Toxic Assets

Toxic AssetsToxic assets has become a popular term for certain types financial assets whose value has fallen significantly and for which there is no longer a functioning market, so that such assets cannot be sold at a price satisfactory to the possessor of those assets which leaves those possessors in a very bad position since they’re holding assets that often cannot be sold except at a significant loss.

To-date this term has mostly been used to describe a subset of securities that were based upon mortgage-based derivatives. I wonder though if people should start thinking of America’s debt in similar terms, at least in the longer term.

USA Economy - Money To Burn

The US government, especially the bloated federal government, is and has been living well beyond its means. Expenditures consistently outpace revenues and it’s reached the point where the government and the pundits are all claiming that, if we don’t borrow more money we’ll default on the debt that we already have. Hence, the brouhaha over the current debt ceiling argument in Congress.

In the near-term it would be ridiculously hyperbolic to describe the American government’s debt as a toxic asset but that doesn’t mean that it should objectively be considered a sinecure for investment either. Moody’s, Standard & Poor, and the International Monetary Fund would be right to downgrade US Treasury Bonds and all US Denomination backed debt. A continued AAA credit rating is unwarranted given the ongoing fiscal irresponsibility of America’s government.

However, if the American government doesn’t rediscover fiscal responsibility it’s debt may well in the years to come be classed as a toxic asset. That’s happened to plenty of other nations through the course of even recent history.

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Feeding The Monkeys

Feeding the Monkeys” is slang for doing something that you know is stupid, unwise, and/or contra-indicated. It almost always has a negative result. It is also a very apt metaphor for America’s ever-expanding entitlement programs.


Feeding The Monkeys Is Not A Wise Choice

The maddening fact that these “safety net” entitlement programs bear greatest resemblance to animal husbandry than anything meant to foster, or even maintain, human dignity just makes the comparison more accurate and pointed.

All we’ll ever get by feeding the monkeys is feeding frenzies, hand-out recipients squabbling and stealing each others’ “Government Manna,” and uncontrolled population increase among the subsidized groups. Worse, after some time being “fed,” neither they nor their progeny are capable of “being released back into the wild.”

This holds equally true for any all corporations that were declared Too Big To Fail and/or those industries that are now or have been receiving copious federal subsidies.

It’s all the same. It doesn’t matter if they’re sagging and wearing Ecko, Sean John, or Apple Bottom, or they’re in Brooks Brothers, Hermes, or Ralph Lauren; the feeding frenzy is fundamentally the same as is the expectancy that the trough will be refilled.

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Obama’s Job Creation

President Obama’s and his Liberals’ Porkulus, commonly referred to as The Stimulus Package, has largely failed to create jobs in America and had to be rebranded by the White House as a jobs saving effort. Likewise, both the mythical “Green Jobs” and the upcoming “Jobs Bill” will not actually create jobs.

On the other hand, President Obama and the Liberals trying to rule Congress have caused a sudden and dramatic increase in one sector of the American economy – the lobbyists!

The financial sector hired 2567 lobbyists in 2009 and, in the first three quarters of the year, spent over $336 million lobbying Congress. The US Chamber of Commerce hired 127 lobbyists and paid them $52 million through September 2009.

Consumer Watchdog

That’s a fair amount of commerce going on there with almost $400 million changing hands in three fiscal quarters, and that’s just in lobbying for the financial sector; it doesn’t include the number of jobs created for lobbyists for other sectors of the economy and other interest groups.

See, President Obama and his Liberals can create jobs. 😉

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A Reminder

It is important that Americans remember our brave history because that history, whether we remember it or not, can, does, and will repeat itself. Whether that is to our doom will be determined by whether or not we remember the lessons we learned – and forcibly taught upon occasion – in the past.

Here is a timely reminder:

The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves; whether they are to have any property they can call their own; whether their Houses, and Farms, are to be pillaged and destroyed, and they consigned to a State of Wretchedness from which no human efforts will probably deliver them. The fate of unborn Millions will now depend, under God, on the Courage and Conduct of this army.

— Gen. George Washington
Orders to his officers, July 2, 1776

The subornation of TARP – which was a piss-poor idea to begin with – to embed the Federal government in America’s Financial Institutions, the coercive purchase of much of the American Auto Industry, the Waxman-Markey American Clean Energy and Security Act (HR 2454), America’s Affordable Health Choices Act, (HR 3200) – the list goes on and on and everything in it has one commonality: they will greatly harm and possibly destroy the American national economy.

President Obama and his Liberals in Congress know how destructive their plans are. That is why each of these abominable pieces of legislation include subsidies to be paid out to offset the immediate damage that will be done if these bills pass into law.

Are Americans still Freemen if enterprise is forbidden and/or punished, and each and all must queue up for whatever “largess” the Government chooses to dole out?

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Some Things Do Work

I won’t call it a rally – it’s not even close – but there has been some improvement over the last week or so in both the stock markets and the credit markets. How long this will last and how far they will climb, along with the reasons for it, are still in doubt though.

From the NY Times:

It is hard to miss the news: the stock market has been on a bit of a roll lately. But with far less fanfare, the credit markets, where the financial crisis began, are also showing signs of a spring awakening.

Companies with good credit are borrowing more money in the bond markets. Confidence in the banking industry seems to be returning, despite the daily ups and downs of financial shares. Even junk bonds, the high-risk corporate debt instruments, are luring brave souls again.

The revival is tentative and, like the gains in the stock market, which pulled back on Monday, it may well prove fleeting. But analysts say the improvements suggest that investors are starting to get some of their old nerve back, mainly because of sweeping federal efforts to get credit flowing again.

So it’s possible that people may see some slight relief from the economic woes assailing the average American right now.

Yes, I know – the NY Times aka Pravda West aka The Jihadi Journal aka The Dirty Whore Who Was Once a Lady isn’t anywhere near the best source of information, but what can you do?

I’m sure the Liberals will agree with what passes for the NY Times’ analysts’ and “journalists'” assertions that this shows that the sweeping measures by Obama and his Liberals are working – and therefor their intervention and growing control of the American private sector is justified.

Of course it was President Bush who enacted TARP, so anyone who likes it or its supposed benefits should be thanking him, not Obama. Yeah – that’s not going to happen.

Of course this slight rise in the markets may just be an indication that, despite the current crisis, the fundamentals of the American economy are still sound and that we’ve hit the bottom of this recession. This may be – just maybe – the start of the long crawl back out of the pit.

Even the NY Times stated that companies with good credit are borrowing more – i.e. lenders are loaning them money – and that there’s been a small resurgence in the junk bond market, which indicates are certain courage and/or greed on the part of investors is in evidence. So it’s quite possible that this is just a case of the strong surviving while the weak perish.

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