Friday, September 19, 2008

What does it all mean?

It is striking that big Wall Street firms like Lehman Bros., AIG, Merrill Lynch, and others have failed or are in big trouble. All this appears to come from the collapse of housing prices. What's even more troubling is that many of these firms are being bailed out by the US government.

I was shocked to hear of the collapse of Fannie Mae and Freddie Mac. I don't know alot about "Freddie" or "Fannie" other than they are partly controlled by the government, and they underwrite about 50% of all mortgages in the US. And they failed? That's got to be a big problem.

But what does it all mean for us? I don't own stock in any of these failed companies. I've always had a fixed rate mortgage. My credit card debt is low. How will I be affected?

I know that when the stock market goes down, my 401k takes a hit. But since I don't actively trade that money, I just leave it alone and eventually the value comes back. At least it always has in the past. The stock market goes down then back up. Unless there's a "crash", I'm not too worried. Maybe I'm naive.

I think the more direct consequences of all this financial news is that the US government takes on more and more debt. What does the government do about debt? Simple. Print more money. That works for awhile until we get to a point that printing more money doesn't work. Inflation sets in and consumer goods began to cost more and more as interest rates go higher and higher. Remember the Carter years? We don't want to go there.

Here is an explanation from Neal Boortz as to how we got into this mess. While reading his article, I remembered the headlines he refers to and the cry to get loans out to more americans.

"...years ago the buzz-word in the media was “redlining.” Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd “redlining” claims. Frankly, the claims that evil mortgage lenders were systematically denying loans to blacks and other minorities were a lot sexier on the radio than my claims that when credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage – but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

Who was the African American CEO of Fannie Mae during this time. Franklin Raines, who is now one of Obama's advisors.

"In 1991-1996 Raines became Fannie's Mae's Vice Chairman, a post he left in 1996 in order to join the Clinton Administration. In 1999, he returned to Fannie Mae as CEO, "the first black man to head a Fortune 500 company."

So here's the bottom line as I see it. CEO's like Raines and others loosened the requirements for mortgage lending in an effort to get more loans to minorities and lower income folks. Then greedy corporate types took advantage of the loose lending practices to package together all sorts of investments that were sold to investors around the world. All of it based on weak loans. The loans collapsed and the investments based on those loans became worthless. The house of cards has fallen down.


Read the rest of the story here:

http://en.wikipedia.org/wiki/Franklin_Raines
http://www.realclearpolitics.com/articles/2008/09/the_rest_of_the_meltdown_story.html
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Who are we?

While visiting the flying W ranch during our Colorado trip, the following was printed on the back of our tickets. It is part of an essay by Dean Alfange. Alfange was an American statesman born in 1899. I liked it enough to add it here.

"I do not choose to be a common man. It is my right to be uncommon. I seek opportunity to develop whatever talents God gave me-----not security. I do not wish to be a kept citizen, humbled and dulled by having the state look after me. I want to take the calculated risk; to dream and to build, to fail and to succeed. I refuse to barter incentive for a dole. I prefer the challenges of life to the guaranteed existence; the thrill of fulfillment to the stale calm of utopia. I will not trade freedom for beneficience nor my dignity for a handout. I will never cower before any earthly master nor bend to any threat. It is my heritage to stand erect, proud and unafraid; to think and act for myself, to enjoy the benefit of my creations and to face the world boldly and say----'This, with God's help, I have done'. All this is what it means to be an American."

Jokes

A Republican and a Democrat were walking down the street when they came to a homeless person. The Republican gave the homeless person his business card and told him to come to his business for a job. He then took twenty dollars out of his pocket and gave it to the homeless person.

The Democrat was very impressed, and when they came to another homeless person, he decided to help. He walked over to the homeless person and gave him directions to the welfare office. He then reached into the Republican's pocket and got out twenty dollars. He kept $15 for administrative fees and gave the homeless person five.
________________________
Hillary Clinton goes to a primary school to
talk about the world. After her talk she offers question time. One little boy puts up his hand, and the Senator asks him for his name.

"Kenny." he replies

"And what is your question, Kenny?"

"I have three questions:

First --- whatever happened to your medical health care
plan?----Second - why would you run for President after your
husband shamed the office?----And third - whatever happened to all those things you took when you left the White House?"

Just then the bell rings for recess. Hillary informs the kiddies that they will continue after recess. When they resume Hillary says, "Okay where were we? Oh, that's right, question time. Who has a question?"

A different little boy puts his hand up; Hillary points
him out. "And what is your question?"
"I have two questions: First - why did the recess bell go off 20 minutes early?
And Second - what happened to Kenny?"

______________________

Some sad news. Over the weekend President Bush's dog, Spot, passed away. The family flew the dog back to Texas and he was buried at the ranch - right next to 10,000 Al Gore ballots.
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"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again." —President George W. Bush, Nashville, Tenn., Sept. 17, 2002
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More Jokes

A young Chinese couple gets married. She's a virgin.
Truth be told, he is a virgin too, but she doesn't know that. On their wedding night, she cowers naked under the sheets as her husband undresses in the darkness.

He climbs into bed next to her and tries to be reassuring. "My darring," he whispers, "I know dis your firss time and you berry frighten. I pomise you, I give you anyting you want, I do anyting - juss anyting you want. You juss ask... so... whatchu want?" he says, trying to sound experienced and worldly, which he hopes will impress her.

A thoughtful silence follows and he waits patiently (and eagerly) for her request. She eventually shyly whispers back, "I want to try someting I have heard about from other girls... Numbaa 69."

More thoughtful silence, this time from him.
Eventually, in a puzzled tone he asks, "You want garlic chicken with steam vegtable?"

______________

So you're an adult, aren't you? Maybe not. Anyway, think you can outsmart a pre-schooler? Take the following test and find out. click on the link below:

Pre-School Test


_________________

Pay Attention
First-year students at Texas A&M's Vet School were receiving their first anatomy class, with a real dead cow. They all gathered around the surgery table with the body covered with a white sheet.
The professor started the class by telling them, "In Vet Medicine it is necessary to have two important qualities as a doctor:

The first is that you not be disgusted by anything involving the animal body. For an example, the Professor pulled back the sheet, stuck his finger in the butt of the dead cow, withdrew it and stuck it in his mouth.

"Go ahead and do the same thing," he told his students. The students freaked out, hesitated for several minutes. But eventually took turns sticking a finger in the anal opening of the dead cow and sucking on it. When everyone finished, the Professor looked at them and said,

"The second most important quality is observation.


"I stuck in my middle finger and sucked my index finger."

"Now learn to pay attention.

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Boudreaux died and was on his way down to Hell. In anticipation, the Devil turned up the thermostat to make it extra warm for Boudreaux. When Boudreaux arrived, the Devil asked, "Hey Boudreaux, how do you like the heat down here?"

Boudreaux says, "Mais, it's just fine. It reminds me of Bayou PonPon in July."

That made the Devil mad. That night, he turned the thermostat up all the way it could go. Man it was hot! When Boudreaux woke up, the Devil asked him, "NOW how do you like it down here?"

Boudreaux says, "Mais, it's fine. It reminds me of August on Bayou Lafourche."

As you might expect, that made the Devil all the more mad. Well, that night, he turned the thermostat down all the way it could go! The whole place frosted over. Icicles started forming from the rafters. When Boudreaux woke up, the Devil asked him, "How you like it NOW, Boudreaux?"

Boudreaux, shivering, through blue lips, says, "Mais cher, I'm one happy Cajun!"

The Devil was infuriated! He yelled, "What do you mean you're one happy Cajun?!!!"

Boudreaux, still shivering says,"The Saints done won the Superbowl!!!"

____________________

A religious man is on top of a roof during the Katrina flood. A man comes by in a boat and says "get in, get in!" The religous man replies, "No I have faith in God, he will grant me a miracle."

Later the water is up to his waist and another boat comes by and the guy tells him to get in again. He responds that he has faith in God and God will give him a miracle.

With the water at chin high, a helicopter throws down a ladder and they tell him to get in. Mumbling with the water in his mouth, the religious man again turns down the help for the faith of God.

So the man drowns. He arrives at the gates of heaven with broken faith and says to Peter, “I thought God would grant me a miracle, but he let down." St. Peter chuckles and responds, "I don't know what you're complaining about, we sent you two boats and a helicopter!"

______________________

A couple drove down a country road for several miles, not saying a word. An earlier discussion had led to an argument and neither of them wanted to concede their position. As they passed a barnyard of mules, jackasses, and pigs, the wife asked sarcastically, "Relatives of yours?" "Yep," the husband replied, "in-laws."
__
___________________

A man called home to his wife and said, "Honey I've been asked to go fishing with my boss & several of his friends. We'll be gone for a couple of days. This is a good opportunity for me to get that promotion I've been wanting, so could you please pack my clothes and set out my rod and fishing box? We're leaving from the office & I will swing by the house to pick my things up" "Oh! Please pack my new blue silk pajamas."

The wife thinks this sounds a bit fishy but being the good wife she is, did exactly what her husband asked. The following weekend he came home a little tired but otherwise looking good. The wife welcomed him home and asked if he caught many fish?

He said, "Yes! Lots of Specs, some Reds, and a few catfish. But why didn't you pack my new blue silk pajamas like I asked you to do?"

The wife replied, "I did. They're in your fishing box."

Abe Lincoln

Abraham Lincoln was a champion who never gave up. His perseverance is legendary. Lincoln was born dirt poor in a log cabin. His formal education consisted of perhaps 18 months of schooling from unofficial teachers. He was self-educated, studying every book he could borrow. He studied law books, took all the necessary tests, and became a lawyer without ever attending law school. Lincoln's road to the White House:

1816 His family was forced out of their home. He had to work to support them.

1831 Started a business but it failed.

1832 Ran for state legislature - lost.

1832 Lost his job – Applied to law school - rejected

1833 Started another business, it failed

1833 Became bankrupt.

1834 Ran for state legislature - won.

1835 Was engaged to be married, fiancée died.

1836 Had a nervous breakdown.

1838 Ran for Speaker of the State Legislature - defeated.

1840 Sought to become elector - defeated.

1842 Married Mary Todd Lincoln, had 4 sons. 3 out of 4 died before becoming adults

1843 Ran for Congress - lost.

1846 Ran for Congress again - won.

1848 Ran for re-election to Congress - lost.

1849 Sought to become land officer - rejected.

1854 Ran for Senate - lost.

1856 Sought the Vice-Presidential nomination – lost

1858 Ran for U.S. Senate again - lost.

1860 Elected president of the United States