GET THE FACTS BEHIND THE NEWS No.1
An important part of our effort to improve the present economic situation depends on building confidence in govt and industry. The public cannot have confidence in a gov’t that looks the other way whenever wrong doing is discovered, no matter what the reasons for the neglect. This is particularly true when the guilty parties indicates they knew they ware doing wrong.
Recently the Dept of Justice released torture memos. The Pres released a statement
that the torturers would not be prosecuted because the Dept of Justice had okayed
the procedures. WRONG ANSWER. These people have committed a crime they should stand trial. The statement added that you are looking to the future and don’t want to dredge up the past. WRONG ANSWER. The writers of these memo’s should also be brought to Justice.
At the Nuremberg trials the Nazi generals tried this “only following orders” ploy. The Nuremberg Court rejected this ploy and so should we. This is one of the poorest discredited excuses for avoiding justice. It is also important to point out that the rash of destroyed files and videos probably indicates the torturers knew they were doing illegal acts and were trying to destroy incriminating evidence. How can we respect a gov’t that protects law breakers?
The second statement about focusing on the future is true. All our efforts should not be focused on the mistakes of the past. However some effort has to be made to bring criminals to justice. This is a bizarre and complete co-out. I don’t recall FDR or Winston Churchill telling this to Hitler, or the FBI saying this to Al Capone or John Dillinger.
The President’s statement on April 20th. that he understands the hard choices people in the agency had to make as an excuse for not prosecuting tortures is the worst. Does this mean that torture is okay if the struggle is difficult? This is beneath a good Pres and good leader.
Furthermore these crimes strike at the very foundation of our democratic society, the
Bill of Rights and should not be taken lightly. This together with your complete indifference to prosecuting the greedy and shady business people who brought on our economic problems,the readiness to overlook illegal surveillance by the CIA that is still going on under your administration and your deference to the National Rifle Association clearly anti- public policies indicate a lawless administration that is failing to protect and further the interest of the public. The public can have no confidence in the Obrama Administration.
Monday, April 20, 2009
Friday, April 17, 2009
Leadership and Moral Responsbility
GET THE FACTS BEHIND THE NEWS
Guest comment by David Gibbs, prominent Boston Attorney--Mr. Gibbs is commenting specifically about the "bailout bonuses". His observations also have a far wider applicability for our private and public leadership.
"Every contract has a covenant of good faith and fair dealings. Diretors, officers and those in a position of trust owe a fiduciary duty of the highest level. I believe those doctrines and others would be a basis for a refusal to pay the bonuses or to litigate their return. Oliver Wendell Homes often wrote that a party may choose whether to perform a contract or pay the damages. Prof Fried is simply wrong when he states that damages are not a substitute for performance. Finally Pres Truman nationalzed the steel industry after World War II duing a labor dispute.
If all else fails Congress should consider reinstituting the draft. If the executives and traders who lost billions and now collect bonses of millions were drafted they could not cause further loses and serve their country rather than themselves.
We must remember that those in service and their families are the true heroes and patriots who deserve bonuses, our thanks and prayers.
Guest comment by David Gibbs, prominent Boston Attorney--Mr. Gibbs is commenting specifically about the "bailout bonuses". His observations also have a far wider applicability for our private and public leadership.
"Every contract has a covenant of good faith and fair dealings. Diretors, officers and those in a position of trust owe a fiduciary duty of the highest level. I believe those doctrines and others would be a basis for a refusal to pay the bonuses or to litigate their return. Oliver Wendell Homes often wrote that a party may choose whether to perform a contract or pay the damages. Prof Fried is simply wrong when he states that damages are not a substitute for performance. Finally Pres Truman nationalzed the steel industry after World War II duing a labor dispute.
If all else fails Congress should consider reinstituting the draft. If the executives and traders who lost billions and now collect bonses of millions were drafted they could not cause further loses and serve their country rather than themselves.
We must remember that those in service and their families are the true heroes and patriots who deserve bonuses, our thanks and prayers.
Wednesday, April 8, 2009
TO FIX OUR MORTGAGE SYSTEM
Get the facts behind the news
Our current mortgage system has broken down in large part because of a structural defect that should be corrected to help our economy avoid similar problems in the future.
At the present time mortgage originators do not retain any part of the credit risk. Therefore they are motivated to maximize their fee income by closing as many mortgages as possible. Once the mortgage is sold it is usually without recourse. The originator if
unscrupulous has no interest in the welfare of the mortgagor than
to close the sale and get the commission. The interest of the
mortgagor is not identical to the interests of the property owner. Even
if the originator has credit risk originators who wrote sub prime and no
down payment mortgages have very little capital. Probably some
form of insurance would have to be written to cover this credit risk.
There are mortgage systems where the originator is either responsible
or shares the credit risk. One of these is the Danish system. In the Danish systemrvice companies retains the credit risk. Theyhave to replace the mortgages that are in default. In contrast to our reliance on government sponsored enterprises (GSEs)—namely Fannie Mae and Freddie Mac.
The Danish is an open system in which all mortgage participate on equal terms and it operates without government guarantees. Yet Danish mortgage bonds are traditionally very highly rated; often they yield less than government bonds.Their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages. House owners can redeem their mortgages at any time by purchasing the equivalent mortgage bond in the market and xchanging it for the mortgage. Since bond prices and house prices normally move in the same direction, this feature--called the principle of balance--reduces the chances of householders having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated.
When Mexico wanted to securitize mortgages in order to promote house ownership, it opted, for the Danish system.
Our current mortgage system has broken down in large part because of a structural defect that should be corrected to help our economy avoid similar problems in the future.
At the present time mortgage originators do not retain any part of the credit risk. Therefore they are motivated to maximize their fee income by closing as many mortgages as possible. Once the mortgage is sold it is usually without recourse. The originator if
unscrupulous has no interest in the welfare of the mortgagor than
to close the sale and get the commission. The interest of the
mortgagor is not identical to the interests of the property owner. Even
if the originator has credit risk originators who wrote sub prime and no
down payment mortgages have very little capital. Probably some
form of insurance would have to be written to cover this credit risk.
There are mortgage systems where the originator is either responsible
or shares the credit risk. One of these is the Danish system. In the Danish systemrvice companies retains the credit risk. Theyhave to replace the mortgages that are in default. In contrast to our reliance on government sponsored enterprises (GSEs)—namely Fannie Mae and Freddie Mac.
The Danish is an open system in which all mortgage participate on equal terms and it operates without government guarantees. Yet Danish mortgage bonds are traditionally very highly rated; often they yield less than government bonds.Their distinguishing feature is that they are identical to and interchangeable with the underlying mortgages. House owners can redeem their mortgages at any time by purchasing the equivalent mortgage bond in the market and xchanging it for the mortgage. Since bond prices and house prices normally move in the same direction, this feature--called the principle of balance--reduces the chances of householders having negative equity in their houses.
The mortgage originators are strictly regulated, and their interests are closely aligned with those of the bondholders. They pass on only the interest rate risk to bondholders, retaining the credit risk. That is why the bonds are so highly rated.
When Mexico wanted to securitize mortgages in order to promote house ownership, it opted, for the Danish system.
Wednesday, April 1, 2009
HOW DOES THE US ECONOMY RATE TODAY?
GET THE FACTS BEHIND THE NEWS
In judging measures to help our economy we should look at the effect on the “forest” and not get completely lost in the woods. The OECD, Organization for Economic Cooperation and Development an international non-gov’t and non-profit group dedicated to furthering growth and competitiveness completed Nov 08 a study of 144 nations for eleven categories from Institutions to Business Sophistication.
Over all the US ranked first. However many will be shocked to see how low the US economy is rated on several important economic categories.
For instance US workers want to be paid high wages. High wages are usually paid to highly skilled well educated workers with good experience. This is one of the reasons Prof Michael Porter (Harvard School of Business) and others including Pres Obrama believes our educational system must be upgraded. Data from OECD reports show the US IS 12TH out of 144 nations IN THE NO. OF COLLEGE GRADS 25 TO 34. We have not made any progress in this vital area in 30 years. We have to compete with the best skilled workers of other countries and regions of the world. It is in our national interest to make it possible for intelligent people who desire to do so can get an education and become skilled people,
Fallowing are some figures from the Global Competitive Report
2008-2009.as to where the US rates as a free market economy.
US
Out of 144 countries
1) Openness to Capital Flows 20
2) Low Trade Barriers 21
3) Absence of Distortion from 35
Taxes and Subsidiaries
We will continue to examine in greater detail where the US ranks on several important t categories.
In judging measures to help our economy we should look at the effect on the “forest” and not get completely lost in the woods. The OECD, Organization for Economic Cooperation and Development an international non-gov’t and non-profit group dedicated to furthering growth and competitiveness completed Nov 08 a study of 144 nations for eleven categories from Institutions to Business Sophistication.
Over all the US ranked first. However many will be shocked to see how low the US economy is rated on several important economic categories.
For instance US workers want to be paid high wages. High wages are usually paid to highly skilled well educated workers with good experience. This is one of the reasons Prof Michael Porter (Harvard School of Business) and others including Pres Obrama believes our educational system must be upgraded. Data from OECD reports show the US IS 12TH out of 144 nations IN THE NO. OF COLLEGE GRADS 25 TO 34. We have not made any progress in this vital area in 30 years. We have to compete with the best skilled workers of other countries and regions of the world. It is in our national interest to make it possible for intelligent people who desire to do so can get an education and become skilled people,
Fallowing are some figures from the Global Competitive Report
2008-2009.as to where the US rates as a free market economy.
US
Out of 144 countries
1) Openness to Capital Flows 20
2) Low Trade Barriers 21
3) Absence of Distortion from 35
Taxes and Subsidiaries
We will continue to examine in greater detail where the US ranks on several important t categories.
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