What Every American Should Know About The Bailout

Now I am no economist, in fact, I will readily admit that there is a wealth of information about the banking system that I know nothing about. But I do try to be informed and to keep up with the news and current events. And considering the state of the economy I have been paying a bit more attention to accounting and how the banking system actually works.

So here are a few things that while everyone has been watching these bailouts go out that should be known. Thanks to John C. Coates (a professor at Harvard Law School) and David S. Scharfstein (a professor of finance at Harvard Business School) who wrote a beautiful op-ed in the New York Times, I now know that the bailouts did not actually go directly to the banks that are having trouble lending but rather to bank holding companies. In their piece they ask why the government would give this money to a bank holding company as opposed to a bank, I mean we aren’t bailing out the automotive companies by giving the money to the equity firms that own those companies so why would we do this with the banks? I realize that we, the people (at large), may not be informed of this. But I would hope that those members of the House Financial Service Committee would be aware of this and would have created legislation to be appropriate to the situation instead of going this awkward (not to mention inefficient) way about it.

The next point was raised by yet another fabulously written op-ed by James Deitrick and Michael Granof (professors of accounting at the University of Texas at Austin). The point that they brought up is how the banks are having such trouble accounting for the money being lent to them by the government. But this should not be so difficult. Every non-profit is required to have their accounting systems in order such that they can be held accountable for the funds they receive from various parties. Now, if a non-profit organization can keep their books accordingly, one would imagine that this should not be such a difficult task for a bank. I mean banks are financial institutions, which leads you to believe that they should have a sufficient understanding of accounting to be able to manage the money that they have. I mean isn’t that the point of a bank. If one were to decide to be a banker, it shouldn’t be so difficult to imagine that said banker could be held accountable for their actions. And that they would be capable of having it done correctly. I mean if bankers cannot do this then why are they managing banks, perhaps we should be turning to the accounting teams at non-profits for some guidance. But in all seriousness, it should not be cause for this much of a stir, it should be standard business practice or at least one that they are familiar with.

Lastly, I’d like our government to remember that these are not free handouts to spoiled children who misbehaved. It may be critical to our economy to aid the banks but it is also critical to our economy to not encourage poor practices. However, it is critical that we encourage those wayward souls to start implementing best practices, such as responsible accounting so that things like this will have less of a chance of occurring. Let us remember that it was no accident that we ended up in this position. And if our lawmakers, who are bailing these irresponsible people out of a self-made crisis, do not set the record straight about what is acceptable and what is not, I have little faith that such an event will not occur again in the future.

When Good Is Not Enough

Why is it so difficult for politicians to admit that they make mistakes? And why is it that we think that reaching across the aisle is more important currently than making effective changes to the major bills going through Congress to actually effectively change the way things are headed. I mean surely making nice with the Republicans, who I would like to note, have quite successfully been ousted out of the House, Senate and White House or we could pass some legislation that actually puts some good back into this country. Tax cuts are not effective and they are not the path to helping out people who are truly struggling. Let me tell you those tax cuts are not helping the guy that just got laid-off… you know one of the most recent in the 500k+ that have lost their jobs thus far.

I love reading Paul Krugman’s op-eds (like the most recent one) because while they can be a little depressing, he is generally quite insightful. Also, I have noticed he has become more emphatic as the economic crisis has been getting worse, which I am eternally thankful for because it is nice to have someone actually care and speak intelligently about what is going on. What I can’t fathom is why we still have these Wall St schmucks advising our new President. I mean, really, it would’ve been such a tragic idea to take someone who may not be in industry but, oh, maybe a Nobel Prize recipient instead who can actually speak intelligently about economic theory and perhaps not go down the same path of greed that Wall St has been following for far too long.

For one, I think the politicians are understating the severity of this situation, which is really not helping our cause. Not to mention the fact that everyone wants to be a “centrist” because it’s oh so safe in politics. But in reality they just created a big gaping hole in some of the most significant legislature of our time. Seriously, was that necessary? It’s so hard to hope for change and for rebound when it just seems like they aren’t getting the memo.

And It Breaks My Heart

I was just reading one of my friend’s blogs when I ran across this video. And I couldn’t say it better than she did:

I struggled to find the words to express the helplessness, the disappointment, and most of all the hope that I feel in California’s struggle to protect the rights of its people and to set a standard for the rest of the country.


“Fidelity”: Don’t Divorce… from Courage Campaign on Vimeo.

Is There A New First Lady Of Politics

Well Kirsten Gillibrand does seem to be making quite an impression. In fact I believe she has been in the New York Times every day since this past Saturday when I first read this piece on her. I know that there has been much skepticism amongst the Democrats of New York but considering the NY political scene isn’t exactly the kindest world I have to say I am impressed with her from what I have heard. She seems to be a woman of many talents and I respect that.

Quite frankly even being poster-child for the NRA doesn’t bother me because she actually has valid reasons behind it, perhaps not reasons I agree with or viewpoints that I care for but I appreciate that she can justify them. I also like that she’s ambitious and spunky and at ease in the city and the country. That’s a great thing to have in a Senator. I have high hopes for the new Junior Senator from New York. And I’m excited about what she may be able to accomplish. It’s great to have another woman fill Hillary’s shoes, an accomplished woman at that who has earned her way into the seat and did not have it handed to her as it would have to Caroline Kennedy. Not that Caroline Kennedy isn’t smart but really I don’t see how her credentials could have stood. I’m glad to have a woman who actually has made a concerted effort to work her way into such a position.

A New Age For Politics

Now I am pretty upfront that I’m not exactly an Obama fan-girl (skeptic would probably be the best descriptor) but I’m starting to come around to actually liking the guy a little bit. In fact Obama fan-girls/boys still irritate me and bring out the “devil’s advocate” voice in me all the time. But I have to say I am a fan of some of the things that are happening. One very trivial example would be not wearing coats in the oval office. While it may be a trivial example I think it just shows a President who is a little more relaxed with formalities and more interested in doing what’s best for the country and you don’t have to be in a full suit & tie to do it. I’m not saying wear jeans to work but loosening up a bit is not a bad thing, in my opinion.

Not to mention there has been much progress in the past week or so. I am pleased.

Update:
So Thursday morning I was reading this lovely article about how Wall St has been freely giving away bonuses this year despite the fact that they cannot stay out of water without tax-payer dollars bailing them out. And I was just lamenting to a friend about how I wish someone would say something to those people in finance who believe they deserve a bonus for actually making their companies fail because quite frankly, I’d say the opposite is true. These are the same people that got unreasonably large bonuses for doing things that we have found to be completely unethical and made of naught. The money just wasn’t there and they made it up, so why should they be rewarded for this? I cannot explain how pleased I was to read this article later that afternoon which appeared in this morning’s paper. I am really glad that President Obama is actually taking a hard stance on this, granted I wanted a little more brimstone and fire a la Maureen Dowd but you know, I’m still happy that he is showing his displeasure.

Perhaps I will end up actually liking Obama I do really like some of the new moves that Obama is making even if I am not (and am determined never to be) a “fan-girl”. I certainly reserve that fundamentally American right to criticize our politicians but I have to say I think this is a great start to what I hope is a new era in politics.

The Unemployment Debate

I have always thought of myself as a rather drastically liberal person who believes in social responsibility which also goes hand in hand with hard work. But very recently I was called conservative and judgemental in the same sentence. Typically it wouldn’t bother me but the reasoning behind it bothered me so much that I have been thinking about it all week.

Let me backtrack a bit, this all stemmed from someone I know who is reapplying for unemployment. Now, I do believe that there should be a safety net out there for people who lose their jobs. I believe that they shouldn’t be left hung out to dry because of the economy or the fact that it can take a few months to find employment again. I get that, I really do. But this person has maxed out the terms of unemployment and reapplying for an extension without even looking or wanting to look for a job. I am just flabbergasted at this phenomenon. I have met some conservatives who always tell me when I speak about how I am a proponent for welfare, umemployment, social security, and quite frankly most social services that all these people are just free-loading off of our hard work. Up until this point I had never met anyone that I felt was doing anything close to that, so I never took it all that seriously. But now I don’t necessarily know how I feel about the whole unemployment system and I have to say that I really do not appreciate people who abuse the system. Because I have friends that due to the failing economy or other unfortunate circumstances have lost their jobs and they are working extremely hard every single day to find a new one. They are not happily collecting unemployment they are just thankful that they have it so that they aren’t on the street with nowhere to go. And I am glad that unemployment exists so that they are relatively safe and stable until they can find another job.

What really strikes me is the fact that a person can say that they don’t particularly want to look for a job because they would rather “enjoy life” and then talk about how they don’t have enough money to do fun things that they want to and yet still continue to be unemployed. I mean I understand that working is not always fun. In fact it often sucks (for lack of a better word). But, in my opinion, we all have to do it in order to survive. Working is simply a part of life and it is up to you to find some form of employment that suits you. I mean I’m not in love with my current job (although, I have been lucky enough to have had work experiences that I love) so I know that I am working towards having enough experience and education to move to something better at some point. It doesn’t have to be immediate but I know that I have the ability to control my work environment to a certain extent. It does not excuse me from having a job. And society does not “owe you” the money to exist when you are not contributing anything back to society. And I don’t think that is a conservative view point. In fact it is the basis for social responsibility.

Being liberal isn’t about giving away free hand-outs, it is about helping those who are less fortunate who need the help to get to where they need/want to go. It is about being socially aware and trying to think of what’s best for the entire community, not thinking only of oneself (in fact, I believe that’s where being conservative comes in). When one takes advantage of the system it’s just being on the other side of the conservative coin, except that you believe someone else should be paying for you to do whatever you want. I mean it sortof reminds me of Donald Trump who believes that he should be able to get out of his massive loan from Deustche Bank to build Trump Tower in Chicago because of the real estate crisis but he won’t let those home-buyers who bought those condos at outrageous prices out of their mortgages with him. I mean does that strike anyone else as just a little self serving? Because that’s the way it seems to me. And honestly, shouldn’t Trump have enough money to cover the costs for such an ambitious project anyway, he sure acts like he should.

I digress, the point being, I do believe in having an unemployment system. And yes, I will admit there are flaws that are not easily rectified. In fact, they may never be rectified and while I do not appreciate people who cannot be bothered to get a job I still believe that the system is necessary for those who are not abusing the system. For those people who truly need it to get back on their feet and who use it as such. I think that the selfishness of a few should not make us so close-minded that we forget the great benefit it gives to so many. If nothing else at least we all have the security of knowing that should we lose our jobs to this fantastic economy that we won’t be immediately out on the street.

The Hype About Maureen Dowd

So I’ve noticed that a lot of people I know are just in love with Maureen Dowd. And I’ll admit, for a while I was a Maureen Dowd fan-girl but I was seriously disappointed with her after her extremely vicious attacks on Hillary. There is one blog that actually has a few very poignant examples of this that I like. (And I know, I have been an avid Hillary supporter so perhaps I took it more personally than I would have if it had been someone else). But what I noticed when I was reading her work is that her writing is just seething with venom for anyone she doesn’t particularly care for. I mean sure I’ve gotten a kick out of her depictions of W and Palin but I do think they are caricatured to a degree. I mean I feel that W and Palin leave themselves far more open to her attacks than any other figures out there. The part that I find amazing is that there are so many MD fan-girls but I rarely hear anyone speak of Gail Collins. Now I have recently discovered Collins while I have been on vacation and I have to say that I love her work. Personally, I think of her as wittier, funnier and less bitchy than Dowd, why wouldn’t I prefer her column? Or say Paul Krugman, his pieces are typically more thoughtful and substantive than hers. I mean sure MD is still interesting to read but I don’t quite get the hype that surrounds her. I just think there are other political writers that are far more put together and some are still somewhat biased but not so far out there that you no longer have a sense of what the truth is anymore.

Losing Our Morals One Dollar At A Time

It seems to me that this economy is nothing but a product of sheer greed. What has always baffled me are the pay scales for people in different industries. I mean, in the banks people make millions of dollars in bonuses for what exactly? I would like to know why those executives make approx 100x what the lowest paid employee makes. Perhaps I believe too much in equality but I really think that’s a huge problem. When you have no clue what your actions effects are on the general populous and you no longer know how “normal” people live.

Not to mention our law-makers. It’s not just Wall St that let things go haywire, it’s our politicians too. Who quite frankly are totally out of touch with reality. I mean I’d really like to know who thinks that a salary of $169K+ is the salary of any average American (if you don’t believe me here are the links for actual figures for the House and Senate). I believe statistically speaking the average household income in America is approximately $50K, so why is it that our law-makers who are supposed to “be in touch with the pain and reality of regular Americans” make 3x as much as the average American? Not to mention, I don’t know about y’all but I am still a small fry so I only get 2 weeks of vacation but you know congress took 5 weeks just this summer when the housing market was crashing and the auto industry was in distress. Not to mention the fact that they will have government health care benefits for the rest of their lives for themselves and their families if they have served in office for 5 years. I ask you, how many corporate employers would do that? In fact, does the government even do that for any other employees? I know for a fact that isn’t true for teachers, so why are our policy makers so different? What exactly gives them all these rights and benefits when I’m not seeing a return on our hard-earned tax dollars. Sure, I’m upset with the banks. No, I don’t believe that their executives should be making the kind of money that they have been for the past I don’t even know how long, but at least that is their own private wealth that they can choose to dole out howsoever they see fit. (At least that was the case until the bailout and I believe there are no bonuses this year so at least there is *some* change in that field). Congress, on the other hand, is benefiting from *our* tax dollars. I mean the general public is expected to be able to balance our own budgets and live within our means but what about you? What right did Congress have to give themselves these raises? (They give themselves a raise every year, how generous right?) Have they truly made enough progress for us to think they are so above the rest of us? Quite frankly the way things are going, I’d say most of them deserve to lose their jobs *and* their benefits as is what would happen in the private sector if they did such a piss poor job as they’ve been doing for the last 8 years.

Granted I also believe that Wall St became too greedy and too loose with their money and with the government supporting their every move it’s hard to want to pull back. I mean why be smart when you could be getting an incredible bonus. You’ll have the money and will probably be gone by the time the whole thing goes bust, right? So who needs to be responsible. And Paul Krugman wrote a great piece on The Madoff Economy where he talks about what happened with the salaries. I think he makes some great points. I just wonder why no one ever considered him for a position in the White House considering he did just win the Nobel Prize and he has been writing insightful pieces for the NY Times for years now. Perhaps he wasn’t interested but I’m sure there would have been rumors if he had ever been considered and I find it quite distressing that he wasn’t. In fact I find a lot of the appointments to be less-than stellar. I mean it’s just a new set of characters from Wall St isn’t it? Instead of Hank Paulson we have Tim Geithner who headed up the NY Fed. Great let’s put more people who were involved in this giant mess into positions of power. Not to mention Larry Summers, why that man should be allowed anywhere after his Harvard fiasco is beyond me. And I mean let’s face it he’s the one that went along with Alan Greenspan back in the Clinton days and clearly that was not a good choice. But oh, I forgot we’re not allowed to criticize our new fabulous President-Elect because he is, of course, Prince Charming and will save us all. (And yes I am *still* licking my wounds that Hillary is only Secretary of State and not our first female President, not just because she’s a woman but because I still think she is the better candidate even if I have resigned myself to being satisfied with the lesser of two mediocre candidates.)

Does Every Country Have To Have A War On Terror?

In my personal opinion the “War on Terror” in the United States was possibly one of the stupidest things I had ever heard of. And now to hear things like that coming out of India. To hear about how the Mumbai bombings were India’s 9/11. Well, frankly, they were not. The circumstances were entirely different and certainly the impetus behind it were not even close to being the same. Surely there are radicals everywhere but a War on Terror and “trying to keep the country safe” by essentially creating hysteria within the people is dumb. I know that may be a bit much to take for some people but let’s face it how much has this “War on Terror” really done for us? We (the US) are successfully in the middle of two miserably failing wars and on the brink of starting something up with Pakistan that I have no doubt will be equally as ineffective if we try that route. These wars have caused the rest of the world to lose almost all their respect for us, if it weren’t for the fact that world has simply become too globally intertwined I do believe most of it would have turned it’s back on the mighty US a long time ago. In the modern world that is not possible so they simply whisper behind our backs about what fools we are.

This brings me to India. Now why on earth would anyone want to follow such a failing model? I recently read a beautiful article by Arundhati Roy on her thoughts about the terrorist attacks in Mumbai. It is truly a well thought out and eloquent piece on the complications of naming the Mumbai bombings “India’s 9/11”. And if anyone needs some historical background on the complexities of India it also illuminates many of the reasons why it can never be “India’s 9/11”. It saddens me to think that such a great democracy is leaning towards becoming a police state.

And I find it atrocious that we only seem to be able to blame Muslims for acts of terror. Wake up, world, there are terrorists of every nationality, religion, race, ethnicity, you name it there is probably one out there. The scale may be different in what they have been able to accomplish but they are out there. I do not think any people should be persecuted simply because of their beliefs. Perhaps we should try to understand the context, understand why they are so angry and try to fix the problem diplomatically instead of by creating more war, more terror, more hurt, more pain and more anger. Perhaps creating a little understanding might be a better way than to keep on increasing radical beliefs.