Credit, like hope is a major element for achievement in our society and culture; but without substance they become the hollow cry of defeat; a prologue to disaster. Hope, without the effort to achieve the prize hoped for is meaningless. Credit, without the security for repayment is a frivolous gamble.
While investment is a financial risk for the investor; credit is a double risk; a financial risk for the party giving credit, and a financial risk for the party receiving credit. Insurers of the risk for the party giving credit has tended to encourage less responsible issuance of credit. The insurers of the insurers guaranteeing credit have created a false illusion of security that has produced grossly irresponsible issuance of credit, resulting in the crisis we now face.
Government bailout for irresponsible credit to restore credit will not solve the crisis. The only solution to credit failure is government regulation to require more responsible issuance of initial credit. Insuring credit by a third party passes the liability to a party once removed from the transaction. Insuring the Insurers passes the liability to a party twice removed from the transaction. The government proposal to establish the FDIC as the insurer of the insurer brings up the question, who is to insure the insurer of the insurer. That of course would be the taxpayer, a most audacious injustice.
Monday, March 30, 2009
Sunday, March 29, 2009
THE FREE MARKET IS DROWNING IN CREDIT!
With a futile effort to eliminate Bankruptcy and Depression, the merger of Big Business and Government has the Economy taking its last gasps for freedom.
The ingenious Free Business Enterprise system that has produced the wealthiest nation in the world is destroying itself with the ambition to become perfect and to make the world perfect as well.
The free market system, which was a plan to distribute the wealth of the material world by non-violent means, has expanded and conquered the frontiers into outer space,and may have extended itself beyond the gravity of reality.
The "Free Market" was built on progress through risk. Forces competed with each other to explore and exploit the unknown. In this environment some forces fail and the total market tends to over produce causing a Recession; that could lead to a Depression. The process developed into what has been called the : Business Cycle.(ie Progress, Recession, Depression and Recovery)
Depression has been recognized as a "bad" thing, and the forces desired to "insure" against this dreaded disaster. Investment (Risk) was joined by the other "eye" of the system, Insurance, to lead to the promised land of constant prosperity.
In the first Depression, the banks failed and the masses lost their savings, which was determined a national disaster. The FDIC was enacted and regulations were put onto effect to curb irresponsible risks and insure against this disaster ever happening again. This conservatism slowed progress and impatience fought against the regulations to guard against the irresponsible risks. The merger of Big Business and Government (called by many, Government intervention) slowly
eroded rational responsibility until the "brilliant" idea of insuring insurers made billionaires out of some and victims out of the masses. The big question was "who is going to insure the insurers of the insurers? The foolhardy answer was "credit!"
Just as the government had established an artificial person created by law (The Dartmouth College case defining a Corporation) the government now created an artificial insurer called credit. This "scheme" has now collapsed and panic has set in. Some feel that more credit disguised as "private-Public Investment" (risk) will solve the problem. A few others feel that it is time to take a pause and recognize the Free Business Enterprise System and the Business Cycle for what it is. The only way to avoid depression in this system is to regulate the system (without government intervention) and outlaw unreasonable risk (investment). One of the major unreasonable investments is the Conglomerate Corporation. a monster that manipulates the wealth of many by a few to reward the few. As a starter, these monsters must be divested into manageable units that would be unable to bring the economy to its knees. Of course, the return of integrity to Big Business and Government would be an enormous help as well.
The ingenious Free Business Enterprise system that has produced the wealthiest nation in the world is destroying itself with the ambition to become perfect and to make the world perfect as well.
The free market system, which was a plan to distribute the wealth of the material world by non-violent means, has expanded and conquered the frontiers into outer space,and may have extended itself beyond the gravity of reality.
The "Free Market" was built on progress through risk. Forces competed with each other to explore and exploit the unknown. In this environment some forces fail and the total market tends to over produce causing a Recession; that could lead to a Depression. The process developed into what has been called the : Business Cycle.(ie Progress, Recession, Depression and Recovery)
Depression has been recognized as a "bad" thing, and the forces desired to "insure" against this dreaded disaster. Investment (Risk) was joined by the other "eye" of the system, Insurance, to lead to the promised land of constant prosperity.
In the first Depression, the banks failed and the masses lost their savings, which was determined a national disaster. The FDIC was enacted and regulations were put onto effect to curb irresponsible risks and insure against this disaster ever happening again. This conservatism slowed progress and impatience fought against the regulations to guard against the irresponsible risks. The merger of Big Business and Government (called by many, Government intervention) slowly
eroded rational responsibility until the "brilliant" idea of insuring insurers made billionaires out of some and victims out of the masses. The big question was "who is going to insure the insurers of the insurers? The foolhardy answer was "credit!"
Just as the government had established an artificial person created by law (The Dartmouth College case defining a Corporation) the government now created an artificial insurer called credit. This "scheme" has now collapsed and panic has set in. Some feel that more credit disguised as "private-Public Investment" (risk) will solve the problem. A few others feel that it is time to take a pause and recognize the Free Business Enterprise System and the Business Cycle for what it is. The only way to avoid depression in this system is to regulate the system (without government intervention) and outlaw unreasonable risk (investment). One of the major unreasonable investments is the Conglomerate Corporation. a monster that manipulates the wealth of many by a few to reward the few. As a starter, these monsters must be divested into manageable units that would be unable to bring the economy to its knees. Of course, the return of integrity to Big Business and Government would be an enormous help as well.
Friday, March 27, 2009
IT'S THE TAXPAYER, STUPID
Is the government expanding the role of the FDIC to become the new AIG? The FDIC currently insures Deposits in Banks up to $250,000. The new proposal wants to expand the FDIC's role to include insuring high risk loans to public-private investment funds. If the Goverment guarantees against any loss on these high risk investments, who will bear the risk? Of course, it's the taxpayer, stupid.
Proponents of this "plan" claim to be able to "regulate" these high risk investments, but the only way to regulate high risk is to lower the risk. Schemes like this (to insure the insurer) are either wishful thinking or attempts to confuse the potential victim, the taxpayer.
Proponents of this "plan" claim to be able to "regulate" these high risk investments, but the only way to regulate high risk is to lower the risk. Schemes like this (to insure the insurer) are either wishful thinking or attempts to confuse the potential victim, the taxpayer.
Wednesday, March 25, 2009
IS THE HONEYMOON OVER?
Did the President's March 24th Press Conference indicate that his honeymoon is over? Although the President held his ground against some very challenging "questions," Mr. Cool wasn't his coolest in response to a "question" that criticized his two day delay in reacting to the outrageous AIG Bonuses. "I like to know what I am talking about before I talk," does not quite squelch the criticism.
The AIG Bonus problem is not a simple issue. While the bonuses may be ethically wrong, they are legally right, especially the ones contracted well before the "Bailout" was considered. To break the law just because you are in command goes back to the criticism of the Bush/Cheney Administration that this Administration was supposed to change.
The problem lies in the quick enactment of a bailout before THE LAW, and all contingencies and possible abuses were addressed and considered. The panic button usually creates more problems than it solves. Perhaps knowing what you are doing before you do something is a good policy after all.
Perhaps a pause to deal with a problem as it presents itself is a better approach than trying to solve the problem so it won't errupt in presumed disaster. Although quickly trying to avert a disaster may sound like the simplest approach, it may be foolhardy in a complex issue like the AIG affair.
Simply stated, AIG has insured the insurers of loans that are defaulting. Instead of a shot gun approach at the top, perhaps a rifle shot at the bottom might be more effective. The government might put a moratorium on foreclosures and 'responsibly' bailout foreclosures that meet established criteria for bailout. Let the Insurers perform their legal responsibility under their contracts and then let the Insurers seek damages under their contract with AIG. If AIG cannot meet their contract obligations, perhaps they should go bankrupt and remove a cancer in our economic system.
Those who are not held responsible for their actions tend to act irresponsibly! Passing on the responsibility for insuring loans to another insurer only appears to relieve the insurer from the responsibility that they contacted to accept. UNDER THE LAW,THIS DOES NOT LEGALLY RELIEVE THEM FROM THEIR RESPONSIBILITY! BAILOUT AT THE TOP VIOLATES THIS PRINCIPLE OF LAW.
ie. Under the law, if a company has an insured liability, they are responsible to the injured party for the determined loss, AND THEN the insurance company reimburses them to the extent of their insurance contract. If the insurance company secures an insurance company to insure them against losses that they cannot cover, it does not negate their responsibility to honor their contract with the company they insure; it simply gives them the right to reimbursement for their losses to the extent of their insurance contract. You can't just pass the buck, legally. (This is available to politicians only)
Unfortunately, first the Bush Administration and now the Obama Administration have ignored the law and have made panic attempts to solve the crisis in an illegal manner. Perhaps the law is not adequate, but it is the law, and perhaps attempts should be made legally until we find that we must break the law to survive. (Rob the bakery to keep from starving?)
(To my friend Marty)
The AIG Bonus problem is not a simple issue. While the bonuses may be ethically wrong, they are legally right, especially the ones contracted well before the "Bailout" was considered. To break the law just because you are in command goes back to the criticism of the Bush/Cheney Administration that this Administration was supposed to change.
The problem lies in the quick enactment of a bailout before THE LAW, and all contingencies and possible abuses were addressed and considered. The panic button usually creates more problems than it solves. Perhaps knowing what you are doing before you do something is a good policy after all.
Perhaps a pause to deal with a problem as it presents itself is a better approach than trying to solve the problem so it won't errupt in presumed disaster. Although quickly trying to avert a disaster may sound like the simplest approach, it may be foolhardy in a complex issue like the AIG affair.
Simply stated, AIG has insured the insurers of loans that are defaulting. Instead of a shot gun approach at the top, perhaps a rifle shot at the bottom might be more effective. The government might put a moratorium on foreclosures and 'responsibly' bailout foreclosures that meet established criteria for bailout. Let the Insurers perform their legal responsibility under their contracts and then let the Insurers seek damages under their contract with AIG. If AIG cannot meet their contract obligations, perhaps they should go bankrupt and remove a cancer in our economic system.
Those who are not held responsible for their actions tend to act irresponsibly! Passing on the responsibility for insuring loans to another insurer only appears to relieve the insurer from the responsibility that they contacted to accept. UNDER THE LAW,THIS DOES NOT LEGALLY RELIEVE THEM FROM THEIR RESPONSIBILITY! BAILOUT AT THE TOP VIOLATES THIS PRINCIPLE OF LAW.
ie. Under the law, if a company has an insured liability, they are responsible to the injured party for the determined loss, AND THEN the insurance company reimburses them to the extent of their insurance contract. If the insurance company secures an insurance company to insure them against losses that they cannot cover, it does not negate their responsibility to honor their contract with the company they insure; it simply gives them the right to reimbursement for their losses to the extent of their insurance contract. You can't just pass the buck, legally. (This is available to politicians only)
Unfortunately, first the Bush Administration and now the Obama Administration have ignored the law and have made panic attempts to solve the crisis in an illegal manner. Perhaps the law is not adequate, but it is the law, and perhaps attempts should be made legally until we find that we must break the law to survive. (Rob the bakery to keep from starving?)
(To my friend Marty)
Thursday, February 19, 2009
WE ARE NOT COWARDS!
Mr. Attorney General, we are not cowards, we are simply a nation of selfish individuals; the degree of selfishness varying from individual to individual.
There are many negative terms to describe Americans; such as Hippocrates and bigots, but we are also industrious and generous.
We completely distort the concepts of Democracy and Freedom. We are not a Democracy of the people, by the people and for the people. We are a Republic managed by the elite in a society favoring the elite.
Freedom is a myth. Our freedom depends upon the restrictions of others. Consequently the freedom of others depends upon our restrictions as well. Our goal in life is to get more than we have to give. The Economy is our basis of life. All else is window dressing. Every business transaction is made to gain a profit; to receive greater value than the value of what we give. Guilt sometimes makes us charitable.
We are not ideal, Mr. Attorney General, but we are not cowards. Regardless of race, religion or creed, we have limitless courage and we will tackle any goal and perform any task to satisfy our limitless desires.
There are many negative terms to describe Americans; such as Hippocrates and bigots, but we are also industrious and generous.
We completely distort the concepts of Democracy and Freedom. We are not a Democracy of the people, by the people and for the people. We are a Republic managed by the elite in a society favoring the elite.
Freedom is a myth. Our freedom depends upon the restrictions of others. Consequently the freedom of others depends upon our restrictions as well. Our goal in life is to get more than we have to give. The Economy is our basis of life. All else is window dressing. Every business transaction is made to gain a profit; to receive greater value than the value of what we give. Guilt sometimes makes us charitable.
We are not ideal, Mr. Attorney General, but we are not cowards. Regardless of race, religion or creed, we have limitless courage and we will tackle any goal and perform any task to satisfy our limitless desires.
Friday, February 13, 2009
FINE TUNING THE STIMULUS
If the bailout for Free Business Enterprise Businesses is to save jobs, then shouldn't funding to these businesses be limited to Payroll expenses?
And, if the bailout for Banks is to stop the foreclosures, why not limit the funding to the interest on foreclosed loans with interest set at the current interest rate? Banks cannot foreclose on a mortgage if interest payments are made, and if the mortgagee cannot afford the interest on the mortgage, they are in a house that they cannot afford.
Responsible credit regulations should be enacted and enforced to prevent a credit crisis in the future. Responsible regulations for corporations should be enacted holding Executive Officers responsible for irresponsible actions that lead to a similar crisis in the future.
Too Simple???
And, if the bailout for Banks is to stop the foreclosures, why not limit the funding to the interest on foreclosed loans with interest set at the current interest rate? Banks cannot foreclose on a mortgage if interest payments are made, and if the mortgagee cannot afford the interest on the mortgage, they are in a house that they cannot afford.
Responsible credit regulations should be enacted and enforced to prevent a credit crisis in the future. Responsible regulations for corporations should be enacted holding Executive Officers responsible for irresponsible actions that lead to a similar crisis in the future.
Too Simple???
Thursday, February 12, 2009
"JOBS"
The cry for "jobs" seems to be the accepted solution to the current crisis facing our nation today. Perhaps, "career opportunities" would be a better solution.
At first glance, it may seem to be a small play on words, but a more serious thought might show the difference to be enormous.
A job is work to do to make a living. A career opportunity is work to do that will make living better. The difference lies in the attitude of the worker. The businessman who works to simply make a profit has a job. The businessman who works to give a service to others has a career. The waitress who works for tips, has a job. A waitress who works to help provide a pleasant experience for the customer has a career.
An amazing difference in this change of attitude is that careers not only give a greater satisfaction for life, they tend to yield greater monitary income as well.
The "Green Jobs" alleged to be created by the Obama Administration might better be promoted as "Career Opportunities" to promote the desired spirit for this program.
At first glance, it may seem to be a small play on words, but a more serious thought might show the difference to be enormous.
A job is work to do to make a living. A career opportunity is work to do that will make living better. The difference lies in the attitude of the worker. The businessman who works to simply make a profit has a job. The businessman who works to give a service to others has a career. The waitress who works for tips, has a job. A waitress who works to help provide a pleasant experience for the customer has a career.
An amazing difference in this change of attitude is that careers not only give a greater satisfaction for life, they tend to yield greater monitary income as well.
The "Green Jobs" alleged to be created by the Obama Administration might better be promoted as "Career Opportunities" to promote the desired spirit for this program.
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