Blog Archives

Taliban to take over Pakistan?

Saturday, April 25th, 2009

Hillary Clinton is publicly ringing the alarm bell that the Taliban are on the march to the Capital of Pakistan, and now that the United States administration is stuck in a quagmire in Afghanistan and failed to get any European support, the Taliban are marching in unopposed and will likely seize the entire country of Pakistan soon.  NY Times Story

According to this story from London Times, the Obama administration has told Pakistan if they don’t push the Taliban back, the United States may have to do it for them.   US Secretary of State Hillary Clinton has described the situation as  “I think we cannot underscore [enough] the seriousness of the existential threat posed to the state of Pakistan by the continuing advances,” said Clinton, adding that the nuclear-armed nation could also pose a “mortal threat” to the United States and other countries.

Usually, the State Department is the part of government that understates danger and suggests that a little diplomacy will solve all problems.  Now its head is suggesting the country of Pakistan may fall to the Taliban, and that this could cause nuclear war with the United States (or more likely India).

Wow, I don’t remember that in the Hope for Change campaign last year. Words have consequences.

Meanwhile, the US Media is going to be preoccupied with printing photographs of “US Torture” as the result of the ACLU lawsuit and the Obama administration turning over photos it has.  

Hey, how about that NFL draft?

State of Fear – Craigslist

Saturday, April 25th, 2009

If you’ve been living in a cave, Craigslist is a place where people can post free classified ads that are immediately viewable on the Internet.

Because one man is accused (not yet convicted) of using Craigslist to meet women for sex and then robbing them (and possibly killing one), the politicians see an opportunity to “regulate” Craiglist (and similar sites like Facebook and MySpace) and making them responsible for what people do using their service.  “We must protect the children” and the innocent prostitutes from danger, of course.

Newspapers will be particularly anxious to jump on this Fear Mongering bandwagon.  One of the reasons so many papers are going broke is that Craigslist has destroyed sales of classified ads printed and distributed on dead trees.

State of Fear – OMG, it’s a pandemic!

Saturday, April 25th, 2009

Here comes the next round  in the Obama administration’s Game of Fear to get Americans to turn over all their personal freedoms to the Federal Government.  We have been prepared for this one for several years.  The seeds have been planted, and the scientific illiterates in the media (especially Fox News) will be glad to facilitate spreading the Fear to increase their ratings.

The “OMG, someone in a nursing home died from peanut butter” ploy worked so well that it destroyed an entire staple of the U.S. diet based on no evidence – now it’s time for the full court press – “OMG, someone died from a strain of flu we haven’t seen before”. 

Regardless that in a normal year in the United States, the CDC estimates that 36,000 people die of complications of the flu.  Early indications are that this “new” swine flu is not particularly virulent and easily treated with normal medications.   People die in Mexico because they lack basic health care services.   All “swine flu” means is that it contains pig DNA.

Influeuza is now understood to be a result of a virus that picks up fragments of DNA from ducks, pigs and humans living in close contact with each other.  That’s why the flu starts in Asia (mostly China), where people live with their farm animals, and pigs are used to eat human fecal matter.   Suggesting that farmers not live with pigs and ducks inside their house is culturally insensitive, if not outright racist.

The virus then spreads to migratory birds, which then spread it the next year to their bird cousins who fly South and North in the Western Hemisphere.   Your neighbor who thinks ducks are cute and feeds them is unknowingly helping to spread the flu.

The Drum Beats of Fear are pounding their rhythms now at high volume, and will be in full motion next week.  Expect government and mass media hysteria to call for limits on travel, forced inoculations, “emergency” spending on billions of doses of useless vaccines, and maybe even martial law if citizens resist.

If you think I’m the fear mongerer, read this Reuters account of the “special powers” the government of Mexico has already given itself:

  • Shut schools and museums
  • Cancel sporting events
  • forced testing of people
  • “Isolation” of people who are infected
  • Power to enter homes and businesses without consert to search for the infected 
  • Regulate Air, Sea and land transportation

Perhaps your reaction is “Yeah, but that’s Mexico.  President Obama would never do that here.”   Are you sure of that?

*** Update 4/26/09  5 pm ET ***

Despite the CDC saying the strain found in the U.S. is different than the one that caused the deaths in Mexico, Department of Homeland Security Janet Napolitano has declared a “Public Health Emergency“. [Thank you George Bush for creating this out of control agency]

Of course, we won’t close the border with Mexico or require health checks of people crossing at the border or quarantine immigrants for a few days when they enter the country.  That would be racist.

GM employee 401(k) plan sells all 75 million shares of GM

Friday, April 24th, 2009

Detroit News Story

The trustee of the GM Employee 401(k) plan has dumped all 75 million shares over the past 3 weeks for under $2 a share .  That leaves very little doubt that GM is going into bankruptcy.

– If this was done based on knowledge of a definite decision to proceed with bankrupcty, someone is in serious legal jeapordy.  It seems unlikely they aren’t aware of the situation and the law.   Trading on non-public information is a crime called “insider trading”.   “Tim Geithner told us it is okay” is not a legal defense.

– if your employer holds much of your 401(k) plan in company stock, you’re working for a bad employer.  GM (until recently) required 1/2 of all 401(k) contributions to be in GM Stock.

Bankruptcy Watch – Charter Cable

Friday, April 24th, 2009

Charter is already in the bankruptcy process – so this isn’t about a new bankruptcy.

According to the International Business Times here, Charter’s plans to get in and out of bankruptcy fast have run into a snag. Wells Fargo and JP Morgan have both objected to the “quick prepackaged bankruptcy” and will not agree to it.

Are you listening Tim Geithner? GM? Chrysler?

Seeing how the CEO of Bank of America is being treated now for “going along with the government”, look for a lot more resistance to being told by the U.S. Treasury “the way things are going to work”.

It’s possible that a US Bankruptcy judge may have more power than the U.S. President.  Perhaps people working at the Federal Reserve bank didn’t know that.

BofA/Merrill – the other shoe drops

Friday, April 24th, 2009

One of the principles of a good lawyer is you don’t ask a question of a witness unless you already know the answer.

NY Attorney General Andrew Cuomo released to the SEC details of his questioning of Bank of America Kenneth Lewis. What has become clear is that as BofA was becoming aware of how much money Merrill Lynch was losing, they wanted to back out of the deal.

Then Secretary of Treasury Henry (“Hank”) Paulson and current Federal Reserve Chairman Bernanke threatened Lewis that the entire management of BofA would be fired if he didn’t complete the merger and conceal the financial mess Merrill Lynch was in from Bank of America’s shareholders. Paulson and Bernanke were in clear violation of US Securities law, according to the former SEC Chairman Harvey Pitt and other industry experts according to the Bloomberg News Story.

The future of Health Care

Friday, April 24th, 2009

The Washington Times has a story today about problems with the EMS ambulances in Washington D.C.   It’s primarily a local story (Washington Times is a local newspaper in addition to trying to have a national audience), but it has clear national implications.

Washington DC is peculiar in the entire country in that it is a city run by the Federal Government.  D.C. is not part of Maryland or Virginia – the city gets its funding from Congress.   The normal city funding model of using Property Taxes can’t work in D.C. because so much of the real estate is owned by the Federal Government and cities and states are not allowed to tax the Federal Government.

The District sent its paramedics off to be evaluated to see how evaluate there ability to perform life saving tasks were.   Only three of 95 paramedics tested had passing scores for entry level paramedics. 

What has been the ciy’s reaction?  They threatened to take legal action against the Washington Times for disclosing the results of the testing.

Welcome to your new heath care system, America.

Bankruptcy Watch – Chrsyler

Thursday, April 23rd, 2009

According to the NY Times, the U.S. Treasury Department (translation: Tim Geithner) is preparing the paperwork for filing Chapter 11 next week when the April 30th deadline arrives and Chrysler hasn’t found a buyer.

Geither’s folks have been talking about surgical bankruptcies for both GM and Chrysler – splitting up the “good” and “bad” parts of the company, taking the good and giving them to the UAW and current workers – and leaving the bad parts with the creditors – but that’s not the way bankruptcy works. 

One creditor cannot dictate the terms of the bankruptcy settlement for the others, segregate assets for themselves and cut up the pie the way it wants  (putting the UAW’s claims in front of bondholders – for instance).   Neither can the “Debtor in Posession” do that (DIP is the entity runnning the company while it works through the bankruptcy). 

Those decisions are the role of the bankruptcy judge – and following the law and legal precedents of similar cases in the past.   The more creditors that agree on a single plan, the more likely the judge will accept that version of the plan. 

Section $1114 of the US bankruptcy code already has rules about how to deal with retiree health insurance when their former employer goes bankrupt.   In addition, special COBRA provisions have been added in the past few years allowing retirees to buy COBRA for the rest of their life, and a 65% tax credit to pay for most of it (if they are working for a company whose pension plan was taken over by the Pension Benefit Guaranty Corporation). 

[I am not a lawyer]

Update:  Daniel Howes writing for the Detroit News makes the same point.  He quotes Larry Denton, the former CEO of an auto parts supplier that has been through the process:

“If GM thinks they can package this in a 90-day period, that’s pretty naive. The judge can’t say, ‘I’m going to give this company a good deal here because of its size,'” Denton says. “He has to follow the law.”

Then again, the Rule of Law doesn’t seem to apply lately to the Obama administration’s actions.  Perhaps this is a dry run to see if Geithner can force through the GM bankruptcy in June on his terms.

The Next Crisis – Upside Down 401(k)s

Tuesday, April 21st, 2009

This will take a little longer than home mortgages to play out, but could be a much bigger disaster.

The types of people who “used the system” to “flip houses” and buy preconstruction condos (and are now the ones in default in the real estate mess) are the same types of people who would exploit the loopholes in 401(k) plans.

The 401(k) plan is intended to be savings for your retirement – so that we don’t wind up with a country full of poor senior citizens – but the politicians weakened the entire idea by allowing people to borrow using their 401(k) plan as collateral (originally only for an “emergency”, but that was further weakened).

First the rules:

  • You can only borrow 50% of your “vested balance”, up to a maximum of $50,000
  • You have to repay the loan in 5 years (with some exceptions)

So what some people do is deliberately withdraw their contributions right back out and spend the money – avoiding paying income taxes.  Thirty  years from now, they’ll deal with the unpaid loan balance – Live for today because we could die tomorrow.

But what happens if the “unthinkable” happens?   What if value of the investments in the 401(k) dropped by more than 50%?  Well, that could never happen of course.   The person with the 401(k) could end up owing more on their 401(k) loan than what the 401(k) is worth.    What happens then?  Forced repayment of the loan?   The 401(k) being liquidated by the trustee to pay off the loan balance?   Everyone closes their eyes and just Hopes things work out?

Well, there are 30 years left for the stock market to go back up, so why worry?  

For people trying to fend off foreclosure, borrowing against a 401(k) account is an obvious choice as there is no credit check  – the “loan” is just you borrowing you own money( right?).   You have 5 years to repay the loan back – and what’s the chance things won’t work themselves out in the next 5 years?

Tick. Tick. Tick.

Stealth government takeover of business isn’t new

Tuesday, April 21st, 2009

Several of my “polls” highlight the fact that many of the largest companies (Wal*mart and  GE come to mind)  in the United States are already  largely owned by State Employee/Teacher Pension funds and the prepaid tuition plans where you prepay a State run fund for your children’s college tuition.

For the most part, as long as they’re making money, the state run funds have kept away from telling the companies what to do (at least publicly).  That became more visible today.

According to this Bloomberg Story, the Treasurer of the State of Connecticut (which owns 3 million shares and has lost $47 million) is publicly calling for the resignation of the CEO of Bank of America.    Is this in part a political act or just a politician trying to shift blame away from his own decisions?

From time to time, the topic of the “Social Security” Lock Box comes up, and that we should instead invest money in buying stocks in American companies. 

The Republican proposals generally are along the line of the 401(k) plans,where you could take a portion of the social security taxes and invest them in mutual funds.  

The Democrats usually think in terms of having the Social Security administration invest a portion of the income stream in stocks, the same way the State Employee/Teacher pension funds do – which is defacto nationalization of U.S. business. 

It’s going to become really important to understand the difference.