Obama's Thuggery Tactic Of Calling People Out

If you haven't noticed yet, Obama seems to be using the following tactic to disparage his detractors or certain people or groups that he doesn't like.

First, he publicly calls them out by name. It could be Rush Limbaugh; or, greedy Wall street; or, AIG; or the selfish bondholders at GM; or, most recently, the Fox News Channel.

Then, in doing so he attempts to demonize them and turn public opinion against the named entity. In the case of AIG, the SEIU union members and ACORN followed his lead and actually picketed executive's homes to push public opinion against those people. That stunt was the equivalent of a public flogging.

When Joe the Plumber criticized his higher tax plan, Joe got the "flogging" treatment from every left wing entity in America; including the American media. Similarly, Sarah Palin was compared to a "pig with lipstick" and the left wingers, like Letterman, have continued to attack her, even as of today, in a lemming-like fashion; all for their anointed one, Barack Obama.

In the last week Obama has heavily gone after Fox News. In an interview with Bloomberg, he said that a certain news channel spent all their time criticizing him. During last night's Radio and Television Correspondence Association dinner, he again singled out Fox by saying that he, like Oprah, gave everybody a car company. But, for Fox, he said he gave them AIG. In that joke, he attacked two groups: Fox and AIG.

In the case of Fox, Obama cannot tolerate any dissent. It is sort of like saying: "Though shalt not take the name of the Lord thy God in vain." On top of the calling out of Fox News, he has pulled back his Administration and staff from being interviewed by Fox. The purpose of this kind of behavior by Obama is to force Fox to get in line. And, if they don't, there won't be anymore interviews. Apparently, this thug, Obama, doesn't consider himself the President of all the people. Just the ones he likes.

Obama doesn't just use this tactic on Americans and American entities that he has no use for, he uses it against other countries and their leaders. Recently, he purposely and publicly rejected a dinner invitation with the French President, Nicholas Sarkozy (See Full Story). This was an intentional snub and was done in retaliation to comments that Sarkozy made within the last few weeks.

Obama is devotee' of Saul Alinsky: the founder of Community Organizing groups like ACORN. When it came to opponents he espoused the following serious tactics:

1. Isolate your opponent or detractor by publicly identifying them.
2. Demonize them in the process to create public opinion against them.
3. Then, crush them into submission.

ACORN used this very tactic quite well in getting Banks across America to give out risky loans to low income and minority applicants. They would picket Bank lobbies and store fronts and use the Community Reinvestment Act as their hammer to demonize that bank. They would get the local media involved. And, ultimately, the Bank would give in by issuing more high risk loans. Similarly, Jesse Jackson has used this tactic for years to get money out of Corporations for his Rainbow Coalition and to get companies to hire more minorities.

Make no mistake, Obama is using Chicago-style thuggery politics. He is using ACORN and Saul Alinksy tactics. In doing so, he is stomping all over the freedom of speech in this country. In essence, he is a 'Thug'!

That, to me, makes him less presidential and, probably, the most petty President we have ever had. In support of this pettiness, think about this. Fox News, at best, gets about 3 to 3-1/2 million viewers for any given time slot during the day. This is only 1 percent of all the people in this country. Combined, the Obama networks of ABC, CBS, and NBC get over 15 million viewers each night while they are hyping their new god, Barack. Fox, like Rush Limbaugh, are not big players on the media stage of this country. That's why Barack's attacks are truly petty. It is like fretting over a single leaf that has fallen from a tree! I think Barry would better serve himself by worrying about the increasing loss of job approval points among those Republicans and Independents who might have voted for him. Also, he should start to worry about those previously dedicated Democrats who are now openly criticizing him like Bill Maher, Camille Paglia, Whoopie Goldberg, and so many others.

Why AIG is The Villain

When the housing market collapsed and faulty loan activity was exposed, it was only logical that the mortgage lenders, like banks, would be demonized for their risky behavior. But, in recent days, AIG, an insurance company (not a bank or mortgage lender), has been demonized even more; especially by our Congress.

I think a lot of people are mad at AIG (American International Group) because they received billions of dollars in taxpayer bailout money and they think AIG acted irresponsibly by giving out some bonuses. But, I don't think any lay person, who is now mad at AIG for those bonuses, really understands why an insurance company received that amount of bailout money in the first place; and, why they were said to have been "too big too fail".

If you listened closely to the Congressional hearings that were being conducted to grill AIG's interim CEO over the coals, you would have heard many angered references to the Financial Products Division of AIG and their receipt of $168 million in bonuses. But, again, most of us probably don't really know what the Financial Products Division did to warrant such anger.

AIG is basically an international insurance company that could insure almost anything in the world. 99 percent of what they do is regulated by some form of government; depending on what country or state they are selling their insurance products in. Normally, all their insurance activity has to be supported by a sufficient amount of cash reserves to guarantee that there is enough insurance payout money available in the event of a mass catastrophic loss of insured items. For example, when Katrina hit, a company like Allstate, because of state and Federal regulations, had enough cash reserves to cover all the insured properties that were lost to that specific catastrophe.

Not all of what AIG did as an insurer was actually regulated, however. This was especially true when it came to insuring mortgage loans, business loans, and many other types of loans. Not that they did anything illegal; but, in essence they were not being fiscally responsible.

The Financial Products Division was a very small division of AIG. It was heavily involved in the unregulated activity of insuring loans between two parties where the party receiving a loan might have had less than a good credit rating. Under normal circumstance, that kind loan would not have even happened if it wasn't for AIG providing an insurance on that kind of loan.

To facilitate these somewhat questionable loans, AIG insured that loan by using a product or vehicle called the Credit Default Swap or CDS. The first Credit Default Swaps were initially hatched up by JPMorganChase in the late 1990's. The fact that CDS's were exempt from any regulation stems back to the "Enron Loophole" that was created when Bill Clinton signed into law the Commodity Futures Modernization Act of 2000. That law was originally authored by Republican Senator Phil Gramm and, under the "derivatives" sections of that law, any CDS's were freed of any regulatory oversight.

In a normal mortgage loan environment, a borrower goes to a lender, like a bank, and says that they want to buy a house. The lender, then, in deciding whether or not they want give out a loan for that house, wants to know what the price of the house is; what the amount of down payment will be; and, what ability the borrower has to fulfill the terms of the loan. Up until the invention of the CDS, the lender assumed all the risk for giving out that loan. If the borrower defaulted on the mortgage, the house, which had been used as collateral for loan, would be taken and resold to recoup the money that the borrower lost on the deal. Even in the best housing market, a home loan that was defaulted on generally represented some amount of loss for the lender.

Now enter AIG with their CDS's. For just a small percentage of the interest payments that the lender will receive from the borrower on that home loan, AIG says that they will protect the lender against any losses that could result from the borrower defaulting on their loan. In effect, that insurance product, the CDS, would make the lender whole when there was default. The lender, then, becomes free of all risk. In essence, the real risk has been transferred to AIG. This transference of risk is technically what is called a "Swap" as the name Credit Default Swap so implies.This fact, alone, facilitated many more loans than should have been because lender risk was being eliminated. What has also been swapped at the same time was the borrowers credit rating for AIG's once-formerly excellent AAA credit standing. So, on paper, the lender looks as if they are only giving out loans to the best credit-rated borrowers. But, that was only an illusion. It is also important to note that AIG was fully exposed on their portion of the loan guarantee because the collateral for the loan remained, contractually, with the lender.

In a booming housing market, the CDS is a great profit-maker for an issuer like AIG. As housing values increased, AIG's risk would continue to lessen; and, ultimately, would go to zero. Yet, they would still get income. Over the life of a 30-year mortgage, it's nothing but a win-win for AIG. But, when the housing market collapsed and housing prices fell by as much as 50 percent, AIG was then on the hook for massive amounts of money as foreclosures rose. Further, they applied CDS's to all kinds of non-home loans and those loans, too, became a liability as this recession increased the number of bankruptcies .

But, it was worse than that. AIG wasn't the sole seller of CDS's. Banks also bought into the AIG/CDS scheme and they, too, started selling CDS's to each other for every kind of loan under the sun. Hedge funds, also, got into the game. So, as a result, you had everyone from AIG to world Banks to world Hedge funds who were covering each other's butts and none of them had enough cash to bailout the other when things started to unravel. It was a massive interconnected web that could easily collapse under its own weight.

That's why, when, last year, Hank Paulson and Tim Geithner originally started to look at the possible failure of AIG, they only saw a massive ticking, time bomb. But, this time bomb was a lot more like the small conventional charge that could easily be used to initiate a chain reaction that was akin to that in an atom bomb. And, that is why AIG could not be allowed to fail.

AIG is a big company with over 100,000 employees; worldwide. Most of what they do is both a regulated and quite ethical business activity. Even in the Financial Products division, I don't think that the majority of those people, who were selling and bundling the CDS products, were actually aware of how exposed the world was to their activities. After all, the housing market was just clocking along with ever-increasing house value. For sure, I hardly think that any of those employees of the Financial Products Division sought out AIG in some twisted belief that they could personally destroy the world's economy. Instead, they were just recruited to blindly do a job. I'm quite sure that they, like most of the employees in any corporation, didn't have any big-picture view that was greater than their own day-to-day activities. So, to demonize the employees of the Financial Products division is somewhat misplaced. The true villain in this mess is the management that allowed CDS's to happened without the substantial funding that was needed to cover all the expenses associated with a deflated housing market and a recession. That was the greed and that is where the anger should be aimed. Further, the fact that CDS's were even allowed to be sold all stems back to laws that were put in place in 2000. So, our Congress is to blame for not thinking through or actually reading the bill that Phil Gramm put forth and that Bill Clinton signed. And, Bill Clinton is at fault for signing something that his staff of experts -- now all part of the Obama Administration --- should have better understood.

Lastly, I have attempted to give you the most simplistic explanation of a CDS's as I could. The actual CDS products got more and more complex over time with different financing structures and various forms of hedging and leveraging. Because of these complexities and because of all the tentacles that have jutted out from this kind of insurance product, no one really knows the exact amount of risk that is associated with them. Currently, it is estimated that there is a worldwide risk of $45 trillion dollars; but, it could be a lot more than that. While Obama/Geithner want to impose regulation on these kinds of products, I am quite sure that the industry, itself, doesn't want to ever sell another one of them; seeing the extreme risk that they can carry. For this reason, I think excessive regulation isn't warranted. All that is really needed is to mandate some form of substantial loss reserves for the company selling the CDS.

Was AIG Used As A Strawman?

This morning, anyone who read The Drudge Report would have seen this picture and the bold printed "REGULATE" title at the top of the page. Right now, it is just a teaser without a detailed story behind it. But from the top line heading that appears above that picture, it implies that the Obama Administration is preparing to REGULATE banking and Wall Street salaries and bonuses. And, maybe, even, all corporate pay.

This brings me to a question: "Was the AIG flap a completely "fabricated" strawman which will allow Obama to do what he always wanted to do...control executive pay in America" Was this entire flap allowed to happen in order to move towards the complete regulation of salaries in this country? Don't forget those infamous words of Rahm Emanuel: "Never let a good crisis go to waste!"

You've got to wonder. Is this just the first step towards a broader and even more expansive form of socialism than that which exists in the socialist governments of Europe? This move by Obama is absolutely disturbing me; and, it should be seriously disturbing to all Americans who believe in the benefits of a free enterprise system.

$168 Million Bucks That Stop At Obama's Desk

Senator Dodd blames Obama's Treasury Secretary, Tim Geithner. The White House says it's Dodd and AIG's fault. Representative Maxine Waters is blaming Dodd, Tim Geithner, and the President (See Video & Audio).

It's almost like a scene out of a Three Stooges' movie with Congress slapping the White House and AIG; the White House slapping Congress and AIG; and Maxine Waters slapping everybody as if she was dragging a stick across the slats of a picket fence. You can take your pick as to which group looks more like Moe, Larry or Curly. But, my bet is that Maxine Waters is more like Moe because she's the smart one out of this whole mess by claiming that the President is out of touch.

If you note, the Republicans are increasingly backing off; letting the Democrats dogfight themselves. The expression "eating their own" would be an understatement.

When it's all said and done, it will be Obama that suffers the most. It was his Treasury Secretary that presented the bailout targets and the specific amounts to Congress. He was even involved in the original TARP bailouts because it was him, Hank Paulson, and Bernanke that worked on all of the bailout monies that were handed out in 2007. Obama certified that past activity of the Bush Administration by hiring Geithner.

Therefore, with Obama as the target, you can easily say "the buck stops here." In this particular case, it's $168 million bucks that are stopping in Obama's face.

What is really interesting is the idea that such a relatively small amount of money (as compared to other "trillions" that Obama is spending) may hurt this President the most. Like someone once said: "I's the little things that matter!"

AIG Bonuses: It's A Contract, Stupid!

The days of a contract being someone's good name and a handshake are long gone. In today's complex and litigious society, the legal and binding cement that keeps two parties honest is the contract.

Like it or not, the people at AIG, that received those retention bonuses, got them because they had a contract. That contract was a legal agreement between AIG and themselves. Those contracts were done as part of conducting normal business activities and were negotiated in good faith between AIG and each of those employees. The fact that AIG received bailout funding from the Federal Government can't negate those contracts because they were written before AIG accepted that funding. Anyway, the acceptance of Federal bailout money was a contract between AIG and our government and was totally independent of those retention bonus contracts.

Our Congress knew this and knew that they couldn't override those legal documents by, somehow, passing a law that would retroactively negate them. That would definitely be unconstitutional. So, the Democrats in Congress and some obliging Republicans decided to do an end-around by passing legislation that would penalize the recipients of those bonuses with a 90 percent, retroactively applied tax rate. Even so, that action may be unconstitutional, too, because it may violate Article I, Section 9, of our Constitution by passing legislation that could be defined as a "bill of attainder". A "bill of attainder" is the passage of any law that would specifically target and punish a single person or select group of people. Whether or not our Congress' actions are unconstitutional, will depend on whether or not the focus of yesterday's legislation is too limited in its scope.

This could have all been avoided if Chapter 11 bankruptcy had been allowed to happen. In that case, all those bonus contracts would have been null and void under our existing bankruptcy laws. But, if you recall, the bailout was needed because AIG was another one of those companies that was too big to fail. That was our government's choice in this whole mess. By doing so, the Federal government allowed all the preexisting AIG contracts to stand. Now, it appears we want to pick and choose those things we don't like about AIG's business and we want to do so retroactively.

AIG isn't at fault here. All this anger is totally misplaced. We, as the people who elected our current representatives to govern us, are at fault. Our representatives were too stupid to think through all the consequences of bailing out this company and now they want to change the rules to divert attention away from their own stupidity. When our government "unconditionally" gave money to AIG, they did so in good faith and AIG accepted it without a lot of detailed strings attached. That was our fault.

What was done, yesterday, by our Congress, shows what little regard our representatives have when it comes to the rule of law and the importance of established, legal contracts. And, this isn't the first time. Right now, there is a mortgage "cram down" bill working it's way through Congress that would totally obliterate mortgage contracts by allowing a Federal Judge to set new contractual terms and that would, in effect, only benefit the homeowner and not the lender.

In a similar attempt to thwart an international agreement, the Democrats in Congress ignored the contractual commitments of NAFTA and have now blocked Mexican trucks from entering our country to bring in Mexican goods for sale. As a result of that action, we have had trade tariffs imposed on 90 U.S. goods and products being exported to Mexico (See Full Story).

Another form of contract that was dissolved, and by Obama himself, occurred when he declared that companies receiving bailout funds must restrict their executive pay to a $500,000 ceiling. I don't know about you, but when I went to work for a company, they made an offer of a specific salary and I accepted that fact. That was a binding contract under the labor laws of this country. But, now, Mr. Obama seems to think employment contracts mean nothing anymore.

How many more contracts is this government going to void? Obama and the Democrats talk about the importance of the rule of law when it comes to protecting the terrorists at Guantanamo; but, they seem to ignore the same rule of law when it comes to protecting Americans in America. Are we now moving to some form of a lawless dictatorship or a communist-like Politburo? It's sure starting to look that way!

AIG Bonuses: Another Diversion

The $168 million of taxpayer money that is being used on bonuses for the AIG execs may be worth some outrage but, in contrast to all the other billions and trillions of possibly wasted taxpayer money, it is just a "gnat" in the grand scheme of things.

Right now, there is widespread outrage, from both the right and the left, over the AIG bonus thing. Where was that same outrage when billions of wasted dollars were uncovered in the first TARP bailout? Where was the outrage over nearly $10 Billion (not millions of dollars) that were being spent for pork projects in the recent $410 billion spending bill? And, why not the same outrage over Obama's $3.7 trillion dollar budget proposal or his $800 billion not-so -stimulus, Stimulus Program? Neither of which is hardly targeted to recover this economy!

With AIG, we are literally crying over a couple of grains of rice that have fallen off a wheelbarrow full of rice that is destined to be dumped over a cliff. We have completely lost our focus. For the Obama Administration, the AIG bonuses debacle is just what they wanted. It focuses America's anger on AIG and takes the heat off of them for all of their own wasteful spending. Believe me, this is a political diversion that is both intentional and welcomed.

This whole thing with the AIG bonuses reminds me of an "Everybody Loves Raymond" episode where Raymond's brother, Robert, has fallen on some hard times and is only eating bologna at every meal in order to get by. Raymond and his wife, Debra, decide to give him $1000 as a loan. However, because Robert doesn't want to be indebted, he refuses the money. Then, Ray and Debra, still feeling sorry for Robert, just decide to give him the "thousand", outright, as a gift. As the story proceeds, Robert decides to use the money for a vacation in Las Vegas instead of using that money to improve his lifestyle. As a result, Raymond and Debra get angry and want the "gift" back. However, Robert says "no" to returning the money and reminds them that it was given as a "gift" and not as a loan and without any strings attached. The story ends with Robert still going to Vegas but now, with Raymond as a travel partner. Sound familiar?

The problem with all these monies that are being spent by our Federal Government, specifically by Obama and by our Democratic Congress, is that we are sending money, out the door, with absolutely no strings attached and with little thought behind it. Therefore, you wind up with all the corporate Roberts of our world going to Las Vegas on the taxpayer's dime. Then, after the fact, we start asking for the money back or we start trying to attach the strings on how that money will be spent. This is just ridiculous and, surprisingly, it takes the plot of a decade-old situation comedy to remind us of that fact.

Right now, the Obama Administration is just starting to write the rules on how the stimulus program monies will be spent and we and the recipient states are just now starting to find out about rules. However, some of that stimulus money has actually gone out the door without those rules in place. There's an age-old adage that says "haste makes waste." Believe me, the AIG bonus waste will look like child's play as compared to all the other waste that we will ultimately see when the stimulus money has all been spent and after Obama's trillion dollar budget money goes flying out the door. Waste is just commonplace in Government programs. For many years, the Medicaid/Medicare program waste has been running at a rate of about 14% per year and no effective means of abating it have ever been instituted. What makes us think that the Stimulus Program or Obama's fat budget will be any different?

This article from the Washington Post "Anger Over Firm Depletes Obama's Political Capital" seems to say it all about the outrage. But, in addition, it seems to show that a lot of that anger may now be aimed at Obama and the Democrats.

The Great Corporate Depression

Those who lived through theyears of the Great Depression of the 1930's remember them well. They were the soup lines. Millions of Americans were out of work, poor, and without food. The historical photographs showed the anguish and suffering as people just tried to survive.

Today, we have something akin to those soup lines. Now those lines are made up of major financial institutions and corporations of America. All standing in line before the U.S. Treasury Department with their tin cups in hand looking for a mere few billion dollars to tide their businesses over during times of trouble. The shock waves that were sent out from the sub-prime mortgage mess are bringing some of corporate America to its knees.

In many cases, the corporations that looking for the handouts are in trouble because of bad business decisions and practices and weak management. Many, like the auto industry, have been in trouble for years. The auto industry, from Chrysler to Ford and to General Motors, is now teetering on the brink of non-existence. Circuit City may never recover as competition from the likes of Best Buy and even Wal-Mart may have finally sealed its coffin. American Express, just this morning, wants their share of keep-me-afloat money from the American taxpayers. Freddie Mac and Fannie May have their heads in their hands. Then, there's the bailout of all bailouts, the insurer, AIG.

AIG is the best example of complete management stupidity. First, they took nearly a 1/3 of a trillion dollars in taxpayer money to save their butts against their previously bad business decisions. Further, they got more taxpayer benefits because they were able to benefit from the lower interest rates that had been created when those rates were slashed by our Federal Reserve Bank. Instead of being humbled and greatly embarrassed by their own stupidity in almost losing their company, they decided to look the gift horse, us, in the mouth and laugh by spending hundreds of millions of dollars in junkets to some of the most lavish resorts in the world. I guess sea air, salt water, tanned bodies, and golf are more conducive to clear thinking than the laborious and smog-filled conditions of their home base in New York. Obviously, they must think that, as long as the government is footing the bill, no hard work is necessary.

Then, of course, there's the General Motors' example of corporate governance. They apparently are burning cash at a rate of more than a billion dollars per month. They now say they will be completely out of money by the middle of next year. So, why then, just three weeks ago, were they looking for a handout from you and I so they could buyout either all or part of Chrysler. What are they smoking over at GM? Only a madman would add another failing business to their already substantial repertoire of failing businesses. It would seem to me you would want to shed yourself of unprofitable businesses and not take on more!

I think the taxpayers are owed a better handling of this mess. I think that, if companies need taxpayer funding to survive, they should agree to certain conditions. First and foremost, an interim CEO should be appointed by our Treasury Department. There should be no golden parachutes or fat severance packages for the outgoing CEO. These people are already wealthy enough and totally undeserving of anything else from a company that they helped run into the ground. A new Board of Directors should be immediately elected by a special interim proxy vote by all shareholders. The list of names for the new Board should be twice as large as needed and developed from heads of companies that are currently financially sound. The debt that is incurred from taxpayer loans should have priority of repayment once the company becomes profitable. Further, the government should have repayment priority over all other lenders should the company continue to fail and have to file for bancruptcy.

If there are no severe conditions placed on companies for the welfare they are getting, then the list of companies who need financial help will just get longer and longer. A federal bailout should be a serious situation and a company must weigh the consequences of their actions.