Obama, Slam Those Salaries, Now!

I knew at least two months ago that the CEO’s and other fat cat exec’s would find a way to circumvent the ceiling on their bonuses, their income, and get the money.  Quelle Surprise!

They made over 100 of the upper echelon in one company “partners” to get around this,in others,  they just thumbed their noses at the taxpayer, the government and took the money anyway.

I have yet to see anything to get those damned Credit Default Swaps under control, and with the serious lack of legal recourse, the fat cats are eating out on the taxpayers of the entire world. Remember, most of the banks do have international branches or connections.

President Obama, put those ceilings into law, harsh penalties if they violate, and make damn sure they do give you full disclosure on every damn cent of taxpayer monies they are spending. No excuses, no hiding, nadda.

If necessary, put a full investigation using every federal agency, including the IRS, the FBI, and the Wall Street agencies. Stop this abuse of trust now.

As for our own government here, there is an equally apalling lack of investigation, oversight, accounting, so I can gather the same is happening in Japan, Korea, the U.K., Belgium, Germany, and virtually every country tied to this disastrous mess.

Here is where diplomacy comes in, there MUST be an international cooperation, an international accounting, and definitely an international effort to kick these guys where, obviously, they need it, in the wallet.

Damn this is a mess!

Savings and Loan Fiasco and Familiar Names, Bush and McCain

I don’t live in the US, so I was not totally familiar with the Savings and Loan events of a few years ago. So, I did some looking around and voila, some familiar names show up!

McCain pressured regulators for Keating, Lincoln Savings and Loan

It seems that the current candidate for president was part of the problem in Arizona and the Savings and Loan fiasco, as was a member of the current president’s family. McCain was “rebuked by the Senate Ethics Committee for excercising ‘poor judgement’ for intervening with federal regulators on behalf of Charles Keating, head of Lincoln Savings and Loan”

This certainly explains why McCain is not in favour of any regulations or laws covering monetary transactions. Yeah…………..just what the US needs at this point, someone who was in the inner circle of the Lincoln Savings and Loan fiasco.

The second person is Neil Bush, with the Silverado Savings and Loan, a member of the Bush family currently in power. No wonder I had a very strong feeling the last person to trust with making decisions about this current “crisis” was not able to make fair or even dispassionate decisions.

Then, I decided to follow this down the line, and voila, the same mechanisms, the same type of fraudulent practices are being used again, so I now KNOW this has become a business practice, with the names of the corporations the only thing that did change. Bloody wonderful.

So, twice the financial world has abused the people in the US, twice the taxpayers are being TOLD, not asked in a referendum, to cover the butts of the very people who have just gone from scam to another.

Time for the US to finally realize they do have the vulnerability to these practices, to put into place some strong laws, not regulations, and to limit the way some people hide the scams.

For crying out loud, how long will people tolerate this crap? It has now become the Paulson SEC-FED Septic Bank, with all the crap and paper being flushed out of site, like a drug dealer just about to be caught with the goods.  To carry this further, time to flush out these scammers and put them completely out of business, literally. Remove their licenses, remove their positions from corporate boards, remove them from any and all access to monetary funds whatsoever.

Tough Times

Most people know the news in the US and around the world has not been good this week.

Well, it seems that some banking institutions have done what most of us know is stupidity displayed.

I had to read several explanations to understand what in hell was going on.

So, I am going to try to put it into simple terms here, if only to clarify my own thinking.

A friend approaches me for some money to borrow. (read bank here)

I have some money set aside, but not quite enough to cover the entire loan. (read liquidity in bafflegab banking terms)

I ask why they want to borrow, and they say , ” Well, ya see, I just started working (read they are a bit of a risk to repay) and I want to borrow the money for a car.”

Now, if I were one of the banks that went under, at this stage, I would not even check out what make, model or year, but put my own interests (pun definitely intended here) and my own greed into play.

“Sure, I can lend ya the money, and you will have to just pay me a very low interest, but if you don’t pay it back ( I will use weeks here to represent years) then after 2 weeks the interest changes. I won’t bother to tell you right now what will happen, we will see then.”

Friend is anxious enough to borrow, to have the car for ego buffing, and has no intention of saving up for the same car. So, they agree.

We sign off an agreement.

What my friend does not know is that I don’t have all the money.

I get another phone call, asking to borrow money too!

So, I make a call.  Someone I know is interested in being a silent lender (read investment banker), and has taken steps with an insurance company to cover bad debts, sort of like betting that the debts will not get repaid.

I mention I have two people who want to borrow, but I am not “liquid”, and would my “investment” person back me with some funding. Of course they want interest on their money, but again, they have taken out insurance against failure. Either way they get paid.

What I don’t realize or am told is that the “investor” has no money at all, but they are “selling” this debt bundle to someone else! (read insurance or another investment dealer with no regulations overseeing all of his or her finances)

Sound complicated?? Yep, it is.

BUT! Here is the catch in the whole thing. The investor really does not have the money, the backer of the investor uses some paperwork to show a bundle owing, but has no money invested.

So, where does the money come from for me?

On a note to a bank from the backer.

The money is sent to the backer, then to the investor, then to me, then to the friends who borrow.

Is the picture getting clearer now?

Well, surprise of all surprises, friend pisses off his boss, loses the job, and instead of selling off the car, approaches me.

I have two choices, here. Take possession of the car (which I now find out is basically a wreck) and try to get what I can from it, or demand payment.

Friend cannot repay, so I am in a financial bind here (banks over-extending on sub-prime or high risk loans) so I talk to my silent friend (investment banker) who has the insurance.

But…. the debt is higher than the collateral is worth (wrecks go to the wreckers, right?) and the insurance does not cover the entire debt.

So… he goes to the backer!

Backer has taken out a paper on the debts and now is finding out that they should have investigated the original worth of the collateral and the ability of my friend, myself, my investor, to repay, but they did not.

The backer’s bank calls in the papers, the investor is facing some serious money problems, and I am now broke!

I can seize the car, and put it into the auction, but after doing that, I get maybe 10 cents on the dollar.

And, of course, my friend is out a car, has to declare insolvency (tells me they are totally broke, again) and I get told to sell of what I can to cover the debt I owe the investor. Damn!

So off I go to the pawn broker and sell off something.

Well, all is not rosy for the investor, because they have to pay the backer and I am broke too. Sorry.

They end up selling off some items because the backer has charged them interest on a larger amount, because the insurance company put the “investor” into a higher risk category now.

They end up with some money, the rest of us………. go to second jobs.

Basically this tale is what happened on wall street, with secret loans and bundling of loans to another level, with some of the insurers turning around and getting papers on the debts.

I did not check out the car, did not check out how often my “friend/s” repaid their loans or even how many hours they would work!

Neither did my “investor” , nor the backer, nor the bank who drew up papers check out the risk, the collateral worth, the trustworthiness of the layers below them.

I paid all my debts, so I would be a good risk, but I put my money on a debt that was high risk with someone who had trouble balancing a bank cheque and balance each month.

But, I put my own financial stability on very shakey ground.

Here is the bottom line.

Banks in the US should have always put money into savings, like I did, but neither of us put ENOUGH money into savings.

Instead we relied on credit, lines of credit and the greed.

If a bank is stupid enough to lend money without knowing the people, without checking out the area of town they people are buying houses in, and without having a truly secure basis for understanding the loans (read mortgages) here would be paid, then as far as I am concerned, they should get slapped.

Now, remember the original conversation?? Where I did not happen to mention that the interest would change to a definite amount??

Bubble interest, rising rate, whatever you call it, the banks who lent money to a hell of a lot of people did not happen to mention that the interest rate on the mortgages would rise, significantly.

The analogy here would be that I did lend my money at 3% for 2 weeks, then, if the debt was still there, no matter that it was all of it, or some of it, I would demand repayment at 8%.

Now my friend was budgeting on his repayment for 3%, right? I did not disclose that I would basically up the rate to over double the rate in 2 weeks!

No wonder he could not repay it! He overextended his own money, in the first place, then I hit him with a huge jump in payments.

This is why so many people got their home foreclosed on.

The banks used bubble mortgages on the loans.

So, yes, the shit has hit the fan, but perhaps the whole story boils down to a very simple, very obvious thing.

IF YOU CANNOT BUY IT NOW WITH CASH, YOU CANNOT BUY IT WITHOUT RISKING SOMETHING