What's Cooking in Washington - A Recipe For Ruin

I find Ben Stein to be way out there when it comes to subject of science but with it comes to
How to Ruin the Economy he is spot on.

Here's his Recipe for Ruin

1) Have a fiscal policy that creates immense deficits in good times and bad, burdening America's posterity with staggering burdens of repaying the debt.

2) Eliminate regulation of Wall Street and/or fail to enforce the regulations that already exist, instead trusting Wall Street and other money managers and speculators to manage other people's money with few or no regulations and little oversight.

3) Have an energy policy that disallows producing our own energy and instead requires that we buy energy from abroad, thus making our oil prices highly volatile and creating large balance of payments deficits, lowering the value of the dollar and thus making the problem get progressively worse.

4) Have Congress mandate that banks and other financial entities lend money to persons they know in advance to have poor credit ratings or none at all.

5) Allow investment banks, insurers, and banks to bet their entire net worth and then some on the premise that borrowers known to be improvident will in fact repay those loans.

6) Allow the creation of large betting pools called "hedge funds" that can move markets and control the outcome of trading, thus taking a forum for savings and retirement for families and making it into a rigged casino game that exists primarily to fleece suckers like ordinary working men and women.

7) Have laws that protect corporate officers from being sued for misconduct but at the same time punish lawyers in the private sector who ferret out such misconduct and try to make accountable the people responsible for shareholder and investor losses. If one of those lawyers gets particularly aggressive in protecting stockholders, put him in prison.

8) Appoint as head of the United States Treasury Department a man whose whole life was spent on Wall Street, who became fantastically rich through his peddling of junk bonds at his firm while the firm later sold short those same sorts of bonds.

9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The "subprime" market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.

10) Propose to save the situation by surtaxing the oil industry, which is owned by our fellow Americans, mostly in their retirement plans, thus penalizing Americans for investing in companies that efficiently and legally produce an indispensable product.

11) Insist that the free market requires that banks and insurers with friends of the Secretary of the Treasury be saved but allow other entities not so fortunate to fail, thus creating total uncertainty and terror among financial institutions, and demolishing all of the confidence built up in financial circles since the days of FDR.

12) Then have the Republican candidate say he would keep on the job the Treasury Secretary who facilitated the crisis, failed to protect the nation from the crisis, got the taxpayers to pony up to save his Wall Street buddies, and have the Democratic candidate, as noted, say he would save the day by taxing the stockholders of energy companies.

There, that should do it.

Indeed

Have We Seen The End Of Bling?

Christina Binkley in the Wall Street Journal:
The Billion Dollar Question: Is Bling Over
How Luxury Executives are Handling the Crisis; Selling the Yacht

Francesco Trapani, chief executive of Bulgari Group, is cutting back on the fixed costs of his jet-setting lifestyle. The jewelry, luxury-goods and hotel magnate recently sold his 137-foot yacht, the "Christianne B," and he's holding off on buying any more homes. Even his bespoke Micocci shirt was slightly frayed at the collar last week -- a fact he acknowledged with an apologetic smile.
Wow...selling the yacht...not buying anymore homes....he's really cutting back there. Kind of reminds me of how Richard Fuld of Lehman Brothers is keeping his four homes but sending his art collection to auction....That's some serious economizing!

Not even the richest people are feeling untouched by our current financial crisis. In their personal lives, as in business, the purveyors of luxury are sizing up what it all means. Some of the questions: Is it unseemly to spend money publicly? Will people still shop for the all-important holiday season? Is this the end of bling?

Ralph Lauren Ricky Bag in Alligator $16,995

At the opening of its new women's store in Paris last week, Ralph Lauren upped the ante on its notoriously expensive Ricky bag: It will now be available made-to-order in 20 shades of alligator skin, including platinum, "vibrant cherry" or cobalt, and priced from $12,995 to $28,995.

But unfortunately for the Ralph Lauren brand, carrying a $30,000 handbag isn't just a question of money, it's become a question a good taste.

It's not necessarily a good thing to show up at the tennis club with a new $30,000 crocodile handbag when your friends' net worth has been halved and the Federal Reserve is spending billions to keep the banking system afloat.

The rising tide of anti-wealth sentiment could well affect how conspicuous the rich want to to be.

Let's face it, conspicuous consumption has become totally ingrained in our culture, from the luxury cars that we drive, to the handbags that we carry, to the clothes that we wear...with an increasing focus high end brands...why carry a $300 Cole Hahn handbag when you can carry a $3000 Nancy Gonzalez bag, why wear $20 Levi's 501 jeans you found on sale, when you can wear $200 Rock an Republic jeans... and on and on.

Is this the end of conspicuous consumption? I just don't know.

But, as the ultimate anti-conspicuous consumer and proponent of buying quality fashion for less money with vintage clothes, accessories and estate jewelry...I kinda hope so.

Banquets and Beauty Treatments with your Bailout

Just when I wanted to post something about about the new app for your iphone that will bring you photos of the latest runway fashions from Style.com...I had to come across this charming little piece of news.


WASHINGTON (AP) - Less than a week after the federal government had to bail out American International Group Inc. (AIG), the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.
The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.

St Regis Resort - Monarch Beach, CA

So while we are working away at our day jobs trying to forecast what the next year is going to look like as a result of the financial crisis, the executives at AIG are getting spa treatments.

You can view the St. Regis bill for AIG here.
It is just me or does this seem like something out of a Tom Wolfe novel?

Going for Galliano's Spring Jewels

I don't know why the John Galliano Spring 2009 Ready to Wear show this week in Paris needed to have models in over sized little bo peep hair and Napoleonic hats when some of the dresses were so very lovely. All that crazy accessorizing was superfluous.

Take these three dresses for example.

I love the rich jewel tone palate and the feminine silhouettes. Overall, I found this collection to be less over the top than his usual designs and except for a few pieces that were totally transparent, I found all of the outfits wearable.



In my dream Spring wardrobe, if I could only have this lovely long dress with the keyhole front... I would wear it with these 18 karat Etruscan style amethyst, zircon and yellow beryl dangle earrings from Beladora.com.

I don't know how much these Galliano dresses will retail at, but I would bet that they will be at least twice as expensive as these earrings.

Well no matter....I'm sure that our current economic meltdown will be over by next spring...you know with the bailout and all the "Change" that is coming our way. Surely I'll be able to buy one of these dresses and the earrings too!

Bailout Balderdash

So a 3 page bill aimed at bringing some measure of immediate relief for the mortgage crisis and the banks that speculated on so much bad credit has now turned into a 422 page barrage of BS.

I'm not surprised that this Bailout Bill has turned into another Government Boondoggle.
Are you?

This bill, now signed into law, includes
from Cnet

millions in tax breaks and related pork for kids' wooden arrows, Puerto Rican rum producers, auto race tracks, and corporations operating in American Samoa. (The likely explanation for the latter: StarKist has a large tuna-canning operation in American Samoa. And StarKist's parent company happens to be located in the district of House Speaker Nancy Pelosi.)

The bailout bill also gives the Internal Revenue Service new authority to conduct undercover operations. It would immunize the IRS from a passel of federal laws, including permitting IRS agents to run businesses for an extended sting operation, to open their own personal bank accounts with U.S. tax dollars, and so on. (Think IRS agents posing as accountants or tax preparers and saying, "I'm not sure if that deduction is entirely legal, but it'll save you $1,000. Want to take it?") That section had expired as of January 1, 2008, and would now be renewed.

There are also some Green - Tech measures in this bill that I don't necessarily disagree with...but they don't belong in this particular bill at this particular time.

The bill has become, in other words, something almost unrelated to the business of bailing out Wall Street. The Beltway term for this is a "Christmas tree bill," meaning everyone gets to hang their favorite spending projects on it--though by the time Congress gets it through, it more closely resembles a slop bucket.

And what about the potential loopholes?

Some loopholes exist. It's possible for a bank to buy $100 billion of bad debt--perhaps in the form of subprime mortgages that are becoming quickly worthless-- declare bankruptcy, and sell it to the Treasury Department for $120 billion, or $200 billion. In other words, although the Treasury Department is supposed to look out for the best interests of taxpayers, there's no law forbidding such profits in the case of firms involved in bankruptcy, receivership, or mergers.

Section 115 of the law says that the administration can, after notifying Congress and waiting 15 days, purchase and hold $700 billion of assets "at any one time." (It can buy and hold $350 billion without waiting.)
This, too, is a potential loophole. It permits the Treasury Department to buy up, say, $700 billion in 2008, sell those assets off gradually over the next year at a (probable) loss, and repeat the same process in 2009. Losses to taxpayers, in other words, could exceed $700 billion. Although the Treasury Department is instructed to try to avoid losses, yeah whatever...the text of the law does not forbid that scenario.

Now onto my basic bugbear: Executive Compensation
Section 111 is titled "Executive Compensation and Corporate Governance."
It does not include, however, any statutory dollar limit on how high executive salaries of TARP bailout recipients can be. Instead, it lets Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs, come up with "appropriate standards." In addition, only the top five executives will have their golden parachutes limited; all the rest will remain untouched, even if their second-tier salaries and bonuses happen to be in the millions or tens of millions of dollars.

Bear Stearns CEO James Cayne made $61.3 million from selling his shares a day after the JP Morgan bailout. Daniel Mudd, CEO of Fannie Mae, was replaced last month; he made $11.6 million in 2007. Richard Syron was chairman and CEO of Freddie Mac from 2003 until last month. He made $19.8 million last year. Martin Sullivan was ousted as president and CEO of AIG this summer, and was paid a $47 million severance package.

Pigs at the trough indeed