Barack Obama, Presidente of the United States of America

Barack Obama’s Audacity of Hope prevailed over John McCain’s The Luxury of Negative and Nasty Thoughts. Barack Obama is the President-elect of the United States of America not only because he inspired people with the power of his message for change, not racial or generational change, but change in the manner the economic affairs of the nation are conducted and change in the way we must deal with other nations. More importantly however, he won because he is intellectually superior, better educated and better informed that John McCain. He won because, unlike John McCain, he has the ability to think through domestic and international issues and intelligently analyze the wide range of possible solutions. He won because, unlike McCain, he can clearly distinguish between the significant and the insignificant and that was amply demonstrated in the selection of running mates.

The American people understood that there was a need to elect a president not only with a sense of the general direction in which he wishes to move, but with a sense, also, of the direction in which the times require him to move; these are very different things. John McCain wished to continue to pursue the economic and foreign policies of George W. Bush, policies that have the economy on the brink of a depression (if not in one already) and the country engaged in two very expensive wars in dollars and cents and, more importantly, in human lives.

Barack Obama clearly demonstrated that he has a better sense of the general direction the country needs to take and he persuaded the American people that time is of the essence, that we couldn’t afford another four years of the same. He understands that we need drastic changes. He knows that in just eight years we have gone from the most prosperous country in the world to an America deep in a financial crisis. He understands that the American Dream is going down the drain and that American jobs are flowing overseas. He understands that foreigners are seizing our markets and beating us at our own game.

No one that followed this presidential campaign can’t be greatly disgusted by how vicious was the scrutiny that Senator Obama was subjected to by the McCain/Palin team. For no other reason than the color of his skin, he had to endure the most rigorous negative attacks that any presidential candidate has ever been subjected to in American presidential campaigns. And, probably for the same reason, he knows that from the day that he takes office all that can be said against him and his policies, legitimate or not, is certain to be said.

HZ

SETTING MY COMMENTS STRAIGHT

I have been severely criticized for my views on John McCain and accused of lack of objectivity. That’s is OK, because it is true that I feel that the country doesn’t owe Senator McCain the presidency for his war record and I also admit that I have also said that in my opinion he lacks wisdom and judgment to be president.

This past Sunday General Wesley Clark, the former NATO Supreme Commander told CBS’s Face the Nation: “I don’t think that riding and in a fighter plane and getting shot down is a qualification to be President’. And it was Galen Carpenter, vice president for defense and foreign policies studies at the Cato Institute who said: ‘McCain’s war record simply shows he was a very brave man, But it shows neither wisdom nor judgment to be President’.

But it has been Senator McCain who has set the foundations on which he is judged. For instance:

And on September 15, as the U.S economy was collapsing, Senator McCain stated: "The fundamentals of our economy are strong," despite what he described as "tremendous turmoil in our financial markets and Wall Street." You know," said McCain, "there's been tremendous turmoil in our financial markets and Wall Street and it is -- people are frightened by these events. Our economy, I think, still the fundamentals of our economy are strong. But these are very, very difficult time. And I promise you, we will never put America in this position again. We will clean up Wall Street. We will reform government."

Moreover, since he won the Republican nomination, Mc Cain’s own statements include the following:

That the economy is not one of his strengths; that the country made great economic progress under George W. Bush; that he knows how to capture Osama bin Laden; that the government ought to buy the bad mortgage loans from the banks and, at the same time, reduce spending; that Iraq and Pakistan share borders; that the Iraq war is the first major conflict since 9/11 ; that he thinks Czechoslovakia still exists (mentioned 3 times).

I realize that National Security is an important issue but I do not believe that the fact that Senator McCain was a prisoner of war makes him either a good Commander in Chief or a good President. Likewise, I do not believe that the fact that Senator Obama was president and editor of the prestigious Harvard University Law Review make him a good Commander in Chief or a good President.

There are other important considerations, of course.

HZ

A MATTER OF JUDGMENT

It is very hard to go through all the bullshit that we get from Washington and the presidential candidates, while the current financial crisis is visibly troubling in the U.S and around the world. Is it hard to have confidence in our government, in the financial health of our economy and in the security of our investments when the news we get creates concern not just about our own financial well-being but also about the safety and stability of our financial institutions. This is an all around hard situation that we are living in and thus it is easy to be impulsive with our investment decisions. No longer are we able to make investments decisions with confidence and comfort. Everyone feels the negative effects of this financial crisis. No one is immune to it, not even the rich.

How bad is it? Bad enough. With all the negative news on TV and newspapers there is nothing to be optimistic about. There are no positive signs that things will get better any time soon. We need new and better solutions. And of course, we need a new regulatory system, one with based on laws, of course, but with strong emphasis on moral values and ethic. The existing system has proven too easy for crooked Wall Street executives to manipulate, with the awful consequences we now know. Above all, we need meaningful changes in the political leadership in Washington.

As ordinary citizens there is nothing we can do to correct the wrongs of the smart boys of Wall Street or the inefficiency of our leaders and regulators in Washington. Except, of course, to get rid of them all on November 4th. We’ll have that chance, the chance to bring new hopes to our country by changing the leadership at the top of our government. Selecting the right man is critical.

I am a working senior citizen, I am agnostic and I am politically independent. Iacre for our country and thus I try hard to be objetive. Let me be clear: I am not as much an Obama supporter as I am an opponent of John McCain. And here is why:

John McCain entered the race as a war hero, as an experienced and well-known Senator with 26 years behind him as a member of the Washington establishment. He began running against a young man who was virtually unknown not too long ago, a freshman Senator with barely any legislative achievements to boast of – and a black man with a funny name to boot.

In TV adds, in campaing speeches and in the debates Senator McCain asserts that “he is the known quantity, the safer choice. He portrays himself as an “experienced Senator and as a maverick. In the last debate, in an outrageous show of arrogance he claimed to “know exactly how to get Osama bin Laden and how to destroy Al Qaeda.” I am still wondering, why isn’t he sharing his strategy with the Generals who are fighting in Iraq and Afghanistan?

John McCain describes Senator Obama as a beginner with everything to prove and as a man of questionable character. He asks time and time again “who is the real Barack Obama, subtly implying that underneath Senator Osama’s charisma rest the soul of a Muslim terrorist. What a rotten way to run for the Presidency of the United States. How incredibly sad is to see an old man behave in such a hateful manner, to be convinced that he is more American than the rest of us. It is no wonder that with less than four weeks to go John McCain is behind in the polls and the gap is rapidly widening to double digits. His outrageous rhetoric is not fooling all American people, On the contrary, it has placed him in a most peculiar position.

The personal attacks notwithstanding, what most concerns me is the fact that since becoming the nominee of the Republican party Senator McCain has been jumping wildly from one issue to another and not making real sense on any. He he is making irrational promises to shake things up in Washington, in Wall Street and around the world and not explaining how except to say that he “knows how to get things done”. He is desperately striving for attention with one daring stroke after another in his desire to be President. His boldest move, of course, was to select Sarah Palin as his running-mate.

The selection of Sarah Palin may have been a great initial success and to too many Republicans an election-winner move. Ms. Palin thrilled Republicans with her speech at the Republican convention and pleasantly surprised many people, including me. She got media attention and she still does. Her TV interviews have been awful beyond belief, although she was coached well for her VP debate. Now with news of abuse of power, the Sarah Palin wild ride seems to be at an end – with little positive effect.

Senator McCain’s next audacious move was his attempt to lead efforts in Congress to pass a financial plan of his own. Promising to suspend his campaign, he rushed back to Washington where his intervention was embarrassingly ineffective. Meanwhile Senator Obama rose above it all, winning praise for standing to one side and not interfering with the negotiations between the leadership of both parties. Senator McCain, with the wisdom of 26 years in Washington, made a fool of himself by rolling up his sleeves, acting tough, and getting in everyone’s way.

We have spent the past few weeks watching Senator McCain wearing himself out. His egotistical temperament has redoubled his intellectual shortcomings. People can tolerate only so much unpredictability in a politician, even a maverick Senator. Passion to win the election is fine. Enthusiasm to win the Iraq war is admirable. His choice of a running mate was audacious. But lack of prudence and good ideas doesn’t sit well with the thingking people, people who put the best interest of the country ahead of political and religious creeds, not to mention other petty considerations.

If all of the above makes people nervous about Senator McCain, his latest idea to have the government buy all bad mortgage loans, while promising cuts in government expenditures, is infuriating even to his most fanatic supporters. People are starting to wonder about Senator McCain’s state of mind. His his gimmicks and mistakes, and there have been plenty of both, are showing. People are starting to look for erratic behavior in him and finding it too.

I should mention, parenthetically, that once I read that at age 20 or so Bill Gates went to the people of IBM and told them that he and his partner, Bill Allen, had this idea to make IBM bigger and better. They were told that they were too young and inexperienced, that the R&D unit of IBM was hiring only people experience and a proven track record.

For all the stated reasons I, for one, accept Senator Obama's lack of experience -- and I am prepared to trust his judgment as well..

HZ

THE CRISIS: MISCELLANEOUS THOUGHTS

1. Because those in power are so isolated from the rest of us and so indebted to big business, lobbyists and the wealthy, our way of life as we know it is rapidly fading and so is the American Dream ---- now almost unreachable for most young Americans. I am not smart enough to know all the reasons for what is happening to our economy, especially its financial and credit markets, but I would like to think that I am smart enough to know that one reason is because we don’t care enough to find out; we allow ourselves to be greatly influenced by partisan politics, religious beliefs and ethnic prejudices, all of which further impair good judgment. As a result we elect incompetent people to govern us and we trust an economic model that not only encourages greed but in fact protects it.

2. Before George W. Bush was elected President, all we knew about him was that he was the Governor of Texas and the son of a former President. Not long after we learned that he is an arrogant, incompetent and deceiving man who has screw up time after time and in the process done great harm to our democracy through the war in Iraq, the Patriot Act and his macho kind of diplomacy.

3. How Henry Paulson, Secretary of the Treasury, ever got to be the CEO of Goldman Sachs, an icon of capitalism, is puzzling to me. Yet, this former Wall Street CEO is in charge of fixing the excesses of Wall Street and as such he developed a rescue plan that has nothing to do with Adam Smith’s brand of capitalism. Surrounded by former Goldman Sachs executives at the Treasury Department, this man has clear conflicts of interest and should resign.

4. Considering that the current banking, financial and economic crisis started under the watch of Allan Greenspan, the former FED Chairman has much explaining to do to the American people.

5. In John McCain we have a possible President that is embarrassingly ignorant on all matters related to the economy, the country’s main problem. Except when talking about his days as a hero of the Vietnam War, this man can’t express a single thought without reading a script (probably written by someone else). Most important, he couldn’t have shown poorer judgment than in the selection of his running mate.

6. Sarah Palin is a nice woman and probably a great hockey mom as well, but to suggest that this woman is ready to handle the job of President of the United States is a cruel joke and truly an insult to all thinking Americans. In fact, if Senator McCain showed poor judgment in selecting her, Sarah Palin showed equal poor judgment in accepting.

7. This presidential campaign is not only the dirtiest in history, but much of the dislike for Senator Obama is racially inspired. Senator Obama is certainly pretty young and thus lacks experience. But he is, however, intellectually superior to Senator McCain and has a better vision for the future of our country.

8. The harsh reality is that we are not only in an environment of deep financial crisis, but also a huge crisis of insolvency, confidence and trust. A large numbers of our better known banks, insurance companies, and commercial and industrial concerns are on the brink of collapse. Trillions of dollars in assets are in danger in a sea of all kinds of problems. It is a kind of economic cancer that can’t be saved with a bail out package full of holes. The fair thing in a free market economy is that the losses of businesses should go to the owners (shareholders) and not to the taxpayers. The government shouldn’t have intervened to protect greed, mismanagement and corruption.

9. I doubt that things will improve much unless we have a competent men and women in the White House and in the Congress. We need new rules and regulations that will discourage the kind of behavior that has place the American economy in trauma care.

HZ

THE DEBATE AND THE TRUTH

I am not a republican or democrat; I am simply a grateful immigrant that wishes the best for the United States. And the best, in my opinion, is definitely not four more years of the Republican Party in charge of the White House. I also believe in democracy and such belief demands that in order to make an intelligent choice in the vote booth I must be well informed about the candidates and the issues. I truly believe that.

Like most Americans, I watched the debate last evening. And because the truth really matters I took notes and afterwards I checked into Google, CNN, The Washington Post and the New York Times looking for the facts. Thanks to the Internet doing so is entirely possible nowadays if you don’t want to be fooled by phony accusations and claims.

And here is what I found and concluded:

Sarah Palin is not, not even under the most charitable evaluation standard, ready to be Vice President and much less President of the United States. She is attractive, friendly and eloquent, and in last evening Vice Presidential debate she certainly scored points with her theme: I’m a mom. The week of debate-coaching worked, but, pretty much like Senator McCain, she more often than not stretched out the truth or outright lied on a whole array of issues (rapidly sounding like most Washington politicians). For instance:

In criticizing Barack Obama's Iraq policy, she said that President Bush’s Iraq troop “surge” plan had worked and that U.S. troop levels in Iraq are now back at pre-surge levels.

In fact, there are 152,000 troops in Iraq. There were 137,000 troops there before the surge.

She said that Obama has refused to acknowledge that the surge worked.

In fact, in an interview last month, Obama said, "The surge has succeeded in ways that nobody anticipated . . . I've always said it's succeeded beyond our wildest dream."

Talking about Iraq, she said, "We’re getting closer and closer to victory," and "victory is within sight" because of the surge.

While the level of violence in Iraq is much improved, military commanders - and a report this week from the Pentagon - caution that the gains are fragile and threatened by a number of worrisome developments Most analysts also say that, while adding the extra troops in Iraq last year helped, other changes may have had more impact. These included the decision by radical Shiite leader Muqtada al-Sadr to agree to a cease-fire and a U.S. program that paid Sunni tribesman to fight Islamic extremists in their midst.

On domestic issues, she accused Obama of voting 94 times to either raise or fight against tax cuts.

FactCheck.org, a non-partisan watchdog Web site, called the claim "misleading." According to Fact Check, Obama voted against proposed tax cuts 23 times. He also voted 11 times for increasing taxes on families earning more than $1 million a year to help pay for Head Start school nutrition programs. Moreover, 53 of his votes were on non-binding resolutions on allowing scheduled tax cuts to expire.

Sarah Palin repeated a McCain campaign claim that Obama voted to raise taxes on Americans making as little as $42,000 a year.

That claim, too, is misleading. Obama voted for a non-binding resolution on budget guidelines assuming that the Bush tax cuts would expire on schedule in 2011. The resolution was not a vote to raise taxes.

In a huge blunder Palin overstated Alaska's contribution to America's oil and natural gas needs. She said her state has "billions of barrels of oil and hundreds of trillions of cubic feet of clean, green natural gas."

Natural gas is cleaner than oil or coal, but it still emits hydrocarbons when it's burned. Alaska produces 3.5 percent of all U.S. energy, 13.7 percent of U.S. oil and 2.3 percent of U.S. natural gas, according to the Department of Energy's Energy Information Administration

She also said that Alaska is building a "nearly $40 billion natural gas pipeline which is North America's largest and most expensive infrastructure project ever to flow those sources of energy into hungry markets."

In fact, no building has begun, no federal pipeline approval has been issued and actual construction is years away - if it ever happens. This summer the Alaska Legislature, at Palin's request, passed a law under which the state will issue a "license" to a Canadian energy company, TransCanada Corp., and pay it up to $500 million as an incentive to attempt this enormous project, which Alaska politicians have long sought with little success. The license is not a construction contract.

She put the price tag for the project at nearly $40 billion.

That is an exaggeration. This is roughly $10 billion more than most cost estimates industry players and consultants have made to date.

She also mislead when she said that when she and others in the state legislature found out that Alaska had some millions of dollars investment in Sudan, they called for divestment "to make sure we weren't doing anything that would be seen as condoning the activities there in Darfur."

There's no evidence whatsoever that Palin had any part in the divestiture legislation and one legislator who was involved said there's been no sign of her.

Although Senator Biden also made some phony claims and accusations towards Senator McCain, those were fewer and less outrageous. But if you want to know exactly what they were, I humbly suggest that you go and do your own home work.

HZ

FACING AN UNCERTAIN FUTURE

$ 3.1billion dollars was paid to the top five Chief Executive Officers of Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns during the five year period 2003/2007.That’s $ 620 million a year shared by the five CEOs who led their firms either to outright collapse or close to bankruptcy. It should be noted, also, that the excessive compensations were no limited to the CEOs of the five firms. The CEOs of AIG, Citicorp, Wachovia, Washington Mutual, Country Wide and many other failed or semi-failed companies and commercial and investment banks have been equally compensated for similarly miserable performances.

It appears that for the CEOs of all these failed corporations management and investing expertise were not only business school’s skills, but also a manifestation of their superior intelligence. It was this perception of superior ability what led them to think that gambling their shareholders’ resources, without rules or supervision, were not only the best money games in existence but also the best possible way to justify their obscenest paychecks. And why not? While their gambling worked Goldman, Morgan Stanley, Merrill, Lehman and Bear Stearns had combined earnings of $ 93 billion, profits that enriched their CEOs beyond what anyone in his right mind imagined --- this because their compensation was “tied to performance”.

Although I know that Chief Executive Incompetence is more relevant than Executive Compensation, what I am most concerned about in this fast-moving financial crisis is that there is too much talk about the need to approve a bail out package that is so fundamentally flawed that few citizens want and even fewer understand. Not to mention that there is not enough factual information or the availability of a plan B.

At this critical juncture is imperative to get a resolution as to how to fix the problem and postpone for later the urge to deal with the reasons as to how we got here and who must bear the blame. I have the feeling that the American people already know the identity of those responsible. And if the primary concern right now is to prevent the banking system (the credit markets) from collapsing, why is it that the experts dealing with the issues insists on a proposal (a bail out package mixing rotten apples with good apples) that is designed to invest taxpayers money in banks and firms notorious for their mismanagement instead of placing these funds with banks throughout the country that have been prudently managed? There are more than 7,000 commercial banks in the United States and 90% of them (the good apples) are not contaminated by sub prime loans and thus perfectly able to maintain the credit market going.

I admit, I am frightened by the thought that this crisis, one that is primarily a banking crisis now will rapidly become an economic and financial crisis and will wind up being significantly more costly and painful than what is currently predicted, especially in the jobs and financials markets. And of course America’s middle class will have to swallow the costs of a bail out package that is huge in dollars and promises and shockingly poor in assurances that an efficient follow thru is in place.

HZ

THIS IS AN OUTRAGE, THE VOTE THAT'S.

It is 2:15 PM and I am watching CNN, hardly believing the news anchor: “The House rejects the $ 700 billion bailout plan”, the DOW plunges 700 points”. Wow!

This is an outrage. The citizens of the United States, I am afraid, are mad as hell and asking themselves what else can go wrong. Presumably, however, the only gentlemen not paying attention to this tragic news are those former CEOs who already pocketed tens of millions of dollars after screwing our financial system.
Believe me; like most Americans, I feel a deep disgust for the type of unscrupulous CEOs who wrecked the whole financial system and for the politicians in Washington, D.C unable to put partisan politics aside and for once act unselfishly. It has been widely said that politicians and used car salesman are not to be trusted. Now, let’s add the CEOs of commercial and and investment banks.

WOW, WHAT A SHAME!

I just read that Washington Mutual Chief Executive Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement.

I'm speecheless.

This month of September will be forever remembered as The Nightmare Month, the month when we were savagely awakened by the fact that our country’s financial system is totally in shambles. Day after day President Bush, Secretary Paulson and Fed’d Chairman Bernake have chilled our spirit with poignant explanations into the apparent motives for the downfall of our credit markets but without yielding insights as to the true nature of the problem.

Seldom have we been so directly and dramatically in touch with the flaws of our financial system and how negatively we have been affected by such flaws. I, for one, cannot imagine how the Federal Reserve or the Treasury Department did not know in what financial conditions the failed commercial and investments banks, and other companies, were in before they ultimately collapsed. Listening to Bush, Paulson and Bernake I get the impression that they have been linked too closely to the “smart boys” of Wall Street and still associating themselves with them.

My immense distrust for politicians and even greater distrust for the Wall Street sharks is a good enough reason for me to oppose any blanket or semi-blanket approval of the bail out proposal. In fact, I would prefer no bail out package at all if in any way it will furnish the dishonest CEOs of Wall Street with another opportunity to deceive.

HZ

LET'S SEEK OUT THE "WORST AND STUPIDEST"

While another bank has gone belly up, Washington Mutual, little if any progress is being made on the President’s proposal for a bail out of the financial system. Members of the President’s own party are revolting and not backing his proposal, including Senator McCain who seems to be waiting for celestial inspiration to suggest a plan of his own.

One point of disagreement among those involved in the negotiations, and holding progress, is executive compensation at the companies that would benefit by the bail out plan. Not surprisingly, however, not a single CEO has come forward and offers to forego his Golden Parachute and other perks in order to help and speed up the process.The purpose of this article, however, is not to identify those CEOs responsible for the enormous mess that our credit and financial markets find themselves in. We all know who they are. Besides, it is the job of the Justice Department in Washington and the Attorneys General of the Fifty States to bring the crooks to justice and expose their questionable business and investment practices.

Unlike doctors who take the Hippocrates Oath, there are no sworn pledges to high ethical and moral standards that CEOs must adhere to. In addition, earning tons of money is not a crime, if honestly earned that is. Even so, being a CEO of any of the country’s largest corporations does involve ethical and moral responsibilities, responsibility to the corporation, its employees and shareholders, and responsibility to the community. Yet, it clear that to too many of Wall Street’s “brightest and best” money is not only a medium of exchange but also some sort of divinity to be worshipped. After all we live in a society where one’s standing in the community is often measured by the neighborhoods where we live, the size of our homes, the makes of our automobiles, the labels on our cloth and a whole bunch of other equally ridiculous considerations. Above all, we are judged by how much money we make instead of what we have done with our lives.

We can be fooled into believing the numerous reasons given by President Bush, Secretary Paulson and others for the collapse of our financial system. The fact remains, however, that the root of the problem is only one: the incredible greed and selfishness of the vultures of Wall Street, mostly CEOs of great abilities but who lack prudence and ethical standards. These are the leaders of the free market economy who expect and demand virtues and loyalty from their employees but whose inner satisfaction is the preservation of their Golden Parachutes.

The Fortune 500 corporations, which include all of the troubled companies causing the monumental crisis facing the U.S, are an integral part of our free enterprise system, of our free market economy. The importance of all these corporations is best exemplified by the catastrophic consequences when one these companies encounter setbacks, such as is the case of AIG. Yet, as great the magnitude of these companies is, their shares are so widely held that the companies really have no owners. As a result, Chief Executive Officers run companies at will, appoint unconditional officers and nominate friendly and loyal directors. In essence, these CEOs become surrogate owner with all the matching attributions and powers.

Lack of hands-on management of the country’s most important industrial and financial corporations by its owners, an indispensable condition to prevent imprudent decisions or dishonest behavior, has led to extraordinary abuses on the part of deceitful and money hungry CEOs, namely huge salaries, unreasonably stock options and nauseating bonuses. Such abuses don’t occur on giant companies such as Kock Industries, Bechtel, Cargill, Public, Price Waterhouse or Fidelity Investments, all privately owned corporations run by their owners, primarily.

Since we have been duped, disappointed and financially damaged by the “best and the brightest of Wall Street”, let’s seek out the “worst and stupidest” to rescue us.

Ooopps!, maybe they are in Washington, D.C already.

HZ

WHERE ARE THE IDEAS OF THE BEST AND THE BRIGHTEST OF WALL STREET?

An unmentioned solution to the financial crisis is to place the bad assets held by the troubled institutions exactly where they belong: in the hands of the shareholders of those institutions. In effect, instead of the U.S Government buying the bad assets from the troubled banks and firms, as Secretary Paulson suggest, the troubled bank and firms should themselves take the first step to solve their problem.

Let’s take the American International Group (AIG) as an example:

According to Morningstar, the Balance Sheet of AIG as of the latest quarter shows the following figures:

Total Assets $1,049..8 billion;
Total Liabilities $ 971.7 billion; and
Stockholders’ equity $ 78.1 billion.

I.- By giving the shareholders the bad assets in exchange for their equity (common and preferred stocks), AIG would greatly clean up its balance sheet and be more deserving of Government assistance – if needed. This first step can be easily accomplished by simply forming a separate entity (Newco) to hold and manage the bad assets on behalf of its shareholders (the would be ex-shareholders of AIG).

II.- Since the above step would entirely wipe out the equity of AIG, the company can easily re capitalize itself by selling, let’s say, 20% of its assets at an average profit of 15%. Under this suggested scenario the Balance Sheet of AIG would look as follows:

Total Assets: $ 801.6 billion
Total Liabilities: $ 771.7 billion
Shareholders Equity $ 30 0 billion

What did we accomplish?

1.-Thus far the government (the U.S taxpayers) hasn’t put up a dime.
2.- The bad assets of AIG went to where they belong, in the hands of its shareholders.
3.- AIG got $ 78.1 billion of bad assets out of its balance sheet, and hopefully cleaned it.
4.- By selling 20% of its assets (at a not unreasonable profit of 15%) AIG can generate a profit of $30.0 billion , which will turn into equity (this is cash that will serve as working capital) and reduced its debt by 20%, and
5.- The AIG shareholders still own the re structured company.

The above doesn’t solve AIG’s problem but leaves the company in a much better position to seek additional capital or financial assistance from the U.S Government, not to mention that by selling another $100 billion in assets the company could raise its capital by another $ 15 billion while reducing its liabilities by another 13%.

I wonder why is it that the best and the brightest of Wall Street, the captains of capitalism and enemies of government regulations and interference, haven’t develop solutions somewhat similar to the one suggested above for the institutions and companies troubled with bad assets.

I am kidding when I said that I am wondering. Of course I know that these smart guys prefer to allow for the collapse of their firms and go home with the tens of million of dollars that their Golden Parachutes require they be paid.

HZ.





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BE PREPARE TO BE ROBBED

Be prepare to Be Robbed -- It's For Your Own Good - And Yes, Resistance IS Futile
By Robert Folsom

Picture a nice home in a nice neighborhood. Two men in dark suits walk up and knock on the nice home.

Men: Hello, we're from the government, and we’re here to help. We're going to rob you for your own good.

Taxpayer: What are you talking about?!! I don't want to be robbed...

Men: Sir, we understand. But our records indicate that you are a taxpayer. Is that correct?

Taxpayer: Of course I pay taxes -- so what?

Men: So, we're robbing you. It really is for your own good. In fact, if we don't rob you, the entire banking system will collapse. You have heard the bad news about the big banking bailout, haven't you sir?

Taxpayer: Look, I don't even have very much money in the bank. Lots of people have a lot more money than I do. Why don't you go rob them?

Men: There's no need to make this about you, sir. We are going to rob everyone who pays taxes -- trust me.

Taxpayer: This isn't right. I've played by the rules for years. This is America.

Men: It is indeed, sir. And we're from the American government. And c'mon, sir -- are we supposed to believe that you never took out a sub prime loan, never leveraged your home equity into a second and third mortgage, never maxed out four separate credit cards at once, never tried to buy and flip a couple of houses for a fast buck, or that you never speculated even a little bit in the commodities market with your retirement fund?

Taxpayer: No, no, no -- I didn't do any of that stuff. Of course I've got a retirement account, it's in Treasuries, money markets and a stock index fund. I've got two kids in college. I can't afford to get robbed.

Men: We're not here to congratulate you for being a straight arrow, sir. We've come to rob you for your own good. Resistance is futile. Maybe next time you'll go along and raid the candy store when you get the chance. Lots of people did. That's pretty much why we're here to rob you -- for your own good, of course.

Taxpayer: Okay, okay... but... well, if I stop paying taxes? Will you please not rob me then?

Men: That's not a good idea, sir. If you stop paying taxes we'll throw you in jail and rob you anyway.

Taxpayer: This sucks. I'm calling a lawyer.

Men: Yes sir, I'm sure he's a taxpayer too. Let him know that if we haven't been to his house already, we will be soon.


"By manipulating the rules and its own debt-based, monopoly currency to shift the burden of debts and speculation upon the prudent and innocent, the government can foster illusions of maintained value by keeping nominal stock prices up. But this charade cannot last"

______________________________________
Commercial and investment banks were totally reckless and should be left holding the bag for the bad loans they made. Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Sterns and Lehman Brothers, to name five of those firms making the headlines now, increased their leverage limits from 12 to 1 to as much as 40 to 1 and now they are relying on us, the tax payers, to bail them out. I have a four letter word for them and most certainly is not HELP.
HZ

THOUGHTS FOR THE BRIGHTEST AND BEST

It is clear that many of Wall Street’s brightest and best never learned from the following thought provoking reflections. Surely they made millions, but they never profited from the wisdom of these beliefs:.


1.- Selfishness is the root and source of all natural and moral evils. Emmons

2.- High ethical standards bring about efficient business methods. Watts

3.- Ethical living is the indispensable condition of all that is worthwhile in the world. – Ernest Caldecott

4.- If money is all that a man makes, then he’ll be poor - poor in happiness, poor in all that makes life worth living. – Herbert N. Casson

5.- Everywhere in life the true question is not how much money we have made, but what have we done with our lives. – Carlyle

6.- Aside from the strictly moral standpoint, honesty is not only the best policy, but the only possible policy from the standpoint of business relations. The fulfillment of the pledged word is of equal necessity to the conduct of all business. If we expect and demand virtue and honor in others, the flame of both must burn brightly within ourselves and shed their light to illuminate the erstwhile dark corners of distrust and dishonesty …. The truthful answer rest for the most part within ourselves, for like begets like, Honesty begets honesty; trust, trust; and so on through the whole category of desirable practices that must govern and control the business’s affairs. James F. Bell

7.- Money is only a mechanism to be used, not a divinity to be worshipped. – Anonymous

8.- Money may be the husk of many things, but not the kernel. It brings you food, but not appetite; medicine, but not health; acquaintances, but not friends; servants, but not faithfulness; days of joy, but not peace or happiness. – Henrik Ibsen

9.- Great ability without discretion comes almost invariably to a tragic end. – Gambetta

10.- You, yourself, have got to see that there is no just interpretation of life except in terms of life’s best things. No pleasure philosophy, no sensuality, no place nor power, no material success can for a moment give such inner satisfaction as the sense of living for good purpose, for maintenance of integrity, for the preservation of self-approval. – Minot Simons

HZ

THE UNHAPPY TRUTH

We are being duped, the unthinkable is happening:

While the Outstanding Public Debt of the U.S Government stands at a whopping $ 9, 733, 146, 494, 947, .69 as of September 22, 2008 and growing at an average $2.02 billion dollars per day, President Bush and his Secretary of the Treasury, Henry Paulson, are adding another trillion dollars to the national debt in a desperate effort to bail out failed commercial and investment banks and the jobs (and extraordinary perks) of the “smart boys of Wall Street”.

Should we care?

Considering that the estimated population of the United States is 304,776,541, thus each citizen's share of this debt is currently $31,935.35 and about to increase by $ 2,000 with Bush’s rescue plan, we definitely should care. Big time!

Although we shouldn’t ignore the complexities of the financial and credit markets, it is difficult not to attribute the current financial crisis to anything or anyone other than the uncontrollable greed of the “best and the brightest of Wall Street”, those highly skilled smart guys of the investment baking world that, refusing to make money the old fashion way, invented fancy derivative securities, collateralized mortgage obligations and a bunch of other highly risky financial schemes designed to take leverage (the art of making tons of money with small amounts of money) to new highs.

Less than six months ago commercial and investment banks were falling, the state of the U.S economy was already worse than it looked, and the IRA accounts, the 401K Plans and investment accounts of millions of American were quickly sinking into meager piggy banks. Yet President Bush, Henry Paulson and John McCain were asserting, firmly and without hesitation, that the fundamentals of the U.S economy were strong, that the American workers were resilient, and that the U.S would overcome anything.

Yet, when Bush and Paulson finally admitted that the fundamentals weren’t as strong as they claimed, they quickly turned to interventionism and nationalization (the economic tools typical of socialist countries) to contain a financial crisis that was already in the making four or five years ago. They rescued Bear Stearns, they nationalized Fannie Mae and Freddie Mac and now, in an ultimate state of panic, they are intervening to purchase from the “best and the brightest of Wall Street” $ 700 billions of dollars in assets that no one in the private sector wants.

The credit markets and the financial markets are totally disrupted because of the sheer greed and avarice of the “brightest and the best of Wall Street”, those smart whiz kids that regardless of their enormous disregard for prudence are still collecting millions of dollars in bonuses and other perks while the companies they managed are rapidly sinking.

While the American Dream is fading for millions of young Americans, the U.S Government is doing absolutely nothing to identify, prosecute and punish those bastards responsible for the greatest financial crisis the U.S has experienced since the Great Depression. And, rather than providing honest and comforting answers to the hundred of thousands of people that are being left without savings and jobs, the U.S government continues to fool the American people with financial bail out plans designed to save the rich at the expense of the taxpayers

While the majority of Americans are pissed because the boundless greed and selfishness (perhaps even dishonesty in some) of the top officers and directors of the falling firms, no one in the Government describe, even partially, the real causes for the enormous failure of the U.S financial system. None of the “smart guys of Wall Street” have been held accountable, some criminally accountable, for their role in the creation of this huge and world wide financial turmoil. The auditing firms that surely should have suspected that the high yield, sexy mortgage-backed securities were poorly structured and collateralized, hasn’t been questioned either.

What does it take to figure out that a household with a medium annual income of $46,000 can’t afford the purchase of a $ 241,000 home? Those were the medium household income and medium home price, respectively, in the year 2005 when banks were financing such purchases at record pace and the investment banks were buying the mortgages as fast as they could. Worse yet, where were the regulatory agencies that are entrusted with the task of making certain that the capital structure of the fallen investment banks (and companies such as AIG and Country Wide), weren’t built like pyramids upside-down?. Is it possible that the FED didn’t notice that the capital leverage of some of these firms were 40 to 1?

Let’s face it, the great menace to capitalism is not socialism but the corruption and greed of those bastards that believe that capitalism and free enterprise means that everything and anything goes, that accumulating wealth supersedes all business models and any other moral or ethical consideration. Greed is the root of the problem, of a system of executive compensation that unfairly favors the “smart guys” to the detriment of employees and workers - even shareholders. Is not well enough that the salaries of CEOs and other top corporate officers and directors of the largest corporations are already irrationally and disgustingly high, but in top they get stock options at bargain prices and bonuses based on real and fake profits. And herein rest the imperfection of the compensation system, because corrupt CEOs will stop at nothing to fabricate fake profits, profits that in turn drive up the prices of their company’s shares. Ultimately, it all translates into huge bonuses and stock trading profits for the CEO, officers and directors. And if things go wrong, they still have the U.S Government to protect their Golden Parachutes.

I believe that there can’t be true and lasting success for capitalism and stability for the U.S economy in general, and the financial markets in particular, without adequate, well thought out and strong government regulations.

Corporate wrong doings have occurred much too often as evidenced by the following partial list of screw-ups (or bankruptcies), and we ought to learn from them:

1. Lehman Brothers Holdings Inc, Sept 15, 2008, $ 639 billion

2. Worldcom Inc, July 21, 2002, $ 103.91 billion

3. Enron Corp, Dec 2, 2001, $ 63.39 billion

4. Conseco Inc, Dec 18, 2002, $ 61.39 billion

5. Texaco Inc, April 12, 1987, $ 35.89 billion

6. Financial Corp of America, Sept 9, 1988, $ 33.86 billion

7. Refco Inc., Oct 17, 2005, $ 33.33 billion

8. Global Crossing Ltd, Jan 28, 2002, $ 30.19 billion

9. Pacific Gas and Electric Co, April 6, 2001, $29.77 billion

10. UAL Corp., Dec 9, 2002, $ 25.2 billion

11. Delta Air Lines Inc, Sept 14, 2005, $ 21.8 billion

12. Adelphia Communications, June 25, 2002, $21.5 billion

13. Mcorp, March 31, 1989, $20.23 billion
14. Mirant Corp, July 14, 2003, $19.42 billion

15. Delphi Corp, Oct 8, 2005, $16.59 billion
16. AIG , next?

Unquestionably we been duped by the “best and the brightest of Wall Street”, we are the victims of the well thought out propaganda and misinformation that have led us to believe that these “smart guys” are more intellectually capable to manage our money than we can ourselves. Yet, we are living at a time when we also learn that the “smart guys” are really not smarter than we are and thus we have been double duped.

HZ

THE RIGHT CHOICE IS AN HONEST CHOICE

Ideally, when choosing the next president of the United States, it should be significantly less important the race, religion or social status of McCain or Obama than their individual integrity, education, common sense, intelligence and good judgment.

Considering that the differences between John McCain and Barack Obama can’t be more enormously obvious in all of the above, and certainly in the I.Q and empathy for the less fortunate of each man, it is totally puzzling to me that thus far the race to the White House is so absurdly close. The reason, in my opinion, is that too many people are more afraid of having a black man as president than not enjoying financial security or reaching the American Dream. Regrettably, too many people don’t understand that in allowing their racial and religious prejudices and believes to prevail just to defeat Obama they are only defeating themselves.

John McCain is certainly deserving of our gratitude and admiration for serving his country well in times of war. But we mustn’t be misled into believing that somehow the country owes him the Presidency. Our country is filled with heroes, thousands of men and women who served the country well in various armed conflicts and who too experienced the horrors of war, but John Mc Cain seems unique in the manner in which he has taken advantage of the “hero” label. I don’t believe that he is fit to be president solely for having been captured and tortured in time of war or for having been a professional politician for the past 30 years. Sorry, but there are some of us who don’t measure valuable experience in the manner that Senator McCain does. Moreover, Senator McCain cumulative contributions and record as a senator leave much to be desired, especially during the past eight years when he voted for George W. Bush proposals over 90% of the time. The evidence shows him more as a good soldier following his leader than as the maverick senator that he portraits himself to be.

To be fair, however, none of the presidential or vice presidential candidates has the experience to be president. However, with the exception of Nelson Rockefeller as Vice President of Gerald Ford, neither did any of the previous elected presidents and vice presidents during the past 100 years. Therefore what makes a good president , and should dictate, are the combination of integrity, education, common sense, intelligence, good judgment, I.Q and empathy for the less privileged of each candidate. And if we accept such premises, then we should not be ashamed to admit that overall Obama compares more favorably versus Mc Cain as does Biden versus Mrs. Palin.

HZ