Tuesday, 16 November 2010

The Deer in the Headlight Look

Several financial and news organizations have come around in the past week to suggest (boldly) that we are about to walk into the next valley of economic messes.

This entire episode involving the quick and speedy mortgage moves to take defaulted homes....will have have massive issues. Banks are now slowing down their process and having to actually gaze over the paperwork and ensure every single form is correct.....adding days and increased costs on each default.

The previous screw-ups?  Well....this will likely end up in court and my personal guess is that folks could squeeze $50k out of a bank for acting too quickly.  The humor to this is that the homeowner generally defaulted anyway and he's just milking the system.  Some lawyer will write up the paperwork and take ten percent of the judgement for doing little to no work.  So on top of the defaulted house....the bank will have to find more cash to pay folks....thus making them closer to being closed themselves.

I don't think you could write a script like this for movie.  Guy punches button, computer spits out forty foreclosure forms....toss them into envelopes....and then has a 30-minute break before doing another forty.  In the old days....a guy might be lucky to run through five or six in an entire day, and he'd have an assistant typing up the "We are sorry"-letters.

I imagine that in three weeks....the real news players...NBC, ABC and CBS will finally come around to suggest banks are in serious trouble.  Some senators will appear on TV to agree.  And by January, we are in the next mess where $200-billion is needed to save banks in America again.

After a while, you'd almost think this was a WWE-wrestling match....good guys win then lose to the bad guys....good guys recover but beaten by the bad guys again....good guys get the beautiful and enchanting gal but the bad guys take her away.  Man, if the banking industry only had the Undertaker or Hulk Hogan on their side, then things would be different.

Just An Earmark or Two

The topic of earmarks came up today in DC.  The Republicans have made a big deal about this and are actually talking about halting this practice entirely.

What makes a earmark?  As folks put together a major bill on controlling shrimp fishermen in Bama...some guy from Ohio will come up and write a six line piece into the attachment and basically allot $88k of government money to some monkey research project in Dayton.  It has nothing to do with the shrimp fishermen or Bama....but it was an opportune time and passed by everyone.

One of my favorite earmark stories came up around three to four years ago in Pennsylvania.  The mayor of some small town was walking around the police station (they had around eight full-time cops and a couple of support folks) and noticed new computers everywhere.  He got furious and ran over to the city finance guy and got all huffy about this being wrong.

The city finance guy said he hadn't alloted any money for computer purchases.  So he went to the police clerk who handled their money and asked how they paid for this.  He suspected that they took "fines" and spent the money without approval.  The police clerk smiled and said no.....there was a earmark provided to them.

This episode began to unravel.  Some Pennsylvania congressman had tossed over around $50k for communications gear and IT equipment for the cops.  The money had gone straight to the cops, and not to the town finance clerk.  There was no transparency by the town into this.

The mayor got upset....as did the city council.  The police chief basically told them that this was their money....and not the money of town.  Adding to this....the cops had a private bank account that the city knew nothing about and this was where the money was originally deposited.

Eventually....after heated discussions....the money was turned over to the city clerk and everyone admitted that it could be used for the intended purposes but this was a mess waiting for a corrupt guy to misuse the money.

There are probably hundreds of police departments in America....getting earmarks and just smiling as they spend tens of thousands weekly on a wide array of "toys".  The truth is.....earmarks cloud up reality.  You feel like sneaking around and talking about shrimp fishermen in Bama is a good time to toss in $100k for some roadkill research project in Kansas?  What's the roadkill money have to do with the other bill?  Nothing.  It's a lousy way to run a government.