A "Taxing" Question

You might think that finding fair analysis of the two candidates' tax policies would be easy in the world of the Internet, but it isn't. I went through several sites, and on a couple of occasions, I thought I had what I was looking for, only to see that the analysts favored one candidate over the other (and this went both ways). Now, having a favorite candidate is fine, and is certainly not against the law, but I just wanted a "no spin" analysis. If I wanted "spin," I'd watch the two candidates or their surrogates, which indeed will leave you with your head "spinning." Ah, maybe that's why its called "spin?"

What prompted my search was an interview I saw today with John McCain. I did NOT see the entire interview, but what I did see and hear was Senator McCain saying that he wants to cut corporate taxes from 35% to 25%, "and I actually believe they should be lower than 25%," he added. Republicans have long advocated tax cutting as a solution to just about anything, and I seriously believe it won't be long before they claim to have found a cure for the common cold...cutting taxes! Their basic claim is, if you cut taxes for businesses and wealthy individuals, those entities will invest the savings and this will create jobs. Personally, I think there is a certain amount of truth to this, but the problem has often been that the jobs created have not provided a "living wage"or had any or enough benefits, except for the rich, of course.@@@

Now, we all love to hear that we might have our taxes cut, regardless of which candidate is telling us such. The question is, how far can we go on tax cuts? The basic Republican philosophy has been the prevailing philosophy since 1981 when Ronald Reagan took office. Even Reagan raised taxes, often under the guise of "revenue enhancements." ("A tax by any other name would smell so sweet.") When Bill Clinton proposed raising "taxes," not revenue enhancements, on wealthy Americans, Republicans told us that the end was near, this was it, that the economy, then coming out of a recession left by George Bush, Senior,*** would go to hell in a hand basket. After a while, however, the economy didn't collapse, it surged, and the second half of the 1990s, especially, saw tremendous growth. The rich always survive, and you needn't concern yourself with their welfare. (A word history is below)

@@@ See : http://pontificating-randy.blogspot.com/2007/06/you-wont-need-time-machine.html

*** This is not really meant as a shot at George Bush, Senior, but I just wanted to make a point. Bush was bashed by his party for agreeing to hike taxes to try to help cut the ballooning deficits of those times, and he deserves credit for having gone against his own party. His courage may well have cost him a second term, as his famous "Read my lips...no new taxes" line from his 1988 Republican Convention speech, was used with great effect against him.

Word History:
Fare-This word goes back to Indo European "por," which meant "passage, going." In the Germanic branch of Indo European, the root word was "fer," and meant "go, travel." In Old English, it was "faer/faru," (noun) meaning "journey," and it seems also "road" (the place one travels). The Old English verb "faran," meant "to go on a journey, to travel." As time passed, the word became obsolete in these meanings, except in compounds like "seafaring," and "wayfarer." Today, if you're a golfer, you go to the "fare way," a place where you "drive the ball, or the ball travels." If you get on a bus, you pay a "fare," as the idea of travel developed into a term for the amount you pay to travel. In Old English, too, there also developed the notion of "fare" meaning how a person was doing, health wise, literally "how well are you traveling or getting around," and we still have that meaning today, as well as in the compound "welfare." Further, this notion of "faring well," seems to have also provided the meaning relating to food, as in, "Our 'fare' gives you a choice of meat and side dishes." And don't forget "farewell," when someone is leaving (literally wishing them a good, safe trip). In German, the meaning is still used as the basic word for travel or drive, and you may remember the Volkswagen commercial with "Fahr Vergnuegen," (short "a" sound, like in father) meaning "driving pleasure." Some examples from other Germanic languages: German also uses the verb form, "fahren," to mean travel by vehicle or drive ( driver is a "Fahrer"), Dutch has "varen," and Danish and Norwegian have "fare," Swedish and Icelandic have "fara." By the way, "fare" is also related to "ferry," a boat used to "travel."

Since I Mentioned The Media...

Since I just recently mentioned "the media" in a blog, this article (see link below) caught my eye, and I thought I'd share it. The guy makes good points, but actually, they are more or less things we all "should" realize, I suppose. It doesn't exactly take a genius to figure out that, for example, the more conservative you are, the more likely you are to watch Fox News, or listen to conservative talk radio. The more liberal you are, you're probably more inclined toward maybe MSNBC and National Public Radio. To be quite honest, most Americans watch or listen to a variety of stations, and that's GREAT, in my opinion.

Go look in the mirror. Are you too close to one side? Too close that you can't see any of their flaws, or even some of their out-and-out nonsense? All political philosophies have flaws and nonsense, at least at times. If you read my blog regularly, you probably think I'm a "fire breathing liberal." Actually, I don't smoke. (Get it..."fire breathing"...I don't smoke.) I hit hard, and I intend it that way, because for quite a while now, the political Right has basically had the prevailing philosophy of the land, so they get hit! They have been against health care for millions of their fellow citizens, preferring to let them die or suffer without proper medical care, than part with some of their money to take care of them. I wonder... how many of these folks attend some religious service on a regular basis (or on an irregular basis, for that matter)? Any sense of religiosity in them has had to be overcome by their sheer greed, and their greed is just a symptom of their egomania. Of course too, they may just "pretend" to be religious, because it looks good to others. Health care is just one issue I have with the Right.

Behind the political Right stands the wealthiest people in the country. To me, they have "sold" many average Americans a bill of goods, just like they do in advertising soap, dish detergent, or floor wax. That's why I've begun to preach their basic philosophy of self interest, a philosophy they are VERY good at. They NEVER stop thinking of themselves. When more average Americans wake up and realize what's been going on, and practice self interest, we'll see the country change for the better. It is more than a little ironic to me that John McCain chose to use "Joe the plumber" as his poster child. Now I'm sure all of you have heard of "Joe." McCain raises the name at every campaign stop. What he DOESN'T tell you is, Joe has no plumber's license, owes back taxes, doesn't own a plumbing business, and may not even be properly registered to vote! Further, McCain and his campaign have tried to front Sarah Palin as just an average person, not telling us that they put $150,000 clothes on her back. Now, do I think either of these cases is really all that important? Not actually, compared to the real issues, but they show how the Right has tried to "market" everything to us, just like the products they sell to us in every day life. There needs to be a "truth in advertising" department for all of this stuff (and for BOTH sides, but I'll argue that the Right has just gone way overboard!)

Now that I'm at it, McCain has slammed Obama for taxes and income redistribution. It is all fair game, and I'm not whining about it***, we need vigorous discussion and debate, but what he DOESN'T say is, that his tax policy, essentially the Bush policy, is to give MORE MONEY TO THE RICH AND BUSINESS INTERESTS! His speeches are carefully worded to use use code words and catch phrases, so that YOU don't hear the actual meaning from his lips: "I want to give tax breaks to the people who create jobs!" "I want to give money to people who create wealth and give opportunity to you." "I want you to get rich!" Folks, these are statements designed to appeal to you without telling you what the hell they really mean!!! What he isn't really telling us is, John McCain voted AGAINST Bush's tax plan several years ago (when he WAS a maverick), saying that it favored the RICH!!! Now, having to cater to those very same rich folks, he's in favor of the same policy (now that he's the "un-maverick"). These are many of the same rich and business people who just got $700 billion from taxpayers (If you listen to CNBC@@@ analysts, most being pro-business, they say when all the bailouts are totaled from several months ago to the present, the actual total is at least one and a half TRILLION bucks!)And yes, Obama favors redistribution of income, but at least he says so!!!! He doesn't use catch phrases to hide it. If you favor continuing this "take from the average and poor and give to rich" philosophy, then you definitely should vote for McCain. (A word history is below)

*** See: http://pontificating-randy.blogspot.com/2008/10/rules-should-apply-to-all.html

@@@ CNBC is a cable business channel, owned by NBC.

Link to "media" article:


http://encarta.msn.com/encnet/Features/Columns/?article=MediaBashing&GT1=27004

Word History:
Read-This word traces back to Indo European root word "rei," meaning "to reason, or to count." The Germanic branch of Indo European had "raedanan," and this passed into Old English as "raedan," and "redan," the first being in Saxon dialect and the second in the Anglian dialect, both from the Germanic tribes that invaded Britain and whose dialects evolved into modern English, and these words meant "advise, consider, explain/interpret, read." The "read" meaning comes from the notion to look at a text and "interpret" it. ("Raed/red" (long "e," not like the color) meant "advice," and later is was spelled "rede," but is now obsolete, although the word "unready," is derived from it, initially meaning "ill advised." The "interpret a text" meaning that we have today developed only in English, as the other Germanic languages retained the original meaning of "advise, counsel, consider:" German has "raten," Dutch and Low Germnan Saxon have "raden," West Frisian "riede," and Danish and Norwegian "råde," Swedish "råda," and Icelandic "ráða" (the 'ð' equals "dh" or "th"),  all with the meanings "advise, consider, guess (when you "guess," you consider a number of things), decide."

The Rumors Fly

There are often nasty rumors being circulated, often by emails, about candidates in both parties. Don't be gullible folks! Don't let your imagination run away with things! People who spread many of these vicious stories do so because there are other folks out there somewhere who believe, or who want to believe, the worst about some of the candidates they're opposing. Just use some common sense, as you can't always easily prove or disprove some of this nonsense. Most of you may already be familiar with the old question posed to a guy: "Have you stopped beating your wife?" As you can see, either a "yes" or a "no" answer gets the guy in trouble! (If your mind is running a bit slow today, if he says "Yes," that means he HAD BEEN beating his wife. If he says "No," he's still beating her!)

The country is in dire straights, and we need to focus on the issues at hand, not on a bunch of nonsense, rumor, or innuendo. Don't let your self esteem get in the way, either. Too often, some folks let a candidate, or a political party, become so much a part of their very life, that they can't see the forest for the trees. Don't get to the point where you say, "Oh people in my party would NEVER do a thing like that!" Often times, rumors spread by the party operatives themselves are designed to do two things: 1) energize their core supporters who want terribly to believe any bad story about the opposing party's candidate or, 2) get what are now called "low information voters." The idea with this is, while some people LOVE politics, to the point that they "live, eat, sleep" politics, most Americans pay much more fleeting and casual attention to what's going on in politics, and still others, maybe because they work a lot, come home and take care of the kids, fix dinner, and then sit down and watch the news for a few minutes (or just maybe, YIKES, could it be, some just don't like much about politics!!!), only get snippets of what's going on in politics. What ever the reason, the political operatives throw out nasty stories about the opposition hoping to at least get the attention of these folks, often in 30 second ads, and that with their low attention to political goings on, that these stories will stay fixed in their minds, (and with low attention also comes the possibility that they will never hear the stories debunked) and then come election day....

Now I know, if you lean leftward, you may not like the Wall Street Journal, and if you lean rightward, you may not like the New York Times (or maybe ANY of the media), but while some writers may have an agenda, the more reputable publications aren't just out knowingly spreading lies about people they don't agree with. So, beware false emails and even false websites claiming to have real articles, or emails that appear to have "rewritten" an article, rather than supplying the actual article. To be quite honest, I wouldn't even be opening up ANY of these kinds of emails to start with, as viruses and such can be accompanying the email. Just delete!!! Further, the perpetrators count on you forwarding this stuff to others, thus spreading the rumor ever farther. Don't be part of the problem!

Why there has even been a nasty rumor about me!!! It has REALLY got me ticked off, too! The rumor has it that I love the top income people in the country!!! Now, you don't have to check to verify that one. You should know BS when you hear it! (Below is a word history)

Word History:
Wood-This word originally meant "tree, group of trees; that is, forest." Eventually, the notion developed about it meaning "the actual substance of a tree," which is what has carried over to modern times. Old English had widu/wudu (No, not voodoo!), which came from Old Germanic "widuz." Old High German had "witu" and Old Norse (which is North Germanic) had "vidr." The Old Germanic word went back to Indo European "widhu," which meant "tree, wood." Welsh, a Celtic language (Celtic is an Indo European language, related to English, but a bit more distantly on the English "family tree."), has "gwydd," which means "trees." Swedish, Nowegian and Danish (all North Germanic languages) have "ved," also meaning "wood." Why our closest relatives, German and Dutch, don't use the word in some form is unknown to me, but I'm sure there's an explanation by linguists.

There's another "wood" in English, but it is now obsolete. It is NOT connected to the above word. It meant " very insane/ mad/frenzied." (Okay, no remarks, or I'll get "mad!") In Old English is was spelled" wod," and modern German has "Wut," which means "rage, anger, fury." Old Germanic had "woth," and this came from Indo European "wat," which had a connotation of "mental excitement."

Incredible Foreclosure Numbers

Below is the link to an article about the tremendous numbers of foreclosures and why it seems no one has been able to slow, much less stop, this incredible snowball rolling down hill.

http://www.msnbc.msn.com/id/27388935/

John McCain

First, I think the REAL John McCain is a decent person. Now I want you to know, I was not one who climbed aboard his bandwagon in 2000, but I still thought he was a decent person. When we came to the nominating process for a Republican candidate for president in 2008, I figured McCain had little chance. While there's no question that he's a Republican, he has had some very open disputes with others in his party, including with George W. Bush (after Bush was president). I guess I'd have to say that with the Republican label so damaged, it came down to John McCain or Mitt Romney, with Governor Huckaby a distant third. There were no other big names in the race who could have attracted the Republican base to their cause and preempted a possible McCain win. Romney gave it a shot, but let's face it, he was not really the heart and soul choice of many Republicans. Huckaby attracted some of the more populist Republicans (Hey, don't laugh! There are such Republicans, many of whom supported Pat Buchanan in the past).

Once McCain got the nomination, the problem became, "Now what?" Obviously he was NOT inspirational to many in the Republican base. If this were a more "normal" presidential election year, John McCain may well have been able to pull in many Democrats (and will undoubtedly get a fair number, as it is) and, certainly, many independents to offset some Republican malcontents who may well choose to sit out the election, or at least no get involved in helping McCain. This is obviously NOT a normal a year. The incumbent president is about as popular as malaria, the economy is teetering on the brink of what could become a catastrophe, and Democrats are resurgent, as their two main candidates, Barrack Obama and Hillary Clinton, inspired many around the country to get involved in politics and register as Democrats.

McCain still was not totally down and out. He certainly appeals across party lines and the hard fought contest for the Democratic nomination left that party a bit divided, at least at first, and McCain and his campaign saw an opening to bring Democratic voters over to his side. When he picked unknown Governor Sarah Palin out of nowhere, it energized the Republican base for a few weeks, and even got many non Republicans to take a look at the McCain-Palin ticket, but then the glow began to fade as reality hit home....ECONOMIC MESS! This turned any gains for the ticket into sawdust. Palin had to show that she was capable to lead the nation, if something were to happen to John McCain. This showed the basic flaw in picking Palin, she was NOT ready. That was not her fault, but McCain's. For a campaign that was trying to make the opposition candiate's judgment an issue, this turned the tables.

With Obama the Democratic nominee, the campaign took a nasty turn, as nasty as I think I've EVER seen in my lifetime, with Republican spokespeople referring to Obama as a Muslim, as a pal of terrorists (obviously with the intent of implying that Obama is perhaps a terrorist, too, without actually coming out and saying such), as a socialist, and as anti-American. In the past, most nasty attacks have come from surrogates or, in more recent times, from organizations outside the two respective parties. This time, we had a vice presidential candidate stand on stage and say that the opposing party's nominee "pals around with terrorists." The "tone" from the McCain-Palin campaign took on an ominous sound. With the economy slipping, millions of Americans at risk of losing their homes, and many more already renting elsewhere, the Republican ticket decided to make a concerted effort to scare the absolute hell out of Americans regarding the Democratic nominee. It didn't work! Polls found McCain-Palin falling further behind, as middle-of-the-road Americans were appalled by the tactics of the Republican campaign. I'll go out on a limb, as the campaign still has a tad over a week to go, but it looks like the whole situation culminated in a definite rejection of such actions when Colin Powell, Republican, former Secretary of State and four-star general went on "Meet The Press" and endorsed Barack Obama for president. Not only did General Powell endorse Obama, but he said why he was endorsing him, including a scathing indictment of Republican tactics during the campaign. Folks, this man, General Powell, should have been president!!!

Prior to Powell's endorsement, Senator McCain finally took the bull by the horns. In a highly visible campaign rally, he corrected a woman who said that she didn't trust Obama "because he's a Muslim." McCain told the crowd that Obama is not a Muslim and that "he's a very decent guy, and you don't have to be afraid if he's elected president." That was the John McCain that the country loved in 2000. It took lots of guts to say what he did. To show how out of touch some in the Republican camp are, he was booed by some in the crowd for his remarks. I have a feeling that John McCain slept better that night, as this campaign had besmirched his reputation. A day or two later, it was a total joy to watch McCain and Obama at the "Al Smith Dinner," trading friendly barbs and put downs of each other, but also including some put downs of themselves. That's the McCain the country likes and admires.

The Rules Should Apply To All

The 2008 presidential campaign, which started....ah.... like 24 minutes after the polls closed in 2004, has given us some dramatic changes in the political landscape. These changes have made it difficult to follow the "rules" of campaigning, and I guess we're still feeling our way, although to a somewhat lesser degree than a during the primaries. What do I mean? Let's see if I can sort this out....

The primary season kicked off with a very strong woman candidate, Hillary Clinton, being the front runner on the Democratic side, and a strong possible winner in the general election . Now, the rules for her seem to have been somewhat different than for recent GOP vice presidential nominee, Sarah Palin, until very recently, anyway. Why? Clinton supporters may not like to hear this, but Hillary was an EXCEPTIONAL candidate (they'll like that part), but by being a former First Lady of eight years, and also having been an adviser, or at least perceived to have been a close adviser to her husband (something they used in the 1992 campaign-"Vote for one and get two!), she had taken some hits from the media and the public over various things, perhaps most notably over her heading the secretive government health care reform committee. Later, when she ran for the Senate, she was in a campaign that, at least initially, got pretty tough. When she ran for president, she was already an experienced public figure. Knowing her as they did, the media didn't always cut her a hell of a lot of slack, and that's fine with me (Hillary supporters, please read further, before you get all excited).

When John McCain announced that his pick for a running mate was Sarah Palin, many people, even many people who paid attention to politics said, "Who?" It took several days for news and talk show people to get the pronunciation of her last name down pat. The McCain campaign proceeded to insist that Palin was highly qualified, but they essentially hid her away from public interviews. At first she was highly popular, perhaps because she was a fresh face, and I would argue because very few Americans really knew much about her, including the conservative base she was supposed to appeal to. Her digs at the media did nothing but give her a further boost in the public's eyes. At first, this "hide the candidate from the media" strategy seemed to work. But after a couple of weeks, Americans seemed to want to know more about this person who might not only become vice president, but potentially president. When the interviews came, they were NOT always very pretty. Despite the McCain campaign's insistence, Sarah Palin was NOT qualified, at this point, to become vice president, and certainly not president. Living near Russia is not a qualification, and when the comedians got hold of that line, Palin took some serious hits to her credibility. The interview with Katie Couric was a disaster, and since that time, Palin has seemingly been a drag on the Republican ticket, as far as the broad cross-section of the American electorate is concerned, although even some conservative columnists have recently tossed her under the bus.

A few years ago, Barrack Obama won a U.S. Senate seat in Illinois. He gave a much lauded speech to the Democratic National Convention in 2004, and I guess along about the latter part of 2006 he made it clear that he would be a candidate for president in 2008. As events unfolded, it seemed that Obama's run for the presidency would be doomed to fail, as Hillary Clinton and John Edwards were seen as the top Democratic candidates, early on. When Obama stunned the political world, and definitely his challengers, in the Iowa caucuses, he was off and running, and became a viable candidate for president. Now, you can argue with the overall details, but he went through the process and wasn't hidden away from questions by the media. His qualifications were challenged, and that's all fair game for a person aspiring to any office, let alone THE office. There's no question in my mind that many in the media took a liking to him, and the fact that he was giving Hillary a run for her money endeared him to many more, both media and non-media. For the media, this was THE story, and with the media, THE story trumps any liking they may have for a particular politician. I'd argue that many in the media probably liked Bill Clinton and agreed with many of his policies, but when the scandals erupted, they went after him with great fervor.

The problem with all three of these high profile candidacies is that they presented problems for their challengers and for the media, at least in the minds of the pundits. We've heard such rules as "You can't talk down to her," or "You can't be condescending to her," or "You can't seem to be dismissive of him." The whole point was/is, during the primaries, many women, but certainly not all, wanted Hillary to win, because she is a woman. Some claim otherwise, some even adamantly so, but let's lay the cards on the table. That was one of the reasons. The thing is, there's not necessarily anything wrong with that. We vote for, or against candidates for any number of reasons that weren't part of our high school Civics class. Further, many African-Americans want Obama to win because he's black (the fact that he's half white doesn't seem to matter, to pro-Obama or anti-Obama folks). I suppose there's also an element of support for Sarah Palin because of her gender, but I'd say far less so than with Hillary. On the other hand, there were/are people AGAINST Hillary, Palin, and/or Obama because of their gender or race.

When the vice presidential debate was about to take place, the pundits started about Biden not being able to say this to or about Palin. To me, the pundits can say what they want, but in the end, it is up to voters to listen and watch and then decide what they thought of each candidate. Our views of such can definitely be influenced by our gender (or in the presidential debates, by our race). Let's not be naive here. It was pointed out that when then vice president George Bush (SENIOR) faced off against the first woman vice presidential candidate, Geraldine Ferraro, in the debate in 1984, that she zinged him with a comment that he didn't have to "explain" things to her; with the implication being that he was doing so because she was a woman. The media loved it and this incident has oft been shown in recent news/talk shows. What seems to have failed to register is, SHE LOST! The Mondale-Ferraro ticket lost 49 states, and damned near lost the fiftieth by only a couple of thousand votes!!!

None of us likes everything the media reports, that's why overall the media is fairer than we realize, or at least that we care to admit. The media wants a story, any story. Any reporter wants to get the scoop of his or her life and win some prestigious award for journalism. The individual reporters and anchor people may favor one candidate over another, but in the end, the story is almost always what matters, even if it hurts "their" personal favorite. In more recent times, all points of view get an airing in the media, and while I may not like it when my candidate or an issue I feel deeply about gets knocked, in the end my candidate and my precious issues do get coverage in the media. I just wish they'd always AGREE WITH ME! Folks, that's what much of this stuff over the media is really about. We want them to give our views or candidates favorable presentations, and while we may not always wish for it, we'd probably like it just as much if they'd lambaste the other point of view or candidate to the point of destroying them. On any given day, there may well be a point where candidate X got a raw deal from "the media," but chances are, the next day or two that same media will give that candidate a boost. Republicans frequently whine how the media favors Democrats, but let's see, who usually wins the elections? ..... Republicans! (Now there's a DOUBLE win: victory in elections AND getting to play the victim.) To the defenders of Sarah Palin, I don't recall hearing much whining when she was the talk of the town, only now that the scrutiny has taken hold.

My personal belief is that "usually" the media is too timid with many candidates or office holders. The candidates need to be pressed, ala the way former ABC White House correspondent Sam Donaldson used to do, on what they really mean about certain issues and policies. I'm NOT advocating that race, gender, religion, or such be brought in by the media, but if it is, even subtly, the American people will react against such behavior, even if they don't necessarily agree with the attacked person's policies. All of this stuff about you can't ask this, and you can't ask that, or you have to ask it this way is a bunch of nonsense. We're talking about people seeking public office, and in the case of those mentioned above, HIGH PUBLIC OFFICE. The hell with their feelings, we need to know things. In the case of presidents and vice presidents, tough foreign leaders will not treat their feelings so kindly. In campaigns, candidates love to portray themselves as victims. I say, "Enough already! The standards applied for Hillary should be applied to all!"

Finance Basics, Part Three

Here is a little more info on the basics of the current financial crisis.

Another part of the puzzle of the housing crisis, which led to the financial crisis, has to do with the appraisal of property. Typically, when property is purchased, an appraisal is done to determine the value of the property. This appraisal assures the lending entity, usually a bank, that the property has the necessary value to secure the loan, and then, too, the buyer knows that the property is generally worth the amount being paid for it. If Randy comes to you and says, "Hey, can you lend me a hundred bucks? I'll let you hold this watch until I pay you back." What's the first thing you want to do? Ah, no, no. I mean besides kicking my butt out the door. You want to know the value of the watch. If I get $100 from you, and the watch is only worth $10.00 (Hey, can I help it if one of Mickey Mouse's fingers is broken?) Anyway, you get the point.

Okay, so what's this got to do with what's been happening in housing? Much of the magnitude of this is still to be determined, and it seems that not all mortgage companies/banks or appraisal companies were involved, BUT at least some mortgage companies or banks were in cahoots with the appraisers to have the appraisal given at a "bloated" amount. In other words, if you wanted to finance a house for $100,000, but in reality, it was only worth $80,000, the appraiser was "nudged" by the mortgage company to make sure the appraisal covered the $100,000 amount! I'm sure you can see that this is dangerous business. As long as property prices kept going up, it essentially covered up this practice, but once some people couldn't pay the mortgage and prices came down, it showed how vulnerable things were. I believe New York State has brought charges against some lenders for this practice, and there may be other states that have done, or will do, likewise.

The other problem was with rating agencies. These companies rate various investments as to their safety for investors. If you read the first two parts of this series, you'll know about "bundles" of mortgages sold to investors (see links below), or used as collateral. It seems that many of these "bundles" were given high ratings, when it was known full well by the rating agencies that they didn't deserve such ratings, but the rating agencies are paid by those wanting their items rated!!! Get it!!! If you invested in a "bundle," figuring that it was pretty much of a safe bet, only to find out later that many of the mortgages in the "bundle" were in foreclosure .... again... you get the point. As this whole situation was uncovered, these "bundles" became unmarketable, as investors or banks wouldn't take them for fear that they were full of bad loans. Now, the "sit on their ass class" want government regulations for rating agencies! And here you thought they hated the government! (A word history is below the links)

Below are links to the first two parts:

http://pontificating-randy.blogspot.com/2008/10/some-financial-world-basics.html

http://pontificating-randy.blogspot.com/2008/10/finance-basics-part-two.html

Word History:
Berry-This is only found in the Germanic languages, and originally, it meant "grapes." It came from Old Germanic "basj" or "basjom." I'm not a linguist, but they can tell you why the "s" sound became an "r" sound in some, but not all, Germanic dialects. In Old English is was spelled "berie," and gradually it came to be applied to the various fruits that we use the word for today. Some examples in other Germanic languages: German has "Beere," while Dutch has "bas" (Hey, I told you not all dialects gave up the "s" sound!), Danish has "baer." Some linguists have tied the word to Sanskrit "bhas," which meant "eat." Sanskrit was an early form of writing for the Indo Aryan part of the Indo European languages, and is still used (very sparingly) in some parts of India for religious ceremonies.

Give Them Self Interest

My dad was a staunch Republican much of his life. He was a Republican by tradition, not self interest. For decades, Republicans fumed over Social Security, I'd say, early on at least, maybe because they didn't enact the legislation themselves, although the administration of Herbert Hoover had developed a basic plan for what became Social Security during that beleaguered president's term in office. Due to the severity of the economic situation, the plan was never pushed to the forefront. Other Republicans were just plain against the very idea of Social Security. In my opinion, it just kind of gnawed at the Republicans that they had failed to grasp how this important program slipped through their fingers, giving Democrats a major advantage with Social Security recipients for decades. Republicans correctly criticized the funding for Social Security, as it has always been based upon "pay-as-you-go" financing; a problem to this very day. On the other hand, some real hard line conservatives just seemed to want to turn the clock back to a time when older folks were left to fate, or to their families to provide them with life's basics of food, clothing and shelter.

Toward the end of his life, my dad made some pretty startling statements to me. He gave praise to Eleanor Roosevelt for helping my great grandmother (his maternal grandmother) with some issue about Social Security, I believe it was. He got the attention of Mrs. Roosevelt for his grandmother's cause by writing a letter to her when he was in the Army during World War Two in the Pacific. By the time he told me all of this, circa 1996, the Republicans were preaching about investing Social Security money in the stock market. His comment was something like, "The Republicans should just leave this stock market stuff alone. These business people can't wait to get their hands on that Social Security money. That's what this is about! The Republicans are getting too close to big business." Now, this was a BIG statement to be coming from my dad.

That statement shows one thing, blasting a government program for older folks when you're 30 or 40 or 50, or even 60 is one thing, but hearing about risky proposals on such a program when you're 65, 75, or 80 (he was about 80 when he made his remark about Social Security), when you're in need of that program, is another matter entirely! Self interest and necessity trumps any ideological nonsense.

I hope all of you will vote. I also hope that when you go to the polls, you will think about your own self interest. The big money people have told us over and over that self interest drives the capitalist system. We've now seen how their self interest has driven that system to the edge of the cliff (and maybe over the cliff). Now it is OUR turn. Whichever presidential candidate wins, they may well be constrained by ( and maybe destroyed by) the economic situation that confronts, not only the country, but the world. But think for a moment about which candidate will think about YOUR interest the most. Which candidate wants more tax reductions for the bastions of greed and the wealthy,*** and which candidate wants tax reductions for more average people. Give the big money folks what they love to proclaim (when things are going their way) and think about self interest, YOUR self interest!


*** To me, with the one side, it is more like, "Capitalism and the free markets really DO work, we just didn't give them enough tax cuts!" Folks, these people can't spend all that they've got now!!! If truth be told, I'll bet we'd find out that many of them took any and all extra money and invested it in various commodities, like oil, gasoline, natural gas, wheat, corn, etc; thus driving up the prices of those things and picking our pockets even more.

Word History:
World-This word only seems to exist in the Germanic languages. In Old Germanic, it was "werald," a compound of "wer," which meant "man/human" in Germanic, and is still with us in "werewolf," that is, "man wolf," and "ald," which meant "old, or age." So the basic concept was, "age of man," or "the present time." Later, it developed the more extensive meaning of the existing actual physical surroundings or "world," as opposed to "the hereafter." In Old English it was "woruld/worold," and Old Saxon (while Saxon was one of the dialects that became English, "Old" Saxon refers to the Saxon dialect that remained on the Continent) had "werold," and Old Frisian, another very close dialect to English had "warld." Modern German has "Welt," as the "r" sound died out in that variation, Dutch has "wereld," and Danish and Norgegian have "verden." By the way, in Old English, "worldly," was "woruldlic," with the "c" being a harder sound similar to "k." That sound eventually morphed into English "ly," but is still alive in modern German, which has "weltlich," although when you here some German speakers pronounce it, it is very similar to English "ly."

Visit Your Local Zoo!

With winter bearing down on us, take time to visit your local zoo. Rates are usually cheap compared to many other get-a-ways, and you won't have to travel forever to get there, so you'll save gas, too. Many zoos may have "family rates," or even free admission for children up to a certain age. For Cleveland area residents, make a day of it by visiting, not only the zoo and rain forest, but the new shopping center not all that far from the Cleveland Zoo, called "Steelyard Commons." Now, I'm not going to claim that will save you money, if you or others in your family are shoppers!

http://www.clemetzoo.com/index.asp


http://www.steelyardcommons.com/main.asp

Word History:
ZOO-Hmm, wonder why I picked that woid? I mean word. Zoo comes from "Zoological Gardens" in 1800s London, England, which was used to display and house wild animals (Surprise! Surprise!) . It didn't take the English long to shorten the form to just "zoo." The word comes from Greek "zoion," (first "o" was long) which meant "animal," or even just "living being." Greek is an Indo European language related to English, although a little further down the family tree. It came from the Indo European base "gwei," (I believe the "gw" pronounced almost like "zw") with which meant "life/to live." By the way, it also gave Greek "bios," which means "life," and from that English got "biology," the study of life, and "biography," the story of someone's life. I know that it is difficult to see how people got from "gwei" to "zoo" and "bios," but sounds changed in various dialects as time passed for human beings, and, according to linguists, no two people on Earth speak exactly the same way; that is, we all have our very own dialect. Hey, I gotta get out of this zoo!

Our Staggering Debt

Below is the link to an article about how the National Debt Clock has run out of room to keep tabs on our debt. Keep in mind, when Bush took office, the country was running a surplus; that is, the debt was actually decreasing. That fact was accomplished by both President Clinton AND the Republican led Congress. Both deserve credit...ahh, that might not be a good word for this blog. If remember right, Bush took office when the National Debt was about 5.5 trillion, and it is now about 10.5 trillion. Ever fearful of raising taxes on the wealthy, he not only let things ride, he has insisted on keeping the current tax cuts for the rich and adding in more cuts for them to boot. Further, if my recollection is right, as part of the recent bailout bill, the debt limit was raised to more than 11 trillion.*** With the 700 billion dollar bailout just passed and signed into law, we'll easily hit that limit in the not too distant future before Bush even leaves office. This man is so far in over his head!!! Whoever wins the presidency in a few weeks is likely to be destroyed in office, mainly a result of what Bush has done to this country. The man is so out of it, that when he sits on the toilet, he uses the Charmin to wipe his face!



http://www.msnbc.msn.com/id/27150961/

The Greed Ran Rampant

Below is the link to an article in Business Week about how the Bush Administration was warned about the housing/mortgage crisis:

http://www.msnbc.msn.com/id/27121535/

Global Economic Meltdown?

Below is the link to an article about the possibility of a global meltdown:

http://www.msnbc.msn.com/id/27129830/

Keep Looking Forward

I guess there's a lot of human nature in trying to live in the past. Since we know what happened in the past, that's a hell of a lot easier to take than to look to the future, since we don't know what will happen with absolute certainty, and that makes many of us jittery to different degrees. Sometimes we refer to "the good old days," even when those days weren't really very good when they were actually taking place. There's comfort in the past and a bit of anxiety about the future, even in far less turbulent times than now. We need to look back to see where we've been, hopefully to help guide us to where we're going. There's a difference, however, in looking back to assess a situation or to reminisce, and actually trying to take ourselves back in time. I hope all of you will never get so old or cantankerous that you try to "escape to the past."

George W. Bush and his administration tried to take the country (and the world) back to a time when businessmen (now also businesswomen) and wealthy interests ruled without any restraints. Mankind learns from the past (hopefully, after all, that's why we have history), but these folks didn't learn the lessons from those times long since past, or maybe they did, and their ego trips and greed were in the forefront of their agenda. They got much of what they wanted and WE share a degree of blame for letting them get away with it. Now all will pay the price. Don't forget, years ago many people believed that kings and queens were somehow given their power from God, and that therefore, they had the right to rule. Mankind came to see that this idea was nothing but a bunch of nonsense! Mixing religion with politics in such a direct way can be VERY dangerous!

Capitalism without regulation and income fairness is, like "Divine Right of Kings," nothing but nonsense. It may sound good, but it just doesn't work that way. It is much the same with that almost indefinable word "freedom." We all talk about "freedom of speech," for instance, but the fact is, we put limits on free speech, because you can't have this "pure concept," as humans aren't pure, and the concept gets perverted. Remember the saying, "We have freedom of speech, but that doesn't give us the right to cry 'FIRE' in a crowded theater." The "capitalists" have made a major comeback from the days of "The Great Depression." Ever so gradually they got regulations removed or lessened, and as memories of the abuses of the pre-Depression times faded, they came roaring back to a position of dominance. All of this talk about free markets being so "natural," is more bunk! If you got ill and went to your doctor, how would you respond if that doctor said, "Oh I can't do anything for you, we've got to let things happen naturally. Giving you some kind of medication would be interfering." Or if the doctor examined you and said, "Well, you've got the early stages of cancer, but that must be what God wants, so go home and I'll see you in six to nine months, if God decides differently, otherwise I'll send flowers." Hopefully you see the nonsense in this bunch of malarkey! Whatever your belief about a Creator, we have minds. That's a fact! You may wonder if that's a fact with Randy, but even I was given a mind. We must use our minds to try to control things that are controllable, or to lessen the pain of things we haven't quite figured out.

Word History:
Law-This comes from the same Old Germanic word that gave us "lay;" that word being "lagan," which meant "lay or put." Old English had "ae" and "gesetnes" for "law." I'm not sure of the origins of "ae," but "gesetnes" meant "that which is set down." (See the bold!) In modern German, the word for law is "Gesetz," nearly the same as our old word, and with the same meaning, "that which is set down." Old English picked up "lagu" (with a short "a" as in "father") from Old Norse, a form of North Germanic, and again, the meaning was similar to our original word, but instead of "that which is set down," it meant "that which is laid down, or fixed in place." Over time, the "g" and "u" sounds died out, leaving us with "law."
Now...that's what I call..."Laying down the law!"

Costs Versus Income

This article appeared in the (Cleveland) Plain Dealer and was written by Alex Veiga for the Associated Press. The info speaks for itself, and this is much of what I've been saying all along in this blog for a couple of years. Until the non rich get income, don't expect the economy to improve much, if at all, and with the economy imploding, that seems to be a long way off. You can't give mortgages and other credit to folks, then cut their wages and benefits and expect things to just keep sailing along.

http://www.cleveland.com/plaindealer/stories/index.ssf?/base/iseco/1223541049300460.xml&coll=2

States In Trouble!

Here is a link to an article about how states are now in financial difficulty....

http://www.msnbc.msn.com/id/27103082/

This Election

This past year or so has been almost mind boggling for Americans. We've had the first woman in a truly competitive run for the presidency and the first black American as a truly competitive candidate for the office, although by rights, Obama is half white. We had Republicans nominate a rather less conservative candidate than they usually do, although Bob Dole was not necessarily way to the right, either. We had John McCain name Sarah Palin a the vice presidential nominee, the first female Republican nominee for that office. I guess all of this shows that America wants change, and don't forget, this was all done BEFORE the current crisis hit the news. Maybe there's hope that bigotry will die, but I'm not exactly hanging by my thumbs awaiting such. I think there's something in us human beings that chooses, at times, but not always, to focus on the differences each of us have, whether it be gender or race or ethnicity or religion, or just about anything else you might care to toss in.

I remember in 1960 (ahhhh, I don't remember it all that well!) that Catholics were thrilled at the candidacy of John F. Kennedy, and they celebrated his subsequent election as president. This was followed in 1964 by the selection of William Miller, a Catholic, as the running mate of GOP presidential candidate, Barry Goldwater. In 1968 (I remember that far better!) Greeks were happy with the selection of Spiro Agnew for the vice presidential slot on the Republican ticket. In 1984, Walter Mondale chose Geraldine Ferraro as his vice presidential running mate. In our multi-ethnic, multi-racial, multi-religious society, it may take us time, but America does move forward on these kinds of issues. Now, in 2008, we may well have our first black (or half black, half white) president. Just remember, if many black Americans "celebrate," if that event happens, they will not be doing any different from what Catholics did earlier in our history, or Greek-Americans did earlier in our history, or what many women did when Ferraro was chosen (even though the ticket lost the election), or what some women are doing now, with Palin on the GOP ticket. If you're Hispanic-American or Slovak-American or Hungarian-American, you'll probably do the same if someone from one of those groups is placed on the ticket of one of the major parties in the future, and especially if they win!

The Vandals

The Vandals were a Germanic tribe that originally seem to have lived in northern Europe, Scandinavia, and then crossed the Baltic Sea and lived in the area of modern Poland and eastern Germany. They spoke an East Germanic language. Eventually they migrated westward (Hmm, I wonder if they ever heard of the saying, "Go West young man, go West!") They are most famous for "the sack of Rome" in 455 A.D. They carried off many things of value and laid waste to a large part of Rome. Now, their plunder was probably not any worse than what others did back in those times, but the fact that they took and plundered Rome itself, left a lasting impression in the minds of Europeans, so much so, that the tribal name, Vandals, became a word for destruction and plunder. The word came from old Germanic "Wandal," meaning "wanderer," and in Old English the word was "Wendlas."

We have our very own "Vandals" in the modern world. They are the ruthless, greedy people of American business interests, aka, "the wealthy." George W. Bush and his minions chose to unleash these disreputable "vandals" upon us, and they plundered and "vandalized" the America that we once knew. They took every penny they could lay their greedy hands on; never caring how many people were left destitute or damaged in the wake of their plunder. Many Americans will never recover from what they have done to us. Our lives have been utterly ruined. The effects of these "vandals" is an ongoing and developing crisis, and the actual number of victims may not be known for years, as we may well be entering the era of "The Great Depression, Part Two."

Agenda Of New Prez Will Suffer

Below is the link to an article giving some of the possible ramifications of the current economic downturn and financial crisis. Note how much the upper incomes would benefit by John McCain's tax cuts, and how much average people would benefit from Obama's tax policy.

http://www.msnbc.msn.com/id/27035622/

Finance Basics, Part Two

So, we've got a real tailspin in housing sales, falling real estate prices, and an alarming rate of foreclosures. Banks with lots of "Collateralized Debt Obligations," aka CDOs, are struggling to stay afloat. The situation has gotten so bad with these CDOs, that banks have cut back on lending. Many will not even lend money to another bank!!! Banks typically borrow, usually short term, from one another for a variety of reasons to cover certain operating expenses. It seems that they had been using these CDOs as collateral, and now, talk about taboo! (Not Tab who; taboo!!!) It also seems that to offset losses from their investments, they are holding onto cash, unwilling to loan it out, as they don't know if there's another shoe to drop soon.

Now, why has all of this stuff happened? You have to go back to Ronald Reagan. You also have to put Reagan into the perspective of his time as president. Back then, there was a backlash against "liberalism" on many levels, including cultural issues, fiscal policy, and regulatory policy. The problem, in this case mainly for Democrats, was that the country saw programs that seemingly had outlived their usefulness, or that needed to be overhauled. At that point in time, Democrats in essence began to become a sort of "conservative party," in that they defended the old order, although at times, with public approval, like with Social Security. Reagan uttered what became a rallying cry to conservatives, "Government isn't the solution to the problem, government IS the problem." The problem for Reagan was, however, that resistance to many of the things he wanted to cut was so strong, that he couldn't achieve all that he wanted. (I might add, "THANK GOD!" That's not because I didn't like Reagan, I did, but in many ways, he wanted to take the country back to some idyllic age, pre-Depression, that really didn't exist, except for perhaps the wealthy.) Republicans since Reagan have all invoked his name and tried to wear his mantle, no matter how badly it fit. Let's face it, even Bill Clinton was not what many consider a "typical Democrat," as he took many ideas from the more conservative "Democratic Leadership Council."

Anyway, when George W. Bush took office, he and his administration chose to try more deregulation than had already been adopted prior to his taking office. During the Depression, Congress and President Franklin Roosevelt instituted measures to regulate banks. Now, they didn't put these measures into effect just because they felt like it. Congress investigated why so many banks had failed, and they found that many banks had "gambled" their customers' money in the stock market. When the "crash" came, guess what happened? As banks continually failed, it made the Depression worse, and many depositors lost everything. I'm not naive, and I'm sure the laws instituted during those times were not always perfect, but they were put in place for a purpose, including the FDIC, which insures deposits up to $100,000 (now it will be increased, with the passage of the new bailout measure). Since those times in the 1930s, there haven't been many bank failures in the country, until...ah...guess who was in office? BUSH! (But guess who was president when some crucial deregulation measures were passed by the Republican dominated Congress? CLINTON! Including the removal of regulation by the Securities and Exchange Commission of insurance for investors in mortgages.)

During the Bush Administration, government regulators chose not to enforce existing regulations. When mortgages were written and granted with little or no paperwork documenting the borrowers assets or types of income, they could have required more stringent documentation.

Part of the problem with many loans was this: I give you a loan for some amount and I have your signature on a note that you'll pay it back. I turn around and sell that note to someone else. Now, do I care if you pay back the money? HELL NO!!! That's now the buyer's problem. What happened too, was that I didn't check into your background or assets, because I knew that I wasn't potentially going to get stuck, as I was going to sell the loan to someone else!

Now, this is a part I don't quite understand in detail as yet, but I've heard it mentioned many times during the past several months, as foreclosures have mounted, and banks have gotten shakier and shakier. The banks didn't always insure the mortgages and CDOs to anywhere near the amount they should have. I've heard the term, "just pennies on the dollar" used in reference to this. Of course, less insurance, less money paid out for the insurance. If you have a home worth $100,000 and you insure it for $20,000, it will cost you a hell of a lot less than insuring it for 100 grand! Of course, if it burns down, guess what?

Boosting Confidence Is Not Enough

When the stock market suffered its famous crash in October 1929, then president, Herbert Hoover, gave a statement saying that the "fundamentals of the economy are sound." The President was trying to instill confidence in a market and nation that had been badly shaken. In those times, economic data was nowhere near what it is today,*** and having been in office for only a few months, the President sacrificed a large part of his credibility by giving his statement. It would come back to haunt him many times over, as he spent almost four years in office grappling with one crisis after another; all wrapped into a package called "The Great Depression. On the other hand, presidents are expected to step up to the plate and try to instill confidence in uncertain times. Some historians have called Hoover one of the unluckiest presidents we've ever had. Hoover's statement notwithstanding, the economy was NOT fundamentally sound, and it wasn't long before he and his administration came to that realization, as he called a conference of business and labor leaders just weeks later to try to avert a more serious downturn. It was too late, however.

Later, Ronald Reagan and Bill Clinton would each issue similar statements after stock market meltdowns; that is, "The economy is fundamentally sound." Why did the country not experience another depression after these stock market crashes? Because even though the economy is never perfect, it was more fundamentally sound when these two presidents were confronted with stock market panics.

So what about now? Well Bush took office, inheriting a government surplus. He got tax cuts passed, mainly tilted toward upper income people, and then he got into two wars.@@@ At no time did the president say that we needed to pay for these wars. Then he got prescription coverage added to Medicare, an admirable thing, but the costs were far higher than his administration had estimated. Again, no call on the American people to sacrifice to help cover the costs of any of these major expenditures. The two ongoing wars cost many billions each month. Then there was a tax package that gave breaks to oil companies, with the idea being that they would bring more fuel online to American consumers. They took the money, but have you seen or heard of ANY new refineries being opened, or even started? Maybe they're keeping it a secret. The biggest income inequality since just prior to the Great Depression has been pointed to even by Alan Greenspan and Ben Bernanke, among others, and they're hardly candidates for any "Socialist of the Year" award. Huge trade deficits, trade deals done without concern for American workers, cuts in job training for American workers, unions in decline, illegal immigrants at record numbers, oil/gas prices at record levels, record budget deficits, bank failures, and millions of Americans losing their homes,### all of this has led us to the present. "When you want to dance to the music, you've got to pay the piper." Bush has danced, but now we, the American people, will pay. The fundamentals are not there.

John McCain uttered those words about "the economy being fundamentally sound" just about ten days ago. Like Hoover, I'm sure he's regretted it ever since. He then said that we're in a crisis, and that we have tough times ahead. You can't have it both ways.

Treasury Secretary Paulson has been out trumpeting the economy, telling us things are not that bad. He must have been talking to former McCain economic adviser, Phil Gramm, who called us a bunch of "whiners." Then suddenly, Paulson tells us we're on the brink of catastrophe. Throughout the "Dubya era," Bush and his administration have looked the other way, or just didn't recognize what was coming, or they have been in serious denial. They and most Republicans in Congress, along with some Democrats (I'm not letting them off the hook) have "wedded" themselves to this "free market" philosophy. They have been so dogmatic, that they didn't even evaluate things on a case by case basis, they just clung to this philosophy. Now, like a marriage gone wrong, they will find that getting a "divorce" from this philosophy is not easy in the world of politics. As they seek election or reelection, we won't forget what they've done to us!

The "powers that be" have reacted too late, in my opinion. Unlike Hoover, they HAD solid and up to date economic data showing how bad things were getting, but they waited, and waited. Denial is a terrible thing!

***Ironically, it was Hoover who had developed many of the economic gathering services of the government during his time as Secretary of Commerce during the 1920s. He was highly praised for that work, but it can't compare to the technology and information that we have today, so he and his advisers can at least be excused for not always recognizing developing economic problems.

@@@I'm not judging whether these wars were/are right or wrong, only that they took place, and, indeed, continue to this day.

###Even Ed McMahon, of "Tonight Show" fame, has had trouble keeping his home. I'll tell ya, when millionares are in foreclosure trouble, things are bad all over!

The Economy Slides Further

Here is a link to a report about U.S. manufacturing. The economy continues to slide.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aY_yX5_X8Ulg&refer=home

Some Financial World Basics

I’m certainly not an economist, but I did stay at a Holiday Inn Express last night! (Just kidding!) Actually, I had a couple of economics courses in college, but that doesn’t exactly qualify me to be Federal Reserve Chairman. Then again, if living next door to Russia qualifies Sarah Palin to be vice president, hey... Federal Reserve, here I come! Just to give something of a basic explanation as to what is going on in the economy and financial world, here’s a little info, but it is only very basic and should not be construed to be all encompassing. The overall financial world is VERY, VERY complex, and even people who are involved in Wall Street don’t understand all of the various aspects of finance.

Years ago when a person got just about any kind of credit, that business held the note or agreement until it was paid. Back then, individual store accounts were common. If you shopped at such and such a department store, chances were you had a credit account there, too. The store (or the department store chain) carried their own credit accounts. If you got a mortgage from such and such a mortgage company (usually they had a bank affiliate that actually loaned the money), they sometimes held the note you signed giving the repayment terms, but with mortgages, they did often sell them to companies like Freddie Mac or Fannie Mae, the two companies that recently collapsed. They sell the mortgages to free up money to make more loans.

In more recent times, mortgages are written and then often times immediately sold. The basic idea and procedure being that “Mortgage Company XYZ” got you to take out the loan, they checked you out for credit worthiness for the amount you needed, they took care of all the paperwork, and then, after you signed on the dotted line, they sold the mortgage to someone else. A mortgage is just another word for a loan, but it is typically secured by the property that is being bought. In even more recent times, mortgages have been “bundled” into packages to be sold, or used as collateral. With the ongoing financial difficulty lately, you may have heard or read the term, “CDO.“ That is what these “bundles” of mortgages are, “Collateralized Debt Obligations.”

Example for mortgages and just about any kind of loan today:
I come to you to with hat in hand... I mean to borrow money; say $10,000. You do some kind of check on me, and either say “yes,” or “no.” If you give me the loan, I sign on the dotted line saying that I‘ll repay the $10,000, and so much more in interest over some specified term. Then you more than likely put my loan together with other loans, perhaps as many as thousands, and you sell the “bundle” to some investor, or more likely, some form of group of investors (banks around the world have bought or loaned money against these). They pay you a specified amount, freeing up money for you to loan out to someone else. They may turn around and sell this bundle to someone else, or they may use it as collateral to borrow money for whatever purpose. I hope you’re with me, so far.

So, now you’re saying, “Well, so what’s all the fuss about, then?”

First, there’s no easy answer to that question, because there are undoubtedly many reasons for what has happened, but I’d say there are “probably” two main things that have taken place with mortgages (forget about other types of credit, for right now). First, some mortgages were given without the originating company having done much to limit risk; that is, they didn’t check out thoroughly whether the person was a good credit risk. Now, when you loan money, there’s always risk, because lots of things can happen over a given period of time, especially for mortgages, which typically are written for thirty years. Anyway, as some kind of jokingly say, “They gave mortgages to anyone capable of writing their name, and got witnesses for those who could only make a big 'X.' " Often times, too, these mortgages carried very high interest rates, or had provisions that allowed the lender to raise rates after such and such a time.

Second, some areas of the country have been especially hard hit by jobs losses in more recent years, often times, but not always, in manufacturing. When these folks signed for a mortgage, they were very credit worthy. When they lost their jobs, that was it. Ohio, Michigan, Indiana are some of the states that fall into this category. Often times too, when interest rates were extremely low (post 9/11), many people who had existing mortgages refinanced them at lower rates, often times taking some cash out for some purpose, or they took out home equity loans. Again, once they lost their jobs, that was it.

So now we’ve got all kinds of “bundles” of mortgages that have been sold or used as collateral. Gradually, more and more people couldn’t pay their mortgages, resulting in defaults on many loans. Banks began to foreclose on these properties. The number of these cases escalated so much, that with so many foreclosed properties put on the market, that new or existing homes sales fell, and many folks had to lower the price of their property in order to sell it. (Now, in more recent months, IF they can even sell it!)

Guess what happened to the value of those “bundles” of mortgages? They lost value. As matters in the housing market deteriorated and foreclosures increased, they lost even more value. That brings us to very recent times, when no one even wanted to buy them at all, or take them as collateral. Thus you hear the term “toxic” used. Banks have had to write down losses in the billions as the housing market has collapsed, in my opinion, into a depression for that industry. As losses mounted, banks have often been pressed for money to cover all sorts of things, including reserves held to cover many deposits in their institutions. As financial information became available on how bad a condition some banks were in, their stock prices plunged, depositors have pulled their money out, and some have been taken over by the government or forced into mergers with what are thought to be stronger banks.

Further, the “bundles” of mortgages became a problem, too, because often times they contained thousands of loans and the banks having them didn’t have the personnel to check into the situation with each mortgage to see who was paying, and who wasn’t, and who might not be able to pay next month. That’s why you have heard that they don’t know the value of these bundles. No one will buy them, because they don't want to be stuck with a bunch of bad mortgages. In order to sell ANYTHING, you have to have a BUYER, and preferably many potential buyers to bid the price up. With no buyers, these mortgages are worthless, at the moment, until they can somehow get investors bidding on them, and thus setting a price for each.

This whole series of events shows no sign of getting better, either, as foreclosures have skyrocketed, putting more houses on the market at cheap prices, and thus preventing other folks from being able to sell their homes. If you lose your job and now make far less money, you may say, “Well, I’m going to have to sell the house and live more cheaply.” The problem is, there’s a good chance you CAN’T sell your house at a price that you need. It may well be worth less money than you owe on it! Eventually, in such situations, some people have given up, mailed in the keys to the mortgage company and left. Others have just plain abandoned their homes. It is just UGLY!!!

Part Two in a day or so.

Another Blow To Our World Image

Below is a link to an article about the how others in the world view the financial crisis. The Bush Administration has already damaged our image around the world in foreign policy and military matters. Now "The Bush Wild West Show" has taken us to new lows in world opinion.

http://www.msnbc.msn.com/id/26962762/