Perhaps I’m in the minority, but I have felt that Paulson and others following his lead were using fear to try to instigate an immediate release of taxpayer money to a system that is broken.  As business people, does that makes sense to any of you?

If you had a manager overseeing a department that it was just uncovered that their unscrupulous tactics now have your company in a hole, threaten the existence of your company, and now this CFO tells you he needs $700 billion to fix it?  What would you do?  Yeah…that’s what I thought.

I truly believe in the resilience of the American Capitalistic system.  I believe we will rebound, and learn and grow from this tragic experience…only if someone “feels” it.  No Pain/No Gain we’ve always heard around the gym.  For too long few have felt the “pain” of bad decisions, and frankly I’d like that pain to reside with those that created it.  If you have lived within your means, have not amassed huge credit debt, invested for the long-term, you’ll weather this storm, just as I will. For those that got greedy, they will now have to pay the piper, learn from their mistakes, and move on.

I do not believe that the absence of a bailout will ruin our economy.  The press has tried as I’ve indicated here for over a year, to talk us into a recession, without results. Our economy is 70% consumption based.  If we do not lock all of our money away in a vault, we will be OK.  Yes, we’re in for hard times. But perhaps that’s what America needs…a little growing and learning pains.  I’ve seen our work ethic decline over the years, and now it’s going to be those that really buckle down and improve their efficiency that will prevail.

I’m thankful for those leaders that took the courage to vote against this bill, and for Nancy Pelosi, who spoke out so passionately to defeat it.  I might ad that I am a conservative economic model believer.  I also believe in someone watching the hen house.  And that has not been done for too long.  We need to find a balance between free markets and oversight, because if there’s one thing we hopefully realize that both are needed.

Many of you, myself included have been looking for a layman’s explanation of what caused this crisis, and how it unfolded into one of the biggest messes since the Savings & Loan Crisis of the 80′s, which consequently cost US Taxpayers over 175 billion in THAT bailout, so this is nothing new to us.

Read here at Wikipedia how this mess started and unfolded

And read here if you want to refresh yourself on the Savings & Loan Crisis of the 80′s

The common theme of both is that if not closely watched, people will do what they know to be the wrong thing.  Once one person does it, others must make a decision to continue on the responsible path, or be consumed by the competition.  Kinda like the steroid conundrum in sports.

Bottom line, our financial system need regulations and far better oversight than it’s getting right now.  Frankly I do not know why Hank Paulson still has his job.  If your CFO allowed this to happen to your company, would you still employ him?

We got out of the S & L crisis and while it may take years, there’s no doubt we will recover from this…I simply hope that America is paying attention to the lesson, and learning from it…

Betting on a brighter future for financial institutions on Wall Street, Warren Buffett, CEO Berkshire Hathaway has announced his plans to invest five billion dollars into prefferred and common stock of Goldman Sachs.  The Bulls will rally around this news for sure today, but will it last?  I think that depends on what happens with the bailout plans being negotiated in congress.  Our markets are very emotional, and the gains created by Buffett’s motions could be swept away tomorrow if news on Capitol Hill becomes grim.  Nevertheless, this move by one of the World’s most prudent investors is positive news for Wall Street, and our economy.

http://www.reuters.com/article/topNews/idUSTRE48N2AJ20080924?feedType=RSS&feedName=topNews

While this is good news for a struggling economy, it highlights this adminstration’s lack of oversight, and the need for responsible executives that make prudent business decisions.  If I ran my household the way these CEO’s ran their companies, my family and I would be living at the local YMCA. Nevertheless, the person that everyone wants out of their lives is here to bail them out when they get in trouble… Now lets hope both sides learn from this fiasco and that  it truly can shore up an industry that’s still in deep financial crisis.  And Wall Street responds with a major run-up of over 8% since 3pm yesterday.

Reuters: Treasury Pulls Out Stops To Support Money Market

NY Times: Treasury To Guarantee Money Markets

Duke University surveyed 1,300 CFO’s about their economic outlook and more of them have a positive outlook for our economy this month, than last time the survey was taken in March.  Over 50% expect the economy to begin recovery by mid 09, and many expect capital expenditures to increase this year, and unemployment to sink… Read the entire story at Reuters.

http://www.reuters.com/article/businessNews/idUSN0935708420080910?feedType=RSS&feedName=businessNews

The US Government took over and will be backing Freddie Mac and Fannie Mae, the two housing loan giants that hold the majority of US mortgages, and the markets responded positively around the globe.

Coupled with the recent decline in oil, two major hurldes have been cleared for the short-term.  Keeping a positive eye on our economic future is important right now as we still have the housing market in a slump and consumer confidence still needs a boost.

Read the entire story at the New York Times;

http://www.nytimes.com/2008/09/09/business/worldbusiness/09markets.html