The Madoffs of the World: Hit 'em Where it Hurts

By Robert Weiss

At the age of 71, Bernard Madoff will likely live out the rest of his life in prison. Victims of the fraud were given the opportunity to speak about the impact of Madoff’s scheme, which affected thousands of investors, including charities, hedge funds, trusts and individuals. Some of Madoff's investors went from being millionaires or having comfortable retirements to being nearly destitute overnight after the fraud was revealed.

In 2005, Bernard Ebbers, the then-63-year-old former chairman of Worldcom Inc., was sentenced to 25 years in prison for his involvement in his company’s fraud, which was valued at nearly $11 billion. I had the opportunity to represent thousands of WorldCom employees who saw their hard-earned retirement savings vanish before their eyes. As I sit here almost four years to the exact date of Bernard Ebbers’ sentencing date, I have concluded that the threat of incarceration is no deterrence to these corporate giants. Clearly, Madoff - in his prime during Ebbers’ era - did not learn from the mistakes of other swindlers who were sent to prison.

I have said this once and I will say it again: the only way to get to these people is by hitting them where it hurts - their bank account. These people need to be watched over like a fox loitering in a chicken coup. We are their prey. Millions of dollars of year are not enough for the Madoffs of the world - only when their billions are at risk will they find a sense of remorse for all that they have taken from us. The SEC must step up their watch or we will face the same situation in another four years. [more...]

The Buffett Rebuff

By Bill Glynn
Stimulus Success = Consumption

I will say it again: the U.S. is a consumption economy. This is a rock solid fact. Even Berkshire Hathaway is feeling the impact. Buffett said it will get worse before it gets better. I think I have heard this before. Hmm, in fact, I even said it! The stimulus packages - and there's certain to be more of them - are not getting to the street. In fact, even if money does get to the street, it will be stepped on so much that it won't stimulate consumers to consume.

Worse, if you see all these programs, they mostly target low-income families. Another fact is the consumption power of these families is not close to the consumption power of the rich and upper middle class that represent a large percentage of consumption worldwide and definitely in the U.S. I frankly don't see the entitlement consumers shopping at Dillard's, Nordstrom, airlines, fancy new cars, etc.... Even if they did, the money they will get in stimulus may not even pay for one month of their utilities. It wouldn't even pay my electric bill! So, here we go again, bailing out large businesses only to face a marketplace that is devastated and can't or won't consume their products, goods and services. [more...]

What The Numbers Mean to Main Street

World Bank, Unemployment, Trillions in Spending...
By Bill Glynn

Is there an end in sight? Nope! The news keeps getting worse and these projections made by our government and the guessing game around the world should not surprise us. But what do all these facts and figures mean to us?

Unemployment. Reaching over 10% in modern America is an unrealistic number and equivalent to an American nightmare come true. The figures, as vile as they sound, do not represent all the facts. Underemployed and unemployable workers would paint a true picture and, believe me, it is far worse than 10%. State by state is even a worse picture. This means that a large portion of workers in America and therefore families are being wiped out. In order to pay bills, savings, stocks, mutual funds and 401Ks are getting raided every day. Are these numbers reported? No! We just give Americans the broad strokes to keep our education at a minimum. Remember in the long run the only thing that kept Japan out of a complete national meltdown was the fact that they are a savings nation. You hear that? Even if you were, it's not the case now, is it?

Contraction of growth. The World Bank is right on when it reports the world has become an economically smaller place. People see this and say, "hmmm... the world is suffering a bit too." They may even take solace in that fact. But as the world goes, the U.S. goes worse. If the world can’t consume and we can’t consume, then the writing is on the wall. Yes, more layoffs and unemployment. With that comes more businesses cratering because they can’t sell products, goods and services. Airline solution, for example - raise rates and make it even more unaffordable to travel for those who don’t have the money. Go to Arby’s, for example. Last night I spent almost $20 for 3 roast beef sandwiches and some taters. Find Chache’ Lux for me. Strasburg Kids? Real bargains there. Car dealers, construction - you name it. At least Wal-Mart is hanging in there, but we all know why that is true. [more...]

Increased Rates of Welfare

By Robert Weiss

Sunday marked the first day of summer; as we head into July, our economy continues to weaken as welfare rolls across the country soar. 23 of the 30 largest states, which account for more than 88% of the nation's total population, see welfare caseloads above year-ago levels, according to a survey conducted by The Wall Street Journal and the National Conference of State Legislatures. It is no surprise that increases in welfare caseloads coincide with high unemployment rates. The biggest increases are in states with some of the worst jobless rates. Oregon's count was up 27% in May from a year earlier; South Carolina's climbed 23%, and California's 10% between March 2008 and March 2009. Americans are now reaching for help from the federal government when unemployment compensation runs out. [more...]

There is a Way to Pay for a Nationalized Health Care Program that Would Make Everyone Happy

By Ross Reck

Right now, nobody seems to be happy with President Obama's proposed health care program. The doctors don’t like it because it stresses cost containment, which would interfere with their individual prerogative to practice medicine the way they feel it should be practiced and it would also make it that much more difficult for them to get rich while practicing medicine. The pharmaceutical companies don’t like it because it means less profit for them. It’s the same with the hospitals. The taxpayers don’t like it, because it’s going to cost them a bundle. There is, however, a way to fund this expensive program that will make everyone happy - fund it with the profits from government run companies. The federal government already owns controlling interest in GM and Chrysler. Why not funnel all the profits from these two companies into the President’s health care program? [more...]

The Stimulus Has Yet to be Felt

By Robert Weiss

According to the national Lundberg Survey of fuel prices, the price of a gallon of gasoline continues to climb, rising an average of 17 cents over the past two weeks. Analyst Trilby Lundberg says the U.S. price of regular grade gasoline was $2.66 a gallon on Friday when the survey was completed. Usually prices of gas hit a peak for 4th of July weekend where Americans are thought to be on the road to visit family and friends. In this economic downturn, we can barely afford the gas for a commute to work, let alone for a long weekend drive to vacation. Unfortunately the stimulus has yet to be felt by the people who need it the most - the hard working men and women of this country. Corporate banks that were handed billions of dollars of TARP money began announcing their return of the bailout money. Our only guess can be that they have used the funds to handle their economic pitfalls and now refuse to be attached to strings, which will control how they can use future funds. These strings were supposed to be how Americans could finally feel the "trickle down" of federal funds. Millions of American continue to be unemployed and continue to face foreclosures. Where is our help? Where is our bailout? Not surprisingly, the "trickle down theory" continues to fail. There will be no rain - we have yet to even feel a drop. [more...]

Watch Out McDonald's!

The Government May Soon Be Telling You Where You Can Locate Your Next Franchise
By Ross Reck

Not all that long ago, there was a distinct line of separation between the government and the private sector - like the line of separation between church and state. Given the recent fiascos in the banking and auto industries, it's beginning to look like that line has been permanently blurred. Various members of the House and Senate have seen fit to meddle in the operations of GM and Chrysler by playing the role of senior executive for these firms and telling them how to run their businesses. What's more, these government officials are thoroughly enjoying this new role. For example, Senator Tom Udall of New Mexico is lobbying the auto companies to restore the 12 GM dealers and six Chrysler dealers in his state that had their franchises terminated. Representative Barney Frank, a Democrat from Massachusetts, has lobbied GM to keep a parts distribution center, which employs 90 people, open in his district. Representative Frank M. Kratovil, a Maryland Democrat, has introduced a bill that would restore the franchise agreements to dealers who have them terminated. Other members of Congress are debating whether or not they should regulate executive pay in all industries, not just those receiving government financial aid. The list goes on and on, "...don't close the assembly plant in my district; don't build the Volt battery in Korea, build it in my state or don't build pickups and SUVs, make smaller, more fuel efficient cars." [more...]

Obama's Changing the Rules

By Roger Hedgecock

You can feel the tension in the air everywhere in America these early summer days. Savings have eroded, plans for retirement have evaporated, 6.8 million Americans are out of work, and the rest of us are more uncertain about our jobs now than ever before. Business is bad, and many familiar businesses are failing. "Inflation"? "Deflation"? I don't know. What I do know is that prices for things I buy - food, gas, utilities - are going up. One U.S. dollar in 2000 is worth 70 cents in 2009. But its feels worse than that, worse than a "recession." The Obama government is changing the rules. It's promising that the government can borrow (or print) trillions of dollars to solve problems caused by trillions of dollars of past bad debt. It's promising that good times will return if the government takes over the banking system, gives the auto industry to the UAW, appoints a "czar" to determine how much we can be paid in our jobs, stops all drilling for oil and raises taxes to take over health care. [more...]

Obama "Spend What You Have"

Back Peddling is a Direct Result of China Visit
By Bill Glynn

I am certain as you are that the recent change in tone coming from the White House about debt and spending is a direct result of our Treasury Secretary’s trip to China. Invoking 2007 Democratic rhetoric “Spend What You Have,” the administration is doing an about face as the world is threatening to bring our wild spending to a halt. This quick turnaround is on the heels of our leaders having to go pander to China to get permission to issue new debt and print more currency. We haven’t received the official politically correct download yet and won’t get the detailed version anyway, but China and the rest of the world is FED up. We just got spanked!

Like Great Britain that couldn’t sell its bond to fund its debt at an attractive price, the U.S. is heading right down that path. In fact, the major rating agencies are already preparing to downgrade the British creditworthiness if they don’t clean up their act. Do we really believe this won’t happen to us? How much leverage does the world have over the U.S.? Obviously a tremendous amount. [more...]

Pension Funds Hit Hardest

By Robert Weiss

Unemployment and foreclosure rates soar as we head into the summer. As the nation continues to deal with the worst depression since the Great Depression, every area in the country has been hit hard - from the gaming industry to the manufacturing industries of the south, to the auto industries in the Midwest. AP calculates a score from 1 to 100 based on each county's rate of unemployment, foreclosure and bankruptcy, with lower numbers indicating less economic pain. The average stress score dipped to 9.7 in April. Last April, the national average was 5.9.

One of the groups that have been hit the hardest by the economic crash is pension funds across America. From coast to coast, it has been estimated that pension funds have lost nearly $55 trillion nationwide. Yes, trillions. The amount that has been lost by these pension funds continues to hemorrhage and the worst part is that the pension fund members may have no idea what is to become of their retirement savings. The American Dream includes retiring with dignity and without worry. Not only is the nation's Social Security fund rapidly depleting, but these hard-working men and women may wake up one day to find an empty nest egg. The monthly pension they waited for may not be there or may be significantly lower than expected. This type of loss is devastating when amidst rising gas prices, rising food prices, and pay cuts, the average American continues to contribute to his pension with the hopes of seeing the money in the future. [more...]

Why GM is Doomed to Failure

Government Loses Money at All Levels and Departments
By Wayne Allyn Root, 2008 Libertarian Vice Presidential Nominee

So we've just put government in control of General Motors? Well that should solve the problem. The same people that have run the American economy into the ground now think they can run an auto company. Has anyone thought this through? Government loses money at virtually everything it does and touches. Virtually every level of government operates at a loss (deficit). Government can't spell, let alone achieve, profitability at anything. Government is the most disastrous and inept failure at everything it does of any organization in the world. It only survives its colossal mismanagement of everything by raising taxes and therefore confiscating more money from the private sector - filled with people who are competent and do know how to run a business and achieve profitability. In other words, government only survives by confiscating money from smart people in the private sector to pay for its mismanagement, waste, corruption and nonstop failure and losses. [more...]

If You Own GM Stock, You Have Worthless Papers

Obama calls it sacrifice... I call it being wiped out
By Bill Glynn

This is Economic Rape! We are being wiped out! All your GM stock - whether you are a private citizen, an institutional investor, an autoworker or anyone that invested in GM - you have lost all your money. If you think the portfolio of other stocks you own won't be affected even worse than it already is, think again. Yes, the stock market is up - but it goes up and down every day. Yes, the general economy needed an unprecedented government intervention. But at what cost to the American company itself? We are not investing in these companies - we are borrowing money from the world to invest and loan this money. So we shore up the balance sheets of all these companies while our balance sheet is so upside down we are essentially getting a bailout from the rest of the world. Do you think Clinton and Geithner going to China is a coincidence? [more...]

The New GM And The New Chrysler Will Not Survive

By Ross Reck

Chrysler and GM will emerge from bankruptcy with completely new looks. The logic is that the new Chrysler and the new GM will be in a much better position to compete with companies like Toyota. As GM Vice Chairman Bob Lutz put it, "We will be smaller, leaner and we're going to be a powerhouse." Unfortunately, that doesn't have a chance of happening because Chrysler and GM have not dealt with the one issue that got them into this position in the first place - their management style, the way they treat their employees who do the work that the company gets paid for. Both Chrysler and GM have a long history of top-down management that uses fear as a motivator - the people at the top are treated like royalty and the people at the bottom are treated like third class citizens; it's part of the DNA of these companies and Ford's too, for that matter. Until these companies address this fundamental issue, they are doomed to eventually be run out of business. [more...]