Wednesday, July 28, 2004

Don't Let The Sun Go Down On Me

I was in shock & awe while listening to President Clinton addressing the 2004 Democratic National Convention. I couldn't believe what HOPEFUL visions and practical concepts I was hearing from my usually mis-guided, mis-informed, and branded TV --- I was hearing AMERICA FIRST principals coming from the not so late, distant President of the United States. I was amazed and re-affirmed by his message.

Secondly, the next day's address by Teresa Hines, an immigrant from South Africa and possible 1st Lady of the United States, was a very moving portrayal from the outside-looking-in of our very best qualities... qualities & vision that has been lost for such a long, long time it seems. Somewhere along our recent journey, we have allow ourselves to fade to black.

Here is the question every American must ask himself/herself today:

Due to our role as the World's Care Giver & Superpower, and all of the trappings that go with it, how on earth do you expect the United States to compete with those that do not carry such a burden in the race to the bottom of GLOBALIZATION?

President Clinton knows the answer to this question and touched on it briefly during his DNC address:

"...These policies have turned a projected $5.8 trillion surplus that we left, enough to pay for the baby boomer retirement, into a projected debt of almost $5 trillion, with over $400 billion in deficit this year and for years to come.

Now, how do they pay for that deficit? First, by taking the Social Security surplus that comes in every month and endorsing the checks of working people over to me to pay for the tax cuts. But it's not enough.

So then they have to go borrow money. Most of it they borrow from the Chinese and the Japanese government. Sure, these countries are competing with us for good jobs, but how can we enforce our trade laws against our bankers? I mean, come on... "

What would Theodore Roosevelt have said about this issue?

"You wanna talk about trade agreements with the United States, meet me on an Aircraft Carrier, yours or mine?"
My plea to the Soroses, Buffetts, Iacoccas, Welches, & Gates is:

"Don't leave this country's destiny and fate open to blind faith. Develop a safeguard that will provide appropriate guidance and action when needed in order to protect the best interests of the United States at all times, regardless of party leadership. We needed AMERICA FIRST! yesterday!

My God, could you actually imagine another 4 years of GWB and his robot hardliners? Can we endure 4 more years of collateral damage? Instead of seeing stars, we will wind up sending our sons and daughters on slave ships to the far east to pay for our past ignorance."
Please continue to visit and comment about AMERICA FIRST!

Just a reminder from a song by Elton John:

I can’t light no more of your darkness
All my pictures seem to fade to black and white
I’m growing tired and time stands still before me
Frozen here on the ladder of my life

Saturday, July 17, 2004

Our Murky Economic Undertow Plagued by Lurking Financial Sharks

Indebted U.S. Ponders Maggots, Robbery
Sat Jul 17, 7:28 AM ET
By Alister Bull
WASHINGTON (Reuters) - A mouthful of maggots could not deter Michele Goncalo from vying for a $50,000 prize in a television game show because, like millions of other Americans, she wants to clear her credit-card debts.

Besides tasting insect larvae on "Fear Factor," she crawled out of a helicopter as it hovered over a chilly lake.

But luck was not with her. Goncalo was eliminated from the show, and a few weeks later the Federal Reserve (news - web sites) raised interest rates for the first time since 2000.

U.S. consumers are laboring under more than $2 trillion in debt after years of easy credit. And with that era drawing to a close, the plight of those who borrowed too much has fallen under a harsh spotlight.

Goncalo declined to be interviewed, but she said on "Fear Factor" that if she won the prize, she would use it to wipe her slate clear of debt.

Others whose obligations have gotten out of hand say constant demands for payment can quickly create a sense of desperation.

Ric Wade, who had $16,000 in debts after renovating a house he couldn't sell, said he was getting six calls a day from credit-card companies.

"I told them I just don't have the money," the South Miami resident said. "I can go and rob a bank?"


Americans possess more than 600 million credit cards, or 4.8 for every holder in the country, and have loaded that plastic up with some $700 billion.

Wade turned to a nonprofit credit counseling organization -- a growth industry in the United States -- and got his monthly bills cut to $450 from $1,400 under a four-year repayment plan he hopes to complete ahead of schedule.

"We're a consumer nation, and advertising works," he said. "They create demand and you feel that you've got to have it ... They don't ask 'Can you afford it?' You just look at the monthly payments, and suddenly you can afford it."

Affordability has become less certain after the Fed's June quarter-point rate hike to 1.25 percent, which economists see as the first of a number of moves to keep inflation tame.

According to the influential Blue Chip survey, top economists on average see the fed funds rate at 2 percent by year-end and 3.5 percent by December 2005.

How debtors react to the pinch from rising borrowing costs is important in an economy where consumer spending accounts for roughly two-thirds of gross domestic product.

Market interest rates, which are influenced by the fed funds rate but set independently, had climbed even before the Fed moved on June 30. Their rise was among the factors blamed for weaker household spending in the second quarter.

But Fed officials have repeatedly said they don't think consumers are at risk from tighter monetary policy even though household indebtedness stands at a record and debt service levels, a measure of monthly interest obligations as a percentage of disposable income, are also near their peak. 

One reason policy-makers remain sanguine is that many households used low interest rates to consolidate debts into single, longer-term loans.

This pushed up debt levels, but disguised an underlying improvement in the strength of household finances and their ability to absorb higher interest rates, Fed officials say.

"Although there are pockets of financial stress among households, the sector as a whole appears in good shape," Federal Reserve Board Governor Susan Schmidt Bies said on Thursday.
But those dealing daily with people drowning in debt see enormous problems.

"This will hurt the middle class, families on $30,000-$70,000 a year," said Howard Dvorkin, founder and president of Consolidated Credit Counseling Services in Fort Lauderdale, Florida.


Americans received 4.9 billion unsolicited offers for credit cards through the mail last year. While the success rate of these marketing efforts is just 0.6 percent, a lot of the wrong people have been tempted into signing up.

Dvorkin has students with no current income turning up for counseling after charging thousands of dollars to their cards. His average customer has $23,000 on plastic.
Nor is it just credit cards. Some people are also having trouble repaying bank loans, and higher interest rates would only make this more difficult.

Dvorkin calculated that a 2 percentage-point increase on a typical 20-year, variable rate home equity line of $50,000 would raise the final interest bill by $60 a month, or $14,000 for the life of the loan.

"These families are doing what they have to do (to get by)," he said, "but a 2 or 3 percentage point rise in interest rates will hit them pretty bad."

Would this make a difference to spending? Definitely, say people at the receiving end.
"If rates go up, it makes everything more of a struggle," said Ted Long, now within a couple of months of completing a debt workout thrashed out in counseling. "It would have had a severely negative impact on our financial decisions if we still had the credit card debt we had back then."
Long and his wife ran up $11,000 on cards and were paying $650 a month -- more than the rent on their Hollywood, Florida, home -- before going to the counselors.

"I didn't wake up one morning and decide 'I'll want $11,000 credit,' but it just builds up little by little," Long said. "People think credit cards are like money or a paycheck, and that is so wrong."

How can the United States continue to sustain a thriving middle class consumer base when their careers are being threatened and at the same time having their financial stability eroded by daily compounded interest?
I believe that Critical Mass has been achieved in this area. Would you choose to remove it from our economy as you would a wart?

Thursday, July 15, 2004

Who Ultimately Pays for this Group of Legal Fees of $4.95 Billion for MCI & ENRON ?

MCI, Enron Imbroglio Gut Citigroup Profit

NEW YORK (Reuters) - Citigroup Inc. (NYSE:C - news) on Thursday said second-quarter profit fell 73 percent to nearly a six-year low, after setting aside $4.95 billion for legal costs related to MCI, Enron and other scandals.

Ken Lay

The world's No. 1 financial services company said net income fell to $1.14 billion, or 22 cents per share, from $4.3 billion, or 83 cents per share, a year earlier.

Excluding items, profit would have risen 24 percent to $5.34 billion, or $1.02 per share, New York-based Citigroup said. On that basis, analysts on average had forecast profit of 97 cents per share, according to Reuters Estimates.

"It was better than I was anticipating," said Jeffery Harte, an analyst at Sandler O'Neill & Partners LP in New York. "Retail and consumer (was) stronger than corporate and investment banking, but they seemed to offset each other."

Revenue rose 15 percent to $22.3 billion. Expenses rose 87 percent to $18.6 billion, but would have risen 7 percent excluding the legal charges, Citigroup said.

In May, Citigroup said it would pay $2.65 billion to settle claims by investors in WorldCom Inc., now known as MCI Inc. (Nasdaq:MCIP - news), that it hid risks.

It also increased reserves to pay for pending lawsuits involving energy trader Enron Corp. (Other OTC:ENRNQ - news), alleged biased stock research, initial public offerings and other matters.

Results also included a gain of $756 million, or 15 cents per share, for the sale of a 20 percent stake in Saudi Arabian bank Samba Financial Group.

Profit was the lowest since Citigroup reported $677 million in the fourth quarter of 1998, when the company had expenses for the merger of Citicorp and Travelers Property Casualty Corp. Citigroup has $1.4 trillion of assets.

"Underlying business dynamics were strong ... despite sluggish capital markets in May and June," said Chief Executive Charles Prince in a statement. "The credit environment is the best we have seen in years."


Consumer profit rose 37 percent to $3.07 billion, including half of the Samba gain, on revenue of $12.1 billion.

Retail banking income rose 15 percent to $1.16 billion, credit card income rose 34 percent to $1.01 billion and consumer finance income rose 14 percent to $594 million.

Citigroup's corporate and investment bank posted a $2.81 billion loss, including the legal charge and the rest of the Samba gain. Capital markets and banking income rose 28 percent to $1.5 billion, and transaction services income rose 45 percent to $261 million.

Global investment management profit rose 7 percent to $451 million, including increases of 15 percent in life insurance and annuities and 9 percent at the private bank, and a drop of 16 percent in asset management.

Private client services profit rose 15 percent to $209 million.

International profit surged 76 percent to $2.83 billion, including increases of 50 percent in Asia; 161 percent in Europe, the Middle East and Africa; 34 percent in Latin America, and 13 percent in Japan.

Citigroup shares closed Wednesday at $45.10 on the New York Stock Exchange (news - web sites). They have fallen 7 percent this year, while the Philadelphia KBW Bank Index (^BKX - news) has fallen 3 percent.

Answer: WE DO as Usual; however, knowing and accepting this fact during the pre-train wreck phase, could we have gonna ahead and spent $2.5 billion US Treasury dollars to restore & turnaround these huge companies instead of burning them to the ground?

Remember: Companies = People + Relationships + Assets
Economies = People + Companies

Thursday, July 08, 2004

Is There a Decade of New Hope for The Whitehouse or Just Us Stuck in the Middle Again?

John Edwards' "Two Americas" stump speech is a powerful rallying cry to take our country back. As he said at a campaign stop in December:

“Today, under George W. Bush, there are two Americas, not one: One America that does the work, another America that reaps the reward. One America that pays the taxes, another America that gets the tax breaks. One America that will do anything to leave its children a better life, another America that never has to do a thing because its children are already set for life. One America -- middle-class America - whose needs Washington has long forgotten, another America - narrow-interest America - whose every wish is Washington's command. One America that is struggling to get by, another America that can buy anything it wants, even a Congress and a President.”

“I've been fighting this fight my whole life. For 20 years, I have sat in courtrooms across from these people. I have been an advocate for families and their children against armies of lawyers. I've won most of those battles. In the Senate, I fought for the Patients' Bill of Rights, against big HMOs, against big insurance companies. I fought to bring down prescription drug costs for every American, against big drug companies. I fought to do something about drug company advertising on TV when others weren't willing to do it. I fought to create energy independence in this country.”

“I believe the backbone of the American economy is the hard work, determination, and ingenuity of the middle class, not the insiders. I believe the way to grow the economy is to grow and strengthen the middle class, not shrink its size and add to its burdens. I believe the way a rich nation gets richer is by giving all its citizens the chance to get richer, not by only helping those like me who've already succeeded beyond our wildest dreams. I believe the way to create new wealth is by rewarding work and responsibility, not coddling the privileged and going soft on executives, accountants, and analysts who squander other people's money.”

“For every man and woman who is worried about paying their bills; for every child who needs health care and a strong school to go to, and for every American who waits for the 1st and the 15th of every month -- together we will end this era of anxiety. We will replace the crass politics of greed and the current politics of rage with a new politics of opportunity.”
(As Prepared, Des Moines, IA, 12/29/03)

John Kerry adds on:

“In the next 120 days and in the administration that follows, John Edwards and I will be fighting for the America we love,” Kerry said. “We'll be fighting to give the middle class a voice by providing good paying jobs and affordable health care. We'll be fighting to make America energy independent. We'll be fighting to build a strong military and lead strong alliances, so young Americans are never put in harm’s way because we insisted on going it alone.” (As Prepared,, 7/6/04)

The question remains: Will they remember what they said and the passion they once embraced?