Saturday, 21 February 2009

The Stanford Effect

There have been several comments made over the failure of the Stanford Fund and what comes now. Alot of these people who put their money into the Stanford Fund...were regular people throughout the south. They had their $100k, their $200k, their $300k.....safely in what they perceived as a normal CD. It wasn't.

What I've noticed in various interviews over the past 72 hours...are mostly family members who are in their early 40s. I'm guessing a good portion have teenage kids around seventeen years old and were to graduate high school in June....with a intended path to a major university. I'm guessing there are family meetings underway.....discussing what happens if the family nest egg of $400k is completely gone.

What you will notice throughout the south....when Johnny Junior got ready to finish high school, and the family had money....they would send him off to Texas Tech or Duke or University of Florida. They wouldn't hesitate to pay the tuition or the yearly costs of $15k for the kid's car, gas, food, and expenses. We could be talking about $125k over four years....to get Johnny Junior through UCLA. The money that the family had in the Stanford Fund would have paid for it. Without the cash....Johnny can't go....and has to attend Alabama State or even some regional college.

What Mister Stanford has achieved....has destroyed a thousand likely dreams....and potentially....this could go up to 10,000 kids who aren't going on the path that they had been planning for the past three years.

So quietly tonight, across the heartland....there are dreams on the fireplace....burning away. I don't consider it the end of the world....and would tell any kid that attending Auburn or Alabama or Tennessee State isn't such a terrible shame. You might actually learn something....and under the watchful eye of dad who is only two or three hours away.

Katrina Lives!

Deep in the non-existent heart of the $780-odd billion stimulus package, that no one read....is a total absence of stimulus for Hurricane Katrina people.

I realize you are wiping away tears now....once you heard me say this.

No, there's not a single bridge, not a single school, not a single stop-light.....that was mentioned in the whole damn stimulus package that also had the word "Katrina" attached to it. Yes, it has to be specially connected and worded with "Katrina"....to mean something in New Orleans. Forget those idiots in Baton Rouge or Shreveport....they just don't get it.

So Obama spent not a dime on Hurricane Katrina on this deal. The rage just spills over now.

Apparently, Democrats were always on the pulpit.....telling people hourly about how President George W. Bush simply didn't care.

“I’m not saying there won’t be a need in the future, but right now the focus is not on more money, it’s on using what we have.” spoken by Senator Mary Landrieu, who happens to be a Democrat of course. She actually has criticized Democrats and Republicans alike over Katrina funding.

To be kinda honest, I checked the stimulus package. There is around $315 million spent on New Orleans. $20k is going for a hot-wash system for mass transit. I believe this is to use hot water and clean buses. I realize some of you Katrina folks don't see the relationship here with hot-wash, but damn, this might help clean up some things.

I also noted a $55k expenditure for a front-end alignment machine for the city motor pool. I'm guessing they were in pitiful front-end alignment....which would really screw up a nice car and nice tires. That might be Katrina-related....but maybe not.

I also noted 350 transit stands, which will cost around $2.8 million. I'm guessing you folks needed a cover, when waiting for the city bus to come by. This would be Katrina-related, although to be honest....ifing another hurricane came up....they'd likely blow the damn transit stands away.

I also noted around $2k for a paint shaker for the city streets department. Damn fine piece of equipment, which each city department ought to have. You don't want Larry Joe to be messing up his joints shaking up paint, now do you? Plus, remember....all those damn city paint lines disappeared when the flood waters came....so they need to repaint all of them pre-Katrina paint lines.

I'm thinking its awful pitiful to be a survivor of Katrina and still living in New Orleans. My advice for you folks.....start gazing over at Mobile and how it was destroyed in the 1960s via a hurricane. Folks really don't talk much about it.....and they certainly didn't get much money from the Feds to build anything. You might want to just give up on New Orleans and just move to Mobile....to get a new and fresh attitude on life.

And for you political folks writing up more bailout......I think a Katrina bailout and stimulus package is in order. I'd suggest $48k for each family, that will agree to leave the state of Louisiana and promise not to return for 33 years. Thats probably the best stimulus money that could ever be spent.

How Covers Lose Readers

I saw this cover last week, and its been on my mind for a number of days. "Obama's Vietnam".

For Newsweek, they needed a sharp stick to poke at the public....to recapture lost readers. They are in dismal shape...as is their sister organization...Time. Neither is making a profit...and they are totally prepared to say just about anything now....even to harm the new administration...to get readership up.

The truth? No one reads Newsweek. I'll pick up one copy a year now...and its mostly when I travel.

This pointed cover? It goes nowhere. They've basically lumped Afghanistan into their brand of salesmanship. I won't read the article because the cover says the entire story. The funny thing? After this comes out....Obama authorizes the build-up in Afghanistan with more US troops. So Newsweek had about 24 hours of real imaginary hype, and then fell back to the earth.

What I would suggest...for the next issue...come up with a Hurricane Katrina picture and label the cover "Obama's Katrina". Maybe after that issue...then have a picture of Gitmo....and label it "Obama's Gitmo". That would really help readership identify with a fine magazine like this.

Financially Insane

This is the term that I'm starting to apply to people who have lived way beyond their means.

This past summer, on German TV...I sat and watched this reality show. The show has this guy who is an absolute expert on financial affairs. They bring him in and introduce him to a family in dire straits. The family gets a month of service from him...visiting two or three times each week to educate and help them out of a mess. He revolves around a couple of families but you only see one case per week.

So he came to this family. The guy was mid-30s, and the wife was early 30's. They had a kid. He married this gal about five years ago. From day one, she had this purpose in life of building her own house (it had to be new). Three years ago, he settled into this scheme to buy property and build. By the time he was done....he had a total debt issue of $300k. The house was about 95 percent done, but he'd basically ran out of money and couldn't do the last bit of finishing. The house was livable...no doubt. But things weren't working for them.

You see, as the expert came to figure out. This guy barely brought in $3000 a month after taxes. The wife had quit working when she had the kid, and had zero interest in going back to work. The guy had barely $60k to put down on the property and house when he started. Normally....a bank probably wouldn't have touched him with that type of debt on his back. But there are numerous credit groups now in existence in Germany....so they have two deals. One is "nice"....they get you to buy a hefty insurance requirement for fifteen years, and they loan you a massive amount of money at a decent interest rate. The second is a seven percent interest rate....way above the norm. This guy got into the second deal.

So as the financial expert laid out the issues with the bank, then he came to the car payment, the lifestyle situation, and finally it was apparent.....they were $400 in the hole each month. They were literally borrowing money from the bank to cover food, fuel, or electricity.

The financial expert tried to understand why it had to be a "new house" and not just rent for another ten years to build up a down payment....but the logic wasn't there. Then he tried to understand why they couldn't buy a fixer-upper, and do what they could each year....but the logic was not there. Then he tried to understand the need for the wife not to return to work, but the logic was not there. The husband was too far into debt....to ever get out. The relatives of both were already hit with requests before and helped them in the early stages dig deeper into debt.

So by the end of this one-hour show, it was apparent. This guy would never climb out and never be able to recover. He would have to declare bankruptcy. The wife was furious..."how could you do something this stupid?"

I just sat there. My German is lousy, but the visual effect overwhelmed me. This freak of nature....who was financially insane....had demanded the husband accompany her to this pit, and now she just couldn't accept her part of the responsibility. The outcome? They kinda left things there.....there was no exit that you could see except bankruptcy.

I'm guessing the couple lives in a two-bedroom apartment now. The wife is miserable. The husband likely drinks. And she likely tells him the woes of how things came to be each evening. The chances of her leaving? Zero. This guy is stuck with an idiot each day who can't grasp financial insanity.

Club Gitmo

Total shock. Gitmo, is humane. The Obama inspection team now gives a "stamp of approval" to the whole Gitmo operation. The Pentagon report actually does say that the institution does meet Geneva Convention rules....if we were going to treat the dues as Geneva Convention prisoners....but we aren't.

To be honest, the Pentagon report even went one step further....it made a couple of suggestions. They said the boys there...didn't have enough recreation. So they recommended that the more dangerous and less compliant dudes...get something new and fresh to do. I'm guessing this might might mean some playground equipment, a couple of cigars each week, maybe baseballs (but no bats) given out.

The kindly folks even suggested that maybe the prisoners would be better off if the government allowed prisoners to gather in groups of three or more. That idea might not sell well to the guards....I'm just guessing.

For the pro-Obama folks, and the New York Times....this is dismal stuff. They all expected the place to be shutdown shortly after President Obama took office....it hasn't. The earliest it might be shut down is January of 2010. But to be honest....a growing number of folks think that a second, third, and even forth "Obama Club" will come along and find reasons to keep the Gitmo operation going.

The European human watch dudes? I'm guessing they are fairly upset about this whole thing, but what can they say in public now....to disagree with President Obama?

And the boys in Gitmo? If they ever came to realize how bad things might be at the "Max" in Colorado....where they might be sent....they would beg with mercy to stay right at Gitmo.

The truth is....the best thing that could happen....is simply a review of people and their actions. Probably over half of the Gitmo population has zero value for intelligence, and they can't be pinned over some crime. These cases need to simply be presented to a neutral source, and a quick decision made. This group could leave tomorrow, and rejoin the war on America within days. The rest? If there is some crime...then bring charges and do a court-scene....and come to a final outcome. This is the action that should be done. Instead....we've basically got everything stuck in second gear, and not moving.


The Stanford Fund

For around a week, I've been watching this colossal fraud episode with the Stanford Fund unfold. Its interested like the Madoff Fund collapse in New York.

Yesterday, I was watching clips of people who were at the various Stanford Fund institutions (several in the south)....and then came this lady up. She was visibly upset and it was barely a 60-second interview with her. She had come in the interest of the family to try to remove the money, but it was basically too late. She wasn't ultra-rich, at least my opinion. As she quickly laid it out....the family fortune....was all tied up in these CD's.....drawing good money for the past couple of years. Now? She was fairly emotional about....it might be gone. How much? They didn't put that on the air....I'm guessing in the $150k to $200k range.

The thing is....these salesmen with Stanford were looking for upper middle-class folks....those with $60k a year coming in and they had a nest egg of $100k to $500k built up. They enticed them with the word "CD"....with everyone thinking it was safe. The interest rates were anywhere from two to three percent more than a bank would normally offer.

My brother brought up this topic last night. Out at the local bank where my dad lives....they had a regional sales guy show up and wanted to chat with my dad a couple of years ago over his CD options. There were the regular CD's which he'd always invested in, and then there were these special CD's. My dad sat there, and asked if they were FDIC-insured? No...but there are these great rates as the come-back. My dad said his interest wasn't there....so he turned them down flat. How many of the local guys there in this Bama town had switched their money over? This would be a curious question now.

Madoff screwed mostly rich folks. He wouldn't have cared about farmer Joe who had $100k in his account. This Stanford guy said he'd take the working class. The feds have served papers on Stanford but basically allowed him to wander freely around America. I suspect that these middle-class folks are not as polite or nice about their losses. At some point, someone will likely try to take Stanford out. Not to suggest a trend here....but as each one of these guys get whacked...its going to pump up society that they "deserved" their end. Based on the fact that the feds won't arrest them or put them into jail....I think the fed policy to just "wink" and let the guys get shot. Lets face facts....Madoff and Stanford both sponsored alot of political figures in America. There are senators, representatives, and presidents...who relied upon their kindness. Its best we not know the whole story.

So somewhere in Bama tonight....I suspect there is a farmer sitting there....who had $350k invested in the Stanford Fund....and mostly weeping away that he got taken. He's got nothing but the farm left, and he's sixty years old. His life is screwed....because the feds wouldn't control the game. Thanks to the SEC.