Igorsky

Wall Street Breakfast: Must-Know News

On bonus bill blocking Congress ....that would apply a 90% tax on executive bonus payments made by companies receiving more than $5B in federal bailout funds, it seems like our legislators once more are protecting their campaign contributors.

When they put in the provision that the law....."would apply to payments made after Dec. 31, 2008" ... they put in a big loophole that Merill Lynch bonus receipients will get to keep their bonus money after running down the company and saddling the taxpayers with debt. I wonder if this is another of Chris Dodd's/Barney Frank's unconsionable acts.

The Week Ahead: Geopolitical Issues Dominate

icandoitdon, as you very well know it is the radical leaders in Iran that have been supporting the terrorists all around the world that makes Iran unique and therefore needs to be destroyed...before they can severly damage us. All the other wackos will behave themselves once we have demonstrated the consequence of Iran's support to Islamic radicals to the world. This generation has not seen the mushroom cloud and needs to be shown another demo in their own land.

The Week Ahead: Geopolitical Issues Dominate

The Bush Administration has made these 4 monumental mistakes:

Mistake #1.
During the 2000 Presidential campaign, it became apparent that George II was an intellectual lightweight. Experienced people like Scowcroft, Powell, Sinseki advised him not to go to Iraq but he could not comprehend and was swayed by others so he still did.

Mistake #2.
Then he got rid of one of the few competent guys he had in his administration, the one who had an actual successful experience running the Kurd area - Jay Garner - and replaced him with an inexperienced diplomat - Bremmer - who quickly dismantled the whole government of Iraq by dismissing the military and the Baatist gov't workers who had kept the country running relatively smoothly.

Bush II and his administration, heavily dominated by the religious rights wanted to so badly get rid of the bad Saddam guys that they thought naively that by letting the Shiites (with zero experience in organizing and running a government) run the country everything will be fine. Bush II and his administration did not understand that it takes decades to change and develop governments. He could have just gotten rid of a few of the top Saddam people and maintained the military and the rest of the government. Bush did not understand at that point that the worse thing he could to do is put people in the military (who are trained to shoot and bomb enemies) out of work (no income) and with no hope. (The insurgency was run by ex-military Iraqi leaders.)

**These first two mistakes is costing us about $800 B and counting.

Mistake #3.
Not only did he (and still does) refuse to heed scientist's warnings about global warming but even made moves to fire them from their government positions. He let his people alter critical reports to make it appear that everything is hanky-dory and there is nothing to worry about. Even now when evidence is coming in daily, he still has not admitted his mistake and therefore, is not making any moves to change direction. The Global Community has been asking for a change in direction and he still would not budge. Calculations have been made indicating the cost of addressing global warming is still affordable. How much this wrong headed decision to ignore global warming is going to cost will not be known (in dollars and future of the human civilization) until a few years from now but it could very well make the cost of the Iraq War relatively puny.

Mistake #4.
Subprime. His administration was hell bent on pushing the American dream of home ownership and encouraged it to the hilt without regard to sound economic practices. When the price of houses rose many times faster than personal incomes to support them, no one in his administration did anything investigate and stop it. In pushing for the expansion of home ownership and consequent expansion of the US economy, he failed to consider the limits of affordability. Why is this his mistake? His hiring of incompetent and unqualified people to oversee his pet programs. Remember Brown of FEMA of the Kathrina fame?


These are the major mistakes of the Bush II Administration. Surely he has made some very good decisions in the last 7 years but I have limited my discussion here to his mistakes for it far overshadows his good deeds. I am glad his administration is almost over.

The US is now at the brink of electing a new President. The next one should be one who has the wisdom and mature judgement to hire qualified and competent people regardless of their religious beliefs. He should hire a Chief of Staff a person who has a global perspective and a passionate student of world history and be a very persuasive person. None of the candidates have this quality so this person need to fill this gap.

One last item for the future.

Comments were given above regarding Iran. If Iran insist on making the 'bomb', then it needs to be pre-empted.

The justification? When we dropped the bomb on Japan, it was because it was better to kill several thousands of the enemy who started and was prolonging the war, than several millions of both our military as well as enemy population - military and civilians.

With Iran, if we let them make a bomb(s), they will surely use it. Although Iran can deliver it via missles they now have, they can also deliver it in numerous other ways. An example is via innocent looking ships ... like oil tankers which they can blow up when it docks in say, a port in New Jersey across NY City. A Nagasaki type will surely kill millions in the NY area. With the advancement in technology and aid of Mr. Khan of Pakistan, we can almost be sure the bomb they are making is several times more powerful. It will make the twin tower event really miniscule. But like the twin tower, it will be a surprise. This is a justification for pre-emption.

We can deliver several of our nukes right where Iran is making their fissle materials and bombs. Just to be sure we wipe it out, we deliver our nukes simultaneously on several locations. It will show our resolve and warn others. Surely there will be repercussions like bin Laden calling on his troops to create chaos all over the world. But if they do and they surely will, the damage to us will be a lot smaller than Iran's bomb.... and what if Iran instead explodes several bombs knowing we will retaliate? Remember, these willing-to-die-guys want to go to heaven at our expense - the infidels - so it does not matter to them and their innocent bretherends if they die. It is all in Allah's will.


So, it is a decision we have to make, to take the lesser of two evils. the last thing the US should do is send our troops into the country. Destroy their nuclear bomb making capability. With this dire scenario, the US need to pick the right candidate to be our next President.

Don't we all wish Truman was our next President so we can count on him to make the right decision?

Why Did the Mortgage Market Go Out of Control?

Well written article. The reason subprime did not exist in the past was because it is not good to lend money to people who have a high probability of no being able to pay back the loan. They are almost a sure bet to default on the loan.

Now, why do we want to bail them subprimers out with our taxpayer money? Except for a few whose subprime status was temporary, sooner or later, they will go into default. Helping them will just prolong the inevitable...at great cost to us taxpayers. Helping them will just lenghten the time when the economy will recover. A good example of this is Japan. How long did it take them to recover from the real estate crisis they had in the 80's?

This mortgage crisis is equivalent to the Enron fiasco, except it is so much bigger and worldwide in scope.

The lesson here for investors is when you see institutions selling new and creative instruments, watch out! Do your Due Diligence or if it is so complicated, stay away and stick with the tried and true and very sound practices of the past.