WHO IS RESPONSIBLE FOR THE AIG BONUS BOONDOGGLE?

       For the past week or so, the American people have exploded with anger over AIG's granting of 175 million dollars in "retention bonuses" to high executives, just to keep them working on the job of a failing company.      This is after the failing company has already received 180 billion dollars of taxpayer's money just to keep afloat.  Also AIG had given out millions of dollars in regular bonuses by year's end, even though they were defunct.

     Of course, the company CEO, Mr. Libby claims he had no choice to pay the bonuses since they were part of the employment contract with said executives.

     The American people have an absolute right to decide where and how this public money is to be spent but is required to depend on their representatives in congress to enforce their principals that you do not give a bonus to employees who put their company into a state of bankruptcy.  Unfortunately, congress has failed us again because they cannot read.

      This aid to AIG started when former president Bush and his treasury secretary decided to give AIG about 35 billion dollars from the federal reserve bank funds in the early fall of 2008 to shore the company up to make insurance payments for bad loans suffered by financial institutions like, Goldman Sach, a company which secretary Paulson had headed as it's CEO.    It is interesting to note that all these companies have contributed yearly to congressional candidates like senator, Chris Dodd, chairman of the committee on banks and banking, and to presidential candidates such as Barack Obama.  Some of these political contributions were made after the October, 2008 bank bailout.      

        Then, as part of the hurried bank bailout bill proposed by then president Bush in October, another 760 billion dollars was handed to secretary of the treasury Paulson to dole out at his sole discretion to whomever he chose.   I believe under this bailout AIG received an additional 85 billion dollars, most of which went to banks or bonuses and lavish parties for top employees.   Again all this  money was appropriated by a generous congress, just before election time for congressmen who reaped millions of dollars in campaign contributions from AIG banks and financial institutions congress had just bailed out with our public money all these bailouts were allegedly designed to free up loans to businesses and help the mortgage foreclosure market.

     By January, and president Obama's inauguration we learned credit loans were still unavailable and the mortgage help was not forthcoming, these same benefited banks refused to account to the government that had just assisted them as to just how they spend the money.

     All this is a result of congress's failure to insert conditions and restrictions as to the use of this money as it should have.   Now we learn that a large part of this public bailout money went to banks in Germany and France to help bail out foreign banks, this is utterly ridiculous and totally unacceptable.

     By mid February, president Obama called for a stimulus package to be passed by congress, who, obliged with a 785 billion dollar bill, filled with earmarks and pork projects and including another 65 billion dollar bail out for AIG. 

      When this bill was passed in early March, it was discovered that it contained an authorization to pay AIG's top executives 165 million dollars in retention bonuses, inserted at the last minute by this same senator Chris Dodd, chairman of the senate committee on banking.  You will remember in their rush to pass this bill at president Obama's behest, the final bill contained 1100 pages which, was delivered to the congressmen on the morning of the vote, which took place without one member reading it.   

      When the bonus boondoggle was revealed everyone in the nation, including president Obama, "expressed shock" at its inclusion.   As a result of a news correspondent's interview of senator Chris Dodd and secretary Geithman, it was learned, or we were told, that the good senator had inserted in the bill a prohibition to these bonuses but that the secretary's staff had convinced him to strike it and replace it with a specific authorization for these bonuses "as long as they were in the public interest".   

      This is how the congress has repeatedly failed the American people who have elected them to protect their interests.  They did not even bother to read the bill before the vote or ask for time to read it.  Since when does a member of our legislature bow to the executive branch?   If there was a legal question raised by this removed provision it should have been ruled on by the house or senate legal staff, not the employees of the treasury department.   

      The fact that the house recently passed a bill taxing these bonuses was a mere smoke screen to cover their past blunder in this regard.  The senate has stalled it.

       The American people now realize that congressional members are in business for themselves and not for the American people who elected them.     It is obvious that they are motivated by greed, profit and how much money they can extract from bank and financial institution's lobbyists, who gave congress a total of 2 billion dollars last year alone.   Now you know who congress is representing and it obviously is not the American people if they did, we would not be in the economic crisis we find ourselves and this is but one example of congresses failings.   

     It is ironic, that as to this bonus boondoggle, the American people habitually feel that one person is to blame and call for their resignation.   Here we have a prime example of the continued incompetence of the entire membership of congress and no one is blaming the legislature responsible for passing the nation's laws, as they should.

      If the bonuses paid to AIG employees with taxpayer's money was bad, so are the campaign contribution given by AIG with taxpayer's money to members of congress.   This money should also be returned to the treasury by these congressmen.

     This whole bank bailout scheme is nothing but an attempt by politicians to keep the hen laying the golden eggs for them, and their re-election efforts.     We should demand a stop of bailouts and loans or help by the government to private companies.  No one forced them to make bad loans and for that, they alone should pay the consequences, if they cannot survive, their fate is the bankruptcy court. 

      President Bush doubled the national debt in his 8th year tenure now it's certain that president Obama will double it again in four years and again in eight years.    

     Congress must stop earmarks and pork barrel spending while we have this, economic crises, while our president must stop spending money unless it's specifically for jobs for unemployed American workers.  CEO's are robbing companies with excessive pay stock options and bonuses. 

     Finally, we watch as each political party blames the other for this crisis, and the sad fact is that they are both right.  They are BOTH to blame.

"TOO BIG TO FAIL" OR THE BIGGER THEY ARE, THE HARDER THEY FALL,

THE PLAN TO SHUT DOWN THE AMERICAN STOCK MARKET

Dear president Barack Obama,

       I have heard you and a few other office holders say and conclude, that certain financial institutions and banks including that giant insurance company A I G are "too big to fail."

      As I digested that remark, a bell went off in my empty head.  Maybe the answer is, to keep all businesses small and controllable.  Then we could allow our traditional free enterprise system in this country to work and flourish.  Those that cannot compete and adapt will fail, as they should, only to be replaced by others.   Instead of A I G we should have "m & p, mom and pop" operations that seldom fail and if they do another will spring up to replace them.

      It is obvious that we have allowed big businesses to get bigger and bigger by buying up other companies or merge with others to become unmanageable conglomerates with high priced CEO's dragging down huge salaries stock options and bonuses.  We need strict controls passed and enforced, now!

      At the same time, with Wall Street's support some perfectly successful companies have been allowed to go public and have their value, bid up in the American stock markets only to have their original owners and investors sell off their stock to make a huge profit at the expense of the blind and neophyte investors in the stock markets looking for bigger profits, the low interest banks have been paying due to the control of the bank discount rate by the likes of chairman bernake of the federal reserve system have driven investors to the market like bees to honey.   He may be manipulating to control inflation, but at the same time he is preventing the conservative saver from obtaining decent interest on their bank deposits.  Many foolish holders of IRA and Keogh retirement plans felt compelled, because of this lack of interest income over the inflation rate to gamble with their funds in the stock market which has now dropped half its artificial value when the economic bubble burst in our faces.  Now the average American realizes that the American stock market is nothing but another gambling den, based on bidding for public company stock prices and not the reality of profit and loss balance sheets, as most small private businesses are restricted to, in the open competitive market of business.

       Who does not know that most public companies were bid up to more than three times their actual book or asset value.  This action causes an   artificial value by the bidding between stupid investors anxious to make a quick profit.  The daily gyrations of the market up and down, reflects the profit taking actions of big gamblers in the market, some called daily traders, who buy and sell within a twenty four hour period.  Of course, if you are a very big trader like mutual or retirement fund managers, they have been known to team up to manipulate the market almost daily at will.

     A red light lit up my still empty head as I realized, " big is big but small is better" when things are small the problems are small.   The work force may be limited to family members or close friends, but all this breeds efficiency and little if any waste or duplication of effort.  This is the story of American competivness in business and the survival of the fittest; in a really free enterprise system that produces profit and success while turning out a quality product.

      If we shut down the American stock exchanges, investors will need to find less risky places to invest.  First they may invest in the banks you are trying to save.  That is the private capital infusion needed to put them back on their feet.  If the banks could pay a decent interest rate, deposits will rise.    Also, people will invest in US treasury notes or bonds and we don't need to depend on China for credit. 

     Then, investors may invest in those so called "m& p, mom and pop companies," that traditionally turned profits thanks to the tight control of their primary owners or small investors. Everything is transparent and for every one to see, every day.  I suggest, the start up of alternative energy programs, should be handled by these small companies and their small investors.  With a few intelligent and determined managers who are also risking some of their own money, while providing permanent work for their growing business as it builds and succeeds.  As an added incentive, these new workers should be offered profit sharing plans to make and keep them efficient now, in this way, we have eliminated high priced CEO's, who have operated these extra large companies with little or no accounting to their stock holders and whose only interest is to make more and more money but only for themselves.   This is how these companies have been operating for sixty years since the depression days ended.  And this is the result, chaos, and failure; due to lack of controls or incentives to make profit for the company they are supposed to lead.

    All this may sound radical and new, but it is in reality, a return to the tried and proven original way to run businesses.  In the past they were successful until they grew so big there were no longer the controls and transparency in order to operate efficiently and at a profit.  The lessons of Enron a few years ago, the savings and loan scandals of the mid eighties and the present fiasco with A I G, the financial institutions, and the big banks are staring us in the face again.

    Where were the state or U S controls on the asset premiums, paid by banks, etc.  Certainly, they should have been required to hold a certain minimum in reserve for the losses of customers.  The American people want them and the banks, etc., investigated and criminally prosecuted for not meeting the standards required or for any fraud involved.

     The U S guarantees should be limited to 50% of the amount to keep the banks honest on loans and deposits.  Small business loans must be monitored almost monthly for compliance.  

     The fact is, that the string of patience has run out with the American people because of the last six months of bungling by the past administration and congress and by you and your congress who don't even read the laws they propose and vote for.  The average American person is fearful for the future and depressed, because the job market has dried up and real estate values are beginning to exceed their mortgage obligations, while they see the future debt payments for all this borrowing and bailouts being saddled on our children and us.  We need permanent jobs now and a stabilized real estate market before this economy can hope to recover.  

     Most everyone is still convinced the bailout of A I G and the banks is the only way out of this bad economy. I think you are throwing good money at bad people who are left to repeat their misdeeds you and congress have repeatedly failed to stop with strong controls and restrictions.  Please ask your very smart and talented secretary, Geithman, to give you some alternatives before you decide that, "A I G and the banks are too big to, fail, and that course of action is the only or best course of action.  You and he may have decided so, but about 150 million Americans do not agree and they are very upset and their anger will not subside until you convince them to the contrary, and I'll bet, you cannot.  It is time to fish or cut bait.  You cannot run, "test runs," you cannot afford any more missteps, in my opinion.   I hope I am proven wrong, for your sake, and that of congress, who is content to run a "business as usual" congress with earmarks and pork barrel projects.  Junkets to Rome and free trips to here and there while the American people are suffering.  It is time you stop letting them run amuck, it is time you to rein them in and stop being politicians and start being the representatives of the people they were elected to represent as were you, Mr. President.

    Thank you for this opportunity to express our views.

A letter recently mailed to president Obama:

March 16, 2009

Dear president Barack Obama:
   The American people are rising up to protest against congress and your administration's actions during these economic crises while they lose confidence in your plans for economic recovery.
   You were elected on the promise of hope and change from the "politics as usual" in Washington, from all our elected officials. The result, for the last 75 days has been nothing but a repeat of "politics as usual".
   Last October, you and John McCain rushed back to Washington to vote for a bailout bill hurriedly proposed by then president Bush and treasury secretary Paulson, a Wall Street veteran. This bill has turned out to be so lacking, the 800 billion dollars wasted on banks and AIG, because of the lack of controls and directives in the bill. Now we see the results, instead of spurring the banks to make loans and help defaulting mortgages, they bought other banks, thumbed their noses at the country, and have not helped the credit economy. Here we are, five months later, still in a sinking economy with rising unemployment, worse off than we were when the 800 billion dollars was spent from an already defunct treasury with a 10 trillion dollar deficit. You cannot expect banks to loan money for mortgages and businesses until you stop the mortgage foreclosures so that real estate market values stabilize; the culprits are the foreclosures you have failed to stop. If values drop much further, every mortgage will be at risk of foreclosure.
   Since your inaugural, your three-week push for the stimulus package only signaled congress to load it with earmarks and pork barrel projects designed to help themselves, rather than the American people. You signed that bill and did not have the courage to veto it. Now the American people see you as a patsy for a congress nobody approves of.
   Your so-called nearly 800 billion dollar supplemental budget passed by congress contained an additional eight billion dollars of pork projects including a few for some republican supporters to reward them for their needed vote.  You should have vetoed that bill, also, since congress would not dare shut down the government in that event.
No one knows what has happened to the 350 billion dollar balance of the October, 2008 vote for the bank bailout, but it appears it is still going to the recalcitrant banks, which have put us in this mess in the first place, and, still without any controls and only with empty promises. You have struck out three times, now, and in baseball you'd be out. In basketball, despite your evident prowess and talent you have committed three personal fouls.
   The insurance firm AIG, has been given repeated grants or loans totaling 185 billion dollars as it throws lavish parties for its staff and gives out huge bonuses to its irresponsible employees. Some claim these are part of a contract, but where I come from, bonuses are given only as a reward for good work not failures. It is obvious that the only way to control this company as well as the banks is to let them fail and enter bankruptcy. These will be replaced with new companies and new investors. Since when, do we reward people for their failure in this free enterprise country. If you increase the number of authorized national banks, new banks will emerge with money to loan. Loan guarantees should be limited to 50% of loans in the future to avoid abuses.
   The present guaranteed loan in default should be challenged by your justice department because of the obvious fraud perpetrated by the banks and borrowers.
   You must have heard the loud and clear message from the American people that they oppose the US plan to pick up the sub prime mortgages of their foolish neighbors and greedy banks, yet we hear that is part of your plan. If you stop listening to Wall Street and instead listen to the Main Street American people who elected you, you may not lose your popularity.
   The American people do not want to be saddled with any more debt or taxes. The "American tea party" is ready to act against you, by sending you a token tea bag as a protest note. Please take heed before it is too late, they want congress's spending on staff and junkets with American taxpayers money, stopped. They want congress to work five days a week like all the American people do. They want money spent only to specifically produce jobs for our unemployed. The American people want the jobs and factories that were exported overseas returned. They want balanced trade not free trade. They want all those work visas cancelled and Americans allowed to fill those jobs. 
   They want all those people that have overstayed their visa permits, rounded-up and returned home until we have full employment. They do not want illegal aliens to hold down American jobs until we have full employment. They want the I-verify system of checking out immigration status strictly enforced along with a requirement that, in all those spending bills to boost the economy only American made goods and materials be used. These are times of emergency when such measures are required. You need to spend five times the amount appropriated for alternative energy because that will give permanent jobs to Americans and stop the trade deficit while freeing us from this dependence threat. They want gasoline and fuel oil prices stabilized at fair prices or you may act against them. If you put all American workers back to work where they can regain a living wage, every thing else will solve itself. When people work, they spend money, pay their taxes and the local, sate and federal government will have the funds to service the people and then we all will be content and the economy will fix itself. They want the domestic auto companies to survive or fail based on our free enterprise system of fair competition. High union wages are the problem, here and have been for sixty years.
Wall Street and the stock markets are a curse and gambling den of greedy investors who should be putting their money in business ventures or government bonds and treasury notes, instead, where it is safe from loss.
   If you think the American people are unduly picking on you, wait until you see the results of the next congressional election in 2010.
   You can expect the flood of tea bags between April 1-15, 2009 so; have the hot water ready, please.

Ps:    As a graduate from a Catholic Law School, I was confronted with the choice between my religious beliefs and my obligations under the law, as a lawyer, sworn to defend this same constitution both with regard to divorces and abortions.    I did not hesitate in the least to choose to represent all clients to the best of my ability in whatever case presented it self to me.  I felt, to do otherwise I would violate my oath as a lawyer and to my profession to uphold the U. S. constitution of the United States and to do justice to everyone.

MARCH 6, 2009

DEAR PRESIDENT BARACK OBAMA,
ON MARCH 4TH TREASURY SECRETARY GEITHNER FINALLY UNVEILED THE LONG AWAITED MORTGAGE BAILOUT PLAN. UNFORTUNATELY THE PLAN ONLY BAILS OUT THE BANKS FROM THIS LOANS AND PLACES THE RESPONSIBILITY ON FANNIE MAE WHO WOULD END UP WITH THEM EVENTUALLY UNDER THE GOVERNMENT GUARANTEED LOAN POLICY. IT IS CLEAR THAT BANKS HAVE CONSCIOUSLY TAKEN ADVANTAGE OF THIS POLICY TO GRANT UNQUALIFIED AND SUB PRIME LOANS TO PEOPLE INDISCRIMINATELY IN THEIR QUEST FOR PROFIT.
YES, YOU MAY CALL THE PLAN A MORTGAGE ASSISTANCE PROGRAM, BUT ITS VERY LIMITATION WILL REVEAL ITS INADEQUACY.
THE PLAN MERELY BUYS THESE FANNIE MAE MORTGAGES FROM THE BANK AT THEIR CURRENT MORTGAGE BALANCE, REDUCES THE INTEREST RATE, AND EXTENDS THE TERM OF THESE MORTGAGES SUFFICIENTLY TO MAKE THEM AFFORDABLE TO THE HOMEOWNER SO THEY WILL STAY IN THE HOME AND RELIVE THE BANK FROM THIS BURDEN. ALL THIS IS APPLAUDABLE BUT ITS PURPOSE IS EXPOSED AS MAINLY HELPING THE BANKS AND THE GOVERNMENT FROM THE PROSPECT OF HANDLING LOANS THAT MAY TURN SOUR SOON UNLESS SOME RELIEF IS ASSURED THE HOMEOWNER. THIS ONLY COVERS A SMALL PERCENTAGE OF MORTGAGE SITUATIONS AND THEN, THE LEAST VULNERABLE OR IN NEED. WHY BUY A MORTGAGE NOT IN DEFAULT? JUST TO POUR MONEY INTO THE BANK AT THE RISK OF THE AMERICAN PUBLIC.
THAT LEAVES US WITH THE QUESTION, WHERE IS THE PLAN TO HELP THOSE HOMEOWNERS WITH MORTGAGES MUCH HIGHER THAN THE 5 % LIMIT YOU HAVE SET AS A MAXIMUM OVER THE MARKET VALUE. SOME HAVE EXORBITANT INTEREST RATES AND OTHERS WITH BALLOON PAYMENTS IN THIS HIGH CREDIT SOCIETY THESE HOMEOWNERS HAVE NO INCENTIVE TO STAY IN THEIR HOMES AND CONTINUE TO PAY THEIR MORTGAGES. MOST ARE JUDGMENT PROOF AND PRIME CANDIDATES FOR THE BANKRUPTCY COURT, IF THEIR MORTGAGE IS FORECLOSED AND THEY ARE GUARANTEED BY THE U. S. WE WILL BE OBLIGED TO PICK UP A PROPERTY GROSSLY OVERVALUED ON THE MARKET IN A SITUATION WITH CONTINUING FALLING VALUES AT THE SAME TIME. I THINK IT IS TIME FOR THE GOVERNMENT TO REFUSE TO PAY THOSE SUB PRIME MORTGAGES AND SUE OR INVESTIGATE THE BANKS FOR FRAUD FOR APPROVING SUCH LOANS IN THE FIRST PLACE.
IN ADDITION, WHERE IS THE PLAN TO HELP THOSE HOMEOWNERS WHO BECAME UNEMPLOYED THROUGH NO FAULT OF THEIR OWN WHO ARE NOW IN DEFAULT OF THEIR MORTGAGES? THEY NEED RELIEF MORE THAN ANYONE ELSE, TO KEEP THEM IN THEIR HOMES AND STOP FLOODING THE MARKET WITH HOMES IN A FLAT MARKETPLACE. THE FORECLOSURES OF THESE HOMES SHOULD BE STOPPED UNTIL JOBS ARE FOUND FOR THESE INNOCENT PEOPLE.
YOU HAVE SPECIFICALLY STATED THAT THIS PLAN DOES NOT INCLUDE THOSE HOMEOWNERS THAT ARE ALREADY IN DEFAULT OF THEIR MORTGAGES AS A RESULT OF BUYING A HOME THEY COULD NOT AFFORD. I DON'T KNOW HOW YOU PLAN TO MAKE THAT DETERMINATION, BECAUSE, IN LIGHT OF THE ACTION OF MOST BANKS IN APPROVING SUB PRIME LOANS, BANKS HAD THE LAST CLEAR CHANCE TO REFUSE THESE LOANS BUT DID NOT BECAUSE OF THEIR GREED. IT IS THE BANKS THAT SHOULD BE HELD ACCOUNTABLE FOR THIS SITUATION NOT THE HOMEOWNER, MOSTLY MOVED BY EMOTION THAN PRACTICALITY. LOOK BACK AT WHAT YOU AND I DID WHEN PURCHASING A HOME AND YOU WILL AGREE. THE BANKS SHOULD BE MADE TO REDUCE THESE MORTGAGES TO MARKET LEVELS AND REFINANCE AT CURRENT INTEREST RATES FOR LONGER TERMS IF NECESSARY SO THESE HOMEOWNERS MAY STAY IN THEIR HOMES. OTHERWISE BANKS SHOULD BE MADE TO UNDERSTAND THEY WOULD BE INVESTIGATED FOR FRAUD ON U. S. GUARANTEED MORTGAGES IF THEY PROCEED WITH FORECLOSURE AND BANKS WILL BE SUED BY HOMEOWNERS FOR FRAUD IN APPROVING A LOAN THEY HAD THE LEGAL OBLIGATION TO TURN DOWN FAILED BANKS CAN BE REPLACED QUICKLY.
LASTLY, IT WAS ANNOUNCED THAT THIS PLAN WOULD NOT INCLUDE THOSE INVESTORS SPECULATING FOR PROFIT. AGAIN, THE BANKS SHOULD BE SUBJECT TO INVESTIGATION FOR FRAUD IN THESE INSTANCES, BEFORE THESE INVESTORS ARE CASTE ASIDE.
IN ADDITION, THE QUESTION ARISES THAT THIS PLAN MAY BE DISCRIMINATORY, IN GRANTING RELIEF FROM THE U. S. TREASURY TO SOME SELECTED FEW AT THE EXPENSE OF EQUALLY NEEDY OTHERS. ALSO, THIS PLAN AS ANNOUNCED MAY VERY WELL VIOLATE THE EQUAL PROTECTION CLAUSE OF THE U. S. CONSTITUTION ESPECIALLY IN REGARDS TO THE LOWERING OF INTEREST RATES ON THE PLAN'S MORTGAGES.
WHEN ALL IS SAID AND DONE THIS PLAN FAILS TO STABILIZE THE HOUSING MARKET PRICES WHICH CONTINUE TO FALL. UNTIL THERE IS STABILIZATION IN THIS MARKET, BANKS WILL NOT APPROVE LOANS ONLY TO SEE THE EQUITY CUSHION BE REDUCED, AND BUYERS HAVE NO INCENTIVE TO BUY IN A FALLING MARKET. VALUES WILL NOT STABILIZE IF FORECLOSURES CONTINUE UNABATED.
ALSO FANNIE MAE SHOULD NOT BE TRUSTED TO DO THIS JOB, BASED ON THEIR PAST RECORD OF ABUSES, THOSE CEO'S SHOULD BE REPLACED.
AMERICANS SHOULD NOT AND WILL NOT PAY SOMEONE ELSE'S MORTGAGE; ONE IS TOUGH ENOUGH TO PAY, THESE DAYS.

March 3, 2009

Dear president Barack Obama,

      For the last five months, the U.S. government has been throwing money at everyone to help correct our economic crises, without any thought or plan as to what may have caused it and act to prevent it from happening again.

       The recent 750-billion dollar bank bailout last October was a bonanza for banks.   The intended purpose as stated by president Bush was that it would encourage banks to resume lending money and aid those in trouble paying their mortgages.   However the aid never materialized.   In addition, these banks refused to account for the use of these funds, which left congress with egg on their faces for their "hurry up, the sky is falling" action.   In our opinion, none of you should have voted for this bill in haste in the first place.    The obvious lesson learned, is not to do any thing in haste.

      Next, you pushed through the so-called 850-billon dollar stimulus bill through congress and the 400-billion dollars budget bill after three weeks in office, giving no one a chance to read it.    It is obvious to the American people that congress never wanted the public to learn about the earmarks and pork contained in both bills for the congressmen of both parties.   None of the above bills has put a single person to work, as yet, and not one mortgage has been saved or rewritten.  To date earmarks should not be included in bills when there is no money in the treasury to pay for them.

      We have been told that your treasury secretary has been preparing a mortgage bailout bill and that some banks in anticipation, have declared a temporary moratorium on foreclosures, which have been causing the steady decline in home values for nearly three years now.   It is imperative that these prices be stabilized as soon as possible to give the banks confidence in their loan procedures and the home buyers the confidence that the price of the home is right in order to convince them to buy.   This must happen before the construction industry can recover and put unemployed workers back to work and material suppliers start up production again with workers they put back to work producing the building materials.   The problem is that this should have been the first problem you should have solved, and that was another mistake, because prices keep falling resulting in continued instability.

     In the meantime, a hue and cry has arisen from the American people, complaining, as you did, that mortgage help should not be extended to those homeowners who purchased homes they could not afford, but for the generous mortgage terms offered by greedy banks.    These complainers feel that taxpayer money should not be used to help them.

     Then, there is a hue and cry from most Americans, opposed to any more plans to help banks bail out, including AIG and other financial institutions.   The two major reasons supporting this view are the way these banks handled the first bailout and the fact that it was the greed of these same banks that have placed themselves in the financial mess they are in.  It was the actions of these very banks that have left these homeowners in this vulnerable and impossible position.

     It is a fact, that ultimately; the congress gave rise to this abuse by banks by repealing all the controls that had originally been in place to avoid such abuses.  Everyone now realizes in their haste congress did not reinstate the controls needed to rein in future abuse in lending practices.

     For years now, the Federal Reserve has kept lowering the prime rate for loans to prevent inflation and to spur reasonably priced loans to the public. This was felt necessary to help the economy.   It helped the economy by increasing the demand for homes and the businesses to serve them, but at the same time people refinanced their homes over and over for lower and lower interest rates while extracting most of the equity in their homes with the encouragement of the greedy banks, anxious to lend more.

    Another result of the low interest rates was the fact that banks now could barely pay depositors much more than the inflation rate each year.    This in turn caused unhappy people with savings and retirement plans to put their money into the stock market hoping for as higher returns.   Of course conservative retired people made less and less interest on their meager savings, causing many to tighten their belts.

     The bubble burst when the home and commercial building markets found resistance to sales due to rising costs for heating fuel and gasoline and unemployment.   High diesel fuel for trucks, transporting goods in commerce, has seen a dramatic rise in the price of goods as a result.   This resulted in depressing the economy further, while congress failed to rein in these costs when prices and profits for diesel and gas rose to unheard of heights.

    This, and rising unemployment, in turn, caused the public to stop buying the gas guzzling vehicles from the Detroit three at prices higher and quality lower than foreign makers.

    All along, for the last ten years manufacturing in the USA was being hammered with labor costs and unable to compete with the free trade policy passed by the congress in the late 1990's due to the lower wages overseas.    The result was that, one by one, most manufacturers in the USA were forced to set up their factories overseas in order to compete, while, laying off their USA employees.  They also obtained generous subsidies from congress to make the move profitable.

     Therefore, when all is said and done, the real blame for the economic crises must be laid at the doorstep of congress and the White House in Washington, first and foremost, since they alone set the stage for all these problems.

      Unless we decide to fix these mistakes the congress and White House have made in these areas, we cannot begin to find our way back to economic health.   Throwing money at the problem never fixes it; the fix must be made to the problem first.

A LETTER TO THE PRESIDENT

February 28, 2009

      For years these “conservative republicans,” especially those from the south, have troubled me.   These are the same people that suddenly turned democratic, because of the civil war and the emancipation proclamation by president Lincoln.   These are also the same people that also suddenly turned republican, when the civil rights act was signed by president Johnson in 1963.   The south has remained a solid republican strong hold for some forty five years, until you, president Obama, broke this stranglehold thanks to the courage of the blacks to stand up and be counted for you.    No matter from which angle you look at this in congruency of the southern states you come to the inevitable conclusion that they simply are racists that cannot and will not come to the realization that we are all equal under our constitution.     They have kept the black people “separate but equal” since the assassination of president Lincoln, and will never accept them as equals.   Don’t think the KKK is dead in the south.   For some reason they also hate Jews and Catholics.