The Great Depression

I want to apologize to my readers for the few posts. It is so humbling to actually get comments and emails asking for more frequent postings.

My various business and consulting gigs are all retail related and go into high gear in December. Generally I'm working 18 to 20 hour days and I absolutely love it. If (heaven forbid) retailing gets into your blood, this time of year is the World Series, Super Bowl and Kentucky Derby all rolled into one. Posts will be light until after the holidays.

But....... All you faithful readers already know I've been trying to tell anyone who will listen that we are not in a recession, but are instead heading into a Depression that will dwarf the 1930's. I am appalled that our so called financial leaders in Washington either can't or won't see the coming disaster.

Our current activities in Washington will not help. The proposed auto bailout is a huge mistake. We are plunging the nation into a deep national debt from which we may never recover.

Today's record breaking unemployment report is a harbinger of things to come: Employers cut 533K jobs in Nov., most in 34 years

Make your personal financial decisions based on the coming disaster.

What McCain Needs to Say.....

You can add me to the long, long list of bloggers who are already second guessing John McCain's performance even before the debate has begun.
I am deeply distressed that Senator McCain cannot gain traction against Barack Obama. Obama is a terribly flawed candidate, one who certainly should not be elected President.

I remain absolutely convinced that Barack Obama will win and win by a landslide. Can John McCain do anything tonight to stop the train wreck? No. So what McCain should do is simply argue policies and facts. He should leave William Ayers and Rev. Wright at home.

Two recent Wall Street Journal articles point out the road Senator McCain needs to follow. First is Obama's 95% Illusion which clearly point out the flaws and absolute fantasy of Barack Obama's constant claim of a tax cut for 95% of all Americans, and a tax increase only on the rich. Like the Journal, I remain stunned that McCain and the Republicans haven't blown this house of cards up before now. It is, quite simply, a lie. And it's a huge lie.

Obama's plan actually is a dramatic increase in welfare. And his plan increases welfare in a way that will dis-incentivize people from working or improving their job or salary. If people get a better job, they will actually lose money.

Worse, it's a plan that will institutionalize poverty. Obama's plan will pass out a lot of checks to people who pay no taxes. But the checks will be too small to lift people out of poverty. Yet his program actually penalizes those who try. We will create the largest underclass in history, permanently on the dole.

Second McCain needs to genuinely attack Barak Obama on his absolute failure to lead during the fight for legislation that could have saved the world from this huge Banking Crisis. Again, I'll reference a Wall Street Journal article, Obama Voted 'Present' on Mortgage Reform

I must also reference my own essay from October 11th, We're About to Elect a Good Listener When We Need a Strong Leader which covers all the same facts. I can only assume, since my essay preceded the Journal article by 4 days, that they are reading my stuff...... O.K., probably not.

The Journal article is much better and much more complete than my own. You need to read every word to really understand why this collapse happened and how it was that the Democrats, and not Republicans, authored "the only banking deregulation in recent years." We are reffing to the Democrats deregulation of Fannie Mae and Freddie Mac, the two mortgage lenders who caused the subprime disaster.

While Barack Obama wasn't the only villain in this meltdown, he could have personally stopped it. And, worse yet, he clearly saw the disaster in the making and yet he did nothing.

The Journal writes, "In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward."

"Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending -- but was unwilling to confront his own party by pressing for legislation to control it. As a demonstration of character and leadership capacity, it bears a strong resemblance to something else in Sen. Obama's past: voting present."

These are just two of the real issues Senator McCain needs to address. There are several others, but Bill Ayers is not among them. Senator McCain, you cannot win. So you need to fight with class and bring the real issues of the election to a public that, frankly, does not want to see them.

America Burns while McCain Fiddles

Sad to say my time machine is broken. But I would love to travel back in time to the stock market crash of 1929 and listen to the discussions President Herbert Hoover had with his Cabinet and advisers. Do you suppose he was just a clueless as Barack Obama and John McCain are tonight?

I'm betting he didn't realize what the stock market crash meant. He thought it would recover. He didn't see the Great Depression coming.

Neither did a vast majority of the population. But the economic landslide was relentless.

But tonight most Americans are starting to realize they have lost 1/3 of their life's savings and/or their retirement fund. Folks that thought they could retire at 59 or even 65 now realize they may need to work the rest of their lives. Retirement is no longer an option.

People on fixed incomes or living today off their 401K's realize they are moments away from losing their homes or worse.

And they realize that neither Barack Obama nor John McCain will have the money to institute their proposed Medical Programs.

And many people really fear they might be laid off before Christmas. Those fears are well founded.

The current disaster is far worse than the stock market crash of 1929.

John McCain is genuinely clueless. He actually believes this election is about Barak Obama's relationship with distinguished University of Illinois at Chicago Professor (and unrepentant radical terrorist) William Ayers.

Wake the hell up, John. Americans couldn't give a rat's ass about Ayers. In fact Americans would overwhelmingly elect Ayers if they thought he could solve this financial mess.

And America is already scared as hell of Barack Obama. Trust me, we are terrified. And it doesn't have anything to do with Ayers. So give us an alternative. Show some real leadership.

I realize that you must attack Obama. It's part of the campaign mix and negative ads so work. So hit Obama where it will really hurt: Barack Obama's total lack of experience and timid decision making. Obama hasn't ever managed his way out of a Senate cloak room. He generally refused to make decisions. He's inexperienced and weak.

Give America an alternative. But if you continue to ignore the 8 trillion ton gorilla in the room, we are all going to lose.

Could We Have a Mulligan?

I enjoyed a series of conversations during the day that speak volumes about the current and generally unexpected economic meltdown and the terribly poor timing of the 2008 Presidential election. Talk about an October surprise. This is an October Nuclear Explosion.

I hope every one of you, readers and passersby all, will add your thoughts in the comments section.

Here's the question: What if the primaries were held tomorrow, not months ago. Who would you nominate from each party, in light of the economic meltdown?

The consensus in discussions earlier today was that neither Obama nor McCain would get their party's nod. Obama is way to inexperienced. McCain way too weak in the area of the economy.

Many folks feel we really need Republican Mitt Romney at the helm. He is an acknowledged economic genius. And he has solved big, big crisis in the past.

Many folks feel we need Hillary Clinton's experience and that Bill's advice and counsel would be critical in handling what could be a major depression.

What do you all think?

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P.S. I thought tonight's debate was simply terrible. Boring. Tom Brokaw was worse than Gwen Ifill and I thought that would be impossible. The questions were old and tired. The answers were right from the stump speeches. And there was never a follow-up or a demand for clarification.

Did Obama really win? The early polls say he did. I'm not so sure Obama won. I'm positive McCain lost.

But before you pull that lever on November 4th remember one thing: Barack Obama has never made one single tough decision in his entire life. Not one. Not ever.

He makes a good speech. But he tends to vote present or miss the vote or dodge the issue as he did last week during the bailout debate. Give it some thought.

The End of the World as We Know It

It's really ugly out there.

I'm not sure where to start. But I don't like what I see. It is ugly out there.

John McCain has decided to play ugly. Really ugly. I'd like to be able to devote an entire entry to the mistakes John McCain and his advisers are making in this campaign. I believe Barack Obama is vulnerable. But not to the type of attacks McCain is contemplating.

The press and main stream media are really ugly. Journalism is indeed dead. Way too many editors, publishers, reporters, newsrooms, magazines and newspapers have an agenda. And it is interfering with their their ability to fairly report the news. And most of them don't realize what they are doing. It's all about the O. This is so ugly. And we the people are being so short changed.

And the economy is ugly. Really ugly. We are headed right into a major depression. Not just a recession, but stagflation, too. Prepare today for double digit inflation. And double digit unemployment. Life as we have known it is about to come to an end.

I wish I had confidence that Barack Obama could handle all of this. I don't. He is in way over his head. You want a frightening dose of reality. Obama has never made a single tough decision in his entire life. Not one. Not ever. But he's about to learn. On the job training.

Of course nobody is discussing this. The main stream media is orgasmic. It's all about the O. Oh, and Sarah Palin. Let's not forget the fluffy bunny from Nome. The press is so obsessed with her.

Oh look, it is all about the O's. Obama and obsession.

Meanwhile John McCain is lost in endless and meaningless cycles of Ayers and Wright. If McCain can't handle this election, why would we think he could handle the economy?

A fluff bunny could beat Barack Obama. Oh wait, maybe a fluff bunny will.

Change.

Be careful what you wish for. Things are going to change. It's the end of the world as we know it.

A Failure of Leadership

Warren Buffett has called the current crisis an "Economic Pearl Harbor." But can you imagine what December 7, 1940 might have been like if we hadn't had the inspirational leadership of President Franklin Delano Roosevelt?

If today's crisis is the economic equivalent of Pearl Harbor, what is missing the leadership to rally and galvanize the American Public into action. As the American ship of state sinks into an economic cesspool, no captain has emerged to organize the crew to begin bailing out the water and turning the ship's weapons toward the fight.

Missing in action is President Bush. The worst kind of lame duck, Captain Bush was late to spot the economic mine fields and slow to steer the ship past the danger. It goes without saying that Bush is no Roosevelt.

But the two would-be Captains were even worse. Both abandoned ship and instead worked to organize the crew into competing water polo teams. Suddenly the object was not to save the ship, but to "win the game."

Obama's phone-it-in failure is especially bad. Not that the press or public is paying any critical attention to Obama, but he is doing what he always does, he is "voting present." Even in the heat of the House vote yesterday, Obama never ever endorsed the plan. In fact he has never admitted any support or opposition for the plan. He is completely invisible.

Obama's pathetic performance over the last week may well win him the election. but it should actually disqualify him from the office. The pubic and the press will long regret giving Obama a free pass in this election. You cannot vote "present" during the biggest economic crisis of our time.

On the other hand, McCain flopped and floundered like a wounded fish. At first he attempted to take on the role of leader. He flew to Washington and assume the role of Captain. Except he, too, refused to actually take a position on the bailout. His failed attempt at action came off as political grandstanding.

America really wanted a leader. McCain should have opposed the bailout. I believe that was his natural inclination. But he didn't. Yet he failed to actually rally enough house support to get the compromise bill passed.

The debate last Friday night was revealing. Moderator Jim Leher allowed Obama to skate completely by the issue with making any kind of commitment, but then pressed McCain repeatedly and forced him to commit his very weak and tentative support.

It was a test of leadership. Obama cut class and never took the test. He, instead went to the mall. McCain took the test, but failed.

It would be really remiss of me not to point out the biggest failure of leadership was the "worst Speaker of the House in American history." Pathetic. Once again Speaker Nancy Pelosi could have easily and simply engineered a landslide victory for the bill in the House. But, as I have often pointed out, Pelosi doesn't care about America or the people, she only cares about cheer leading the water polo game.

While some Republicans falsely blamed Pelosi's incredibly tone deaf speech on the House floor for "poisoning the vote" her real failure was in poisoning the entire process. She constantly marginalized Republicans and typically refused any effort at bipartisanship.

She falsely claimed to support the bailout, but never organized the Democrats or attempted to whip the vote. Virtually every Democrat Party leader in the House except Pelosi and Barney Frank voted against the bailout. And she demonized Republicans every second of the day. She demanded bipartisanship from Republicans but practiced none.

Any other Speaker of the House in our nation's history (and I mean any) could have easily passed the bill. Only Pelosi failed. She must be removed from her role in the House.

Economic Pearl Harbor

The current Wall Street credit and lending crisis has been called an "economic Pearl Harbor" by mega-investor Warren Buffett. After doing as much study and research as I can, and talking with experts I trust, I believe Buffett's analogy is true.

President George Bush's speech last night was probably the very finest of his presidency. Bush was clear, logical and he didn't "talk down" to his audience as he often does. He told the true and exact story of the events leading up to the crisis and didn't play politics at all. That was a surprise.

In fact, Bush was unusually non-partisan. He clearly reached out to Democrats.

The only political note I will add is strictly my personal opinion that John McCain continues to handle this crisis about as badly as it is possible to handle it. His political "time out" and his proposal to delay the Friday night debate looks incredibly foolish.

An important part of the decision we voters must make in choosing the next President is watching how he or she handles events. McCain looks very bad here. Even if he is totally sincere in his desire to help solve this crisis, he still appears to be playing politics. As I often say, "Perception Becomes Reality."

If the McCain campaign was frightened by the polls yesterday, just wait until next week.

But let's get back to the real crisis. Warren Buffett is like the men and women who volunteered to join the military after Pearl Harbor. He immediately volunteered to serve with his FIVE BILLION DOLLAR INVESTMENT in Goldman Sachs.

From the Bloomberg article linked above:

Sept. 24 (Bloomberg) -- Billionaire Warren Buffett, calling turmoil in the markets an "economic Pearl Harbor,'' said his $5 billion investment in Goldman Sachs Group Inc. is an endorsement of the Treasury's $700 billion bank rescue plan. "I am betting on the Congress doing the right thing for the American public and passing this bill," Buffett said on cable channel CNBC today. "I certainly have a vote of confidence in Goldman and vote of confidence in Congress." Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke are pushing Congress to quickly approve the proposal to remove illiquid assets from the banking system. Buffett is buying a stake in New York-based Goldman after three of the investment bank's biggest competitors collapsed or were forced into emergency sales. "I think the Treasury will pay back the $700 billion and make a considerable amount of money," Buffett said, adding that if he had $700 billion on the government's terms to buy distressed assets, he would. "Unfortunately, I'm tapped out." Goldman rose $4.95, or 4 percent, to $130 at 4 p.m. in New York Stock Exchange composite trading after Buffett's Berkshire Hathaway Inc. agreed yesterday to the investment. It will pay 10 percent interest and give Buffett the right to buy $5 billion in common stock in the next five years at $115 a share. Buffett, 78, has frequently scolded Wall Street for shoddy accounting and risky investments. He's investing in the most profitable U.S. investment bank a week after Lehman Brothers Holdings Inc. went bankrupt and Merrill Lynch & Co. sold itself to Bank of America Corp. Bears Stearns Cos. in March was absorbed by JPMorgan Chase & Co.

I have been a strong and unrelenting critic of Warren Buffett on these pages for his absolute failure to cease investments that are empowering the genocide in Darfur. But I certainly applaud his stepping forward today to help calm the markets and support America during this current crisis.

Rewriting History

I watched Senator Chris Dodd (D-CT) on the news shows on Sunday. Long gone are the days of Tim Russert when reporters actually did their homework and did actual research. Tough questions were off the table. However, ample opportunity was given to Senator Dodd to blame everyone but himself for the current crisis.

Sadly, the bulk of the blame actually belongs at Senator Dodd's doorstep.

From THE NEW YORK TIMES, September 10, 2003:

WASHINGTON, Sept. 10 — A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates. ...

"The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

"These irregularities, which have been going on for several years, should have been detected earlier by the regulator ..."

A bill was placed before Congress that would have implemented the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade earlier.

Guess who sounded that strong warnings about the impending crisis at Freddie Mac and Fannie Mae?

Guess who proposed the bill to increase strong REGULATION of the Housing Industry?

President George Bush and the Bush Administration!

And guess who fought it all the way?

The Bill was opposed and eventually blocked by none other than Senator Chris Dodd!

Dodd was completely in the pocket of Freddie Mac and Fannie Mae and Countrywide Finanace Co. Dodd was (and still is) the largest recipient of campaign contributions from the now failed housing lenders. We're talking hundreds of thousand dollars.

The New York Times news story from 2003 continues.....

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

After the hearing, Representative Michael G. Oxley (R), chairman of the Financial Services Committee, and Senator Richard Shelby (R), chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the [Bush Administration} proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing. ...

"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

President Bush's strong regulatory proposals died in the Senate with Senator Chris Dodd leading the effort to block any regulations or protection for the American Taxpayer.

I just love it when history gets completely rewritten.

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A grateful tip o' the Wizard's Pointy Cap goes to Wiz-ziW for pointing me to this story and providing documentation.