Category Archives: Politics

Cuddle Up to the Trough, Little Piggies (er, banks)

Posted by bulldawgy on October 3, 2008 1 comments

What to make of the government bailout?  It finally passed, you know.  I think Bushie was standing on the floor of the House to sign it as soon as the gavel fell.  Sad, really.  Very sad.

It is sad that our economy and our country have come to this.  I personally believe that something had to be done.  Reasonable minds can differ on what we think is and was necessary – but to have done nothing – would have spelled certain disaster for our economy.  Without capital, banks cannot lend – period.  If banks don’t lend – then the economy stops.  Not too many companies and corporations (yes, those evil – greedy corporations – that provide JOBS to the masses) are capitalized enough to operate without debt.  So – without lending (without debt) the economy comes to a screeching halt.

We can all be self-righteous – and claim that everyone should live as Dave Ramsey would have them to – debt free.  But the reality of an economy that immediately has no lending capacity – well, it’s brutal.  It’s like a plane – slamming into a mountain.  Or, to use an analogy that many will understand – it is like poison ivy.  You see – right now – our economy has rubbed itself all up in the poison ivy.  That nasty itch producing stuff is all over us.  But just like it takes a few days for the allergic reaction to begin – so today – we find ourselves in that pre-reaction stage.  People are starting to feel it, but not enough to think that $700 billion is needed.   But the itch, the nasty – oozing – spreading itch is coming.  It’s coming – even with this bailout bill.  Just wait.  It’s going to be painful.  And the $700 billion bailout bill is like a big, fat steroid shot in the economy’s butt.

If you like reading financial news, read this article by William Isaac.  He is smart – and used to run the FDIC back in the day.  He thinks the bailout bill stinks and that there are other things we could have and should have done.  He’s right.  However, ultimately – something had to be done.  Let’s just hope our next president has the sense NOT to raise taxes. 

Ultimately, this is all in the hands of the Almighty – and that is a comforting thought – as we find our hope not in government and presidents, but in Christ – our Savior.

Is the Bailout Plan a Good One?

Posted by bulldawgy on September 22, 2008 1 comments

Since all my pals out there are so keenly interested in finance and accounting, I thought I’d supply you with ample bathroom reading for your week.  As you may know, the U.S. Treasury Department has presented a plan to Congress to purchase impaired assets of financial institutions.  An impaired asset, for those of you who majored in history in college, is an asset which has a lower value in the market than it does on the holder’s balance sheet.  This can happen for many different reasons, the most prevalent reason today is the large amount of mortgages that can’t be paid by the borrowers.

So, in that light – William Isaac – a former chairman of the FDIC – has an informative opinion on how to save the financial system.  He seems to think the crisis could have been avoided altogether.

At the outset of the current crisis in the credit markets, we had no serious economic problems. Inflation was under control, GDP growth was good, unemployment was low, and there were no major credit problems in the banking system.

The dark cloud on the horizon was about $1.2 trillion of subprime mortgage-backed securities, about $200 billion to $300 billion of which was estimated to be held by FDIC-insured banks and thrifts. The rest were spread among investors throughout the world.

The likely losses on these assets were estimated by regulators to be roughly 20%. Losses of this magnitude would have caused pain for institutions that held these assets, but would have been quite manageable.

This is just one man’s opinion – but as an accountant, I think he has a pretty good point.  After the dust settles on this mess, the U.S. taxpayers are going to be saddled with hundreds of billions of dollars of debt – which will have to be repaid by our children and their children.  It could have been avoided.

WSJ on Rick Warren

Posted by bulldawgy on August 25, 2008 1 comments

Regardless of what you think of his book, the Wall Street Journal has a nice article on Rick Warren and politics. It’s a pretty quick read and provides a good perspective on the man.