Tom Petty Knew

Song lyrics politics. No I haven’t been drinking this morning, but maybe I should be . Right now is the perfect time for a Bloody Mary and a shot of bourbon.…

I was talkin’ with a friend of mine,
Said a woman had hurt his pride.
Told him that she loved him so,
And turned around and let him go.
Then he said, “You better watch your step”
Or your gonna get hurt yourself
Someone’s gonna tell you lies,
Cut you town to size

Don’t do me like that,
Don’t do me like that,
Baby, baby, baby,
Don’t do me like that.

So, there I was reading the morning news, baffled and befuddled by the seemingly unrelenting hypocrisy that spills form the headlines on a daily basis and then this song popped in my head. Tom Petty and the Heartbreakers are one of my all-time favorite bands so it’s only natural that I could associate the words of this song with the politics of our times.

Imagine you are the narrator in the song, the guy doing the talking and now imagine you are talking with your friends. Let’s say they are ultra conservative and every time you talk to them they warn you about the government and the hypocrisy of our politicians. No replace the ‘woman’ in the lyrics with any government official. Bingo, it’s the perfect warning.

What has me so riled up this time? Well it’s Ben Beranke, the Fed Chairman. I read in the paper today that he is now warning congress and the government that they need to immediately start creating plans to reduce the deficit or we’ll face huge problems down the road.

ARE YOU KIDDING ME! Now he’s saying this crap? What? When he’s been right at the forefront of printing money to buy our own debt essentially the creator of the ‘money for nuthin/’ scheme that has gotten us in the situation.

Talk about hypocrisy! Do these guys forget what they say from day to day? Isn’t Bernanke part of the old Three Stooges (Bush, Paulson & Bernanke) and the new Three Stooges (Obama, Geihtner, Bernanke) that said what we need to do is spend our way out of this recession and then set our government on a course to do just that!

Unbelievable! That’s all I have for you today, just freaking unbelievable.

I was talkin’ with a friend of mine,
Said the politicians had hurt his pride.
Told him that they loved him so,
And then they turned around and let it blow.
Then he said, “You better watch your step”
Or your gonna get hurt yourself
You guys gonna tell you lies,
Government’s power will cut you town to size

Don’t do me like that,
Don’t do me like that,
Obama, Giehtner, Bernanke,
Don’t do me like that…..

At least we still have the music, they can’t take that away can they? Can they? What? Oh Nooooo!

Lending Lies

There is a great new show on Fox called Lie To Me. In the show the main characters are experts at facial expressions. They can literally tell when someone is lying by the look on their faces. Pretty amazing and fun to watch.

I wish I could get the bank execs in the room with these experts. Here's why, the banks say they are lending, but are they really? The truth is that many banks have increased lending but at a paltry rate.

Bank of Americas recent revelation that they earned a profit of almost $4 billion dollars in the last quarter was quickly quashed and the ‘real’ number was reduced to $2.5 billion. But even that number may not be accurate.

B of A, Citi and other large banks would have us believe that these profits stem from an increase in lending to home owners, when the truth is that lending increased less than 2% over the same period last year. So where did the profits come from?

The profits came from thin air. As reported in a very eye opening article on MarketWatch.com, much of the banks profits were driven by the TARP money they received. With TARP plugging gaps in the banks balance sheets, huge write downs allowed by larger banks swallowing up smaller failing banks and additional relaxed accounting rules allowed by regulators, the banks all of the sudden look very strong.

But that’s not the real story. The real story is this, banks aren’t lending for good reason. After years of excess and easy money the banks have learned their lesson and their hording their cash to protect them from further market turmoil.
In a recent quote in The Wall Street Journal, Fed Chairman Ben Bernanke talked about the need for more education about credit by addressing the inequities in wealth between whites and minorities.
He stated: "Part of it has to do I think with financial education," Mr. Bernanke told students at the historically black college. "There needs to be broader understanding in minority communities … about the importance of saving and building a credit record."
In my opinion Mr. Bernanke missed the point. This is more than a white vs. minority issue. He could have just said; There needs to be a broader understanding …and a core curriculum starting in grade school that teaches… the importance of saving …money… and building a …good... credit record. (the bold comments are mine.)

Additionally, I still hold to my belief that America needs to change our economy from a spending based econ to a savings based economy. Some have argued that this will limit growth and achievement.

Those that argue against a savings based economy miss the point completely. All a savings based economy refers to is an economy where the pace of credit spending does not outpace the rate of earned income and savings.

http://www.marketwatch.com/news/story/Banks-say-theyre-lending-theyre/story.aspx?guid=%7b4280B32E-53CB-49A7-8DC8-D0E95F855358%7d&print=true&dist=printMidSection

Watch the Birdy

Recently in the news there was a lot of furor over AIG giving out millions in bonuses to some of it's top executives. I don't want to get into the argument of whether that was correct or not, I'm sure there are many opinions on both sides.

What I want to point out today is something that many of us missed. While the left hand was waving for our attention the right hand was doing something else that the dolts in the media didn't see.

While the spectacle of Chris Dodd stuttering uncontrollably as he tried to explain his way out of allowing the AIG bonuses without throwing the Obama administration and Timothy Geihtner under the bus was amusing. It served to dupe the one-sided media types.

What didn't get reported this weekend and last week was the fact that the Feds decided to throw and additional $1 Trillion dollars at the market and made an additional $6 billion dollar commitment to keep buying MBS (mortgage backed securities).

Sounds good right? What's so bad about that. Well I'll tell you. They don't have the money ...or should I say WE don't have the money to do this with. So the printing presses were pushed into full gear and just to top the bad news off with more bad news... ready...

We used the freshly printed money to buy our own debt. Now in the real world this is essentially like 'kiting' a check. You know, you go down to the bank and you deposit a check from your own account back into that account.

You don't really have an extra grand in the bank but for a brief while the books show that you do. The government just did that. I dare you to try it! They would nail you for fraud and throw you in the slammer for sure!

But the hypocrisy of all this nonsense is not the worst part. The worst part of all this is that we know, everyone with any common since and historical economic knowledge knows that printing money devalues the currency and leads to inflation.

Our only saving grace is that monetary policy with regard to printing new dollars has been relatively tight over the years and we are in a recessionary time, so maybe, just maybe we make it without getting dinged to hard this time.

It's scary out there. While things should start to improve, we won't see real improvement and wealth generation until the bureaucrats and blow-hards in Washington quit with their Tax & Spend ways.

America, this is our wake up call! We can't spend our way out of the mess this time. We need to save and our government needs to save along with us. It's time to STOP spending money we don't have.

That's my opinion, I welcome yours.