Looking Ahead

LOOKING AHEAD by Wally Dobelis Quo vadis, President Obama? What was President Obama doing, breaking his campaign earmark elimination promises, an action that has driven his Republican opponents crazy? Why did he approve a year-old pending $410B spending bill with $7.1 B of earmarks? Well, it fits with his confidence building plan, the idea of not letting the constituency get so scared that all general spending stops and having people stuff those marginal discretionary funds in mattresses, with our and the world’s economies consequently ceasing to roll on and dying down. Anyway, call it “don’t sweat the small stuff.” Why then is he not really attacking the bank and credit system collapse, maybe letting the bad ones die, be nationalized , let GM and AIG go, as Senators Schumer and Graham had recommended? My personal opinion about the collapse of Wall Street stock prices is that greedy moneybag speculators were short-selling equities to the max early in March, with DOW down to the 6,000s, waiting to lower the bottom as much as possible before cashing in, and that the President and the Treasury Secretary are letting them do so, to shorten the period of pain and to expedite the stock markets’ recoveries. That is called “letting the market forces operate,” something that the conservatives applaud. Recover they must. As is, vultures (see ex-Countryside CEO Stanford Kurland, now heading PennyMac) are already snapping up mortgages from the government at 38 cents on the dollar, at the taxpayers’ expense, painful to us , but that is precisely what we need, helping to set a price and a bottom. There are billions of dollars abroad and here, and ready speculators, who pushed the oil prices to $150 a barrel before letting them collapse to $40, and making their scores, the same people who are torturing us now. Let the market bottom out soon, asap, let the pain be brief, and may the shorts roast in fires of hell. The idea that the market is ready to recover bears out when a mid-March internal memo at Citicorp announcing a small last quarter banking profit had the DOW jump nearly 400 dollars, with some minor other good news causing the week’s total rise of 9%, now up to mid-7,000s, worth trillions in market values. Or was it another trick of the shorts, leading to the next see-saw phase? The bank collapse revealed a lot of shameful things about more people and institutions. Switzerland is a country that lives on banking for people with secrets, and its UBS, Switzerland’s flagship bank, has 52,000 US clients , corporate and individual, 17,000 of them suspected of evading taxes. The bank will not divulge the names. To save that country’s raison d’etre, the UBS CEO, Peter Kurer, was fired, and a former Minister of Finance with international reputation, Kaspar Villiger, replaced him, to carry more weight in international negotiations. UBS agreed to pay $780M in fines to avert indictment to the charge that it had defrauded the US of tax revenue on some $20B of deposits. That is only a fraction of the tax havens worldwide. Someone figure out how to divert that into recovery measures, please? The market uptick also related to the Bernard Madoff jailing. This brings up the question of his 14,000 victims. It is hard to believe that so many rich business people, accustomed to evaluate, could succumb to a belief in the magical superpowers of a stock market operator. More likely, the belief was in Madoff’s ability to perform shenanigans of which one would be better off not knowing the details, sort of “teflonize yourself” don’t as questions about the sources of wealth rolling in. Regrettably, many ignorant widows who trusted their neighbors were caught up as well. The lesson is to diversify, although it should be “honesty is the best policy,” if you’ll pardon my quaint language. So, what is President Osama doing to lighten our lives and propagate jobs? Why generate an outrageous $3.55T budget for 2010, with health programs, clean energy and education, and not concentrate on the banks and the market? Well, for one he is sort of putting the fulfillment of his campaign promises, of health programs for everybody etc etc etc, back on Us the People, the Congress of the US. The Clintons tried using force in 1992, and failed. The budget seems to be what we in business call “exposure draft” a.k.a. “run it up the flagpole and see who’ll salute it.” Many health, environmental and education ideas, and “buy American” will definitely be dropped, although the anti-tax and anti-government people are in retreat, in the furor of the popular outrage over the bonus/retention payments for bailout recipient fat cats. We wish President Obama the best of success. And bad cess to Rush Limbaugh and his sorry pol GOP cohorts for wanting him to fail, and for shaming Michael Steele. Look, elephant clan, Democrats swallowed their pride and backed Bush in 2003, when they perceived the country to be in danger; these times may be even more crucial. People in the glue factory, we must stick together.