Tuesday, March 10, 2009

Maybe Billy Mays Can Mighty Mend It

By no means am I a billionaire, nor do I pretend to know how to become one. In fact, the only thing remotely similar to myself and a billionaire is "air" – and even that is speculative. However, I think billionaire Warren Buffet, of Berkshire Hathaway Inc., needs to keep quiet for a while. Why? First, he practically single-handedly facilitated the sale of St. Louis-based Anheuser-Busch to InBev by selling his stock in the former, primarily because he thought the takeover would fail. He later recanted by saying he thought it was a mistake to sell…simply because he lost money on the deal by selling a majority of stock too early. Cue the smallest of solemn violins…

Then yesterday, Buffet’s pessimistic remarks that the economy “has fallen off a cliff” sent Wall Street plummeting faster than an airplane with no wings (for reference, see Superman Returns). Contrastingly, Citigroup, receiver of multiple government bailout funds, today reported profits for the first time since 2007. What happened? Wall Street soared on the news. Of course, any positive banking news is good at this point. However, the promising upswing does little to offset the reality that Citigroup and the general banking sector are still in deep caca. Instead, financial analysts would rather see a “shift in sentiment” for a sustained rally.

Wait...sentiment? As in attitude, feelings? Are you saying Wall Street bases achievement on having a few Dr. Phil moments?!!

The worst was when Alan Greenspan was head of the Federal Reserve. When Alan spoke, the economy listened and acted accordingly...like a Catholic mass. Up and down, up and down. The economy seemingly hinged on his every word. The question is does it seem secure that the economy can swing on the words of a few? It is scary that the likes of Greenspan and Buffet could send the economy over the cliff – even after it has fallen off – simply by yawning.

Forbes.com - You Are Not Warren Buffett

©2009 Steve Sagarra

Thursday, March 5, 2009

The Winds At Dawn

In 1978, President Sardar Mohammad Daoud Khan, the founder of the modern republic of Afghanistan, and his family were assassinated and buried in an unmarked grave during a communist coup. Daoud, a progressive yet repressive leader hardly representative of democratic government, had wrested control of the country only five years earlier in a coup against his own cousin, King Mohammad Zahir Shah; ironically, it was Zahir who introduced democratic reforms during his reign, including free elections and universal suffrage. Sadly, the assassination of Daoud precipitated thirty years of conflict – beginning with the Soviet Union’s invasion the year after – that still endures. Yet, thanks to the U.S.-led overthrow of the Taliban government in 2001, the current democratically elected government under President Hamid Karzai is preparing to put to rest its past by reinterring the former president with a state funeral – a stark reminder of what was lost and what has been regained.

A world away, Venezuelans have seemingly embraced despotism – no less through democratic means. In a referendum vote, President Hugo Chavez secured a slim victory in removing term limits for all public officials, essentially paving the way for him and his political cronies to stay in power for decades and further their socialist agenda. Much like his friend Fidel Castro, the former “president” of Cuba, President Chavez is anything but, and should call himself what he is – a dictator. Only dictators seek to maintain their power for as long as possible, while presidents seek to lead until such time when it is time for them to step down. Castro and Chavez are to George Washington or Abraham Lincoln what an apple is to an orange – not alike at all, except for both being fruits.

There is the belief that such things do not, and cannot, occur in the United States. The U.S. was founded on democratic principles, and Americans have always elected their leaders. Yet, four out of 44 presidents have been assassinated, each time calling into question our self-touted civil character. Meanwhile, a myriad of crises – the Great Depression being the prime example, no less under the longest-serving U.S. president – have put the country on the brink of radical reform. With the largest economic stimulus in its history and calls for nationalization of major corporate entities, the prospect of a socialist agenda imperiously thrust upon Americans is at hand under the Obama Administration; however, unlike Darth Chavez, President Obama has, at most, only two terms in which to do it. All the while, we face daily threats that seek an inglorious end to our national sovereignty and outright existence.

Perhaps stemming from the Soviet-era occupation, a certain affinity for the Afghan people has always existed in the United States. After all, only John Rambo could go to Kabul. Seemingly, Afghanis have been waging battle against oppression and control of their country for decades, from the Soviets to the Taliban. They continue that fight still today alongside U.S.-led forces, understanding what is at stake for their future.

On the other front, the opposite seems true of Iraq. That is not a disparaging observation, simply a matter of perspective. The Iraqis have known only oppression and occupation over the same period as the Afghan people, with no understanding of freedom and self-government. There is a good reason for that fact:  Saddam Hussein ruthlessly stamped out such ideas by slaughtering the people who voiced them.

In the judgment of many, that was the problem from the beginning. Taking for granted our own circumstances, Americans inherently believe that everyone wants what we want. There is, of course, nothing wrong with that thinking. We thought what had occurred in Afghanistan – the overthrow of the Taliban and establishment of an elective government almost over night – could happen in Iraq. When Saddam Hussein was overthrown, we thought the Iraqis at the same time would embrace democratic ideals just as the Afghanis had upon the removal of the Taliban regime. It did not happen for one simple reason:  the socio-political culture and history of Iraq, and our misunderstanding of it. Think of it in terms of a fiery, caged animal versus a timid, abused one – we failed to realize that the Afghanis have been zealously fighting for it for decades while the Iraqis have not. Just because one breaks the bonds of oppression does not mean the enlightenment of freedom will replace it.

At the same time, the defeatist attitude that has crept into the fight against the enemies of democracy and freedom – particularly from those nations that have both – is unfathomable. Regrettably, the United States is not immune. Like the Iraqis, Americans, or at least half of the polled electorate, have no idea, have forgotten or just do not care for what it is we fight, lulled by media coverage and Washington rhetoric that stymies our efforts and portrays an unwinnable situation. The worst possible course is idly to abide the forces that seek to destroy our ideals, particularly when on the cusp of triumph over them. In the end, that thinking that will lead to our undoing and, ultimately, our own self-destruction; Igor Panarin, dean of the School for Future Diplomats in the Russian Foreign Ministry, predicted before a group at the Diplomatic Academy that the collapse will occur in 2010. The only question is will we act like a caged animal who fights back or an abused one who never gets the chance?  

©2009 Steve Sagarra

Tuesday, February 10, 2009

Road of Excesses Paved With Bad Intentions

Ford Motor Company founder, Henry Ford, once said, “You can't build a reputation on what you are going to do.” Declining government assistance and accepting internal accountability, Ford thwarted a corporate collapse of its business ventures through in-house restructuring and refinancing. Consumers will no doubt remember, or at least consider, that when deciding to buy a new car, with Ford’s reputation intact for what it did that competitors like General Motors and Chrysler did not. No company in the world can buy that sort of public relations marketing.

Citigroup, Bank of America and JPMorgan Chase, on the other hand, have pulled off an audacious heist of taxpayer money. After soliciting, and receiving, a combined $155 billion in government bailout money, the companies continued their frivolous spending. Despite supposed near-catastrophic financial straits, the three managed nonetheless to shell out a combined $606 million, of which Citigroup spent the majority at a cost of $400 million, for the naming rights at three sports arenas. Certainly, hardly the indispensable, curative investment needed for curbing the economic strife of the financial sector. Even more, Citigroup, citing contracts already in place, was set to purchase a new corporate jet for $50 million, no doubt for ferrying executives to their now-cancelled Bahamas convention in June. Only the combined outrage of politicians, the media and taxpayers – possibly the first time in history all three aligned in unison – ostensibly forced the cancellation of the purchase.

The precedents and examples set by these corporations, who by no means are alone in their impudence, have only served to entice entities of all ilks – from lobbyist groups like ACORN to the porn industry – to coolly seek their handout from the government. As Davy Crockett, the legendary 19th century frontiersman and politician, so eloquently stated, "We have rights, as individuals, to give as much of our own money as we please to charity; but as members of Congress we have no right so to appropriate a dollar of public money." Unfortunately, that is exactly what is occurring under any bailout plans - government charity taken from the public coffers.

To make matters worse, Treasury Secretary Timothy Geithner had major tax issues, a problem which claimed the nomination of Tom Daschle for Secretary of Health and Human Services. Predictably, the errors were not corrected until they came to light during the nomination process. Geithner took ineligible business and charity-related deductions, expensed personal use items and failed to pay self-employment taxes totaling $34,000 between 2001 and 2005. Yet, as a key member of the economic brain trust, he is the person charged with administering and overhauling the troubled economy – no less paid for by the average American taxpayer. Or at least, the ones who pay into the system. Like the most expensive inauguration in Presidential history, it sends the wrong message at a time when Americans are looking to its leaders for fiscal responsibility with taxpayer money and alleviating the country’s economic ills.

Accordingly, rather than a bailout of financially mismanaged industries and undeserving entities, a more agreeable solution would be the division of the proposed stimulus (House bill - $820 billion; Senate bill - $838 billion) among every American taxpayer – the ones supplying a large chunk of the economic recovery package, after all – who no less would directly contribute to those very industries through spending. With an estimated population near 306 million, with just under half comprising the taxpayers, every eligible citizen (i.e. John Q. Taxpayer) could then receive roughly $6,000. Though outwardly insignificant compared to months of losses in wages and investments, that money could nonetheless be used by burdened Americans to at least pay their mortgage, ease their debt and/or spend on items from groceries to cars. Thus, economic recovery would be driven from the bottom on up, rather than from the top on down. Additionally, it would buy time, literally, for government and industry to affect changes, respectively, to fiscal policy and business models – not to mention establishing proper oversight for implementation and compliance – without haphazardly instituting such in a symbolic rush to satisfy campaign promises.

With the understood reality that we live in a capitalistic society and a global world market, that scenario, however, would not be a win-win for business. In spite of a prospective increase in consumer spending if consumers, rather than producers, were bailed out, business, from its perspective, would not thrive in the way that best benefits their bottom line. Forget the fact that questionable practices and irresponsible dealings were the majority cause of the economic troubles in the first place. For instance, if customers were able to wipe out their debt due to government intervention, banks and credit companies could not continue to exploit and reap from consumers’ debt spending in the form of exorbitant fees and interest rates. As such, those truly in need of an economic bailout – which would not include high-priced executives seeking bonuses – are not the ones who will receive it. Thus, the cycle will perpetuate that continually puts Wall Street ahead of Main Street, and maintain the status quo of economic enslavement for the most impoverished.

So much for the little guy filled with the promise of “hope and change”…

©2009 Steve Sagarra