Monday, September 29, 2008

Fifty-Nine and Thirty-Two

Those are the percentages of Democrats and Republicans in the House that voted “yes” for the Bailout bill. The bill failed with a vote of 205 yes and 228 no.

Democrats: 140 yes; 95 No (59.57% voted yes)
Republicans: 65 yes; 133 No (32.82% voted yes)

I am not a politician. I certainly am not an economist. I certainly do not understand the issues nor do I understand the ramifications of either the yes or no vote. However, I do know that the US is not a Socialist country. We are not France. We are not Russia. We are not China. We are a Democratic Republic - a Democracy.

Now, I don’t have a job. I am out of work, and burning cash. You might think that I would be blindly for such a bailout. You would be wrong. You would be wrong because of the last paragraph. I do not know the ramifications. One of the questions is, who do I trust? Who does KNOW what the ramifications are of either decision? I am guessing that the House of Representatives don’t know. I would think that they have researched it. I would think that they have economists giving them opinion. According to the news the President has economists giving him opinions.

So, were 140 democrats right or were 95 of them right? Were 65 Republicans right or were 133?

I really hate the news. They are good at giving the emotional side of things. They are good at pulling on heart-strings. And yet, the House has voted (according to the news - to the doom of our society) no on this issue. Heck, maybe they do know, and the President doesn’t. Perhaps the agendas are different - perhaps like most things political there is no right or wrong answer - there is just choosing one agenda over another. Each has consequences - both good and bad. As the news stated today - with any financial swing there are winners and there are losers. There are buyers and there are sellers. Wachovia just sold its banking operations to Citibank - creating the largest U.S. bank by total deposits. All for merely giving them $2.16 Billion in stock and assuming debt of $53 Billion. So, they paid, in essence, $55 Billion.

What do I know? Other than knowing we are not a Socialist country, I know that the Dow is ten thousand something. Okay, it has been between ten thousand and eleven thousand for a long time now - since June. It first crossed 2000 in 1985 - the year I graduated High School. It Crossed 4000 in 1994 - 9 years later. It crossed 6000 in 1996 - two years after crossing 4000. It crossed 8000 a year later in 1997. It crossed 10000 in 1999. It got up to above 11,000 to 11,722.98 on 1/14/2000 before starting a plunge to a low of 7,422.84 on 10/7/2002 - a 4300 point drop 22 months. Yeah, it was a good time to be trying to run a small business… mine failed, how about yours? But, after that it started climbing; hitting 14,087.55 on 10/1/2007. Not quite double in five years. And now, a year later, sitting at 10,365.45 - about the same drop amount as 2001/2002.

You know, it just hit me. While the dates and numbers are different, the trend of the DOW’s adj. close resembles another chart I’ve seen in recent history. Let’s compare…

Maybe, just maybe…

Could it be?

Could it be that Al Gore is making the Global Climate AND the DOW Historical average both look like hockey sticks? Does he have some diabolical scheme in mind? Is it really a correlation that we are really willing to admit exists??

I’ll leave that up to you, my two readers, to make the decision. For me, it is something else that I don’t know. I do know that it is scary. I do know that I would rather be contemplating this while employed than while un-employed. I do know that the economy is a big deal and that I know next to nothing about it.

Back to Wachovia and Citibank. What did Citibank get out of it? $700 Billion in assets. That number sounds familiar too… They got $700 Billion in assets for $55 Billion. Since those numbers are no where near equal, where is the rest of the risk? Oh, I know… they also get $312 Billion pool of loans that is expected to lose $42 Billion. Oh, and as part of a deal, the FDIC gets $12 Billion in preferred stock of Citigroup because it has to bear the rest of the risk - in other words, any losses over the $42 Billion get absorbed by the FDIC. So, it isn’t technically our tax dollars, as the FDIC is an independent agency of the federal government and receives no Congressional appropriations. According to their web site (http://www.fdic.gov) they have about $49 Billion insurance fund and (previous to this deal) insured more than $3 trillion of deposits.