New math

We seem to have become a "math challenged" society.  I saw it many times during my 40+ years as a custom homebuilder.  A client would come to me and say they had a hard budget of $    X     .  After learning what they wanted in terms of their amenities, I would advise them they should expect approx    Y    square feet in order to stay within budget.

Then we would all sit down with the architect and they would tell him to cap the footage at    Y    feet, and that they were willing to accept smaller secondary bedrooms, say 100 square feet each...."so make them 12 feet x 12 feet."

That's pretty much how our government has worked for decades.  A succession of congresses and presidents have wanted more than they could pay for.  That's how we got our $19,000,000,000,000 deficit.  We got away with it because no matter how badly we f__ked things up here in America, we were still less f__ked up than the rest of the world.  Smart money "over there" would invest their money here (read:  finance our deficit) because we were still considered a safe, stable country.  It was  all relative.

Tomorrow Prez Trump is going to give Congress his new budget outline.  He's said he was going to dramatically boost defense spending and infrastructure improvement, while not touching Social Security or Medicare.  Oh, and he wants a BIG tax cut, too.  I'm sure the Tea Party is sweating bullets right now!  Their whole reason for being is to cut spending and the deficit, and here a fellow Republican is proposing an increase in both.

"Not to worry" they'll say.  "We're going to increase income by growing the economy by 4% (thereby increasing tax revenues) and by cutting 'waste, fraud, and inefficiency'".

Have you ever heard a competent financial adviser say, "Sure, go ahead and buy that big new vacation house.  You're bound to get a substantial raise any day now.  I hope." And hasn't every president since Calvin Coolidge promised to save money by cutting waste, fraud, and inefficiency?  *still waiting*

The truth is, there are too many powerful constituencies (read: voters, special interests, and campaign contributors) who would scream bloody murder if Congress cut anything that affected them, and if there's anything every congressman loves it's happy voters and campaign contributors, so....

What will eventually happen is there will be, out of absolute dire necessity, a substantial tax increase on the wealthy.  "But how is that fair", the rich will ask?  My answer:  It isn't, but it's sorta like the answer John Dillinger gave when asked why he robbed banks:  "Because that's where the money is."

Fact.

S

Be afraid, a__holes. Be VERY afraid!

Have you heard the funny saying, "Some people are alive only because it's against the law to shoot them"?   I think they were referring to bankers.

Now and then I tend to get off on a vitreol-laced rant about The Banksters.*  Some have asked me why I get my panties in such a wad over them?  Fair question.  Here's why:

Back during the Great Depression thousands of banks went broke, with depositors losing their life savings in the collapse.  The misery was unimaginable.  To restore confidence in the banking system, FDR/Congress did things like create the FDIC (to insure that even if banks go broke in the future, the depositors will still get their money back), and passed the Glass-Steagall Act.  This separated the commercial banks (like the First National Bank of Gooberville) from the investment banks (think Shark Tank in a 3-piece suit).

Commercial banks were regulated, only allowed to loan to solid, credit-worthy borrowers, usually for things like homes or cars or small businesses.  These were usually to locals, and the borrowers were well known to the banks.  It was safe, but not all that lucrative for the bankers. Investment banks could gamble big on just about anything, but with their higher risks (they weren't covered by FDIC insurance) came much higher rewards, too.  This separation worked well, but by the 1980's the banks were wanting to be unshackled, and finally, after intense lobbying, Glass-Steagall was repealed in 1999, and off to the casino they went.

They began an intense home loan campaign, and they had many well-qualified takers.  But after a while all the well-qualified borrowers who wanted a home had a home, so the banks lowered their standards and kept throwing out money.  Not long after, they ran out of even marginally-qualified borrowers, so they just kept loaning to anyone who could fog a mirror.  

If borrowers couldn't afford to make payments based on a 6% interest rate, they gave them a 2% loan....for 4 years, then it skyrocketed to make up for the early-years rate-break.  The banks frankly didn't care if the loans were paid back or not, as they had devised a way to pass along the risk to investors downstream.  They took all their loans, sliced them and diced them, and repackaged them as "derivatives".  These were essentially packages of 10,000 little pieces of 10,000 separate home loans.  

Problem was, the investors they sold them to (often employee pension funds, etc) couldn't easily figure out which homes they had an interest in or who owed them, which is exactly what the banks were hoping for.  The banks LOVE working in the dark!  The senior banksters made literally $$$BILLIONS of dollars for themselves personally with this fraudulent scam!

By 2008 the House of Cards collapsed, and investors worldwide were holding worthless paper.  But....haha....the banks were, too!  They still had BILLIONS in their loan portfolios waiting to be sliced and diced, but the collapse happened before they could get them all out the door.  Oops!

Here's where it gets personal for me:  In their typical bureaucratic knee-jerk over-reaction, the banking regulators pretty much told banks to say "NO" to any real estate loans.  Unless the borrower was solid gold and had a HUGE down payment...NO!  This applied coast-to-coast, regardless of whether an area participated in the fraud or not.  WTF?

Many in my industry were forced to close their doors, losing everything.  (We managed to stay afloat because over the years we had developed nice relationships with many affluent professionals who didn't need any bank financing.)  Plumbers who might once have had 20 employees could then only afford to keep 3 or 4.  The same with electricians, insulation and drywall contractors, etc.  It was to them like Armageddon.  Then it spread to our neighbors who might have needed to sell their homes for whatever reason, but couldn't because there was little mortgage financing available.  They were all defaulting on their homes and cars left and right, EVEN THOUGH THEY HAD NOTHING AT ALL TO DO WITH THE BANKSTER'S FRAUD!

Meanwhile, while millions of middle-class families were being devastated, the guilty bankers still had their ranches in Montana, their estates in the Hampton's, and their penthouse apartments on Fifth Ave.  They still vacationed in Europe, still bought Bentley's, still had their hundreds of millions of dollars hidden away from possible angry plaintiffs. AND  NOT  ONE  EVER  WENT  TO  PRISON!  Their lives didn't suffer one twit!

And they're still at it today.  They still put together fraudulent deals, pricing in a few hundred million bucks to cover the fines they know the Feds will slap on them....not bad considering the few $$$BILLION they scammed in the process!

I truly believe a day of reckoning is coming. At some point in time fed up middle class Joe's and Jane's will invade the Ivory Towers and haul these well-scrubbed criminals off in chains.  And there will be rejoicing in the streets.  :)

S  

*  Not all bankers are Banksters.  The little guys and gals at the local corner bank are NOT who I'm speaking of here.  I'm talking about the BIG BANKS....B of A, JP Morgan Chase, Wells Fargo, Citibank, Goldman Sachs, Capital One, Morgan Stanley, etc.

Ever wonder who "owns" your favorite politician?

Well, now you know.

Here is the list of donations to presidential candidate Super Pacs (minimum $10,000 per donation) for calendar year 2015.  Early in 2015 Jeb! Bush was the anticipated GOP nominee and it showed by the immense war chest he accumulated, 43% of it from Wall Street donors.  By the second half of the year he had fizzled, and he had no new donations.

Next came Tea Party wunderkid Teddy Cruz, the guy who wants us to believe he is NOT part of the establishment....except someone forgot to tell Wall Street, where a whopping 57% of his PAC money came from.  Or maybe they were just being kind to Theodore's wife, who is a partner at Goldman Sachs.  *shhhhhhh*

Surprising (to me at least) is Hillary Clinton, who came in 3rd.  I would have thought she and Bill would have had deeper tentacles into the Banking Class.

Last were The Donald and The Bernie, who had no Super PAC money at all.  And both are VERY serious contenders, which I'll betcha is totally chapping Wall Street's ass!  *snicker*

For those of you who have read my diatribes to date vilifying Rafael Edward Mother Teresa Martin Luther "Ted" Cruz and asked, "Why Scott, what do you mean he's not what he seems?  He's such a nice boy.  Just last week I got a nice note from God Almighty Himself endorsing Ted"....I say wake up and smell the raw sewage!

Only 3 state primaries/caucuses into the campaign, and look what he's already shown us:

Just days before the Iowa race he sent out a very official looking "voter violation" mailer calling out those voters BY NAME who he thought might NOT vote, hoping to shame them into going to the caucus representing him.  It was so official looking the Iowa Secretary of State had to put out a notice saying this was all bogus and did NOT come from the State.

Then just hours before caucus time in Iowa his staff sent out both a written message and a voice mail to their precinct captains telling them to spread the word that Dr Ben Carson would be leaving the race right after the caucus and that a vote for Carson would be wasted, and urge his supporters to come over to the Cruz camp.

So how many of the few thousand vote margin of victory for Cruz in Iowa could be attributed to these dirty tricks?  We'll never know.

Now in South Carolina Teddy ran a TV spot showing a 20-year-old +/- TV interview with the late Tim Russert where Donald Trump said he was "pro-choice", which is the kiss of death to a GOP candidate in evangelical-rich South Carolina.

Except he totally forgot to mention that The Donald had more recently publicly told of his epiphany when he came to become "pro-life", which makes this ad a blatant smear.  Trump's sharks sent a "cease and desist" letter and threatened a lawsuit.  Cruz said "bring it", he wasn't skeered, but in reality he's probably sweating it.  This was an obvious attempt to defame and he knows it.

And just yesterday the Cruz camp photoshopped a picture to seemingly show a smiling Mark O Rubio shaking hands with a smiling Brick O'Bama, celebrating their Rubio-Obama trade pact, never mind that there was no such thing. 

Aren't politics fun?  Every day is SO exciting!  I can't wait to see what dumb thing Trump will say next, or what fraudulent act Cruz will do next.  :)

S

A challenge for the GOP

WARNING!  Back yourself into a corner, sit down, and hold on to your wallets.  The politicians are putting together their budgets. 

The Republican Party has for years called for cutting, or at least not raising, taxes.  It's the glue that holds that party together.  Every two years they run for re-election proudly proclaiming that they didn't raise taxes on their watch.  

They are equally adamant about their opposition to "re-distribution", the policy of taking money from one class and giving it to another.  And the Democratic Party just smiles and lets them get away with it, as they are silent partners in this sham.

Sham?  What ever do you mean, Lowandslow?

It's all about the definition of "tax".  To my way of thinking, taking money from my pocket and putting it in the government's pocket is a "tax".  But what about all those "fees" and licenses we're required to pay?  Whenever the pols need a few more $$$ they just raise "fees", never "taxes".  What's the difference between a "tax" and a "fee"?

Example:  Years ago I had a nursery license (landscape, not the juvenile holding facility kind).  It originally cost me $10 a year.  Then it went to $30 a year, then $90, and when it got to $300 (?) I decided it wasn't worth it and let it lapse.

I'm sure the same can be said for licenses for electricians, plumbers, beauticians, exterminators, etc.  Likewise the cost to get your yearly auto registration and safety inspection has greatly outpaced inflation.  

Wanna go to a state or national park?  It'll cost you more than it did a few years ago.  The list of things we have to pay for that falls outside the traditional definition of a "tax" is long.  It may seem like small stuff, but it adds up.

Oh...and toll roads!  In my state, because the politicians won't dare raise the gasoline tax, which is used to build and maintain public roads, they've come up with a new scheme:  set up new "tollway authorities" and let them build the roads and charge tolls.  Or worse, let them take a road we've already paid to build and turn it into a toll road.  I spend well over $1000 a year on tolls.  Now we're talking BILLIONS!  But at least they didn't raise my taxes.  Whew!

And isn't a "subsidy" really just a "re-distribution"?  When taxpayer money is given as a subsidy to the oil industry, Big Pharma, Big Ag, Wall Street, etc, by my definition that's a "re-distribution".  I once had that money, then government got it and gave it to someone else.  Someone with political connections no doubt.  Same with tax loopholes.  Added up, these total HUNDREDS OF BILLIONS OF DOLLARS!  But it's OK...sleep well...they aren't "taxes".

Here's my challenge for our politicians, particularly the Republicans as they seem to hold all the cards these days:  Declare all things that require us to pay our money to the government a "tax".  No more "fees" or other obfuscated terminology.  

Declare all things that transfer our money to someone else a "re-distribution".  And when one group can avoid paying taxes (formerly known as a loophole), requiring another group to pick up the slack, that should also be declared a "re-distribution".

Now let's see 'em backtrack, declaring tax increases to not be so bad after all.  But...but...uhh...

Here's my point:  Don't bullshit us.  Admit the government needs money to conduct business on our behalf.  But instead of lamenting HOW MUCH we're paying in taxes, concentrate on HOW IT'S BEING SPENT.  Right now we're not getting our money's worth.  

Waaaaaay too much taxpayer money is being wasted on crap stuff that is of minimal if any value, and waaaaaay too much taxpayer money is being handed out as political largess.  The bureaucrats and political insiders are living very well at the expense of the rest of us.

Politicians need to learn that The People won't mind paying taxes IF THEY FELT THEIR MONEY WAS BEING WISELY SPENT.  Right now we're NOT feeling the love.

S

I'm pretty sure Freddie Kruger went on to be a prominent banker

When you were a kid did you ever do something you weren't supposed to and then get caught by your mom (or dad)?  Maybe you were told you could play in your yard or David's yard (next door), but nowhere else, then she came looking for you and found you six yards down the street playing with Tony?  (Or Toni? *wink*)

She was worried and mad, and she spoke to you firmly, or if she was really ticked she would take you home and give you a spanking.  You cried and/or were embarrassed, and you promised to never do it again.  And you didn't, 'cause you knew she was watching, and you certainly didn't want to get caught again.

Apparently today's Ivory Tower bankers were never disciplined as kids.  To this day they do things, get caught, then go back and do them again and again and....

Instead of saying, "I'm sorry, it won't happen again" and then cleaning up their act, they just pull together their top people and brainstorm better, more devious ways to cheat.  To them it isn't a sin to cheat.  It's only a sin to get caught.

Case in point:  The Federales (8 different agencies) are all over JP Morgan Chase bank for screwing over the public in too many ways to list here.  One of the more egregious was a scheme to turn some money losing power-generating plants they owned into powerful "money centers".

....under "pressure to generate large profits," the agency’s investigators said, traders in Houston devised a workaround. Adopting eight different “schemes” between September 2010 and June 2011, the traders offered the energy at prices “calculated to falsely appear attractive” to state energy authorities. The effort prompted authorities in California and Michigan to dole out about $83 million in “excessive” payments to JPMorgan, the investigators said. The behavior had “harmful effects” on the markets, according to the document.

Shades of Enron!  Oh, just FYI, the very senior Chase banker responsible for this fraud, Blythe Masters, was one of the original developers of those "credit default swaps" at the heart of the worldwide economic meltdown of 2008.  

"...and then we wring every last cent we can out of them.  Now, about my bonus..."

See why I'm so down on the big money-center banks?  They are NOT going to change their ways, I don't care how many eyes they have watching them.  That's why these big banks need to be broken up into smaller, more transparent, easier to oversee pieces.  

These guys are just gangsters in high-dollar three-piece suits.

S

Maxine's advice to all politicians...

Had enough politics yet?  The Republicans have been shoveling it deep and stinky this week, and next week it's the Democrats turn.  Oh joy.

I see that Citibank has agreed to pay $590M to investors they defrauded by selling them near-worthless sub-prime loans a few years back.  So they make a couple of billion gross profit, they give back $590M...pretty sweet, huh?  Nowadays banks just figure in fines and lawsuit settlements as part of the cost of doing business.  Just like the light bill and the phone bill.  I guess this is the new Business 101.

Just curious....Do politicians start out in banking to learn the art of sleaze, or do bankers learn how to defraud people with a straight face after doing a stint in Washington? 

All is not lost, though.  There is some good news out there:  It's football season!  And I mean REAL football....college football!  You know, the kind where your team finishes the season with the same players it started with.  Where players play for the love of the game.  And a new car and a couple of thousand dollars a month "laundry money".  *wink*

S

Giddiup cowboy

Yesterday I stopped by my daughter's house for a few minutes and noticed on the way there that all the streets in her community have old west / cowboy names.  This reminded me of a post not long ago by my friend Bruce Taylor pointing out similar street names in the area where he lives. Some examples in daughter Erica's neighborhood:

I guess that's all pretty cool....if you're a fan of those sorts of things.  At the risk of betraying my Texas roots, I must admit I'm not.  I was never into Roy and Dale and Gene and all that "yee-haw" stuff.  

~~~~~~~~~~~~

Some of the things....no, MOST of the things our government does baffles me.  I read today that so far Fannie Mae and Freddie Mac, now wholly owned by the taxpayers after they went bust back in the Meltdown of '08, have spent nearly $100M defending the actions of several of their former executives against accusations of hokus pokus bookkeeping and securities fraud.  And who's making those accusations?  Our government.  We're essentially suing ourselves.

While such "agreements to defend" are common in corporate America, the inspector general of the agency defending the former Fannie/Freddie executives says those agreements went out the window back in '08 when the government took them over, but because we're such nice guys suckers, we're defending them anyway.  And it isn't like these guys are indigent.  Hardly!  (Former CEO Franklin Raines was paid over $90M.)  Let 'em defend themselves!  I sometimes think our government just goes out looking for piles to step in.  *shaking head*

S

Tax cheats

A few years ago I had a Realtor bring to me a Vietnamese couple who owned a liquor store in south Dallas, an area where I'm sure almost all transactions are in cash.  They had a large down payment, and drove a new Mercedes (the BIG one) and a new Toyota SUV.  I later learned the Realtor arranged for them a "no documentation" loan, more commonly called a "liar's loan".  That was an apt description as they only claimed to make, jointly, $13,000 a year.  Hmmmmm.


Just last week I had an oriental gentleman approach me about building him a new, very expensive home, asking if we could have a contract showing a sales price several hundred thousand dollars less than it actually was, with the balance made up in cash.  I refused.  I'm sure he was trying to document that his house was worth less than it actually was (to save on property taxes), or was trying to burn off some unreported cash income, or both.  Either way he was scamming the system, a system that is now in a deep hole, a system that us honest taxpayers are now being asked to sacrifice for.  I also had a man of middle eastern descent (?) recently propose something similar, too.  It seems many of our new immigrants are bringing with them  from "the Old Country" their casual attitude about paying taxes.  Just look at the troubles today in Europe, particularly in Greece and Italy, where tax avoidance is rampant. Believe me, it's not just "over there."


Last Friday the IRS reported that taxpayers here still owed an estimated $385 BILLION from 2006, that's net AFTER the $65 BILLION they collected through audits.  (That could amount to as much as $3-4 TRILLION in lost revenue over 10 years!)  In fact, they admitted they had a voluntary tax compliance rate of only 83%, and I would imagine its only gotten worse these last several years due to the troubled economy.


So let's review:  Our government is a TRILLION dollars a year short of break even, they're cutting back on everything from social services to military spending to paper clips, yet 17% of all taxes owed go uncollected.  Considering how much (probable) tax fraud I've seen right here in my own back yard, imagine how much goes on all across the land?  We're punishing the good, honest folks who pay their taxes on time by cutting back their services or threatening to cut back their Social Security, Medicare, etc, while the cheats are living the good life.  And don't even get me started on the massive tax breaks the rich have bought for themselves.  Grrrr!


OUR SYSTEM ISN'T WORKING!  No band-aid is going to fix it.  We need some extreme, deep changes.  And just replacing  a figurehead at the top isn't going to make a hill-of-beans difference.  The person at the top doesn't control the system; the system controls devours them.  Remember these words.  


S 

"Would you like fries with that, sir?"

I read an online article yesterday about people nearing retirement who are finding their world turned upside down because of their homes.  They had assumed they would retire, sell their homes and use the money for a leisurely retirement, maybe do some traveling, etc.  Those plans are now out the window for many of them.


Because of the financial mess we're now in they either can't sell their homes because of slack demand, competition from millions of super-cheap foreclosures, or because they owe more than their house is worth, or all three.  They're stuck with homes they often don't need any longer or can't afford because their scaled back retirement won't cover their mortgage.  They're screwed!


I'm SO lucky to have seen this coming in time for us to sell our home, make a decent profit, and preserve the opportunity for a modest retirement.  At least we have options, something those people mentioned in the article I read don't.


The sad irony is those crooks that masterminded and profited from the phony financial bubble and their paid political enablers are still living the high life, while millions of good (but naive) middle-class people are going to have to develop a taste for hamburger helper.  Or maybe just "helper".


S

We need to think this through a little more....

Lemme see if I have this right:  The Republicans say no new taxes on the rich because they (the rich) are the ones who are the "job creators", and taxes on them would kill off the new jobs we desperately need right now.  


Sounds good on the surface, but it doesn't seem to hold up under scrutiny.  When the economy imploded in 2008 it was estimated that over two TRILLION dollars was moved out of various investment vehicles (stocks, mutual funds, corporate bonds, etc).  Just today CNBC (business news channel) said again that roughly a TRILLION dollars was still on the sidelines not invested.  In other words the rich are NOT using their money right now to create new jobs.  They're sitting on their wealth waiting for lucrative investments to come along, but there are too many unknowns right now to make them feel comfortable parting with their cash.


So if a little less of rich folks money was sitting idle on the sidelines not creating jobs, how would that hurt the economy?  Seems to me if it were part of an agreement (along with cutting tons of waste, fraud, and bloat from government programs) to dramatically reduce the deficit, THAT would eliminate some uncertainty and help create jobs.  Think of it as a bit of "pump priming".  


Make sense?


S