AntiBVBL

There is all sorts of scuttlebutt over getting rid of Ben Bernanke.  Two Democratic senators, Barbara Boxer and Russ Feingold both started stirring up things on Friday about not re-confirming the current Federal Reserve Chairman.  Before that, there were other democrats including Senate Leader Harry Reid who expressed doubts.  There are already Republicans who place the financial woes on the country onto Bernanke, saying he should have known before hand. 

While the Democrats and Republicans play political reindeer games, some of those who have forgotten more than most people know about all things financial seem horrified at the prospect of not having Bernanke at the helm.  Warren Buffett, the financial mogul, is one such person.  He has said if Bernanke is not reconfirmed he will immediately begin to sell off stock and put his money elsewhere. Wall Street dropped 4% last week over this fighting as well as Obama’s firmly administered bank spanking.

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Before everyone starts leaping and jumping for joy, it is a good idea to put everything in perspective.  Since March 2009, stocks have made a remarkable recovery.    The bottom had also fallen out of the stock market, so much recovery was needed. 

Several people have said they have broken even to where they were before the crash.  I offer up scenerios.  Those people either weren’t invested heavily in equities or they fed their accounts a lot this past year.  For those who have static accounts, the recovery doesn’t come near to breaking even. 

According to USA Today:

Once it was clear a collapse wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8% from its early March low. For the full year, the index rose 23.5%, or 211.85 points, it’s best showing since 2003.

 The Dow Jones industrial average rose 1,651.66, or 18.8% for the year. From its March 9 close, the Dow jumped 59.3%. Powered by the recovery in high-tech stocks, the Nasdaq ended 2009 with a gain of 696.12, or 43.9%. Tthe Nasdaq has surged 78.9% from its March low.

 

Up until March of last year, many people were fearful of opening their statements.  If one lost 40% in the crash, and many of us did, it will take a lot more than 40% increase to bring you back even.  That’s the math of percentages.  I have a 401k that increased by 33.6% but I am not even close to being back to the fall 2007 high water mark.  Not even close.

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President Obama heads to Wall Street this Monday to urge financial reform. Financial regulatory systems need an overhaul to avoid the abuses and failures that led to near economic disaster last year.

Most of the focus this past summer has been on health care reform which is also part of our national financial woes. However, the banking, mortgage and insurance industries need to come back to being blips on the radar if serious reform is to take place and future disasters are to be avoided.

According the Washington Post:

He will urge members of the financial community “to take responsibility, not only to support reforming the regulatory system but also to avoid a return to the practices on Wall Street that led us to the financial crisis,” an administration official said Sunday.

Building up to that message, Treasury Secretary Timothy F. Geithner said recently that “greater urgency” is needed to push through regulatory reform and insisted that “fundamental change is necessary.” National economic adviser Lawrence H. Summers said in an interview that “this crisis will leave a legacy of strengthened regulation.”

Interestingly enough, while the job market hovers just under 10% unemployment, and retail spending is still flatlining, the stock market has gone up on average 45% since March. September which historically is the poorest month for stock gains hasn’t been that bad. Since September 1, the Dow has risen nearly 300 points. According to Bulls and Bears (Fox News) the average Joe 6 pack is just poking a toe back into the water and is investing in the stock market again after the melt down that began last September.

So who will howl about financial regulation? Probably those who are being regulated and need it the most. What are some reforms that contributors on anti see a need for?

[ UPDATE:  TEXT OF PRESIDENT OBAMA'S ADDRESS TO WALL STREET]

We have looked at enough stupid. Let’s look at SMART for a while.

I like Warren Buffett. Anyone that rich or who has a fund that functions like Berkshire Hathaway deserves to be listened to. I listened to him last fall when our country sat on the brink of financial disaster. Now he has posted some strong words in the op ed section of the NY Times. I don’t think Buffett is political–he is just old, wise and rich.

IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

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In a rather anticlimactic move yesterday, PWC supervisors locked in a $1.21 tax rate per hundred. The tax rate can always be lowered but cannot be raised. The vote was predictable. According to the Washington Post:

The spending plan County Executive Craig S. Gerhart proposed last month would reduce services, suspend road construction, freeze salaries and tap reserves to close a $190 million shortfall projected for the fiscal year that begins in July.

The $1.21 rate is the second highest in the metro area. However, looking at the bottom line, it certainly is not the most expensive real estate taxation. Plummeting property values have caused an overall reduction in property taxes. Most homes will find the real estate taxes cut by about $400.

Chairman Stewart, who opened the meeting by commenting on the federal stimulus package money, had this predictably partisan remark to say about the new tax rate:

“I believe the way to spur the economy is by cutting taxes, not raising them. It comes down to a philosophical divide,” board Chairman Corey A. Stewart (R-At Large) said. “Prince William is the only Republican-led jurisdiction in the D.C.-metro area. It shouldn’t be too much of a surprise we’re cutting taxes.”

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Stimulus money is beginning to arrive in Prince William County thanks to the efforts of Congressman Gerald Connolly. So far, $1.1 million dollars has been secured for the Greater Prince William Community Health center. $19.1 million has also been designated for Prince William County Schools. $530,000 in additional law enforcement funding is also slated to come our way.

Supervisor Frank Principi elaborated that the center treated 4,000 patients in 2008, 75% of whom were uninsured. This year, if trends continue, the clinic will see 7,000 patients. Principi is executive director of the clinic.

Officials in Prince William County have a long laundry list of needs drawn up to help offset the economic crunch which threatens to cripple the county. County legislative affairs director Dana Fenton indicated that his office has a list of priorities totaling $371 million. This wish list contains requests for money for law enforcement, roads, and neighborhoods impacted by foreclosure issues, to name a few projects that will go unfunded without stimulus money.

Chairman of the BOS, Corey Steward, has dismissed the incoming money according to the Washington Post:

But Board of County Supervisors Chairman Corey A. Stewart (R-At Large) said he wasn’t impressed, dismissing the stimulus money allocated so far as “a drop in the bucket.” Residents will be shortchanged if Connolly, who entered Congress two months ago, doesn’t secure at least $50 million for county schools, he said.

“Our county is the ninth wealthiest in the country and pays a lot of income tax,” Stewart said. “This is going to be a test as to how much pull Gerry Connolly has inside his own party.”

Stewart didn’t spare Connolly criticism for the allocation to Principi’s health center, either. “It looks suspicious that his friend and ally has been given $1.1 million in federal money to help pay his salary,” he said.

But Connolly said Stewart “can’t have it both ways.” His office provided a copy of a Feb. 9 letter from Stewart thanking Connolly for working to relieve traffic congestion through stimulus funding.

“I think Mr. Stewart’s time would be better spent writing my Republican colleagues and urging them to vote for a stimulus bill he now wants me to bring home the bacon from,” Connolly said. The former Fairfax County chairman was the only Prince William representative to vote for the stimulus, as Reps. Frank R. Wolf, Robert J. Wittman and every other House Republican opposed it.

A “drop in the bucket?” Is Stewart serious? Stewart has always shown himself to be the quintessential opportunistic politician but this is a bit much. That cool $19.1 million to the schools will provide just under 300 new teachers, just as an example of what Stewart thinks is a drop in the bucket is.

He also implies that Frank Principi is profiting from the federal money. This is the first time I have ever heard of obtaining what is the equivalent of grant money being a bad thing. Perhaps Corey Stewart should consider that every penny that comes into the country from the state of federal level pays HIS salary. Wasn’t he looking for grant money this time last year? Let’s see…something about dashboard cameras?

Prince William County needs to grab up every penny of federal stimulus money it possibly can. Corey Stewart needs to stop with the political shenanigans and just act like an adult without political motive every time a microphone is shoved in his face. He appears to be rude and ungrateful. Congressman Connolly needs to be thanked both in writing and in general conversation. He is dismissing this money much the same way he dismissed the millions he planned to spend on the Immigration Resolution.

Someone just sent me that latest from Virginia Education Association Director of Government Relations Robley Jones. Good news for the schools:

The significance of President Obama’s American Recovery and Reinvestment Act (ARRA) is just beginning to sink in. Bush bailed out the banks and Obama has bailed out the schools! U.S. Department of Education ARRA funding for the 2009-2010 school year for Virginia includes the following:

State Fiscal Stabilization $1,202,770,052
Title I – $165,311,666
Ed. Technology – $10,801,292
IDEA Part B – $261,415,033
IDEA Part B, Pre-School – $9,470,492
Grand Total – $1,696,587,551

Dr. Frank Barham, the Executive Director of the Virginia School Board Association wisely sent a message to school board members across the state last night offering that, “Our [VSBA] advice is that you implement no RIF policies, amend or adopt new budgets until you get the printout from the state in the next few weeks.”

Please urge your superintendent and school board to follow Dr. Barham’s advice.

I am not sure what all this means but it tells school boards and superintendents to hold off on major decisions until the ink dries.

It looks like almost $1.7 billion dollars is being pumped into Virginia schools. I suppose what would be critical is when and how the money will be divvied up. PWC Schools are short $57 million. Will our notoriety for having the most foreclosures in the state give us a bigger piece of the pie?

More than 150 Prince William County employees had a lucky day on Tuesday. The county received 323 applications for 167 spots in the Home Help Program. Through this program, the county seeks to cut the number of vacant houses in the county by providing low interest loans and reduced mortgage rates to entry level county employees. These employees will become home owners in Prince William County in the very near future, which is seen as a desirable goal.

According to the DC Examiner:

The plan helps fulfill a long-time county goal to have more public employees living in the county. Martino [county finance director] hopes the program will help Prince William recruit and retain employees, many of whom live outside the county and face long commutes.

The county invested $50 million in certificates of deposit at SunTrust Bank to fund the first year of Home Help. County officials emphasized that the money comes from an investment portfolio and does not use taxpayer money.

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Police officers converged at the state Capitol last Thursday to urge lawmakers not to cut any more money from law enforcement funding.  Many of those who went to Richmond, according to the DC Examiner were area Chiefs of Police like Chief Charlie Deane of Prince William Country, Chief Tom Longo of Charlottesville, Chief Doug Davis of Waynesboro, and Chief Rick Clark of Galax. 

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Several of the banks who have collected billions of dollars from government bailout packages sought permission to bring in thousands of foreign workers for high-paying jobs.

What? Are Americans not being laid off left and right? Why are we importing workers when the American jobless rate continues to grow each week?

A dozen or so banks who have received $150 billion dollars in bail out money have requested visas for more than 21,800 foreign workers over the past 6 years. The average salaries for these jobs? $90,721. Meanwhile, thousands of American workers have been laid off.

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Big 3 Auto Company Bailout

Good grief. You hear nothing else on the news lately.
Has anyone else sorted it all out?

Right to Work states like Virginia do not have the same problems that non-right to work states have. Unions have less influence and strangely enough, workers do not seem too disappointed that there isn’t a union boss hovering around every corner.

It seems that the unions have caused some of the problems. Retirees are living high on the hog and big 3 auto workers are making approximately 60 bucks an hour when the other non-union companies are making around $40 per hour. The terms of their contracts are very lucrative. Other auto plants located in the south east where unions do not have a foothold are prospering. Their workers make much less than their counterparts in the north. How much are union dues eating into paychecks?

On the other hand, what happens if the big 3 fail? How many Americans will be out work? How devastating will the failure be on this industry? Will the American car become a relic of the past? What about the peripheral industries such as dealers, service related jobs, parts, enhancements? What will become of these folks? How many people are we really talking about?

From listening to the news, many senators and congressmen are talking about a chapter 11 restructuring of these companies. It all seems very complicated to me. I tend to look at it as a real part of Americana disappearing. What’s worth saving and why should we save it?

“Drove my Chevy to the levee and the levee was dry….Bye bye Miss American Pie.

[Feel free to make corrections on me. I was free-wheeling in my head with things I have heard the past couple of weeks. My figures might not be accurate.]

Prince William County Supervisors need to account for this phenomenon. What is the difference between the Counties? What accounts for this horrific occurrence of foreclosures which will most likely have lingering effects for a decade? Plain and simple, it’s the immigration resolution. The sooner Supervisors recognize this fact the faster we could turn this thing around. They have the power to stop the hemorrhaging but will they act on it? Do they prefer to see property values decline, real estate assessments plummet and the County’s budget completely destroyed? Perhaps so.

In my opinion, a more prudent course of action would be to not give anybody further reason to abandon a home. There’s never been a complete cost benefit analysis and it’s becoming pretty evident that any perceived savings from drops in ESoL enrollment have been more than off-set by devastating losses in our residential real estate market. These losses are causing extreme economic hardship among home owners who planned to use their home equity to finance their kid’s education, retirement or financing for business operations. Eventually, we will hit rock bottom but at what cost?

Dow 9,387.61 +936.42 (11.08%)
Nasdaq 1,844.25 +194.74 (11.81%)
S&P 500 1,003.32 +104.10 (11.58%)

Wow! What a day. We needed this. Is the stock market giving the finger to the economic crisis, sort of like it gave the finger to 9/11?

No, we aren’t out of the woods yet. The stock market is a reaction and a prediction of what investors think will be happening in the future. However, let’s hope the bottom is in the past and we are on an upwards climb and today’s rally was a sign of good things to come on the financial horizon.

[Update: Today was the largest single-day gain ever for the Dow]