Sunday, September 28, 2008

Securities and Exchange Commission

WARNING another political posting
Just a reminder to not let your guard down, to keep paying attention. WE did, we let the ball drop; my generation did that. My fathers generation were the recepients of the last Depression and it scared them really bad, so much so that many still won't accept any credit for anything. They pay cash for their cars and for their homes for their groceries and at the drug store. They didn't want to repeat the 1920's and 30's. They were the generation that applied the safeguards and the checks and balances to make sure it would never happen again. They were right to keep paying cash but they were wrong to think that it wouldn't happen again, safeguards be damned. It was my generation that forget to check on the safeguards to see if they were working, to make sure that Congress and the executive branch were doing their job. Well they weren't; plain and simple and we were not smart enough to do something about it. This didn't happen yesterday but a long time ago and if the truth be know it probably started happening in1935, the year after The Security and Exchange Commission was started. You see, these people , the Wall Street Bunch and the Congress, are a lot smarter than we give them credit for and they have the money to do the things they do. They have the money to buy the very best advisers in the world to show them how to do it. They have the money to make the Congressmen look the other way or pass the bills that favor them.They have the money to hire the right CEO's and CFO's to hoodwink all of their shareholders and investors into thinking that there is no risk, everything is on the up and up and everyone is going to make more money and when it doesn't they bail out with their Golden Parachutes worth millions and hundreds of millions and the investors are left with worthless stock. The investors contact the Security and exchange commission and they turn their heads, or put it under advisement or tell the investors that they can't act until congress tells them to act. The Congressman has just came from a charity Golf Tournament where that CEO was responsible for raising $250 million for the congressman's favorite charity so he does nothing. The shareholders are caught with worthless stock hoping that the government comes up with $700 Billion and bales them out.The following is from the SEC's website All of the underlining is mine. Who are they? What do they do?

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.
As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.
And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC's actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth. Though it is the primary overseer and regulator of the U.S. securities markets, the SEC works closely with many other institutions, including Congress, other federal departments and agencies, the self-regulatory organizations (e.g. the stock exchanges), state securities regulators, and various private sector organizations. In particular, the Chairman of the SEC, together with the Chairman of the Federal Reserve, the Secretary of the Treasury, and the Chairman of the Commodities Futures Trading Commission, serves as a member of the President's Working Group on Financial Markets. When the stock market crashed in October 1929, public confidence in the markets plummeted. Investors large and small, as well as the banks who had loaned to them, lost great sums of money in the ensuing Great Depression[me again, does the underlining sound a bit familiar?]. There was a consensus that for the economy to recover, the public's faith in the capital markets needed to be restored. Congress held hearings to identify the problems and search for solutions.

Where do you suppose these guys were when all of this was happening? Nice mission statement but I think someone forgot it. Wonder what kind of mission statement Congress has? Sorry but I smell at least one more political posting coming.

Saturday, September 27, 2008

Depression, recession or ?

WARNING: Another Political posting

As I write this it appears that the Republicans and Democrats are close to a compromise on the bailout plan. Its called a bailout plan because it is bailing out wall street. I'm not for that but whatever it takes to keep this country out of a deep recession I would be in favor off. Another thing I don't like is the fact that the bill contains 6 billion in Pork Barrel spending. 6 billion. Can't Congress, just for once worry about the good of the country overall instead of "Oh ya, I'll vote to keep us out of a depression but you'll have to let me at a few Pork Barrel items of my own in return". The Bastards; that is why I detest them so much. Some Pundits are saying that this bill will cost $1.5 Trillion rather than a mere $700 Billion, as advertised. My other concern is how they limit the rewards going to the bad CEO's who got us in this problem to start with, commonly referred to as "Golden Parachutes". Probably the CEO's that will escape these limits will be the ones that have provided the most "Perks" to our Congressmen in the past. Sorry to sound bitter but that is how I feel.

I don't have any type of suggestions to give our Congress as they wrestle with this problem as I am certainly not smart enough to understand the problem let alone the solution. It grieves me to have to sit back and wait for the experts to solve these problems, but I must. It is Congress's job to fix this problem as they are the ones that let it happen. I sure hope they make good decisions, now, after years of looking the other way, and we have not waited too long.

Below is an interesting editorial that I located on a blog entitled "The Big Picture"
I was thrilled to publish this at Barron's. Here's an excerpt:

To: Washington, D.C.From: Wall Street Re: Credit Crisis

Dear D.C.,

WOW, WE'VE MADE QUITE A MESS OF THINGS here on Wall Street: Fannie and Freddie in conservatorship, investment banks in the tank, AIG nationalized. Thanks for sending us your new trillion-dollar bailout.
We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.
But here's a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.

Barry Ritholtz is the author and his blog is The Big Picture. Click on the hyperlink and you will see the text above but below that you can find the full PDF copy. Worth reading as it is one viewpoint of what went wrong and he blames Alan Greenspan for most of the problems. Interesting!

Baby Boomer Panic

Fair Play

WARNING: Political posting
Information in this article was heavily borrowed from articles in our paper by The Associated Press reported by Lolita C Baldor about the Generals and Rachel Beck and Ellen Simon for the CEO story. Thank you ladies.

I am going to put up a political posting but I am very reluctant to do so. Over the past 300 or so posts I have refrained from politics, except of course to make fun of it. I have left those directions to the pundits , pollsters and bloggers out there who revel in that type of active and for the most part are good at it. My problem is I just get mad and then I don't make much sense. I thought it only fair to give you warning about that which I am about to publish as you are probably as tired of political things as I am and with a fair warning you can leave without damage. You won't hurt my feelings and I will know by looking at my readership counter and seeing how long you stayed on this posting. I know a lot about each of you and I promise not to be upset if you don't read this entire postings. For those of you that do foolishly disregard this warning, thank you very much and I hope you are a bit enlightened and not upset.

Every morning I completely digest the morning newspaper The Springfield Republican from Springfield MA as I also digest my bowl of cereal [Honey Nut Cheerios] all the while the news is running on the TV. First the local news and then one of the morning type shows partially gets my attention. This AM the headline buried on page 16 boldly sounded the alarm "8 Army, Air Generals disciplined". Acting Air Force Secretary Michael Donley Disciplined 17 senior officers including the three-star general in charge of logistics, for poor oversight in connection with the mistaken shipment of fuses for nuclear warheads to Taiwan. He stated he could not ignore the "breaches of trust that occurred on their watch". Two army Two Star Generals have also been disciplined. A lot of the punishment was career ending. Our military has a policy of "The Buck Stops Here" and they seem to hold the top in command responsible when things go wrong. I for one am very glad to see it.

The reason I am discussing this issue is because of the next story that I had just read, in the same paper, on page 11. The headline reads "Some CEO's got out with millions." Some of the CEO's have already fled the scene of the financial crisis taking million of dollars in severance packages with them.

Stanley O'Neal walked away from Merrill Lynch with a package worth $66 million. Ken Thompson was ousted from Wachovia in June with a "golden parachute worth $5million and Chuck Prince was forced out at Citigroup with a parting gift of $36million. According to Barry Ritholtz, who writes the popular financial blog The Big Picture and is CEO of research firm Fusion-IQ, "These guys took all this risk, and ultimately they won't have to suffer the consequences of their decisions".

We, the American Public, have to suffer the consequences and once again we have to come in and bail out their screw-ups to the tune of $700 Billion. As you read this, Congress is putting this bailout package together but with our money. I feel that OUR Congress and the President must include punishment for those who led us astray and they must not be allowed to walk away unscathed. I think real investigations must be launched. They also must put in sufficient oversight so it doesn't happen again. Harry Truman has said it best "The Buck Stops Here". If it is good enough for our Military Generals it is certainly good enough for the CEO's that gave us this financial Crisis in the first place.

There must be some way for us, as taxpayers, to get involved in this process with some meaningful results. I cannot believe that any of you reading this would allow these executives to write in these Golden Parachute escapes for lousy work and then dump the burden covering up their misdeeds on us. Our congressmen and women do or have, it appears. No skin off their noses and most of them are in the back pockets of these CEO's anyway. They spend their lucrative days in Congress whiling away their time on expensive junkets or soliciting out donations from these people. Playing golf on expensive courses. The Japanese have a good outlook on these things as you are encouraged to commit suicide if you screw up like these people did and the Chinese put you in jail and take away all you have earned, or stolen as the case may be leaving you and your family destitute. Issuing sharp knives to these ceo's instead of Golden Parachutes might just be the answer. Something to look at or am I just getting old?

Here is another one for you to get upset about before you go to bed tonight from the magazine Newsweek. Bruce Karatz, CEO, KB Homes. His Golden Parachute was $175 million. Karatz retired under pressure in November after an internal investigation found he manipulated stock-option grant dates to inflate value to himself and other executives. The board of directors ensured he'd walk away with $175 million in severance pay, pension benefits, and stock options, provoking an outcry from shareholder groups who say Karatz has been overpaid for years. Over the last three years, Karatz made $232.6 million—substantially more than heads of bigger and more profitable competitors like Pulte Homes and Centex. Where is our Congress, security and exchange commission and the FBI when you need them. Maybe the Board of Directors need some investigation and being held financially responsible for letting Karatz have the Golden Parachute in the first place. Karatz is sitting on some tropical beach with his $408 million plus bail out package and where is the incentive for him to do good in the first place? I would bet that the board is the "Other Executives" in the stock-option manipulation mentioned above. Don't you think the system is a bit flawed?

Sleep well friends.

Saturday, September 13, 2008

Sunflower Barn

GG sent me this photo of a Tobacco Barn. Barns are great background for any type of outdoor photo. Thanks GG
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