Barney Frank and the Subprime Crisis

Committee Chairman Rep. Barney Frank (D-MA) speaks with Federal Reserve Chairman Ben S. Bernanke and Secretary of the Treasury Timothy F. Geithner (R) before a hearing of the House Financial Services Committee on Capitol Hill March 24, 2009.

Committee Chairman Rep. Barney Frank (D-MA) speaks with Federal Reserve Chairman Ben S. Bernanke and Secretary of the Treasury Timothy F. Geithner (R) before a hearing of the House Financial Services Committee on Capitol Hill March 24, 2009.


Many factors contributed to the current economic meltdown, but Rep. Barney Frank (D-MA) clearly has some responsibility. Frank, the Chairman of the House Financial Services Committee, was one of the primary lawmakers pushing Freddie Mac and Fannie Mae to take over a larger share of the mortgage market by lowering lending standards. Frank helped to enable these government supported entities (GSEs) who in turn sparked the explosion in sub-prime mortgages.
Ironically, Frank has now introduced legislation to curb the same subprime lending he was aggressively pushing it in the past. He was in the forefront of the 2004 rule change which allowed high risk loans. Frank also routinely rejected efforts to curb Freddie and Fannie.
The Fannie/Freddie activities are a big part of why we are where we are. As of now there are NO possible good outcomes, and things will get quite a bit worse before stabilizing. The only question is what combination of inflation/economic contraction we get. Our policy makers did not see this coming, and they take no responsibility for their sins of omission. There is very little chance these overtly partisan lawmakers will be a part of any meaningful solution.
Rep. Frank is an intense partisan and it is ironic he uses such high voltage rhetoric to criticize others for the economic meltdown when he was at the center of the subprime crisis. I am sure his intentions were admirable, and we all want to see low income people in desirable housing. However, the encouragement of subprime mortgages had disastrous consequences for the economy.
Rep. Frank is also aggressively attacking those he considers to be his opponents. He has however publicly said Supreme Court Justice Antonin Scalia is a “homophobe” who “makes it very clear that he’s angry, frankly, about the existence of gay people.”
Frank points to Scalia’s dissenting opinion in Lawrence vs. Texas—a case that struck down a statute criminalizing homosexual sodomy—& accuses the justice of thinking that “it’s a good idea for two consenting adults who happen to be gay to be locked up because he is so disapproving of gay people.”
Scalia never said that. He wrote: “Let me be clear that I have nothing against homosexuals promoting their agenda through normal democratic means.” Scalia’s view is that when laws on morality are concerned gay people will have to fight for what they want in the political arena, not the courts. That is consistent with Scalia’s well known judicial philosophy.
According to law professor Ann Althouse: “It is common for justices to soften the blow of a harsh decision by letting us know that they don’t like the particular law they are forced to uphold. Indeed, in Lawrence, Justice Clarence Thomas wrote separately to say that he thought the law criminalizing homosexual sodomy was an “uncommonly silly” one that he would vote against if he were a legislator. Scalia is resisting telling us about his personal views because they are irrelevant to the work of a judge, and he’s modeling upstanding judicial behavior, saying what the law is and nothing more. . . Scalia is adhering to the most basic legal proposition that judges must decide cases according to the law and leave the rest to the processes of democracy.”
There is a blog for gay conservatives. I am in complete agreement with their observations on Frank’s recent exchange at Harvard University, and the link is at http://www.gaypatriot.net/2009/04/08/why-the-left-loves-barney-frank/
“The most telling thing about the exchange between Barney Frank and a conservative student questioning him in public forum at Harvard is how quick the Massachusetts Democrat is to attack. How dare someone pose such a tough question! How dare someone ask him to consider if he might have done something wrong. Barney’s used to getting softball questions from an adoring media. Tough questions mean someone is accusing him. They’re part of some nefarious right-wing plot! . . . His failure to consider his misdeeds is particularly telling given his repeated defense over the years of Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (GSEs) whose failure sparked the financial meltdown. Hence the defensiveness, I suspect.”

Why Does Moveon.org No Longer Care About the Deficit?


This powerful and timely 30 second ad was produced by the liberal activist group Moveon.org. The ad harshly criticizes the Bush Administration for compiling a $1 trillion debt. The spot shows a series of children working blue-collar jobs and ends with the line: “Guess who’s going to pay off Bush’s $1 trillion deficit?” The ad was shown during the 2004 presidential campaign, but it is far more relevant today.
Moveon wanted to spend $1.6 million to show this 30 second ad during the Super Bowl. Back then the deficit was less than 1% of our GDP, and future generations will have to pay the huge Obama  debt.
The arguments made by Moveon.org in 2004 when the deficit was $1 trillion were valid. They are even more valid today when we are looking at a $10 trillion debt. Sen. Kent Conrad (D-ND), the Chairman of the Budget Committee, says the Obama budget is “unsustainable.”
The $9.6 trillion 10 year deficit figure is from the Congressional Budget Office (CBO). The immediate past CBO Director is now Obama’s OMB Director, and the President quoted the CBO in practically all of his debates last year. The situation is even worse than this because the CBO tells us rising unemployment and declining tax revenue means the surplus in the Social Security Trust Fund may vanish next year, nearly a decade ahead of schedule.
There were 50 hours of Senate debate this week on the budget. Democratic Senators Nelson, Bayh, Landrieu, Begich, McCaskill, Carper, Lieberman, Bennet, Shaheen and Hagan all came out against the Obama budget and they have now cut in half the proposed increase in domestic discretionary spending. The budget may pass by a simple majority tomorrow but I am glad the above Democrats are promising further reductions to cope with our massive deficit.

Do Beauty Pageants Degrade Women

Contestants in the Miss America Pageant

Contestants in the Miss America Pageant


Miss America always refers to itself as a “Scholarship Pageant,” not a “Beauty Pageant,” and I can understand why. Miss America is the world’s largest provider of scholarship assistance to young women. This assistance is not just for the handful of young women who are finalists but is available to the over 12,000 young women who compete in the state and local competitions as well.
Some of the most famous women in the world began their careers as winners of pageants: Halle Berry, Diane Sawyer, Sharon Stone, Kathie Lee Gifford, Mary Hart, Phyllis George, Michelle Yeoh, Anita Bryant, Mary Ann Mobley, Paula Zahn, Susan Anton, Deborah Norville and Venessa Williams.
Pageants usually require contestants to have a platform, which is basically a critical issue, such as cancer awareness or the benefits of mentoring, that she wishes to promote and inform others about. Community service is also a major aspect of today’s pageants. Scholarships are awarded specifically to those women who show an exemplary effort in volunteering.
Phyllis George, the former First Lady of Kentucky, was Miss America 1971. She has heard a lot of criticism of pageants, but she praises them for building self confidence. She says there is “positive self-esteem in being able to walk on a stage in front of millions of TV viewers in a swimsuit and evening gown. You can’t be shy and you have to think on your feet at numerous public events. Miss America is great training for so many careers.”
The most controversial activity is the swimsuit competition, which is supposed to be about “fitness, poise and confidence.” If you have the ability to stay poised in a swimsuit in front of America, you have the confidence to do anything! Pageants are criticized because they are not considered politically correct. However, that does not repeal the law of supply and demand. If there is a supply of attractive, intelligent, talented young women willing to participate in such events and a public demand for such events to be seen, then they will continue. Naysayers may tune them out.
As we all know, life is not fair. Our society is visual and beautiful people do have a significant advantage. They receive more attention and opportunities. They also have more self confidence and better social skills.
This has been scientifically proven numerous times, even in studies involving babies. They were shown photos of “traditionally” attractive and average individuals. The beautiful people won every time.The same photos were then shown to adults who were asked to rate several factors about the person such as politeness, intelligence, motivation, etc. The attractive people received far better scores.
Other studies have revealed that attractive children tend to get better grades in school because they receive more attention from their teachers. In the job market, many sales oriented positions are given to beautiful people. Supermodel Tyra Banks tried to demonstrate this double standard when she dressed up in fat suit.
This article demonstrates the admirable work of these women: “Miss America: Making a difference since 1921: After 88 years, the pageant for beauty, brains and drive is still evolving” http://www.msnbc.msn.com/id/28817770/

Remembering Bill Proxmire and the 1979 Chrysler Bailout by Gregory Hilton

 On Aug. 29, 1957, the day that he joined the Senate, William Proxmire, second from right, met with, from left, Senators John F. Kennedy, George Smathers, Hubert H. Humphrey and Lyndon B. Johnson.

On Aug. 29, 1957, the day that he joined the Senate, William Proxmire, second from right, met with, from left, Senators John F. Kennedy, George Smathers, Hubert H. Humphrey and Lyndon B. Johnson.


It is now apparent that the Chrysler Corporation will soon file for bankruptcy. This is not the first time the automaker has faced this prospect. Sen. William Proxmire (D-WI) died in 2005 but if he was alive today he could say “I told you so.” He opposed the Lockheed and Chrysler bailouts of the 1970s. He said both companies need to go through bankruptcy to obtain the necessary concessions. He was worried not that the bailouts would fail but that they would work, thereby “inflaming government’s interventionist proclivities to future bailouts.”
Proxmire served on Capitol Hill for 32 years (1957 – 1989) and was Chairman of the Banking Committee. He was a liberal Democrat but a fiscal hawk. He was well known for his “Golden Fleece Awards” which went to people who cheated the taxpayers.
He blasted the 1979 Chrysler bailout as “a massive giveaway for the taxpayers, and a massive windfall for the banks, stockholders and others who have the main stake in a Chrysler bailout.” The loan was repaid in 1983 but Proxmire was still not satisfied because “the terms should have been tougher.”
Chrysler is not alone. GM has also avoided tough choices for three decades, and now it will enter bankruptcy. GM lost $31 billion in 2008, and the stock lost 97% of its value since 2000. My generation well remembers when GM was the world’s largest and most profitable corporation. In 1980 it had 833,000 employees. The new GM products: Camaro, CTS, Enclave, Acadia, Silverado, Malibu, and the Hybrids are all hits. They can be the basis of a new GM.

Education Policy: Can American Learn From Japan

Japanese high school students.

Japanese high school students.


Japan always outperforms the U.S. in math and science scores. That is well known, but most Americans would be surprised to learn Japanese schools do not have janitors or cafeteria workers. Those tasks are left to the students. They sign up for chores on the blackboard. Students serve the school lunch to the teachers and themselves. This helps students develop autonomy, responsibility and a strong work ethic. It’s an idea that could work well in America.
The Japanese students also wear uniforms. Japan introduced Western style school uniforms in the late 19th century as a part of its modernization program. Today, school uniforms are almost universal in the public and private school systems. They are also used in some women’s colleges. Boys wear pants and jackets, and girls wear blazers and skirts. They have lunch in the classroom, not a cafeteria. Some of them are in school on 2 or 3 Saturdays/month, and they often stay after school for cleaning or club activities. I have spoken to many Japanese students and they enjoy practicing English. I have yet to meet an American student who speaks Japanese. The U.S./ Japan comparison can also be misleading. In Japan it is only the best and the brightest who are able to attend school, while in the US school is mandatory until the age of 18.
Most Japanese students also attend night school five days a week, as well as during the day on Saturdays. They always have homework. They are drilled non-stop to prepare for very competitive exams which determine their entire future course in life. They only sleep a few hours per night – not enough by U.S. standards for growing bodies. They have virtually no free time.
The dark side of the Japanese system involves the high rates of teen suicide and bullying. They are viewed as products of an educational system which demands a high level of obedience. Lack of focus on creativity and expressing one’s opinion is the price to pay for a system that churns out students who excel on math and science tests.
The system is changing but only at the pace at which Japanese society is moving away from the job-for-life philosophy. The Japanese university system is far easier than its U.S. counterpart. Japanese students use their college days to enjoy life.
The current 20 somethings in Japan are now called the “so-so generation.” They have seen the workaholic lifestyle of their parents and they reject it. Young Japanese do not want promotions because it will mean additional work. They are satisfied with a lower income lifestyle that gives them more free time. Also, the plunging birthrate means Japan will lose 70% of its workforce by 2050, and 75% of Japanese will be of retirement age plus by 2035.

The Legacy of Brad Keil: A Tragic Death but a Triumphant Life by Gregg Hilton

The late H. Braden Keil in 2007 with Braden and Kaitlin

The late H. Braden Keil in 2007 with Braden and Kaitlin


The Legacy of Brad Keil: A Tragic Death but a Triumphant Life by Gregory Hilton–
The funeral for H. Braden Keil was yesterday morning. He was the popular “Gimme Shelter” real estate/celebrity columnist for the “New York Post.” His final column appeared six days ago and now his work is done.
During the past few days his friends and admirers have composed numerous condolences. Especially poignant was Hamilton Nolan’s comment: “no one at the ‘Post’ was as Great Gatsby as he truly was.” Donald Trump described him on Thursday as a “great guy, a fantastic reporter who understood real estate as well as anyone in the industry.” His “Post” colleague Max Abelson called him “the prince of the newsroom” and “a scoop artist.”
Brad obviously impacted the lives of many people. I previously reprinted his May 2007 column on the early signs of skin cancer. Brad wrote of the anger he directed at himself because the disease was so easy to prevent.
What the article omitted was that the melanoma came back, and it spread rapidly. Sustained treatment took a heavy toll, yet, his spirit never wavered. In the final months Brad’s thoughts were focused on his family and those he would leave behind. He was not consumed with self-pity and melancholy.
Now skin cancer has claimed Brad as well as my pal Rob Nottingham. They both had so much to live for, and left us far too early. Hopefully their passing will be an important reminder for the rest of us. It is also a reminder that we are here for a brief moment in time, and then we are gone. Although we hated to lose them, their legacy continues in the lives they touched.
To most people our lives are only noted by 8 simple numbers and a single dash. When we were born and when we died. Life, death and the time we spent in between. Brad will be remembered because of the vibrant and exemplary way he used that in between time. I have so many wonderful memories of Brad, and it is difficult not to smile when I think of him.
It takes me back to our glory days in the Georgetown of the 1980’s. This was well before he moved in 1996 and became a fixture in the Manhattan real estate/society world. His phone calls often signaled the beginning of a new escapade, and after being in his company, I always had a great story to tell.
I am not sure why Brad included me in these adventures, but I am so glad he did. He was the one inviting me, and I rarely, if ever, reciprocated. Of course, our contact greatly diminished when he moved to New York City, but I was not forgotten.
I did not know anyone when I arrived at one cocktail party in the Hamptons, and all I could say was “I am friend of Brad’s.” I quickly learned that those were the magic words. His New York friends shared the respect, admiration and genuine affection I always felt for him.
Brad did so much for me, and I hope he was aware of my gratitude. Sadly I can not think of anything significant I ever did for him. I didn’t even attend his funeral in New York City. My debt to Brad can not be repaid by sending a condolence note or flowers. I did not see him in his final months, and I missed the opportunity to thank him in person. Nevertheless, there is still something I can do.
I was a witness to at least some of his good old days. I knew what it was like in those gone but not forgotten lightning years. The stories my Dad told regarding the journeys of his youth always fascinated me, but now Brad will not be able to provide a first hand account.
His daughter Kourtney is 21, Braden is 5, and Kaitlin, 3. In the years ahead the toddlers will have few vivid memories of their father. They will of course treasure stories their mother will share. The condolences will demonstrate that Brad had many friends who were overcome with grief. They will see heartfelt comments such as “really, really sad” and “Poor Braden, I don’t have words.”
They will clearly know their father was loved. His exit was premature, but his devoted and unfailing character resulted in a triumphant life. As a minor character I can not write his story, but I can share my own observations. I have written the following with Brad’s young children in mind.
HOW I MET YOUR FATHER
Now that your father has moved on to that better place, memories of how I first knew him have returned. Almost 30 years have passed since Brad Keil was the center of attention at Congressional Country Club during the debutante season of 1980. A debutante ball is a formal presentation of young ladies, or debutantes, to “polite society,” and the popularity of those events faded a long time ago.
We were both wearing tuxedos but your father’s style was always unique. He stood out from other young boys because, as usual, he was not wearing socks. He maintained that tradition for the rest of his life. There were also times when well after midnight he would be drinking Chardonnay while wearing Ray Ban sunglasses! It sounds silly today but to us he had a particular sense of elegance and distinction.
I was still in school and our paths would intersect frequently at social gatherings in the weeks and months to come. In our early twenties the “preppy” traditions of the elite private schools were in vogue. It was the disco era but your father never adopted that look. He would not want me to say this, but he did like the Bee Gees and Kool and the Gang. For our crowd the fashion and style was the old school.
It meant “Guys in ties, girls in pearls.” For the men, the uniform of the day was often khakis with white or blue collared shirts and ties. In warm weather the girls wore sundresses which were usually some variation of pink or green. I did my best to conform but unlike your Dad, I never would “pop the collar” of a Polo shirt.
Chivalry, or courteous behavior towards women, was an important characteristic of this small society. Doors were opened for women, chairs pulled out, and they always entered the elevator first. Your Dad would frown at us if we did not get up when women entered the room. Deference to others (“After you”) was the cornerstone of good manners. According to the news media, young people today share costs when they are dating. That never happened in our time. The man was always expected to pay, and if a woman made an offer, we knew she was not serious.
THE NATION’S CAPITAL IN THE BRAD KEIL ERA
I was not part of your father’s inner circle. The “New York Post” compared him to the Great Gatsby, and in that case I would have been just one of several Nick Carraway types (the narrator). We were among the many guys Brad was kind too, and it was really fun to be part of his entourage.
Similar to Carraway, I had plenty of time to observe your Dad. Almost every Friday night began at The Third Edition, a popular Georgetown bar for the 20-somethings. It still looks exactly the same today as it did in our time. Your Dad had a ready smile to the fore, he would saunter in and radiate warmth. I was among the first to detect his eventual interest in politics. Barflies like myself would try to latch on to some desirable girl, but your Dad was always in circulation. He made it a point to talk to everyone. He was networking well before that term had been coined.
Our next stop was often a half a block away. The back room at Nathan’s was popular because it featured the music of our crowd, and the dancing was your father’s style. We frequently stayed until closing time.
The girls would depart and the staff did not kick us out. My best conversations with him were in that back room after the crowd had gone home. I will never be in the same league as your father but we did have a lot in common. We shared the same age, hobbies, religion, politics, cuisine, DC and NY, admired fathers, adored sisters, and on one occasion, even the same girlfriend! Of course your father was very social, but he certainly was not a dilettante. He had a real curiosity about life. He was interested in so many subjects, and wanted to serve in the Maryland state legislature. Because of his boundless enthusiasm, I never discouraged him.
Your father was a bachelor in those days and he proved Oscar Wilde was wrong. Wilde, the Irish playwright of the Victorian era, said: “Between men and women there is no friendship possible. There is passion, enmity, worship, love, but no friendship.”
Women were among your father’s best friends, and I am not referring to romance. In those days Mount Vernon College was a girl’s school (it is now co-ed and part of George Washington University), and your Dad was truly the big man on campus. The campus was surrounded by high walls and the only entrance was through a gate house. All of the guards knew Brad, and when I was in his car we were instantly waved through the main gate.
I was stunned when he entered dormitory rooms without knocking, but no one seemed to mind. His hair was quite blonde in those days and while he was very handsome, that did not explain why he had so many female friends. Perhaps it was because he had three sisters? I still do not know the reason, but he was able to understand emotions and feelings. I guess empathy is the best word. He maintained those friendships in the years ahead.
There were many other places that were popular with your Dad. The Chinese Disco, or “Chi Di,” was a Chinese restaurant on Pennsylvania Avenue during the week, but on Friday evenings they pushed the tables to the walls, brought in a DJ and played “beach music.”
Everyone did the “shag.” At one time I could have told you the difference between the Virginia shag and the Carolina shag, but I have long since forgotten. The Spy Club was located in an alley, and it was the in spot for a few years. Your Dad was one of the charter members. I would have to wait on a long line at the entrance, but your father would pluck me out, and because of him I was in the more exclusive backroom. It was a pattern that would be repeated in NYC years later.
As time progressed your father became even more sophisticated, and was amazingly well connected. He shocked all of us when he trained to be a French chef. He was obviously talented because he became well acquainted with Jean Louis Palladin at The Watergate, and Jean-Pierre Goyenvalle at Lion d’Or. Today diners at fine restaurants take for granted fresh and exotic ingredients, but those things were largely unknown when your Dad was a young man. Because of his enthusiasm the rest of us would visit the new places he recommended. Twenty years later he would describe his newspaper column as focusing on “New Yorkers’ favorite topics – gossip, food and shelter.”
In his final years in DC the place to be in the warm weather was the Sequoia restaurant and bar on the Potomac River. Brad’s entourage would gather in the evening hours, and the party would not stop at closing time. He had an apartment that was just a short elevator ride away. I well remember waking up at noon the next day at your Dad’s place. I felt foolish because I had to go home in broad daylight while wearing a tuxedo.
bradenkiel1
WHY WAS BRAD KEIL SO POPULAR?
The first word I would associate with your Dad is “popular.” In the Georgetown-centered universe of people in their twenties and thirties, your father was a focal point for the in crowd.
Brad had a unique style which was sophisticated, charismatic and cool. We all admired him, but that does not explain his popularity. Beyond his unique outlook, he was fun and always appeared interested in the mundane details of our lives.
Brad knew that being a good friend is not just about having a good time. It’s also about how willing you are to put others first. The DC/NYC social circuit will always include some superficial snobs and pretentious people who have no reason to act in that manner. Your father knew plenty of them, but he was just the opposite.
He attended the best parties, but he never pretended to have superior social status. Anyone could be his friend, and I remember him howling at the silliness of one guy who told us he would only date women from the Green Book (the DC social register).
Our circle included a number of good-looking guys from aristocratic families who had all of the impressive trinkets. Far too many of them were also selfish, had bad attitudes, and did not treat women with respect. None of them could compete with your father who was best known for his excellent reputation.
He also was known for his kindness and understanding. At times I did wonder if he was perhaps too kind for his own good. I do not know if he was familiar with Mother Teresa, but he certainly followed her guidelines: “Kind words can be short and easy to speak, but their echoes are truly endless.”
I am not saying your Dad was a saint, but he was not self centered and that allowed him to establish a real connection with people. He appreciated a person because of their character, not because of their occupation or what they could do for him. Many people are glib talkers, but your Dad had the rare ability to be a good listener. He paid attention and remembered our stories.
I do not know if he was truly intrigued by what we had to say, but he certainly gave that impression. He would really tune in to our comments. In my case he frequently asked about books I was reading. He would later surprise me by obtaining the same texts.
WHAT DO YOU REMEMBER ABOUT HIS PERSONALITY?
Brad had that je ne sais quoi. It was a certain something that you can’t quite pinpoint what it is, but it was there. Men like him are rare.
It’s not unusual for women to have close friendships from decades ago, while men often have superficial relationships based on common activities like sports, hobbies or drinking. Men’s friendships often do not have the same emotional richness as women’s, but your Dad was not reluctant when it came to self-disclosure. He had the type of conversation-heavy friendships that comes so naturally to women, and he was passionate about so many diverse topics.
In the lottery of life your Dad had it all. He was handsome, intelligent and had a winning personality. Everyone remembers Brad’s great sense of humor, but he was never cruel and did not use other people as a topic for laughter. Cool guys do not put other people down in order to feel better about themselves. They inspire us to be better people. Your Dad was a cool guy.
Your mother must be very special because she married the guy all the other women wanted. Once again, your Dad’s blonde hair, great smile, and physical appearance were obviously desirable, but there were plenty of handsome guys. These other men could not compete with your Dad because he was a great conversationalist and as I indicated, he had a tremendous sense of humor.
At one point I knew practically all the women he dated. There was a common denominator. All men are visual but Brad liked smart girls, artists and journalists. They were beautiful, but they were also women of accomplishment.
Your father admired people who were subtle, modest and did not boast. I met him in the barber shop one day and he invited me along to a reception that evening at the University Club for then Congressman Les Aspin (D-WI). Years later Aspin became Secretary of Defense. The Congressman gave your Dad his business card and Brad was surprised by what it did not include.
It appeared fairly typical to me but your Dad was impressed that Aspin had omitted his “Ph.D” title and did not refer to himself as a Doctor. He reminded me that when we were at the barber shop another customer had introduced himself as “Dr. Smith.” Your Dad’s comment to me was “What does being a doctor have to do with getting your haircut?”
WHAT ADVICE WOULD YOUR DAD GIVE?
We will never know, but the past is a good indication. Your father’s activities are an excellent clue to what he might have said. Your Dad knew and interviewed a wide variety of people who were on the A list (admired individuals in the limelight). In Manhattan he encountered the titans of finance in real estate and on Wall Street. In DC it would be the power brokers who were often present at functions he attended.
It would not matter if you were in the same room as these celebrities if you did not have anything interesting to say. You have to be constantly informed and that is yet another reason to obtain a good education. Your Dad was surrounded by intelligent people and I know he would want you to focus on your school work.
He was also very fortunate to have an exciting and high profile career in a field he clearly enjoyed. I think he would tell you to find an area that sparked your passion, and to learn more and more about it until you become an expert.
Some experts are genuine geniuses, but most are like your Dad and myself. They are people of normal intelligence who simply work harder than others. Your Dad was in the newspaper business and he knew the basis of becoming an expert is to read more. The old cliché is true, the reader is the leader.
The absence of your Dad means your path in life is far more difficult. Your father lost his battle with his cancer but he would want you to triumph in life. Your first job will be your school work. When you do decide on a career path you will have to focus, maintain good habits and build your self-discipline. Most people will not put in the immense effort required to achieve this goal, but most of us are not like your Dad.
AS WE REMEMBER HIM
The best advice from your father was unspoken. It was the admirable way in which he lived. To those of us who knew him, your Dad will not be forgotten. We will grow old but in our memory Brad will always be young. We were fortunate to have been touched by the light of his life.
In thinking of your Dad always remember that he left you a legacy. It is his curiosity about life, a hunger for knowledge, a passion for the outdoors, an example of a life whose riches owe little to money, a sense that anything is possible if you work hard, and a model of what a man should be. Those are all great gifts.
Pamela Fiori, Jennifer Gould Keil, Braden Keil, Susan Magrino, and Allyn Magrino

Pamela Fiori, Jennifer Gould Keil, Braden Keil, Susan Magrino, and Allyn Magrino

Why Investors Are So Worried About General Electric

GE shareholder value was destroyed this past year when the stock fell 80%

GE shareholder value was destroyed this past year when the stock fell 80%


Why Investors Are So Worried About General Electric by Gregory Hilton–
One of the hottest topics on Wall Street right now is the future of the world’s most successful conglomerate, General Electric. It has the fourth most recognized global brand name, worth almost $49 billion. It is one of my favorite companies because it’s holding are a broad reflection of both the U.S. and world economy.
The current debate is best illustrated in two messages I received in the past few days. One friend wrote “I see a 60%+ return between now and the end of the year if you buy today. We all know the bad points, but GE will be fine. This is a rare buying opportunity which comes around only once every 10 or 20 years.”
Another colleague continues to be pessimistic, and is hoping there will be a divorce from GE Capital. He concluded his e-mail with “If G.E. is in serious trouble, God help us all. We are talking about more than 323,000 jobs if GE fails. If GE goes than expect a 3500 Dow before the end of the year.”
General Electric is one of six companies in the S&P 500 with a triple-A credit rating. GE shareholder value was destroyed this past year when the stock fell 80%, which is far worse than the broader market which is down 46.4%. The stock is now at a 17-year low, trading below $8 a share. GE was at $60 in the late 1990s, and it was at $33 in the summer of 2008. GE has fallen by 3- 8 percent almost everyday for the past several weeks.
The company has been paying a regular dividend for more than 100 years but this was reversed last week when GE slashed its quarterly dividend by nearly 68% in a move to save its investment-grade credit rating. Reducing its dividend to 10 cents a share from 31 cents will save the company $9 billion annually.
GOOD POINTS
1) The company had $18 billion in profit last year, and it is sitting on $45 billion in cash.
2) Several Wall Street experts are still betting on GE. Warren Buffet just entrusted them with $3 billion. He is not known for throwing money down the drain.
3) If you’re investing for anything beyond 12 months, this could be an excellent buy.
BAD POINTS
1) If any agency downgrades the credit rating on GE Capital four notches from its current AAA credit rating below AA- , they would be forced to pay out more than $8 billion immediately.
2) Primarily because of GE Capital the company is now carrying more than $500 billion in debt. It is this debt load which is crushing GE shareholders today. Investors fear GE Capital’s reserves for losses are too low in comparison with the top U.S. banks.
3) The stock will continue to be under pressure because dividend-oriented mutual funds might be selling their holdings on the heels of the recent cut.
I do not believe GE is going to vanish but that AAA rating is questionable. The turmoil at GE is very similar to what we saw at Bear Stearns, Lehman Brothers, A.I.G., Merrill Lynch, Citi, and Morgan Stanley.
In the interest of full disclosure, the guy who is so optimistic about GE also said Citigroup would weather the storm, AIG was too big to fail and Lehman Brothers would never fall. I hope the GE cheerleading is accurate but the stock has dropped from $13 to a little over $7 in 60 days. GE at $7.00 is bargain that can’t be ignored but so was Citigroup, AIG, Fannie Mae, Hartford Financial, DryShips and on and on.

IBM is Ready for a Bear Market Offensive by Gregory Hilton

The IBM world headquarters in my hometown of Armonk, New York.

The IBM world headquarters in my hometown of Armonk, New York.


Only two stocks in the Dow Jones Industrial Averages rose in February. They were Walmart and IBM which is based in my hometown of Armonk, New York. IBM was up by an impressive 5%. Last year IBM earned $8.93/share, as revenue rose 4.9%. I will always have special affection for IBM. They paid 45% of our town taxes for over two decades.
So many things I thought I knew were reversed over the past six months so I should be barred from giving further investment advice. I still do not give guarantees, but it would be hard to find a better pick than IBM (perhaps Walmart or ExxonMobil). They are certainly diversified and well ensconced in the plus-$100 billion market cap world. Many of the stock market pundits such as Suze Orman, Jim Cramer, Larry Kudlow and Maria Bartiromo have not been kind to IBM. Furthermore, it was not that long ago that Prudential Bache Securities gave them a don’t buy recommendation. Personally, I own IBM and I am not selling. The reason for my confidence is partially based on the company’s new annual report.
In a letter to shareholders released in conjunction with the annual report, IBM CEO Sam Palmisano says the company is “positioned to lead in the era that lies on the other side of the present crisis. We will not simply ride out the storm. Rather we will take a long-term view, and go on offense.” IBM can do this because they have greater financial resources than any other tech company.
This no retrenchment policy was further emphasized when Palmisano said: “Many companies are reacting to the current global downturn by drastically curtailing spending and investment, even in areas that are important to their future. We are taking a different approach. Of course, we must continue to improve our competitiveness. But while we maintain discipline and prudence in the near term, we also maintain the discipline to plan for the future. We’re not looking back, we’re looking ahead. We’re continuing to invest in R and D, in strategic acquisitions, in growth initiatives–and most importantly, during these difficult times, in our people.”

General Motors Bankruptcy Could Result in an Additional 1 Million Unemployed

The Sinking of the Once Mighty General Motos Has Been an Enormous Blow to the American Business Community

The Sinking of the Once Mighty General Motos Has Been an Enormous Blow to the American Business Community


According General Motors own auditors, the world’s largest automaker is on the brink of collapse and bankruptcy. General Motors and Chrysler have received more than $17 billion in government loans and the new U.S. auto task force is now in Detroit to determine if they should receive additional funding. The holders of GM debt would most likely receive 30 cents on the dollar if bankruptcy is declared. Parts suppliers would receive a major blow and retires would see health benefits cut back drastically.
House Republican Leader John Boehner (OH) and Senator John McCain (R-AZ) have both said chapter 11 bankruptcy is the best option for GM. Boehner said GM has avoided tough choices during the past 3 decades and now it should work with employees and creditors to plan a stable future. Anything short of that would be “throwing good money after bad,” he said. GM lost $31 billion in 2008, and it needs $30 billion to stay afloat.
I recently wrote an in-depth analysis of General Motors, and three weeks ago I was asked if GM was a good buy because the stock had fallen so low. Many other corporate icons are in a similar position, and last month I wrote the following:
“We have a saying in venture capital,’The people who make the big bucks are the ones who have the most guts.’ I definitely do not have the guts for a GM buy.
“GM has lost 95% of its value since 2000, and that includes $73 billion in the past three years. The bailout funds should keep GM in business, but if they do go bankrupt shares that are purchased today would be worthless. Even if they stay in business that does not mean the stock will rise. If GM is acquired by another company the stock would be exchanged and it might not be a good deal. The new GM products: CTS, Enclave, Acadia, Silverado, Malibu, and the Hybrids are all hits, but I would not recommend the stock.”
Many analysts are now predicting GM will file a Chapter 7 bankruptcy, meaning that it will be forced into liquidation, not reorganization. GM is experiencing its worst sales slump, and according to Bloomberg, if GM fails, Ford and Chrysler will not be far behind. The total GM loans are in the neighborhood of $50 billion.
The collapse of the big three would eliminate three million jobs, and the loss of just GM would mean a minimum loss of one million jobs. The repercussion to the economy are incalculable. GM has said Chapter 11 bankruptcy — under which the automaker would continue to operate while holding its creditors at bay and overhauling its finances — is not an option because that would scare away customers.
Some industry analysts say doubts about the company’s chances of survival have already driven away would-be buyers, who worry that their warranties might not be honored or that they might not be able to get replacement parts. Chapter 11 bankruptcy may be of little use anyway, because GM may not be able to get the necessary financing to reorganize itself. That could lead to Chapter 7 liquidation, in which the automaker’s assets would be sold off piecemeal.

Obama Budget Means More Pain for Non-Profits by Gregory Hilton

The Dow Jones Industrial Averages Have Declined Significantly in the Weeks Since the Passage of the Stimulus Bill

The Dow Jones Industrial Averages Have Declined Significantly in the Weeks Since the Passage of the Stimulus Bill


THE DOW-JONES INDUSTRIAL AVERAGE since the passage of the stimulus bill. Looks like a vote of “no confidence” to me. Because of my major donor work for charities, practically everyone one on our Finance Committees is in $250K+ bracket. Many of them are Obama supporters, but they are taking steps to lower their tax footprint by such steps as maximizing 401K contributions and cutting back on overtime. Targeting the $250K+ bracket is not a new idea.
We did this with the Luxury Tax. It was a popular idea because it was suppose to only tax the rich. Before the tax North Carolina and Maine enjoyed a large yacht building industry, but within two years of the tax being passed, all those businesses were gone and people were out of good paying jobs. The rich were smart enough to figure out that a $200 plane ticket to the Bahamas to buy their yacht was much cheaper than paying the luxury tax. When you punish the productive, you get less productivity. In Denmark workers are not seeking a pay raises because they lose 70% to taxes. Instead, their preferred bonus is extra vacation time, as the government can’t claim 70% of that.