Curmudgeon Gal – Jon Stewart I Love You!

A love note to Jon Stewart. It's interesting that it takes a comedian to have the guts to ask the tough questions to the financial media…, like, where you and why didn't you see danger coming? I have a few suggestions of some more guys who need to have their feet put to the fire…so be prepared mortgage brokers, banks, real estate agents, mall developers. I'm sure I'll figure out a few more in the future.

Here I am today in beautiful Baja California, Mexico, you know, the place where the US Government tells you not to go. It's true, we're in the middle of a drug war, but for the average resident it's less dangerous than the USA with it's home invasions, bank robberies and rapes. Here, the druggies are fighting it out with an occasional attack on the police, but in the states, it seems that everyone is a target these days. I especially didn't like the idea of a bunch of kids kidnapping an old lady they tortured and kept in the trunk of her car. That's senseless violence just "for fun." At least here in Mexico they have a profit and turf motive – control of the drug routes to sell Americans the illegal substances they so crave.

But, as usual, I digress. I want to tell Jon Stewart I love him. I need to do it and he needs to hear it. If I wasn't such an old broad, I would seriously have his babies I love him so much, but I think perhaps I might better just be his second Mom – he's about the age of my kids.

The fact that he took on the financial media was just stunning and done in his usual brilliant manner. I encourage anyone who has not seen his discussion with Cramer of CNBC "Mad Money" go to the "Daily Show" web site and see it. Everyone else has been pussyfooting around these guys and Jon hoisted him on his own petard.

Now, I would like to see him take on the banking cum mortgage industry. That debacle is the dumbest yet and everyone shakes their heads as if it happened while they weren't looking. Give me a break!

How can anyone claim they didn't see it coming when you analyze all the markers staring us all in the face?

Let's look at them one by one.

1. Can you believe your home is growing in value by as much as 35% a year in some areas, when there is no inflation? Now honestly, how can that make sense? Where is the demand coming from? There is no huge population growth or exodus to many of these areas, with the possible exception of Las Vegas which was experiencing a population explosion.
   
2. How can you borrow against your equity when it's an imaginary figure? There is no equity to be actualized until a property sells. Then you recognize equity, until then, it's the same as sitting at the craps table with a big pile of chips in front of you. As long as you sit and play you haven't won anything. Once you cash in your chips and walk away from the table you're a winner – that is, as long as you don't continue gambling.
   
3. Actually, that's exactly what many people did. They took the equity from one house and put it down on a bigger, fancier and more expensive house, or, in other words, they parlayed their bet…just used another word for it by calling it "flipping."
   
4. When they took out their "equity" most people didn't use it to improve their home's value. No, they went on a spending spree and bought toys – new cars, boats, RV's, clothes, electronics. All those things that plummet in value as soon as they leave the store or dealership. What went on in people's heads to take a generally appreciating asset and trade it in for a depreciating one?
   
5. Anyone with their name on a tax roll was bombarded by calls day and night from bull pens selling mortgages. Didn't that raise a danger flag? At the same time, the airwaves and television were filled with commercials for mortgages. How can anyone forget Ditech or Lending Tree commercials? At the end, they made everyone feel like they were missing out on "almost free" money. After all, if you have 30 years to pay it back, we all know for sure that the balance will be a pittance as the value of homes escalates to the moon…except when it doesn't.
   
6. Banks were complicit in the scam with no requirement to prove income, allowing stated income to be the norm. Hell, you can state you make anything – and why not if the fools let you get away with it? If you can't pay, just give it back to them – but don't be mad if you have to.
   
7. Appraisals were made by tame appraisers who made money by being selected by the mortgage company. They would find out what the mortgage amount was going to be and made sure the appraised value was substantially above the loan. It's easy to justify when prices all around are going up and comps can be found at any value.
   
8. And how about real estate brokers who touted you on making offers on grossly overpriced homes just so they could make the payments on their new Hummer or Lexus? They were supposed to represent the buyer in many cases and they only represented their own interests.
   
9. Didn't anyone notice that mortgages were changing hands faster than an infant changes diapers? At one point I had three different mortgage holders in less than a year. It was hard to keep up with where I was to send my payment. If that was happening, then someone was making money in the sales of these things.
   
10. No one regulated anything! It was an orgy of greed!
    

    
     

    If the topic of conversation around a normal dinner table was "How can people afford these prices?" someone knew it was phony, I certainly did. And, if I could figure it out, why couldn't the regulators? Easy, they didn't care!
    

    We had a government for eight years who didn't give a rat's patootie about the middle class, they just wanted big business to make money, and they did.
    

    
     

    Now that's not to say it's all government's fault. I think we all have to take responsibility for the mess, but no one wants to, they just sit and finger point. I like to finger point too, but after all that's my job.
    

    
     

    From this debacle, the US housing market, according to the latest statistics from Bloomberg, lost 3.3 trillion dollars in 2008. The Federal Reserve reported a few days ago that households lost 5.1 trillion dollars, or 9% of their wealth, in the last 3 months of 2008. Is it any wonder everyone is feeling poor? Even the big guys are feeling the pinch. According to Forbes Magazine Bill Gates lost 18 billion and only has 40 billion left and even Warren Buffet lost 25 billion. But I don't think I'll feel too sorry for them, even though I have great respect for their philanthropy.
    

    
     

    Now back to Jon Stewart. Jon, why don't you take on the media for the housing mess as well? They allowed commercials touting mortgages with amazing rates and low entry levels, screamed that a family's wealth is mainly in their homes, and went along with the whole scam. I never heard a whimper from anyone that we were in the middle of a housing bubble. No mention was made of the McMansioning of America. No investigation was made of housing developments with starting prices in the low millions and no justification for price other than the developer could get it. No one gave a thought to the constant calls for mortgages, or the over development of so many areas of the country. It was media complacency as well that failed to point out what was happening. Or did they just not get it?
    

    
     

    Maybe that's the thing, the media is really stupid and doesn't have a clue that things might be going wrong – ya think?
    

    
     

    Well, here's another one that I could never figure out and maybe you can bring on the carpet. How can so many malls survive in suburban areas? I have a home in Orange County, also known as affluent bitch central. I was trying to count the number of malls in a five mile radius from my house and I came up with about 15 or so and gave up, but I know there are more. There are 3 Coldwater Creeks, 3 Costcos, 3 Home Depots and maybe more, I can't think of any Lowes, 2 Kohls, at least 2 Brighton's, god knows how many movies but at a wild guess I'll say at least 25 screens. There are strips filled with nothing but furniture stores, I can think of at least 4 in the same area. There are 4 Macy's, 2 Marshalls, 2 Home Goods, 2 Targets and so on. Doesn't someone have to close? How can all these stores stay in business? J. Jill and Talbots have given up their stores and gone back to their core business of catalogue sales. Circuit City is dead along with Bombay Company, Mervyns and Levitz. How many more are going to die this year?
    

    
     

    Now malls need zoning compliance and city council approval so there were plenty of people involved in the process. Didn't any of them scratch their heads and think about how all of them would survive? Or how their cities would look when they didn't? I guess not. Let's take these yahoos onto the carpet too!
    

    
     

    And, what will the face of the suburban landscape be? Are we going to have half empty malls looking like the broken down and shuttered Main Streets they replaced? It's already starting to happen. Every mall has empty shops and those numbers grow daily. I keep out of the Malls lately as it's too sad to see the sale signs; they have a frantic desperation about them that gives me the creeps. I see them as future ghost towns, empty and decaying as part of our dead culture. Now, when we think of those civilizations that just disappeared, we can add in Malls. Archeologists of the future will be studying escalators, food courts and manikins as symbols of a failed lifestyle and speculating on how they met their demise. We should paint the word "Greed!" on the walls in gang graffiti when they close as a sign to future generations.
    

    
     

    So Jon, please pick on the mortgage guys and the real estate developers, put their feet to the fire and then go after the mall companies that covered our landscape with purchase palaces. You know, those places where we went to spend money we didn't have to compete with those we thought had money we now find out they didn't have either.
    

    Alice Donenfeld-Vernoux
    

Website: www.curmudgeongal.com

Podcasts: http://www.curmudgeongal.libsyn.com

Curmudgeon Gal - Blame it on the Boomers

For a generation so proud of themselves, the Boomers have been oddly reluctant to take credit for their tanking of the world economy. I say, step up to the plate Boomers and finally claim your own mistakes, you will be the first of your generation to do so!

It's all their fault, the Boomers, I mean. They did it and no one said a thing about it because they NEVER take the blame for anything. Boomers are finger pointers, they don't take responsibility for their own mistakes, only the good they accomplish. It's a generational thing, they don't believe they can do anything wrong, just ask them. Two perfect examples of this are our last two presidents, "I didn't have sex with that woman!" and the other one who said he never regretted anything he did, like going to war and decimating a country for trumped up excuses. Yeah, those guys are perfect examples of the Boomers.

You know the Boomers, those born after WWII in the flood of military home coming, an unprecedented new prosperity at the end of the war and the final end of the Great Depression.

They were born into the developments in Levittown, in West Los Angeles and the San Fernando Valley. Their parents went to the outer reaches of cities across the country to create suburbia and find a lifestyle that suited their new families. They were the buyers of those giant sprawls of cookie-cutter houses newly affordable under the G.I. Bill.

They were the first of the American families to be able to attain the oft touted American Dream; something most families couldn't imagine when caught in the midst of the Great Depression. Every household had a shiny new car, one of those new fangled television sets, radios/record player combos in every room, telephones with no party lines and plenty of jobs to be had. This generation was brought up in the most affluent age in history.

The American nuclear family, as it was called, consisted of Mom, Dad and two point five kids. I never did figure out how that worked. They watched "Howdy Doody, " Sid Caesar and Imogene Coca, "Father Knows Best," Desi and Lucy and the Lone Ranger. Families modeled themselves after the Nelsons, "Leave it to Beaver" and "I Remember Momma." "The Great Gildersleeve" and Jack Benny made the leap from radio to television.

Those kids, the ones whose parents brought them to live in those new houses lovingly decorated in turquoise formica and orange shag in the latest styles from Good Housekeeping, came to be known as the Baby Boomers, the largest single age group to come down the generational pike. They were born between 1945 and 1964 according to some studies, and declared with pride they would change the country to the way they wanted it, and they did. They are the largest demographic bulge to date and they changed society, tastes, social conventions, sex, language, fashion, culture and financial models as they moved through the decades.

When they went to war in Vietnam, those remaining home marched against the war and protested as their right. They smoked dope, burned their draft cards, tossed their bras and made the establishment into villains in their new world. They celebrated the Age of Aquarius as an age of enlightenment and worked hard for social causes such as equal rights and woman's liberation. They were pro-abortion, wanted sex education and birth control and a woman's rights over her body. They were not religious, church attendance plummeted but Woodstock was spoken of in hushed reverence. They believed in science and watched in awe the first footsteps on the moon. They believed anything could be accomplished if they set their minds to it.

They insulted their parents for living in "ticky tacky houses all in a row" and called them little piggies and capitalists who cared for nothing but money. These kids were interested in social issues, reform, sex, drugs and rock n'roll. Many of them, fed up with the establishment, dropped out.

The attitude was "why not take drugs if they make me feel good" and certainly coke and pot did. LSD was mind expanding, marijuana was relaxing, booze wasn't bad either, but even better if taken on top of something else. There were years when a normal party included a bowl of pot and another of coke, provided by the good host or hostess for their guests along with some good wines and lots of food. And why not? They deserved it, were entitled to it because it made them feel good, and feeling good was the main goal in life.

But many of them changed their minds along the way. They became the most self-obsessed entrepreneurs since the carpetbaggers of the Civil War and the ruthless robber barons of the turn of the last century. These were children of parents who had suffered through the Great Depression and World War II; parents who were determined to give their kids superior chances in life, fine education, their own automobiles, elegant clothes and the best of everything. They were indulged by families who spared nothing to give their kids the best they could afford. But, they also didn't bother much to teach them the ethics and rules passed down by strict grandparents , rules their own parents had been brought up with. Like, "If you want to dance, you have to pay the piper." What kind of old fashioned shit was that?

How about crap like "If you don't have the money in the bank you can't afford it." "Don't buy what you don't need." "Your actions have consequences; keep that always in mind." And the final insult to another family, "Look at the Smiths over there, always concerned with keeping up with the Joneses."

Then there was, "Don't forget to put something away for a rainy day" and of course, "A penny saved is a penny earned."

Yeah, that was all just old guys bullshit. Everyone knew that anyone over thirty couldn't be trusted and like, didn't know anything, like they were really out of touch with the world. The new mantra was "me first" "I need my space" and the cult of ego and entitlement was born.

When this generation came of age, they believed in maintaining beauty, agelessness, and doing whatever it took to be the top of the heap, have the most toys and live the best life, the life of a king, or at least a lord of the manor. They were primed for MacMansions, chateau furniture, over the top salaries, trophy wives, huge yachts, vacation homes, and the most expensive, fastest and most "in" automobiles, but only for two years and then on to the next, preferably better. They were adrenalin junkies, pushed limits and pushed themselves. They worked hard and played harder. They believed in lots of sex, open marriages, group gropes, divorce and denying themselves nothing. They were entitled!

This mentality took over corporate America. They were shy on morals and long on greed. I remember "Little Abner" and Senator Claghorn who said, "What's good for General Motors is good for the country." What was good for the executives was good for the country, and if not, too bad for them, or, as the popular expression went "Fuck 'em if they can't take a joke!"

Excess became just and equitable entitlement. Games could be played with corporations to bring bigger bonuses, so what if doomsday might be pushed into the future, it might never come so why worry. Remember Alfred E. Neuman of MAD Comics fame, "What, me worry?" The accounting of Enron and Tyco are examples of this.

So, when you put it all together, the generation so socially conscious as teens and early twenties, who smoked dope, dropped out, snorted coke, poked hash into their pipes, were community organizers, led marches on the government to get what they wanted and came back to be part of the establishment with the understanding that they were better than everyone else and deserved more than their parents had. And, sadly, as they had been growing up, their parents were complicit in those lessons.

So, they took it to the next level and ripped off the world!

When you look at Joseph Cassano, the head of the AIG division that brought the company down, remember he was born into this, worked early on with Michael Milken, the junk bonds impresario. Why would he need more of an excuse to dream up credit-default swaps? Few people in the industry can completely explain what the hell they are, so those he reported to took the position that as long as he was making money it wasn't something they had to know much about. After all, it was a time when Presidents of countries (remember Nixon?), accepted the phrase "plausible deniability" as their right, so why shouldn't a president of a corporation? And what the hell, it was only money.

This mentality sees no consequences. No thought about if a company loses money, so do shareholders, pension funds that might be stockholders, employees with retirement tied up in the company shares, life savings tanked, people out of jobs. The only thought is me, me, me, look what I can do, see how much money I can make. And now, hands are out for the government to take the fall, save the day, come to the rescue so those at the helm don't lose their golden parachutes, stock options, executive packages. Just relate it to how they were brought up, given everything, spoiled, little or no rules, bought back into school if kicked out, indulged in whatever they wanted with little of the prior generations' ethics or values and never made to suffer the consequences of their actions. They were brought up by the world's best enablers!

Yes, the Boomers did great things, they were social conscious and interested in ecology and human rights. Without them there wouldn't be the equality we experience today, our society might not be as liberal, we would might not have a brilliant African-American as president, women could still be second class citizens; no understanding of global warming; yes, we have a lot to thank them for. But still, we wouldn't be in this mess caused by the self indulgence of a generation concerned only with feathering their own nest who left the bills to be paid by generations forward.

So, Boomers, here is your own private Hall of Shame. Please remember it next time you feel like puffing out your chest and expounding on how great your generation is.

Martin J. Sullivan, born 1955. Former President and CEO of AIG who presided over a corporate drop in value from over 100 billion to less than 1.5 billion as of February 2009, and received a severance package of $25.4 million plus added perks of approximately another $750,000.

Joseph Cassano, officer at AIG Financial Products, born in 1955 in Brooklyn, son of a policeman and the man credited with almost single handed bringing down the world financial machinery. Before he was forced to retire in March 2008 he received $315 million, $280 of it in cash and $34 million in bonuses, a $1 million a month consulting fees which he was still getting in September last year. When asked how this was possible, then CEO Martin Sullivan told Congress they "wanted to retain his 20 year knowledge." Huh!?

Ken Lewis, born 1947, current chairman, CEO and President of Bank of America for the last eight years and the guy who thought it was a good idea to buy Countrywide Lending, those guys who were running amok in the mortgage lending frenzy and eventually brought all their toxic mortgages over to B of A. He's a bit more circumspect with his pay and in 2008, he only made six million if you include the value of stock granted him between 2005 and 2007. So, for 2008 he took home a salary of 1.5 million, no bonus or stock options, not that they would be worth much at the moment. He also had $275,000 in other compensation which was largely personal use of corporate aircraft. This compared with 2007 where his total compensation was around $17 million, including stock options. Guess they aren't worth too much today if he hasn't already cashed them in.

Vikram Pandit, born 1957, and head of Citigroup, was given a compensation package in 2008 worth more than $38.2 million dollars as the bank posted five consecutive quarters of multibillion dollar losses under his guidance, and turned to the US government for help three times. He got $80 million from Citi for his hedge fund, you know, the fund that bets against the economy succeeding, and $800 million for his investment fund, Old Lane Partners, also sold to Citigroup. He has declined a 2008 bonus and said he will accept a $1 a year salary until the company returns to profitability. I guess he can afford it with all those millions he's already received.

Ajay Banga, Citigroups Asian operations manager, born 1960,and Gary Critterden, born 1953, were each paid between 10 and 11 million. However, since many of these awards were in stock, they have subsequently decreased when the stock tanked.

Charles Prince, born 1950, was former CEO and Chairman of Citigroup who retired November 2007 when he saw the writing on the wall with the companies 3^rd quarter looses in those odd products that no one can figure out. He scampered away with a 38 million pay package as the company was tanking.

FYI, after government criticism and public outcry, Citigroup's bonus pool for 2008 was cut in half to a measly 4 billion dollars – paid of course, out of bailout funds.

So there you have it, a bunch of players in the global crash who the Boomers can claim with pride. The sick irony is they have destroyed their own future and the golden retirement so many of their fellow generation assumed they were entitled too. But hey, fuck 'em if they can't take a joke!

This is your Curmudgeongal signing off. I appreciate the time you spend with me, I know you all have busy schedules trying to make ends meet since the foxes have been discovered in the henhouse.

Website: www.curmudgeongal.com.

Podcasts at: http://www.curmudgeongal.libsyn.com

Curmudgeon Gal – Shunning

Pissed off about guys getting big bonuses for tanking AIG, angry about where taxpayer money is going? Yeah, me too, but I have a way to punish the guys who were in charge that's legal and effective.

I spent most of the week preparing my taxes, listening to everyone bitch about AIG executive bonuses and I watched the CEO of AIG being skewered by Congress. At the end, I felt sorry for him because he came into the picture after the fact on behalf of the government, doing what has to be thankless job for a dollar a year. He started out the hearing by saying that he found the bonuses distasteful too but was faced with contractual fait accompli. He is faced with paying bonuses of $160,000,000 when the company has received $170 billion in bailout money.

He also said he contacted company attorneys to review the contracts and was informed because of Connecticut law they might have to pay two to three times the amounts if they did not pay and were sued. However, if Federal law was enacted to void the contracts, then it would trump the state laws. He didn't get into that issue. I can see lawsuits costing far in excess of the bonuses taking the states' rights and retroactive laws issues up to the Supreme Court. Okay, I can understand why he might have backed down from costing the company more money, increased settlements and legal fees through the roof. And, this all took place before he came into the picture so it was probably not his focus.

Then he was grilled about the people who were to get the bonuses, insistence from various members of Congress they be named. He was also pressed to name the people who were in charge of the division that took the company down by their reckless behavior. Both of these instances he refused by saying first, he didn't remember or know their names, and second, there were fears for their safety in light of the death threats they had all been receiving. It seems the American people have finally let go of their apathy and risen to the point of concern - paying attention to the things going on around them.

But I have no sympathy for AIG or our government. There was an obvious solution and no one took it. Let the company go bankrupt. The trustee in bankruptcy would re-negotiate all those contracts, dump the executives who caused the mess and oversee on behalf of the stockholders all the future dealings of the company. But no one is talking about doing that for some reason I don't fathom. And, no one is talking about prosecuting the bums under Sarbanes-Oxley which provides criminal sanctions for executive and financial personnel who are complicit in corporate frauds. Certainly this is a mammoth one. A few years ago Sarbanes Oxley was enacted by Congress after the Enron and Tyco debacle. It provides serious jail time for executive who mislead shareholders and who do not safeguard the assets of the company. To date no one has mentioned this possibility but it would be nice to see these guys in jail…not in white collar jail, but in with the regular population. Yeah, like in a cell with Bubba!

Those at AIG given outsized bonuses are being asked to give the money back. It's my understanding that fifteen of them already have. The President is furious about the taxpayer's money spent in this manner. It is an ethical conundrum for executives to take this kind of money when some of them were responsible for the failure of the company in the first place. I'm sure they know well who they are and having their names made public will seal their fate for the future, although within the industry, everyone knows who they are already and what they've done.

But so what? Who really cares about their future? These arrogant risk takers deserve everything they get to so recklessly take a company of this size to its knees. I keep studying the risks they were taking and it is an almost inexplicable morass. Let's just say you take shit and try to sell it, and it doesn't sell because no one wants to buy shit. Then you put it in a nice blue box and tie it with a white ribbon, and sell it to someone. When they open the box, it will still be shit; it can't transmogrify into something else. We used to joke about this years ago and call people "fecamists" rather than alchemists. Alchemists were supposed to turn shit into gold; a fecamist turns gold into shit. Seems a lot of these guys have been running the American financial system.

I think there are some things that can be done but no one seems to be getting into it.

But I have another solution. I think the names should be made public and we bring back the old fashioned custom of shunning. It's been used by religious organizations when a member wants to leave or converts to another belief. It can be mandated by an organization and can be extremely painful as it is a way to ostracize the one shunned from the community, friends and even in some cases, relatives.

First on my list is Joseph Cassano, you know, the guy who figured out how to sell the shit in that blue box with a white ribbon with his credit default swaps, the fake insurance scams and the other phony deals that were only virtual deals selling virtual shit until they had to pay up...ooops!

I would then go on to Alan Greenspan, too late for Regan and his de-regulation orgy, Geithner might be making it to the list, but not quite yet. I'll have Paulson at the top with his arrogant refusal to have any strings attached to the money Wall Street had their hands out for; top executives at Indymac, Bank of America and Citicorp, and of course, all the other big boys at AIG.

 

But, if no one wants to go in that direction, shunning is the best alternative I can think of. It would take the nanny, gardener, chauffeur and housekeeper to quit and no one step up to replace them. The doorman to no longer open the door, waiters not to serve them, no tables available in the top restaurants, no reservations at hotels and club memberships quietly cancelled.

Their photos should be on telephone poles around the country and posted all over the Internet so everyone knows what they look like. There is to be no escape. And, I don't really care about their safety, what I propose isn't illegal, let them face up to the hate from people they have severely damaged. We have several generations of executives who have no idea what consequences are. It's time they learned.

Now this takes a conscious effort and would entail anyone who continues to deals with them to also be shunned – at least as long as they work for them or associate with them. This soon gets around and is not worth the problems. The villains are eventually left alone. If a restaurant seats them and serves them, other customers must leave. It takes a little bit of doing but sends the message loud and clear, and after all, those of us totally pissed off far exceed the number of their buddies. If they are shunned when they go out in public, it soon means they are confined to their homes. If they turn the money back, they should then be welcomed back into the community because they are to be rewarded by fellowship for doing the right thing. The guys responsible for the AIG, Wall Street and bank tanking have no reprieve.

Let's face it, religions, cults and civilizations have been doing it for centuries. South Africa used it on Nelson Mandela for many years. It's non-violent and very effective. It can include antagonistic actions, but I don't think that's necessary and don't adviser it. I think the psychological is more damaging. For someone so arrogant they take a company down and still expect to receive millions, to not be able to show off to friends and contemporaries might be the worst punishment yet. It's a sad time for a Master of the Universe when no one wants to be anywhere near him! And there's one more guy we might consider using it on, you know, the one who was in command when the country tanked and allowed his buddies one last windfall before he left office. The buck has to stop somewhere and we all know it's not to be laid at the feet of the current guy in office. All these deals were made before he was even elected.

Website: www.curmudgeongal.com

Podcasts: http://www.curmudgeongal.libsyn.com