities in other countries that provide healthcare for their workers and have low (or no) corporate tax. This is not rocket science. Would someone please explain it to Senator Obama and Senator McCain.

There is a major distinction between the government providing the premium and the government taking over national healthcare. Clearly it makes perfect sense for the government to dictate automobile pollution standards, like the requirement of catalytic converters. However, it would not make sense to suggest that the government should build the cars in order to achieve the standards.

And so it is with healthcare. Currently, we are like the man who has a pistol in both hands and then shoots himself in both feet. Hello! Business as usual will soon mean NO BUSINESS! We must adjust our strategies to the reality of the world marketplace – whether we like it or not.

The most important step is simply recognizing that we need a comprehensive evaluation of all of our many options for healthcare. Then we must decide what makes the most sense given our needs, our resources and the real consequences of continuing to ignore what all of our competitors are doing.

Our next blog will address critical factors, options and opportunities that are inherent in the $2 trillion healthcare issue.

Clintonomics Has Devastated Our Economy - AGAIN!

SO WHAT DO WE DO NOW?

Few would argue that it would wise to put an alcoholic in charge of a bar. So why did Bush put Henry Paulson, the former CEO of Goldman Sachs and one of Wall Street’s $38,000,000 a year hotshots and a definite insider, in charge of the financial meltdown? Paulson recently asked for $700,000,000 of taxpayer’s money, with no restrictions – just let him decide how much and when to hand our money over to any firm of his choosing. Bush should have fired him on the spot for requesting such a ridiculous arrangement. Yet Paulson is still suggesting and executing reckless blunders that are costing the American taxpayers hundreds of billions of dollars.

For example, Paulson foolishly put $85 billion of taxpayer money into AIG, and incredibly cited a warrant to purchase AIG shares as our protection. PROTECTION? You’ve got to be kidding! The bigwigs at AIG knew they had snookered Paulsen and went on a $400,000 vacation – at our expense. They knew that they would need more money AND that under the warrant arrangement, Paulsen would have to give them more of our money in order to protect the $85 billion down payment. And so it went; another $38 billion of our taxes was forked over to the AIG honchos who had just come back from their extravagant vacation.

Where is common sense? What Paulson should have done, and what he (or hopefully someone else) should do with the rest of these big lenders and investment firms, who bet wrong and lost a lot of money, is quite simple. Yes, the market must have liquidity and it must come quickly. Everyone can agree on that. However, the big question is: What is the best method of accomplishing that necessity?

There are six major factors that must be part of any proposed solution:

1. Lenders must have a dependable source of capital.
2. The American taxpayer must have total protection.
3. Any pain (there will be much) should be experienced by those who are responsible for the poor decisions and greed that caused the problem.
4. All of the Clintonomics BS factor must be squeezed out of the system in order for us to regain a sound financial foundation and return confidence to the markets. The phony subprime equity that has been pumped into the financial networks because of the repeal of the Glass Steagall Act and the gross (possibly criminal) misuse of Fannie Mae and Freddie Mac, must be pumped back out of the system. Until reality, accountability, and common sense are discernibly restored, the vast majority of American investors will not consider putting their money in the stock market, which is one of the main sources of new capital for the companies that make up our economy. As long as there is the perception of pockets of Clintonomics still in the financial markets the economy will not run on all cylinders.
5. Like the former blue chip stock and that was once a part of the Dow Jones Industrial Average, Penn Central Railroad ceased to make wise business decisions and went out of business. Good! That is how capitalism works; the best companies survive and prosper, and the poorly run companies fall by the wayside. The consumer wins. Other railroads bought their tracks and trains. Penn Central’s former employees went to work elsewhere. Good! Remember Pan Am, Eastern Airlines, and Nash Rambler cars? Those companies ceased to exist, but the market place filled the void. Well the same basic theory must be applied to this current chapter of the American business book. Some of these lenders and investment firms should not be “saved” by the American taxpayer.
6. The markets – not Obama’s socialism - must be the major part of the solution. The main culprit in this financial nightmare was an abuse of power by the Clinton administration – the government. Suggesting that a take over by the government of large segments of our economy is the best solution is absurd. George W. Bush is still reeling from the “Katrina effect” and is paranoid about once again being accused of not taking action quick enough. He is now ready to agree to anything and sign it as fast as he can – “Mr. Paulson, please tell me where to sign and take the $700 billion.”

THE SOLUTION

If an American citizen was in financial trouble, and he or she went to a bank for a loan, the banker would probably not lend them any money. However if a loan was offered, you know that every asset that person owned would be required as collateral, and that the loan would be for considerably less that the actual value of the pledges assets. The banker would want adequate security – and rightfully so - because the banker needs to protect the interests of his other clients.

Well now the bankers are in trouble and they want money from the taxpayers to bail them out of their poor decisions and greedy lending habits. Incredibly, with the help of Henry Paulson, George Bush, Nancy Pelosi and a long list of recipients of campaign contributions from the lenders in question, these risk takers who gambled and lost want handouts and expect us (the taxpayers) to pay good money for their worthless subprime loan “portfolios”. Thanks, but no thanks.

Here is the deal – take it or leave it! The lenders need liquidity. OK! We (the taxpayers) need protection. Say yes! OK! Our message to any lender who needs liquidity, but who can not get a loan through normal channels can come to the U.S. Taxpayer Bank. Bring the title, deed and certificates to all of your assets. We will lend 50% of the value of your hard assets (not the Clintonomics BS factor – subprime loans) as a line of credit. You will agree to forgo any protection from the bankruptcy courts. If you default, we will seize your operations and liquidate all of the hard assets. Like Penn Central some of our current financial institutions need to be given the chance to succeed or fail, and if they fail – OK! Other companies will buy their assets and their employees will work somewhere else. The taxpayers will get their money back, maybe make a little money, and one more pocket of the Clintonomics BS factor will have been purged from the system.

If the lenders don’t like this arrangement (they won’t – they like the idea of uncle Paulson’s handouts much more), then they need to call Warren Buffet, a competitor, or another hard lender other than the U.S. Taxpayer Bank. That should be their first choice. The U.S. taxpayer should be the lender of last resort and the toughest to bargain with. Squeezing the Clintonomics BS factor out of the market needs to be done quickly and completely. It will not be pretty and it will be painful for many. There is no shortcut or painless way to save a severely infected limb in order to avoid amputation. It must be done, and it must be done immediately! Our future depends on it!

As long as these lenders think that George Bush, Henry Paulson and Nancy Pelosi and their cronies will bail them out, they will not take the necessary action. We need leadership! Let’s get on with it and rebuild our national wealth, rebuild trust in the system and rebuild the confidence of the American people. Where is Ronald Kennedy?

Today, Paulson, Bush, Pelosi and their anti-American taxpayer buddies lifted another $250 billion out of our wallets and INCREDIBLY agreed to “invest” our money in these poorly run companies. Have they already forgotten the $85 billion and the additional $38 billion boondoggle at AIG? Why are they such slow learners? It wouldn’t matter if they were wasting their own money, but of course Henry Paulson’s Wall Street buddies wanted our money – not their own. Where can we hide our wallets? Barrack, George, Nancy, Henry and their friends are just getting started.

The Financial Meltdown of 2008 – Clintonomic’s Second Recession!

WHY DID IT HAPPEN?

Jimmy Carter built the bomb, Bill Clinton detonated it, and Congressmen Barney Frank, Chris Dodd and Charles Schumer tried to deny its existence and thus delayed rescue attempts that could have prevented much of the damage. Barrack Obama who either doesn’t understand or doesn’t care, is promoting a trillion dollar spending plan that would undermine any attempt to resurrect our economy.

In 1977 newly elected President Jimmy Carter, along with an overwhelming Democratic majority in both the House and the Senate, proceeded to throw the economic checks and balances of America’s mortgage industry out of the window. The Community Reinvestment Act replaced the time tested requirements of home buyers having to document credit worthiness, make a down payment and be employed, with merely being able to breathe. Now anyone would be able to borrow large sums of money to purchase a house – whether they could afford it or not.

Because of this and other poor government decisions, the Savings and Loan collapse in the late 1980’s and the early 1990’s, resulted in a $160 billion bailout – funded by the American taxpayer. Having learned virtually nothing from this expensive learning opportunity, the Clinton administration decided to expand on the prior errors - and GO BIG! He knew that a large infusion of unqualified new home buyers, who had a wallet full of easy-to-get credit cards, would also be buying appliances, furniture, and other amenities for their new house. This would certainly fire up the economy – for awhile – until reality finally took over. The plan of course was that reality would not arrive until Bill Clinton had left the White House. Sorry George!

In order to pull off this clever but demented plan, Clinton would have to get the federal government to make two major moves. First, the risk of a mortgage default had to be moved away from the original lenders, so that they would agree to make a large number of these essentially fraudulent loans. Hello Fannie Mae and Freddie Mac (and the American taxpayer), as well as a batch of new financial instruments that allowed lenders to sell their mortgages (and the risk) to some sucker who assumed that there was at least a little common sense being used to qualify the new army of borrowers! Unfortunately however, Clintonomics contained no element of common sense.

Along with Fannie and Freddie, who are quasi-governmental agencies, a new – but unregulated and unsupervised – $60 trillion mortgage buying and trading industry grew and began to feed on the mortgage industry like vultures on road kill. To make this possible and to provide the political cover, Clintonomics called for and obtained the repeal of the Glass-Steagall Act of 1933. This consumer protection act was created after the Great Depression. It required the separation of commercial banks, investment banks, securities firms and insurance companies. For six decades, this restriction of the various industries helped to avoid the kinds of conflict of interest that have recently undermined the very foundation of our financial institutions.

Second, Clintonomics required that Fannie and Freddie invest up to half of their funds into the phony baloney, “subprime” worthless blocks of mortgages. In order for Clintonomics to continue running this high stakes Ponzi scheme, a continuous flow of new money and new suckers were required. The only way to accomplish that was to force Freddie and Fannie, (who guaranteed these phony loans with taxpayer money), to keep the charade going. As former Fannie Mae Chairman, Franklin Raines said, he was “under increasing pressure from the Clinton administration to expand mortgage loans among low and moderate-income people.”

When the real estate market experienced a pull back, the game was over. People who had no money in the deal simply refused to make payments on millions of these phony loans. The mainstream media’s former love affair with the Clintons had precluded any serious discussion about or scrutiny of the fancy financial footwork of the Clinton administration. However, Bill Clinton’s recent preemptive attack and assignment of blame against the Democratic Congress for the current crisis, highlights his concern that the media’s current infatuation with Obama will no longer allow the real truth to be suppressed any longer.

CLINTONOMICS FIRST RECESSION

Not content to merely sow the seeds for the current financial meltdown, the Clintonomics playbook also created the 2000-2002 recession. After Bill Gates inspired the tech boom of the late 1990’s, unexpectedly federal tax revenues spiked upward. Bill Clinton was as surprised as everyone else. The first year of the new monstrous tax revenues, which were due to the taxes produced by the unforeseen prosperity, the Clinton administration had projected a $200 billion deficit! Merry Christmas Bill.

This however, is where it all began to fall apart. To his credit, Bill Clinton was dedicated to reducing or eliminating the federal deficit. Unfortunately, he and his administration were like little kids who could not stop eating candy. They did not understand that moderation is important. The federal deficits had been accumulating for over 30 years. Changing that formula in one fell swoop was akin to attempting to jump across the Grand Canyon, instead of walking the entire one day journey.

From the second quarter of 1999 to the second quarter of 2000, federal tax revenue rose 11.4% while personal income only grew by half as much (5.7%). The net effect was that the federal government revenues sucked all of the oxygen out of the economy. A tax cut at that point was called for and it would have probably avoided the three-year recession. Income tax rates were still high because George Bush I (Read my lips – no new taxes), had in a “spirit of bi-partisanship” joined forces with the Democrats and raised our taxes. Those high rates were still in effect when the tech boom arrived.

One full year before George W. Bush even took office the stock market began to plunge. On January 14, 2000, the Dow Jones hit a high and then spiraled downward for three years. Not until George W. Bush passed a huge tax reduction did the economy respond. This is the tax cut that should have been passed in 1999!

The economy can only carry so much in tax weight. When the tipping point is reached recessions ensue. While that is not the only cause – (Clintonomics caused this recession by pumping who knows how many billions of dollars of phony loans into our economy) – it is a rule that can be counted on and must be obeyed. Would someone please explain that to Obama!

Last Night's Debate - Where was John McCain?

Senator Obama repeatedly criticized Senator McCain for supporting a reduction in corporate income taxes. Incredibly, McCain never responded, defended or explained why corporate tax relief is so important, and thus left viewers to assume that Obama was correct in chastising the silent McCain. Hello John McCain! Where were you?

The U.S. has one of the highest corporate tax rates in the world. Guess why many companies are electing to locate their operations (and the jobs that go with them) in other countries? This is economics 101. Obama does not understand that concept, and McCain does not understand that he needs to explain this to the American voters. Where is common sense?

Many countries that are our competitors do not have a corporate tax. They are actively attracting corporations to provide employment for their citizens. America is deliberately driving jobs away, and Obama said that we must continue that self-defeating strategy. McCain did not respond! Somebody get to John McCain!

Sarah Palin should explain that corporation do not pay taxes in America; they simply collect them for the government and add that expense to the cost their products. We – the American consumer – pay the corporate tax when we purchase a product.

Obama is stoking class warfare against the “rich and corporations,” and McCain passively allows him to get away with it. Obama’s quote was correct. A wheel has fallen off of the “straight talk express.” We need a “common sense” bullet train from now to the election that can shed some light and understanding on this and many other critical issues. Sarah Palin, where are you?