The Blackmail Worked

The government, led by the US House of Representatives, has learned the tactics of the Mafia: Blackmail. Even as activists and capitalists are setting up tours of the homes of AIG executives for angry mobs, Government Lawyers are offering to keep the names quiet of those that return the money, with a clear implication that those that retain the money will be made public.

The Government has made the executives "a deal they can't refuse." When Chris Dodd (Senator-CT) & Timothy Geitner (Treasury Secretary) finally admitted that they had personally had a hand in the language of the CEO Bailout Bill allowing the bonuses, the House of Representatives had their back. The House, believing themselves to be riding a tide of populism, voted for a 90% tax on Specific Individuals.

While such a targeted tax on money earned prior to the legislation would not likely pass the Constitutionality test in the court system, the cost of legal representation (lawyers) would have cost more than the new government employees had earned.

It is now being reported (CNBC) that most if not all of the US executives that received a bonus have "voluntarily" returned it. Most of the remaining executives keeping the bonuses are foreign residents, i.e. not subject to the targeted tax of the US House of Representatives.

Was all of this hoopla, was this blackmail by the government worth the $50 Million returned or even the $165 Million paid in bonuses? Or was this simply something to divert our attention from the fact that Congress paid out $700 Billion to their CEO Constituencies from the pockets of the common worker? Even if all of it is returned, that's still $699.8 Billion paid out of OUR pockets.

At what cost did these executives return the money? The check came with their resignation. In the midst of turmoil at the now Government owned AIG, now AIU (they changed the name), the top managers have decided to walk out. For some, we might say "good riddance." For others, their knowledge, expertise, and experience with the problem itself may mean, we need them. We simply don't know anything about who was there, who was paid a bonus for what, and hence who left.

Those that left were targeted because of their earnings, not their performance, which may or may not be tied to their performance (should be). If the bonuses worked the way they should have, they would have been paid to those that did the most to keep the corporation in the black. But we don't know, do we?

There is a bit of good news in this: Corporations have learned that Government is not a good business partner. The entire affair has been more akin to an Organized Crime operation than what I expect of government. Several Corporations were forced into the "deal they could not refuse." Once in, they found themselves bullied by politicians that have a record of losing money.

But there is a winner in all of this: Warren Buffett, a major contributor to the Obama campaign. Buffett, through his corporation, Berkshire-Hathaway, is known for his market prowess. Even as Congress first began considering the CEO Bailout Bill, Buffett expressed a wish that he could get in on just 10% of it. Meanwhile, he had $50,000,000,000 sitting on the sidelines, waiting for just the right moment to jump in.

And as the financials market plummetted with the acts and talk of Congress, he found his mark. It wasn't the "toxic assets" and failing banks that Representative Frank and Representative Gordon were forcing the American taxpayer to buy. It was the best of breed, Goldman-Sachs, that had to be co-erced into the bailout that he bought into.

We don't know when exactly he bought in, but on November 3, 2008, GS was selling at $89.09/share and on November 20th at $52.00/share. As of March 23, 2009, it is selling at $111.93/share. That's a gain of 25% to 115% gain in less than 6 months on a stock still considered undervalued by the very system that Obama supporter, Warren Buffett uses.

Warren Buffett is an astute investor and one of the richest men in the world. Many people shook their heads when he so forcefully backed both Hillary and Obama last year in the campaign. Who would have thought then that the tens of thousands he personally donated would earn him literally billions of dollars? Should there be a targeted tax on his earnings? Will there be politicians riding a tide of populism to call for it? NO.

As immoral as it is to back a political candidate for personal profit, it is not illegal. Though it may be satisfying to "tax the rich," to "stick it to the man," to forcefully recover those profits through targeted taxation, it is not Constitutional. It is not legal, nor should it be.

But there is more to this story. Goldman-Sachs, which was bullied into accepting taxpayer money it didn't want, has realized that Tony Soprano would be a better business partner than the US Congress. They didn't want the money. They didn't need the money. And they are working on ways to get rid of the dirty money as quickly as they can.

Goldman-Sachs is looking around at the strings and demands being made on others. Perhaps, they will also pick up the best and brightest from AIG executives, even as they rid themselves of the strings tied to government money.

And a final note on AIG, which is now 80% owned by the US Taxpayer. It is no longer named AIG. It is paying large amounts of (taxpayer) money to change its name to AIU, though many are preferring a more appropriate name IOU, for the failing US Government owned company.

Meanwhile, the US Department of Treasury, parent of the IRS, has grown to a prominence and to power, previously unknown in this Nation.

And I cannot help but find poetic justice in Code Pink having turned on Barney Frank and other of their allies that used them in the anti-Iraq campaign.

Tennessee Taylor©2009, TNT, all rights reserved

Outright Lies

Larry Summers:

"There are no tax increases this year." Obama Adminstration, Larry Summers, CNBC 3/17/2009

I guess he thinks people won't notice that the Government increased the Cigarette Tax by $8.00 a carton.

I guess he wasn't listening when Charles Schumer threatened to take by force the Bonuses of AIG, if they didn't give it back willingly, due to threat of force. Frankly, it sounds the same as a common thug, mugging someone downtown Washington DC. "Give it to me, or I'll take it."

Clarity again: It's morally wrong for those executives to take the bonuses. It's contractually obligated they be given those bonuses. It's not in the least bit illegal for them to keep them.

It's not constitutional for Congress to have forced the Taxpayer to buy AIG. It is reprehensible that they did not read their own legalese before they forced us into that $700 Billion in debt (+interest).

Schumer, Obama, Gordon, Cooper, Cohen all voted for the $700 Billion CEO Bailout bill, the same one they're now complaining about.

Tennessee Taylor©2009, TNT, all rights reserved

Is It Malfeasance or Ignorance?

Our Congressmen seem outraged that the Executives of AIG and others are receiving bonuses while presiding over losses. Our Congress has resided over 200 years of losses, 200 years of debt. Why do they continue to get pay raises?

Our Congressman, along with every other member of his party from this state, short of Lincoln Davis, plus the Representative from Chattanooga voted for the CEO Bailout Bill. Marsha Blackburn led the minority party of our state, minus Zach Wamp in opposition to the CEO Bailout Bill, championed by then Senator Obama and supported by his opposition to the Presidency.

They tried to sell it to us as an "emergency" requiring "immediate action." They didn't have time to read the 700+/- pages of legalese and we have to wonder who had time to write it. But why now are they surprised that so much is being spent in Executive Bonuses? Perhaps because they didn't read what they voted for? Or perhaps because they knew it benefitted their campaign paying constiuencies?

We had little choice in the election of 2008. The press didn't cover the positions of Chris Baker. There is unlikely to be much coverage of the 2010 nominees for a while.

It didn't take long for the Common Sense Citizens of Tennessee to voice opposition to the CEO Bailout Bill. I withheld opinion until I could see the bill, but it didn't take but a few sections to realize we were being sold down the river. So why, did OUR Representative vote for it? Why was it that he bucked the views of the people of our district and why did he not realize it did not stop the largesse of CEO's and Executives?

Does he believe we have such short memories? Does he believe he can gloss over his support of the CEO Bailout Bill, the UAW Bailout Bill, and the Debt Stimulus Bill? Does he think that we will forget that he has voted FOR quadrupling the deficit in less than 12 months?

But let's be clear: It's not illegal for the executives to take the bonuses promised them. It is immoral for them to take the bonuses. It is not illegal for them to enjoy lavish retreats while contributing to the political campaigns of those voting for their bailouts. It is immoral.

It is not illegal to vote for earmarks, all 9,000 of them but it is irresponsible to do so. It is time to send a Common Sense Citizen to Congress. It is time to send a nice guy to pasture. It is time for Our Representative to Endorse a true representative of the People of Middle Tennessee. It is time for the follower of Gore to be replaced with a follower of Andrew Jackson. It is time for us to realize that the whipped Blue Dogs are not the Democrats of our forefathers.

Tennessee Taylor©2009, TNT, all rights reserved

Who Should We Trust With OUR Money & OUR Future?

Politicians continue to tell us that those "evil CEO's" have bankrupted their companies and sent the economy off the cliff. To a certain extent, they have a point. Simple greed has led to poor decision making by people as diverse as individuals to corporations. But the economic downturn is global, not local.

Some things are within the scope of an individual's responsibility and other things are not. A person who takes out a 105% loan (as Obama proposes to offer through the US Government) should be astute enough to know that they can't sell that house for the amount they owe on it.

A person with an income of $36,000/year should know that they cannot pay back a loan with a monthly payment of $3,000/month.

A CEO has the job of ensuring a corporation does what it can to make money. Sometimes, conditions outside his control, like an economic downturn or Congressional interference in those policies, will negatively impact his ability to do so. Other times, it is purely on his head that the corporation does not make money for its investors.

But, when one has failed to live up to their financial obligations and responsibilities, the last place that they should go to for advice is someone with a worse record on financial responsibility. When Citibank (and others) lost money in the short term, Congress's record of 200 years of financial irresponsibility at the very time they are accelerating gross irresponsibility is the wrong place to look for advice.

Sure, it sounds nice to hear that we will soon get "free health care" but nothing is free. The Government is one of the least efficient organizations in the Nation. Congress mismanages nearly everything they touch.

CEO's should not be getting multi-million dollar bonuses for loosing money, but Congress should not be the one to change that: Shareholders should be. When Congress becomes the board of Corporations, we will see greater mismanagement, not less.

And we already see the first nationalization of a bank, in earnest: Citibank is now up to 36% government owned. In fact, just two years ago, it would have taken half of the CEO Bailout bill to buy Citibank alone, but now, the $700 Billion CEO Bailout Bill could purchase more than 75 CitiBanks, outright.

We must send a Common Sense Citizen to Congress.

CEO Bailout: Congress Extracts Their Pound of Flesh

Today, 11 FEB 2009, Congress is interrogating the Banking Industry. It is being broadcast live on CNBC and is quite telling of the lack of quality of politicians we have sent to Washington.

The CEO Bailout (TARP) should never have happened in the manner it did. It was a key point in assessing the Campaign to send a Common Sense Citizen to represent the 6th District. Representative Gordon voted for the bill and there was little choice in who to replace him with. The only other person on the ballot in 2008 had received virtually no press in the media.

Things to consider in this are that Banks did not have opportunity to "opt out" of the hostile takeover by Government. I opposed the CEO Bailout privately from the beginning, from the point we discovered the details the House of Representatives first voted on. The Senate only made it worse.

The US Congress decided to force banks to hand over Preferred Shares of their Corporations and take money in return. Preferrred Shares pay dividends but afford no voting rights, no decision making capacity.

Today, one Congressman (I didn't recognize him) demanded that the Common Shareholders of the banks be paid NO dividends until TARP money is returned. Common Shareholders are Americans that have invested their money in the the Corporations. They are the ones taking the risks, the ones that have paid for voting rights, and who have been hurt most in the banking industry downturn.

When Congress demands shareholders be short changed by a lack of dividends, they are removing the money that Retirees count on for their month to month income.

For Congress to chastise any organization for operating in the red, for spending more than they make is pure hypocrisy. The US Government has operated on Debt since Andrew Jackson was President. And while not all debt is bad debt, this Congress and its predecessor have implemented and continue to implement the greatest increase in the history of Our Nation.

The same Congressmen chastising the Banking Industry for a few bad quarters have voted for two quarters of deficits larger than any year EVER in our history. The same Congressmen that demanded banks loan money to unqualified individuals in the 90's and early days of this Century are now demanding to know why more money has not been lent and why those earlier loans went bust.

In the interests of full disclosure, I own common stock in a bank, Regions Financial and previously owned stock in Bank of America. My opinions as a shareholder differ from my opinions as a taxpayer. As a taxpayer, I'm appalled that I was forced into debt by Congress so they could create an Investment firm. As a shareholder, I expect the CEO's salary to reflect his success or failure. I believe in the Lee Iacocca model: if you lose money, you don't get paid as the CEO.

I sold my BoA stock because they were going down the wrong road in my opinion. I neither had as much as did the Clintons, nor did I time the market as perfectly as did they.

As a shareholder, I want banks to act appropriately, to make decisions that will make money and to do so morally. If a corporation is a good corporate citizen, it will make more money. If it treats its employees, its customers, and its suppliers right, it will be successful. Greedy companies will lose in the long run.

I don't want the US Congress running corporations. Their job is to set the rules by which companies run, not to run them. The US Congress has an abysmal record of running things, particularly when it comes to money.

But today, Congress is teaching their Corporate Constituents a lesson: all things come with a price. The banks may not have had opportunity to reject Federal money, but that money came with strings and a bear hug while politicians put that long dagger in the backs of the Banking System.

And Congress has really broke one off in the Banking Industry. They first forced the money (borrowed in your name) on the banks. Then they set penalties if it is returned before three years is up. Now they are demanding billions in dividends be given the Government while at the same time demanding that Roths, IRA's, and Investors be shortchanged of their dividends. Like any other bully, major shareholder, the US Congress is demanding their way.

Unfortunately, Congress is full of lawyers, not businessmen. This is not the time to be selling jets. It's a time to be buying jets from those hurting for cash. Just as the best deals are from those in dire straights by those that have planned for them, so too is now a good time to be getting good deals on jets, construction equipment, and cars.

Meanwhile, the Senate has announced the finalization of the Debt Stimulus bill. I'm proud to say our two Senators voted against it. The Debt Stimulus bill adds another record amount of debt to our Nation. More debt than either of the two quarters of debt, each of which would have been an annual record on its own. I doubt Our Representative, a whipped "Blue Dog Democrat" will vote against it this time, given his record of voting for it previously.

TNTaylor©2009, TennesseeTaylor, all rights reserved.