October 4, 2008
Stop The Presses
Vol. 3 Issue 17
I was involved in a conversation the
other day with regard to the economy and
what has been happening on Wall Street. The
discussion started to heat up when someone
said, those dumb Republicans, did you hear
the news? "They voted against the bailout
just because Nancy Pelosi insulted them and
blamed George Bush." I said, "I guess you
didn't listen to the same story I heard.
What I read and heard was completely
different. I read the words between the
lines the ones The Times did not print. It
is called the truth." Mark Twain once said,
"If you don't read the newspapers you are
uninformed. If you do read them you are
misinformed."
It was not Pelosi's stupid remarks it was
the pork sandwich she had for lunch. The one
that had $25 Billion for the auto industry
and the 20% for ACORN a community based
group whose mission is to get government
funding for poor people to buy houses. The
same poor people whose kids are running
around in $200 sneakers, ride $400 bicycles
and watch 60-inch plasma TV's at home. The
current bill that was passed is so full or
pork it would make a pig squeal just
thinking about it. You can read it here: Top
Ten sweetners in the bailout bill. John
McCain should have voted no on it and
explained why during this Tuesday nights
debate.
So how do we stop the "Terror on Elm
Street," (Wall Street is in its own panic
mode)? The people on Wall Street know what
it takes to get back in the race they have
been playing the game for years. The problem
is that you may not know how we got into
this mess.
The investment houses have been buying
mortgages from mortgage brokers. Mortgage
brokers are only salespeople who sell you a
mortgage or write you a loan. The mortgage
is then sold to the investment firm that
buys it for a small fee. The investment
house is relying on the salespeople to do
their due-diligence in ascertaining that you
the borrower have the ability to pay it
back. As long as all the borrowers make
timely payments on their loans, everyone is
O.K. However, when those boutique mortgages,
we call adjustable(s), adjusted and
increased monthly payments, people could not
make the payments.
Here is a personal true story. During the
late 1970's I was earning about $20,000 a
year trying to support a family of four. My
wife and I both returned to college and
trying to balance a family budget. Many
times, it was like walking a tightrope.
There were many times I needed $10 or $20 to
get us through the week. Here is how I would
borrow interest free money. Monday I would
cash a $20 check at one supermarket knowing
that I did not have the money in my account
to cover it. On Tuesday, I would cash
another $20 check at another supermarket and
quickly deposit it to cover Monday's check.
Wednesday it was the same scenario at a
third store. I kept doing it until payday
when my paycheck covered the last $20 check.
Wall Street does the same thing except it is
not $20 it is Billions and they do it every
day. It is called catching the float. On the
craps table in Las Vegas it is called a come
bet. Here is how it backfires; someone does
not make the last payment. In this case, it
is thousands of little payments not being
made and the float starts to sink like a
rowboat full of holes. And, who is not
making those payments? The people whose kids
are running around in those $200 sneakers,
who should not have been allowed to buy a
house in the first place.
FYI many of those missed payments are greedy
speculators who bet wrong. They are not
being thrown out of their homes. They are
walking away from bad investments. It is
called "Tough Luck." Now the Congress wants
to practice "Tough Love." Tough on the
taxpayer but show your love to the
investment houses who were stupid enough to
buy those bad loans.
Maybe it is fear. You see some of those
mortgage-backed securities were purchased
overseas. It was reported that the Saudi's
purchased over $150 Billion and England,
France and Germany purchased another $150
billion. Is Congress concerned if we do not
bail out Fannie and Freddie and let them go
under, the Saudi's will raise the price of
oil to make up for their losses. Maybe, the
concern lies in needing European support,
that may not be there when we surge the
battle in Afghanistan. Therefore, the
question is, how much are we bailing out
America as compared to the rest of the
world.
Now that you know how it works, stop paying
attention to the horror stories in the
media. If all you do is read the newspapers
or listen to the media who keeps repeating
to you that you are about to lose your
pension or your job and may even lose your
house. Maybe so, but it wasn't George Bush's
fault as Nancy Pelosi so 'pomperoneously'*
remarked in her rehearsed speech.
As I wrote in my previous Op-Ed article,
"There's A Hole In The Bucket, Dear Liza,,"
I stated all the warnings that the Bush
administration, John McCain, Alan Greenspan
and other Republicans gave to the Congress
about the problems with Fannie Mae and
Freddie Mac. These warnings were ignored by
the likes of Rep. Barney Frank, Sen. Chris
Dodd, Rep. Maxine Waters, et al, Democrats
all.
However, all I hear is The Times said this
and Newsweek said that and NBC and ABC and
FOX, Etc, Etc.
So maybe the answer is let's not listen to
the news for a week. Let us turn them off,
Stop the Presses; I promise you if you did
not know what happened, the world around you
would not change. However, what will change
is you will be a lot less anxious.
Think of it like going on a Moose hunt with
Sarah for a week, when you come back the
world will still be here.
*Pomperoneously
- (Adj.) The art of sounding arrogant
through lies or misspeaking
And, that is my opinion.
Michael Solomon
If you want to
help restore sanity to America, join the
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