Back Door Man

What do you do when you’re a likable democratic President, faced with declining approval ratings due to a slow economic recovery, and a groundswell of concern over a ballooning budget deficit?

Answer – Spend more tax dollars!!!!

Just as the core financial institutions start to pay back the bailout money – with interest, President Obama floats the idea of re-purposing those funds to create jobs.

Call it brilliant, call it necessary, or call it fraud?

Two major pieces of legislation have been passed to stabilize and jump-start our economy. TARP and the American Re-Investment and Recovery Act.

TARP was geared toward putting a floor under the collapsing financial industry. We all begrudgingly signed up for this, knowing in the back of our heads that we were headed for an It’s a Wonderful Life “run on the bank” moment.

The Recovery Act, a.k.a stimulus bill, was purportedly geared toward saving or creating jobs. We have spent very little of this money so far and there are tens of billions of dollars in this fund left to be requested and allocated. Much of the money to date has been used to fund short falls in state and local budgets.

But instead of tapping the large amounts of remaining funds that were allocated for stimulus in the Recovery Act, the administration, addicted to spending our tax dollars, wants to allocate TARP dollars for stimulus.

This would be kind of like taking $400M from the education budget a saying we need a bunch of spiffy new tanks! Or taking money from the Social Security trust fund and using it for a new space shuttle program!

I think that Americans are a little too “dis-connected” from our tax dollars. Do we realize it’s our money? That we earned with our own hard work?

Do we realize that when the government tells us they want our support to spend it on one thing, then decides to spend it on something else, that it would be called fraud in the private sector?

Mr. Obama, when all the funds in the stimulus package are tapped, and the economy is still not growing, then come ask us if you can spend more of our money. Then let us debate it. But don’t play the “bait and switch” telling us that we need to tap the TARP money to jump start the private sector when there is already another spending bill with funds allocated to do that.

How about we let the financial institutions pay their TARP debt back to the government, then let the government pay their debt.

What do you think?

Guest Blogger – Jeff Hine

Episode 18 – Shoe-a-cide Watch

An Iraqi reporter hurled a shoe at George Bush in a fit of frustration, while Jeff and Glenn hurl all they’ve got at the Washington Elite in the 18th Episode of PoliTalk. Unlike the Iraqi, however, the PoliTalk guys hit their mark this week: Illinois Governor Rod Blagojevich for his outlandish fraud; Caroline Kennedy for her lack of credentials (does it really matter); the “Big 3″ car companies for ponying up to the trough, and the politicians for filling it; Bernie Maddoff for his unbelievable, unscrupulous $50 billion ponzi scheme that hurt countless innocent people, and the makers of really bad television for leaving Glenn and Jeff off the political talk circuit for yet another week.  Get your real political analysis here at PoliTalk.

Listen to the current installment of PoliTalk and get yourself informed, inspired, entertained and ready for the day… spread the word… tell two friends, and so on and so on…

You can get the PoliTalk Podcast from Podcast.com and iTunes.

Episode 17 – Survival of the Weakest

Elected officials again show profiles in political weakness by buckling to pressure to bailout the big 3 auto manufacturers. As if the lessons of the financial bailout weren’t disastrous enough (fool me once, shame on you, fool me twice, shame on me…). As if caught in a web of bizarre reverse Darwinism, only the weak shall survive. If you’re strong enough to run your business well, you only have to worry about banks freezing credit, the economy crippling your business and making ends meet. But if you fail spectacularly, I mean really, really badly, well, then you are rewarded. John Thain, CEO of Merrill Lynch, is reportedly seeking at $10 million bonus this year.

The car makers, who have essentially run their dinosaur-of-a-business into the ground, are now seeking $35 billion in federal money to prop them up.  AIG… well, we know the story there. So the lesson to all you kids out there: don’t work too hard, take your private jets whenever possible, seek out-of-this-world compensation for something you really haven’t done, and if you fail, don’t worry, the federal government will be there to bail you out. But if you’re one of those who live lives of quiet desperation, who live a decent, unremarkable life, but maybe you’re on the brink of financial disaster — you get screwed. Welcome to the new world economy. We’re mad as hell, in a funny, intellectually, riotous, quirky, lovable kind of way. You’ll laugh, you’ll cry, you’ll ask for more. Catch the latest episode of PoliTalk: where politics and policy meet real people.

Listen to the current installment of PoliTalk and get yourself informed, inspired, entertained and ready for the day… spread the word… tell two friends, and so on and so on…

You can get the PoliTalk Podcast from Podcast.com and iTunes.

Episode 16 – Who is in Charge of the Economy?

Like a bizarre kabuki dance, nobody seems to be taking the lead infixing the economy. Oh, and thanks to the Government for finally acknowledging what we all knew: we are, in fact, in a RECESSION. Want more bad news? The folks from the auto industry are now driving to DC to ask for their $25 billion in bailout money, while AIG spends our money on “cash awards” (that’s corporate weasel language for big bonuses, as in $3 million to one person). More bad news? Jeff and Glenn still don’t have a morning show on MSNBC (or any cable outlet). Won’t you help? Someone in MSNBC… take charge, this show will make your career!

Not every informative political discussion has to be boring — PoliTalk is the podcast where substance meets humor.

Listen to the current installment of PoliTalk and get yourself informed, inspired, entertained and ready for the day… spread the word… tell two friends, and so on and so on…

You can get the PoliTalk Podcast from Podcast.com and iTunes.

Episode 15 – Tech Boom in the White House

A laptop in the Oval Office? The Obama campaign employing new proprietary software which literally changed the way Election Day was managed…now and for the foreseeable future? Technology gets tackled in this episode of PoliTalk. In addition, Glenn and Jeff wax poetic about possible cabinet picks, political appointments and the possible uses for $700 billion in bailout money. Wouldn’t it be easier if we just cut every taxpayer a check? Can we ever stop talking about Sarah Palin? Not as long as turkeys are getting impaled while she’s doing press conferences. What’s next, a live moose hunt while talking budget appropriations and subcommittee assignments? Hey, anything for attention. Finally, Glenn and Jeff imagine a future, with your help, hosting a morning political talk show. Remember…Not every informative political discussion has to be boring — PoliTalk: the podcast where substance meets humor.

Listen to the current installment of PoliTalk and get yourself informed, inspired, entertained and ready for the day… spread the word… tell two friends, and so on and so on…

You can get the PoliTalk Podcast from Podcast.com and iTunes.

AIG Spends $86,000 for a Hunting Trip in England

Despite what AIG said to this very blog on October 9… and I quote:

A short time ago, our Chairman and CEO Ed Liddy said that he has ordered the immediate cancellation of all outside meetings, conferences, and recognition events across AIG, except those that are required by law or that are deemed absolutely critical to sustain our ongoing business needs.

AIG now finds itself justifying yet another extravagant expenditure. This time it is $86,000 for an executive hunting trip in England. Company spokesman Peter Tulupman responded Wednesday morning by saying,

This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York’s loan to AIG.

According to the Associated Press:

AIG officials declined to say which AIG executives attended the trip, which reports have said racked up an $86,000 tab. News of the hunting trip surfaced just days after AIG received an additional $37.8 billion loan from the Federal Reserve, on top of a previous $85 billion emergency loan granted last month.

Apparently, this “outside meeting” is deemed absolutely critical to sustain their ongoing business needs.

Hey AIG… I want my $122.5 billion bailout back!!!!!

AIG Responds to PoliTalk on Executive Retreat Controversy

Today, AIG responded to us on the coverage of the recent expenditure of $440,000 on an executive retreat that we posted to the PoliTalk blog.

AIG states:

Earlier today, AIG announced an important policy change – one that we wanted to be sure you knew about.

A short time ago, our Chairman and CEO Ed Liddy said that he has ordered the immediate cancellation of all outside meetings, conferences, and recognition events across AIG, except those that are required by law or that are deemed absolutely critical to sustain our ongoing business needs.

Given AIG’s commitment to our customers, business partners, regulators, and American taxpayers, coupled with the new and very different challenges our company now faces, we take these responsibilities extremely seriously. Their trust is critical to our success. We recognize the need to be sensitive about all company expenditures.

As we move forward, we will continue to focus our efforts to pay back the $85 billion loan from the Federal Reserve Bank of New York as quickly as possible.

I applaud their acknowledgment of the need for serious policy changes in terms of how they are doing business. I can only wonder if these changes would have come about without the spotlight of public scrutiny.

AIG Blows $440,000 for a Corporate Retreat After Bailout

According to FOX Business, after getting a financial bailout from US Taxpayers of $85 billion, insurance giant AIG spent $440,000 for a corporate retreat at the St. Regis Monarch Beach resort in Los Angeles, California. FOX Business goes on to say:

According to the receipt from the St. Regis, the eight-day company retreat was a lavish one – $139,000 was spent on hotel rooms, while even more money — $147,301 — was spent on banquets. Another $23,380 was spent on undisclosed spa treatments and another $6,939 was spent on golf. A full $9,980 was spent on room service and food and cocktails at the hotel lounge.

Fellow taxpayers… have you had enough yet?

Special Episode of PoliTalk – The Bailout Bill Insurance Program

“The financial rescue package contains a provision that permits troubled financial institutions to apply for insurance (federal guarantees) and could prevent an outlay of $700,000,000,000. Furthermore, it can cut interest rates substantially, keep troubled homeowners in their homes, and certainly end the credit crunch,” says Michael S. Zarin, President, Wellfleet Investments LLC.

In this special episode of PoliTalk, Glenn interviews Michael to better understand his perspective. Michael first came to us via one of our blog postings that he commented on.

If you listen to only one program about the financial crisis that the US and the World faces, listen to this!

Michael lays out the case for a provision in the new Bailout Law that will allow the US Government to get us out of the credit crisis without spending the $700 billion.

Listen to this podcast and spread the word… More people need to know about this!

You can get the PoliTalk Podcast from Podcast.com and iTunes.

Financial Rescue Plan Provision Can Save $700,000,000,000

We got a great comment on our blog entry, Financial Bailout Bill Passes House. It was written by Michael S. Zarin, President, Wellfleet Investments LLC.

It is worth posting as its own post:

The financial rescue package contains a provision that permits troubled financial institutions to apply for insurance (federal guarantees) and could prevent an outlay of $700,000,000,000. Furthermore, it can cut interest rates substantially, keep troubled homeowners in their homes, and certainly end the credit crunch.

The purchase assets provisions of the bill, buying paper at much less than its face value, will not put the financial institutions in enough funds to mitigate the credit crunch.

In fact the guarantee provision could even go too far in that direction. Administered sensibly by the Treasury Department it could be just right – if they would do it.

How?

If I’m a banker holding 13% sub prime mortgage paper now worth 40 on my books instead of 100, and I get a US Government full faith and credit pledge (insurance, really a guarantee) behind that debt, my lousy paper is worth way more than 100 right now. Maybe 120 or more. No one wants that. Inflation.
Big time.

So, when the banker comes in to get his insurance, he should pay a fee and, most important, agree that the interest rate on his paper will drop to, say, 3.5. He has to agree, because the US government can’t change his contract unilaterally.

In that way, his paper is worth 100. He sells it. He’s back in cash and the credit crunch is over. Regulations should cut back on the permission that sunk Lehman – ability to leverage cash 30 times. Twenty times does it nicely enough.

If you want to punish him because he was a bad boy, cut the interest a little so he only gets 90 cents on the dollar instead of 100. Less than that. No good. Because he won’t be able to do enough business and end the credit crunch.

New point. The homeowner who is paying 13% or whatever on the sub prime debt, a victim or a risk take or whatever (we’re at saving the economy not punishing him, his family and us now) should have his mortgage rate reduced to 5% so that he can pay his monthly charges. A sub prime mortgagor (interest rate, say 7and 1/2% or more) who has enough household income to do that should be part of the program. See below for the others.*

The difference between what the banker gets, say, 3.5%, to bring the paper to 100, and 5% ,what the homeowner pays, should go to the federal government to pay the costs of the program and any anticipated defaults.

That’s a program that works and benefits the economy, the taxpayer who lays out no money now, the financial sector and the homeowner.

*For another program, are we, as taxpayers better off if the guy who can’t pay all of his mortgage is thrown into the street, or do we really pay more to keep him in other housing, welfare and so forth. Maybe he should be subsidized some to keep him in his home. As I say, that’s another program.

The program outlined above works. Secretary Paulson has given no assurance that his plan works.