Posting opinions, letters and correspondence from far and wide. Even some to/from my elected representatives.

Tuesday, September 30, 2008

News Flash - Congress indicted for stock manipulation and racketeering.

If the United States Congress were Directors or Executives they would presently face numerous lawsuits from angry share holders and would face investigations by the FBI, the NYSE and the American Bar Association (to name a few). They would then quickly find themselves in front of Congressional hearings, would be subpoenaed by Grand Juries, hauled into courts and ultimately imprisoned and fined for these outrageous manipulations of the stock market and real estate business. And then they'd be disbarred.

One question, what stocks did our learned American Congressmen and women buy today?
A letter to my Congressman

Dear Congressman Shays,

I received your email this morning regarding the failure of HR 3997. Please find my response below.

The sky is not falling and the "greed of Wall St" is not nearly as systemic nor as widespread as the corruption in Congress has been over the last eight years (eight years that I've witnessed as an immigrant, now proud US citizen). Henry Paulson himself has been predicting calamity. Our President has been chiming in with predictions of dire straits. Nancy Pelosi appears next to Barney Frank and the world as we know it is about to end - apparently. But it won't end, not today, not tomorrow, not even six months from now - if only Congress and the President would allow the free market economy to make the adjustment that it needs to. People are not going to starve because they can't buy a flat screen TV, instead American consumers may actually end up paying off some of their credit card debt. Yes, people will be hurting. Yes, the middle class is in for austere times. No, they are not going to have problems getting their pay check.

But they will if our Government continues to predict doom and gloom. I would suggest that quite a bit of the downward trend in the markets is caused by our elected representatives constant, loud and shrill - doom and gloom. And the people will be hurting even more if a fiscally irresponsible "bail out" gets enacted as law.

You say it was unfortunate that the bill failed to pass the house. There are millions of us that are happy, if not overjoyed that it failed to pass. You say it will be introduced again. I would suggest that millions will make sure that bill doesn't get passed either. You say you are determined to be part of the solution. I say you are making the problem worse with all of this spreading of fear, uncertainty and doubt. You and your brothers in Congress should be ashamed of your shoddy and shabby handling of our economy. And, you are making it worse by proposing tax and spend policies that will hurt the very citizens you are all pretending to help.

You blame Wall St tycoons who have no ability to write or pass laws. How dare you blame them when this mess was created by over regulation and interference with the real estate market place. It is people like Barney Frank that should be asked to resign without pay. People like Chuck Schumer. People you work with. Christopher Dodd as well. Using "Wall St" as a punching back makes for nice political boilerplate but the large constituency of voters are neither naive nor ignorant of the canard that it really is. You mentioned "letting the market do it's wonders" and you're right about that. Let it do its wonders. Our recession will be shorter and less painful if you and your partners in mismanagement in Congress let it work.

The Federal Government does have tools at its disposal that are constitutional and worth doing. You and the Republican party should be advocating the following:

Reduce the capital gains tax (don't give me the "there is no capital gains to tax nonsense").
Move forward with a program of tax reductions for all American tax payers. Reducing taxes will save thousands if not more of hard working Americans from facing foreclosure. It will also help small businesses that are not able to access tighter credit by reducing the cost of doing business.
Provide short term money to stabilise monetary policy. Amazingly, that is exactly what the fed's have been doing and, remarkably, it is helping.
Move forward with fiscal policy reforms. Uh, shut down wasteful Government programs and fast.
Repeal Sarbanes Oxley. This ridiculous regulation helps no one but costs billions.
Wind down Fannie Mae and Freddie Mac within ten years. They are both corrupt, were corrupt and always will be corruptible.

Those are the reforms needed to make real progress to correct the errors of the past. Errors that primarily were caused by certain members of Congress who refused to listen to reliable expert witnesses. Now is the time to show the leadership that will also put you in good stead to get yourself re-elected. The electorate understands the engine and mathematics of our economy and the electorate understands that Congress is currently attempting to avoid the blame and are proposing laws that will only make matters worse. Your email provides proof that you would rather harm our economy rather than take the more difficult path of minimising Government involvement in our economy. Big Government will fail us and it will fail you too.

I urge you to consider alternative fiscally and economically responsible remedies and reconsider your position on this very serious matter.

Best regards,

Mike Hawkins

Monday, September 29, 2008

Harping on about Private Equity firms.

I've been saying over and over now. But by crickey, I am gonna say it again. This great nation of ours is swimming in dollars, they just happen to be locked up within private equity firms and as the big investment banks go looking for valuable assets to sell they are going to find more and more private equity firms snapping up those profitable units as fast as the House can say "the sky is falling". And lo and behold, stuck between the notes on the DIJA, NASDAQ and others falling today what should pop out of the financial wires but that:

Lehman Brothers (LEH) reached an agreement to sell its Neuberger-Berman asset management unit and other businesses to private-equity firms Bain Capital and Hellman & Friedman for $2.15 billion. While the deal hands over control of Lehman’s asset management unit and private funds investment group, it doesn’t include the bank’s private equity businesses. Bain and Hellman & Friedman will have equal control of a newly created investment management company that will feature Neuberger as its largest unit.

And also that:

Citi Swallows Wachovia

In the mean time, Wall Street was clearly spooked after Wachovia (WB: 1.84, -8.16, -81.60%) nearly failed and European banks came under fire.

Now on top of that comes this interesting news about Fannie Mae:

Fannie Mae (FNM: 1.56, -0.27, -14.75%) and Freddie Mac (FRE: 1.80, -0.20, -10.00%) disclosed on Monday they were subpoenaed earlier this month by a federal grand jury investigating their accounting. The mortgage giants that were seized by the government also said they are subject to an SEC investigation. Fannie and Freddie said they intend to cooperate with the investigations. Shares of Fannie and Freddie were up sharply on the day.

Now remember how Fannie Mae is the unlucky devil that did what the Government asked it to do? Let me refresh your memory a little. The Congress and in particular Democrats and Republicans (yes both) basically told Fannie "don't say no when handing out loans or being asked to underwrite loans". Well, that kind of executive direction got them into a little trouble. So now, when a federal grand jury decides to subpoena good ol' Fannie their stock price does what? Why, it goes up of course, because finally there will be the harsh light of accountability shed on their shady dealings. Let's not mention the eye popping idea that a quasi private/public institution could pay lobbyists and extend benefits to bank associations as "grants" (see Chuck Schumer/Jesse Jackson HELP program for example).

The main point here is that, the banking sector is NOT failing. It is simply readjusting to the now very well known realities. That is, the banks mismanaged their affairs and now the "predatory buyers" (wait for some Democrat to call them that soon) are buying them up because they will make great assets in the future.

Now the next point, left a message with Christopher Shays this afternoon congratulating him on making the right decision to vote no on this ridiculous socialist program and Bank shakedown of the American people. Now it is up to the house Republicans to reset their agenda to bring forward a stimulus package based on Milton Friedman free market principles. And it is really quite simple.

i) reduce the capital gains tax.
ii) move forward with a program of tax reductions for all American tax payers.
iii) provide short term money to stabilise monetary policy.
iv) move forward with fiscal policy reforms. Uh, shut down wasteful Government programs.
v) Repeal Sarbanes Oxley.
vi) Hey, let's throw in "wind down Fannie Mae and Freddie Mac" within ten years.

Because we ARE going to enter a downturn in the American economy. The only question is: how long and how deep will our Government make it?

UPDATE: Oh dear, it turns out Christopher Shays voted FOR the bail out. Now I have to make sure that he is never able to hold public service office again! Thanks for nothing Chris.