Failed Bailout Package

I've been off the blog way too long. My apologies.

Let me start by saying, I have mixed emotions about the failed package. Something should be done to help Americans, but without snatching away $700 billion dollars from taxpayers and giving it to firms that made risky investments.

All firms are supposed to be able to cover their debts. Just like all homeowners are supposed to pay their mortgages. When a homeowner can't pay, he goes into foreclosure and has to declare bankruptcy. The government doesn't walk up and say, hey, I'll take all your credit card debt, auto loan, and anything else you have to pay for, so you can still have your house. But that's exactly what the bailout was for corporations.

And even worse, the choice on which debts were purchased and which firms were saved was completely arbitrary. It seems on recent experience, the largest firms were rescued and the rest allowed to fail.

So your neighbor builds that second level, or buys that enormous McMansion across the street, while you stay in your one-story, but when you both lose your job, since your neighbor has the bigger loan, he gets the helping hand and you get nothing.

There has got to be a better plan in Congress. Something that is fair to the majority of Americans, that will help the majority of Americans, not reward selfish risky behavior.

I remember the big push ten years ago by banks and investment firms to try and deregulate the market. And here's what we got.

My wife was in WaMu a day before they went belly up to renew a CD and the New Accounts rep asked her if she would like to put her money in a money market account. Beautiful. The banks are getting exactly what they deserve. Sell, sell, sell the associates are told - and if they don't they lose their commissions or their jobs if they don't meet their goals. Sell these crappy risky products that are now worthless to the unsuspecting bloke off the street.

I know America will go through a tough financial situation now and for the next few years, but maybe, just maybe, for a few years a few lessons will be learned and remembered.

Look at the Great Depression, it's lessons were learned and held on to for over 50 years. Then the S&L thing blew up during the last bid to deregulate the financial markets and McCain was known as one of the Keating Five. But the lesson from that debacle lasted less than 20 years. McCain was in DC the entire time. You think he would've learned.

I wonder how long our government and Americans will remember their lessons from this disaster.

Hopefully, a lot longer.

Bailouts

I was going to write about the current discussion surrounding the the drinking age from 21 to 18, until I saw today's news article, U.S. may broker the rescue of Lehman.

I find it funny, albeit sad, that these big investment firms such as Lehman and Bear Stearns whose clients and bankers espouse the idea of limited government and lowering taxes are now seeking massive amounts of tax payer money to help them survive.

Yes, I'm generalizing, but this argument can be applied to all those who complain taxes are too high and the government wastes the money. Every one of those employees at Bear Sterns, Freddie and Fannie should be the biggest fans of a tax system that allowed them to keep their jobs and in Freddie and Fannie's cases, the disgraced CEOs to walk away with $24 million piece.

Bear Sterns and Lehman brothers are not banks. They do not have as many restrictions on their operations as banks. By playing by the FDIC's rules, the banks were unable to reap as much profit as these investment firms during the good times, but as we see now, they had a firmer footing during the current down turn. Having worked at a bank in the 90's and early 2000's, I remember the banks were lobbying to loosen the rules. Looks like it was a good thing they weren't. Now we have a perfect example of what happens to financial entities with loose regulation: investment firms are crying to our government, begging for tax payer dollars so they can keep their jobs.

I don't fault these firms for asking our government for assistance. If I was a business owner and I was facing bankruptcy, I'd be asking the government for assistance as well. But, it's up to our government officials to ensure rules are followed, government actions are fair, and tax payer money is used for the good of the nation.

Was IndyMac bailed out by the government when they went under? No. Why? Because they were too small. I mean what other differences are there be between IndyMac and Bear Stearns? One's on the west coast, the other on the east? The players at the investment firms probably (I haven't researched it) have more contacts in DC - more alumni from the same Universities as those in Washington. I've heard the argument, Bear had so many deals with other banks and investment firms and hedge funds, that to allow them to fail, could cause massive economic damage to our financial system. While I don't doubt this as true, it should be a clear sign that these firms need some type of security in place that either prevents them from entering contracts with regulated industries (i.e. banks) that if they were to fail, they could take everyone with them -or- if they want to be eligible for government help, get ready to be much more heavily regulated to ensure their risk to the average taxpayer is minimal.

In closing, I feel this real estate mess is due in large part to greedy people. Greedy people at investment firms, mortgage brokers and bankers who came up with new ways to turn a quick buck like the Junk Bonds of the 80's and greedy home buyers who bought homes to flip in order to make a quick buck causing home prices to soar, forcing those few who had limited funds but feared being priced out of ever being able to buy a home into making bad decisions.

The government definitely should not bail out anyone in this mortgage mess. They should only enforce the laws, create new laws to prevent the abuse that has occurred over the last ten years, prosecute the criminals who drew up these nefarious financial plans/strategies/products and bail out only those firms and individuals that our current laws allow for.

It just pisses me off see 100's of billions of tax dollars (yes, Freddie and Fannie alone, each cost us tax payers $100 billion - more than our first year in Iraq) going to people who played the market and got burned and now are begging for help. Worse, that our government is actually doing this. And most of this help is going to corporations and not the home owners. (See the current mortgage rescue plan passed by Congress.)

Apple/Raspberry Picking

I had a great time apple and raspberry picking in Oak Glen. Oak Glen is a small community of u-pick-it farms 80 miles due east of Los Angeles nestled at the foot of the San Bernardino Mountains. This year we went to Los Rios Rancho (last years we went to Riley's Family Farm). One of the biggest differences between the two is Los Rios Rancho has been purchased by the Nature Conservancy while Riley's Family Farm is owned by the Riley family which has been in Oak Glen over 100 years and owns most of the land in the area. One interesting character trait of the Riley Farm workers, and in the small town center, was the abundance of piercing blue eyes among the workers. I assume the reason for the abundance of blue eyes was because the Riley's owned most of the farms and land in Oak Glen. But who knows, maybe its the air. Oak Glen is a mile above sea level.

But getting back on track.

The first task when we arrived in Oak Glenn was finding my other family members who drove up earlier. Cell phones get poor, if any, reception up there. It's amazing how dependent we are on our cell phones. Compounding the problem was the fact that Los Rios has two separate ranches: one for picking fruit and another for the gift store, nature walk, picnic areas, food, etc. Fortunately, my mother drives a bright yellow SUV, so after cruising around a bit we spotted the SUV and the note she stuck in her windshield wiper.

It turns out different apple varieties are ready to harvest at different times in September and October. We were there during the earliest harvest, 9/1, which meant our choice of varieties to pick were only the Galas and Spartans. Of course being a military history buff, I was immediately drawn to the Spartans. I pictured Kind Leonidas eating his red apple as his Spartans buried the mountains of dead Persians in the background.

Okay, back to the trip.

So the Galas we learned are the sweet apples and the Spartans are a bit firmer and sour. This meant the Spartans were good for baking pies and the Galas for eating plain. (I baked a pie today with the Spartans and it was delicious!)

While apple picking was fun, my boys and I really enjoyed picking the raspberries. The fun was searching for the best raspberries. Picking out the good from the bad amongst the dozens of hedges. My boys were running everywhere yelling they found one or two or a whole bunch. And it seemed to take forever to pick enough raspberries to fill a little 16 oz. box. (That's a good thing.) Now I know why they're so expensive in the grocery stores.

From here we hopped back in the car and head down the road to the tourist trap area.

We had brought a picnic lunch, while the rest of my family purchased theirs from the restaurant. The prices weren't too bad. $9 for a tasty tri-tip sandwich. The nephew liked the hot dog. We all liked the cider, but no one liked the raspberry shake. Too many seeds and it tasted like it was made with yogurt not ice cream. There was s great picnic area and our kids had a great time rolling up and down the hill and climbing the trees.

We took the tractor ride and learned a little about the valley, apple varieties and how the Nature Conservancy has replanted some of the orchard and planted Sequoias. That's right Sequoias! Our driver didn't seem too pleased about it, pointing out that the awesome view from the farm will be blocked the new trees in a few years. He said the Conservancy was conducting a beautification project.

Hmmm. I have to agree with him. The view was amazing. Besides, one doesn't go apple picking to see a small stand of Sequoias.

There was also a petting zoo, cider pressing and lots of things one could buy in the gift store.

Somehow we avoided spending money on these other items, only to be suckered into paying the $5 per kid to go into the giant jumper/slide in the small town center on our way out.

When we asked the kids the next day what was their favorite part of the trip, they said the jumper.

Kids. You gotta love 'em.