Can't We All Just Get Along? Yes... Sort of.

This week United States President Barack Obama is in Europe for the G-20 Conference and meetings with world leaders. The G-20 Conference is a meeting of the 20 wealthiest nations to discuss global economic policy. (Image: Huffington Post) The weeks started out with a stark division between rough alliances headed by the United States with the U.K. and France with Germany. The French President was skeptical that Obama would be open to regulations and had pre-emptively threatened to leave the meetings because of this suspicion.

However, this is where it differs from the petty politics of the U.S. Congress and the Canadian Parliament -- they ended up getting along. In fact, Obama readily admitted that America was a major factor in the downturn. Four major decisions came out of this meeting:

• A $1 Trillion global investment in the World Bank
• New crackdowns on Tax Haven areas
• Hedge fund regulations
• And, a global economic oversight body to spot problems

These decisions tackle the financial situation on almost all fronts. The partisan politician of the federal U.S. Congress and similar bodies around the world could learn a lot from the G-20 meeting. If the political parties were as open to diplomacy as the leaders at this global summit, there would be a lot more being done that helps everyone.

It's time to kick those hard-line political ideologies aside. In a recession such as this, or any other time of crisis, the government needs to work. Party-politics is simply not an option.
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Non-Scientific Consensus: Everyone Sick of Bailouts

I was reading the Huffington Post this afternoon while taking a break from writing some essays when I came across a story labelled "Comedy" on their front page. The story was about the latest episode of The Simpsons getting in on the mocking. (Image: Huffington Post) After seeing this, and watching CNN for 20 minutes, it became pretty clear to me that this is a growing consensus. During the span of 20 minutes, Wolf Blitzer hit on bailout related stories 5 times.

Here's an image, via the Huffington Post, of The Simpsons bailout-mocking during the traditional chalkboard scene of the shows' opening:

For those of you, like me until 2 weeks ago, who don't know what "TARP" stands for, it's the first financial bailout called the "Troubled Asset Relief Program." The bill, a holdover from the last administration, paid hundreds of billions to banks to try to prop them up and restart the flow of money lending.

Needless to say, it hasn't worked so far. So, more and more often, we hear jokes about the irresponsibility of bailouts and feel that government is protecting the rich as everyone else suffers. Bailouts might be needed to protect our money and investments from completely disappearing as banks collapse, but I think more has to be done now to help everyone.

(And no, to my right-wing readers, tax breaks are not the solution. Especially for the relatively unaffected rich.)
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Poll Results: No Option on Bailouts?

Many of you voted on my most recent poll asking if you believe letting companies fail is a viable solution. Besides a few outlying votes, most of you believe that we won't solve anything by letting companies fail. (Image: CNN) Though the vote was split between Maybe and No, I tend to agree with the sentiment that we have seen enough damage to Wall Street. So what do we do? Bail out every business in this economy? Every citizen too?

Here are the results:

No, obviously that doesn't work. We witnessed the stock market crash after the Bush Adminsitration let Lehman Brothers go bankrupt. That single major investment bank's failure is credited with the Dow Jones Industrial Average dipping to 8000. But who should the government target to prop up?

Well, the theory of putting the money into banks seems logical. Failing financial institutions would make money disappear and cost the federal government more than bailouts. Why? The federal government insures your bank account up to a certain figure; that means that if a bank fails, the government gives you the money covered.

So banks make sense, but what about other industries? Let's speak quickly about the auto industry. Publicly held companies with no other backing like Ford and GM represent a valid option because they employ so many. Many industries like auto parts also rely on these companies. But, what about Chrysler? Chyrsler is privately held. It's parent company, Cerberus, has holdings that can prop up the business, but it has refused to thus far. This is why I agree with the "Maybe" stance more in this poll.

Major industry-driving companies and banks are fair game for bailouts in my opinion. I draw the line with smaller, privately held companies. I also think businesses should be required to do more. GM and Ford are going somewhere with their plans, but Chrysler is a big mess. The company matters! Smart bailouts help; too many bailouts burden.
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AIG Renaming Insurance Operations (?!)

The "AIG" brand name has apparently become too tainted over the past few months to appeal to customers. So yesterday, at the AIG headquarters in New York, the sign that proudly displayed the AIG logo is now blank. (Image: MSNBC) As most of my devoted readers would know, AIG has caused quite a bit of trouble in recent weeks. Whether dishing out bonuses to no-longer-serving executives or having the pleasure of being associated with Rush Limbaugh, AIG has stayed in the news. So, what i pseudo s this-publicly-owned company going to be called?

Well, since "AIG" is so tainted, they decided to call the new company AIU Holdings, LLC. Yes, AIG's major insurance division is now called AIU: American International Underwriters. Much better; problem solved. To be clear, AIG still exists as a parent company, but the property/casualty insurance division -- that covers items such as car, business, and home insurance -- is now AIU Holdings, LLC.

Who would ever associate AIU with AIG though? AIU sounds like a very different company. Not to mention how much better it is to say AIU than AIG. Sarcasm aside (that was sarcasm), what exactly is AIG trying to accomplish? Well, actually it may be simpler than it seems. As mentioned in the MSNBC report, AIU will eventually have its own initial public offering. This means that AIU will get to sell stock to the market and receive its own cash infusion. Not too shabby.

Here's MSNBC's television report on the renaming of AIG's major division:

Visit msnbc.com for Breaking News, World News, and News about the Economy

This is going to be an interesting week...
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Palin Flip-Flopping on Stimulus

As I mentioned in an earlier post, Governor Sarah Palin of Alaska has rejected stimulus money after lobbying for the bill weeks earlier. Since then, she has decided to reject only half of the money, and now recently has decided to take it all. (Image: Huffington Post) Palin has drawn the ire of several pundits quick to point out that she had flip-flopped on this in a similar way to how she flip-flopped on funding for the Bridge to Nowhere. For those of you who forget, she supported the bridge before denouncing the project while keeping the money.

Palin recently annoyed news agencies by dispatching her communications director to challenge ABC for reporting on her earmark requests. This type of behaviour adds to the amusement factor of how she deals with, what many Republican pundits call, government welfare. Alaska is a per-capita leader on earmark requests and is a big beneficiary of the stimulus bill.

I want to make the order of events clear here, because I find it really ridiculous:

1. Palin goes to D.C. to lobby for stimulus bill
2. Palin states desire to reject money
3. Palin thinks she might take half of the money
4. Palin willing to take it all

Did everyone get that? This is just silly. It's more of the same from the campaign. I thought it would be fitting to leave you with a clip summarizing the beginning of Palin's downfall. It call comes back to the money. Here's an MSNBC report via YouTube.

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Limbaugh: American People are "Peasants with Pitchforks"

I feel like Rush-Watch is becoming a staple of my content here. As much as I really don't want to talk about Rush, he just says too many over the top and ridiculous things to ignore (Image: RushLimbaugh.com) What's the latest attack thrown down by Limbaugh? Well, he compared the American people who are angry over AIG bonuses to "peasants with pitchforks" and the legislators trying to recover the funds as communist dictators.

Here's an audio clip posted on DailyKos by way of MediaMatters:

So what's going on here? Are we all getting pulled into some huge communist dictator situation because we're demanding a pay-limit on executives and bonus returns? Well, you know, maybe we would be -- if AIG wasn't 80% owned by the American taxpayers.

I ask you guys, who's reading the teleprompter for direction? Obama and congress who are outraged over what's happened or Rush Limbaugh for sticking to Republican talking points?

I'll leave you guys with another clip from Limbaugh's show (directly from MediaMatters) in which he mocks Barney Frank and the American people alike, claiming there is "hate" directed at capitalism:

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Carlson Still Upset With Jon Stewart

This one has a bit of a background story. Tucker Carlson -- previously a failed host on CNN, MSNBC, and Fox -- has returned to CNN as an analyst. Carlson experienced the most success early in his career at CNN, hosting the show CrossFire. (Image: YouTube) Jon Stewart fits into this because Stewart is often credited with destroying CrossFire by lecturing the hosts during his appearance (video later). Tucker tended to make huge claims, eventually get caught in lies, and became a joke to viewers. So, what's this all about?

As many of you know, Jon Stewart recently ripped into Jim Cramer on his show (Strong language in link), and Cramer accepted the criticism of himself and MSNBC without much opposition. Now, with this in the news, Tucker Carlson appears on CNN's Reliable Sources to attack Jon Stewart:



From that clip, Carlson seems a bit confused about what partisan means in practice. In the United States there are two political parties representing the two sides of politics. Just because Carlson wants to pretend he isn't associated with the Republican party, I would bet that he has never voted for a Democrat in any election. He may not exemplify the party-ties part of partisan, but he is exactly what's wrong with the political system. He won't listen to reason, only his side.

Jon Stewart was not even discussing politics on his show, as much as Carlson likes to pretend Stewart's outrage over CNBC's irresponsibility is due to partisan politics. CNBC got media attention recently by going after the budget, and they were put under a microscope as a result. Cramer went after Stewart as a result of Stewart insulting CNBC generally, and the result was Cramer getting ripped by Stewart for being totally irresponsible.

Carlson needs to let the past go and grow up a bit. He's kept around for entertainment, but he ends up just coming off as a bit stupid. I'll leave you with this clip of Jon Stewart talking sense on CrossFire, leading to its demise:


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Obama: How Do They Justify This Outrage?

Dominating the news cycle this weekend was news that AIG had issued over $160 million in bonuses to its executives. What's the big deal? Well, the American taxpayers own 80% of AIG. (Image: Huffington Post) So it seems the American people are generally angry over this news. In fact, CNN recently ran a (censored) shock-profanity headline to represent the American people's sentiment on the bonuses.

Well, let's go over the reason people are annoyed:

• AIG invested in risky assets seeking a high return
• These practices contributed to everyone's market losses
• Taxpayers are keeping AIG afloat
• AIG is spending on vacation retreats and bonuses for execs

I guess I can see why people might find this more than a bit annoying. What can be done about it? Well, it seems not much. Some pundits have discussed attacking the bonuses by way of IRS-headed taxation to retrieve the funds or flat-out lawsuits, but none of the options seem to offer an easy, cheap solution.

AIG claims that it had no option but to pay the bonuses because it was contractually obligated to do so. Generally speaking, most people don't seem to care that it could have cost more to the taxpayer if AIG had to fight lawsuits from executives, if they didn't pay those bonuses. I understand the frustration, and I don't want to defend the mess that is AIG, but there is some reason behind their defense.

The mainstream media seems to care less about this and more about calling for AIG executives to be fired. I find it quite silly overall because, if I was one of those executives at AIG, I would know that I shouldn't take that bonus. No one working as an executive at AIG or any other major company needs a big pay-day right now. They're not the ones suffering in the recession.

Obama was willing to join the pile-on during a press-event today. At least he made it official that the government is on the case.
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A Top 5: So, Who Likes Earmarks?

DailyKos recently assembled a list of the top 20 earmark-getters. With all the rhetoric we've come across from the Grand Old Party over the campaign and as of late, the results may surprise you. (Image: stock.xchng) During the presidential campaign, John McCain implied that earmarking was a problem caused by "liberal democrats" who are looking to spend tax payer money. I won't villainize the earmark concept too much, but it has been abused by many. Ironically this list shows who are the main people abusing it...

I narrowed the list to the top five since it seems to accurately reflect the pattern of the top 20. Here are the top five earmarkers by dollar:

1. Cochran (Republican-MS) $471 million


2. Wicker (Republican-MS) $390 million


3. Landrieu (Democrat-LA) $332 million


4. Harkin (Democrat-IA) $292 million


5. Vitter (Republican-LA) $249 million

It's amazing that the Republicans from Mississippi are demanding so much money. The one thing Kos was quick to point out was that the Democrats on the list are arguably the worst of the bunch. They are exploiting their position as swing voters to make demands.

I think they need to create a new process for states getting money. The projects earmarkers get money for are not big enough for their own legislation on the federal level, but the state level doesn't have the money to do it alone. The problem is that earmarks become negotiating points for votes; in effect, the congress becomes a massive bribing movement. Perhaps it's time to create a congressional budget for state projects; somehow earmarking needs to be controlled.
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The Crazy Socialist Communism of Canada (Not.)

So, Canada is a bunch of money hungry liberal socialists, eh? Not so fast. Recent reports have shown how Canada, the "Tax and Spend" capital of the world (or so say the neighbors to the south), has avoided the recession due to its active regulation. (Image: CBC) Crazy, eh? Well, I can't say I'm surprised. If there's one thing that U.S. style deregulation causes, it's chaos. There's no two-ways about it, regulation works -- deregulation doesn't.

So, how did Canada remain so prosperous despite it's lack of fiscal conservatism? Truth be told this success has little to do with the government. All the government had to do was pass laws requiring that financial institutions do things within certain constraints. No bailout or handouts, simple legislation.

Why those interested in the success of the financial system (read. right-wing politicians) don't believe in regulation confuses me greatly. The crash of a financial system benefits no one, especially not the private sector. It also doesn't prevent government growth. Regulation, it would seem, is fiscally conservative in its roots.

Being proactive costs nothing. Now, Canada's banks are some of the healthiest on the stock market, which means that Canadians who use these banks are safe from their money and savings disappearing. It also means these banks can continue to loan money without fear.

The article cited at the beginning of this post quotes an economist, Craig Alexander, who points out how regulation forces banks to think long-term. While it may have limited their short-term gains, it benefitted them in the long-term by forcing them to evaluate who they are loaning money to. This is a great success for the country and benefits everyone who has their money in Canadian banks.
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The Rescue-Bailout-Stimulus Plan

As ridiculous as my article title sounds, CNN's Saturday evening headline was "Stimulus bill limits bailed-out execs' earnings." It seems that they don't mind crossing the wires of public perception. (Image: Newsday) Republican commentators call the bill a "bailout" while Democratic pundits call it "stimulus" or "rescue" package. Both talk about a financial crisis; the Republican position is that the bill will cause it, while to the Democrats say that it will prevent it.

I won't pretend to be an economist who understands the ins and outs of the financial situation we are in now. In all honesty, I doubt there are more than a handful of economists who understand what is happening enough to know how to fix it. Instead, I'm discussing this bill in terms of common sense and as a critique of the current U.S. government.

Common sense would dictate that it will benefit the economy to have more money flowing with less restraint through the system. The Republican philosophy on this is that it can be accomplished by leaving more money in everyone's pocket by cutting taxes. The Democratic philosophy is to spend on projects that create work.

Both systems have flaws, but, as I'm sure most of you guessed, I would lean towards the spending approach because it is guaranteed. You pay into a project and it creates jobs for the unemployed. Cutting taxes is not guaranteed to change anything because people may simply sit on the money. That aside, I'm more concerned about the general situation of how the government is operating.

I'm not going to criticize the executive branch because President Obama and his staff have very little sway at this point. He may be a bit behind the Republicans in the media war over the issue, but he's stayed on course with what he said during his campaign. The legislative branch is the real disappointment in this situation.

Thus far, no Republicans in the House of Representatives have voted in favour of the stimulus during both votes. This is in spite of numerous changes made by the Democrats, such as removing lots of spending that wouldn't simulate the economy and adding more tax cuts. This clearly didn't sway a single Republican to see the need for a stimulus.

Though the leader of Republican house thinks it's appropriate to dismiss a vote because the latest draft was compiled in a hurry after already stating his intentions to do so regardless of content, that attitude is the opposite of what we need. Though he says no one has read the bill, it is practically the same bill presented the week earlier with most of his previous complaints trimmed off. That said, I agree with his sentiment that people should know what they're voting for.

The problem is that this man, John Boehner, does not care whether the stimulus is good or bad. He would vote against the bill even if it included and spending instead of tax reduction. I also am annoyed by this man's charade because he complains of partisanship when the Democrats already gave into Republican pressure. I might even let him off the hook if that was all the hypocrisy, but not when combined with the fact that not one Republican in the house voted yes while several Democrats acted with freedom to vote no.

The bill has been sliced and diced down to a lean package, relatively speaking. Some top economists think that the bill was too small to begin with, and now the bill may become even smaller to appease Republicans into breaking the line. Ultimately, I believe the government needs more top economists working on this bill and less politicians who are using their votes as bets on issues to run on in the next election cycle. That's wishful thinking though, the chance of most law-makers seeking expert advice is next to none.
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Incase You Missed It (I Did): The Budget Got Through

Stephen Harper's government lives to die another day, but how did a threat of non-confidence end up passing 211 to 91? Are we still heading for a massive federal deficit? (Image: National Post) Well, as reported by CBC, the Members of Parliament got down to business and passed a budget. After all the hubbub over the past couple of months, this seems a bit anti-climatic.

The country is still heading towards a deficit, which is projected to continue until the 2011 fiscal year (at the very least). There are plenty of spending initiative to kick-start the economy, which have been so effective in the United States. Of course there are some positive features to note...

Highlighted by the CBC in its article, perhaps the single most important change to the budget bill, is the provision that forces the Conservative government to update parliament on the progress of the budget initiatives. This provides the opposition with a chance to see what's going on, and, perhaps, ground upon which to start a non-confidence vote if the budget is mishandled.

Also of note is the movement by the NDP and Bloc to strike down this amendment when the Liberals proposed it -- though they obviously failed, the sentiment is starkly apparent. Similarly, with a few special exceptions the Liberal party supported the budget in the vote earlier today while the NDP and Blog stood their ground voting against the budget.

Now, while I'm sure there are many of you who dislike the coalition initiative -- and as hard as I try some of you may never hear any of it -- but the opposition should not split like this. In effect, the result is a Conservative Minority against a Bloc + NDP alliance with the Liberals in the middle, effectively holding the power. This is far less ideal in a democracy than a coalition government.

We'll have to watch how this plays out closely. Maybe Ignatieff will make his plans known now that this is out of the way. I find it hard to believe there is no hidden powerplay beyond what has come out today.
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McDonald's Likes Recessions

When I was reading the site of the ever-yellow Matt Drudge, I came across a very interesting story about McDonald's and the economic downturn. It seems that people are increasingly turning to McDonald's for food during these hard times. (Image: Wikipedia) Now this story in itself is interesting enough to justify a read, but there are some broader lessons here. Let's just look at this objectively. Economy is down, budgets are tight, so let's eat fast-food more. Weird, huh?

Call me crazy, but I would venture a guess that it's more economical and healthier to make food at home and take it with you for lunch than it is to get something from McDonald's. Sure they make cheap fast food, but they also are a business with surprisingly high margins. I see the draw of the low advertised price, but we can do better ourselves.

Even if we couldn't get our homemade lunch cheaper than a $3 meal, it would be a lot healthier. I don't want to come off as too hard on McDonald's here, because, while I think they make a terrible product, they are not nearly as evil as most companies of their size. Rarely do I hear a news story bashing McDonald's for anything besides the low health standards of their foods. Meanwhile, most corporations of their size are riddled with financial mishaps or labour controversies.

McDonald's is relatively good from the perspective of business ethics and financial stability — and that's important. I won't degrade McDonald's as a business. I also won't categorically say that I will never eat McDonald's foods; sometimes it just happens, during long road trips or late nights, that McDonald's is nearby. It's convenient, it's cheap, and it's addictive.

But the level of business McDonald's is receiving during this downturn is more than just a few new casual customers dropping in. This is an increase in the occasional visitors and in the frequent visitors. Going to McDonald's as a regular source of food is terribly unhealthy -- which I'm sure everyone knows. So why are people doing it?

I believe it comes down to the psychological aspect of the low advertised prices. It's convenient and it seems cheap. However, people need to be aware that there are other options. Even if it costs you $4 or even $5 to fill a lunchbox with a homemade meal compared to $2 or $3 to get a Big Mac Meal, I'm sure your homemade meal won't include 72% of your recommended daily fat intake.
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