I think if you asked just about anyone this year if we were in a recession they would have responded “yes.” Of course it just can’t officially be a recession until The National Bureau of Economic Research says it is.

Oddly enough, they have been eerily quite this year. Sure we get the occasional “could be getting close” and “we are waiting for more information” – number crunchers always need more facts than looking outside the office at foreclosures, rising gas prices, loss of jobs, and lack of consumer spending. 

Well, yesterday the official stamp arrived. The U.S. economy has been in a recession since December 2007. I am not sure this actually surprised anyone but there is something about putting a label on it that will make it more real for those out there who have been in denial. 

Key players believe we may be in for a bit more of a downturn… 

“While we are making progress, the journey ahead will continue to be a difficult one. But I have confidence that we are pursuing the right strategy to stabilize the financial system and support the flow of credit into our economy.” – Treasury Secretary Henry Paulson 

“Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time.” -  Federal Reserve Chairman Ben Bernanke 

“I’m sorry this is happening…” – President George W. Bush 

Additionally, yesterday the DOW dropped 679 points to 8,149. Both Amex and Chase announced they would cut available credit by as much as 45 percent. 

On the upside?…ummm, I will have to get back to you on that one. 

My question: Were you surprised by the “official” announcement or did you already kind of have a “feeling” we were in a recession? 

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So where does the Godfather and The Slow Bleed stand on all of this? 

Well, neither party is specifically to blame. That is not to say neither are guilty, frankly, we all are. Some of us saw it coming and people that could have acted to avoid it didn’t. 
Here is my top 5 list of what went wrong… 

1. Bush administration failed to provide needed oversight. Argue as much as you want about who controlled the House or the Senate, the buck stops at the Presidency. We want to hold all CEO’s accountable for their companies? It starts at the top here as well. 

2. Mark-to-Market accounting. An obscure accounting rule allowing companies to book revenue that has not been realized assuming it will be taken to market at a given price. That works great unless the market changes by the time you get there. 

3. Home buyers who purchased homes they could not afford. Buyers that relied on the hopes the market would go up and they could sell for a profit. If you couldn’t afford the normal payments (amortized) an interest-only loan was not the answer. 

4. Wall Street Companies. They know better than anyone the market will go up and down. CEO’s acted like kids in candy store and forgot the basic rules of gravity. Personal greed outweighed good business judgment. 

5. The aggressive lowering of rates. After the dot-com crash the Federal Reserve aggressively lowered rates. Too aggressively and for too long. At some point the market got to control the rate drop instead of the Federal Reserve. 

I could go on and on but wanted to limit it to my top five. Anything you want to add to the list?

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The Senate may have proved to be so great at fishing this week I think we should move them to ESPN or at least the Outdoor Network. 

The House is debating the economic bailout today and they are optimistic they will pass the $700 billion bailout (oh yea, and the other $110 billion in pork additives to buy their votes). Did I say that?

Come on; let’s just go over the facts. 

1. The Bailout gets shot down in the House. They don’t like it; they think it is a bad way to help. It falls 13 votes short of passing. 

2. Senate decides to take a shot. They add some pork to help sway those that didn’t vote for the bailout. Is this not bribery? “Hey, I know you think the bailout is a bad idea, but what if I throw in some stuff – completely unrelated – that you want?” 

3. House Approves the Bailout, the President signs it. 

Now the House all of a sudden “feels good” about the bailout? 

Rep. John Boehner, the House Leader, said “Is it perfect? No. But its clearly better than it was a week ago,” “I’m optimistic about today.”

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Mmmmm Pork. No not the kind you may find next to eggs during your morning meal. I am talking about the pork “sweeteners” the Senate added to the bailout plan in hopes that the House members will bite. 

This is beyond sad and I can’t say I have seen a better example of a messed up government. Take a bad situation (the economy) and make it worse by throwing on a bunch of personal @#$! to get the bailout approved. 

Sure they call it adding “incentives”  to have the House push the Bailout through – it just looks like a load of you-know-what to me. 

So what gems will we get on top of the $700 Billion Bailout if the House approves it? 

Pork Additive #1 – Provisions to keep movie and television production in the U.S. It allows production companies to deduct the cost of “producing” the movies from their taxes. 

How Much? – It will cost taxpayers about $478 million over 10 years 

Pork Addictive #2 – Allow plaintiffs who won damages from the Exxon Mobile spill to average their awards over three years (as oppose to treating it as single year income). 

How Much? – It will cost the taxpayers about $49 Million. 

Pork Additive #3 – Allow a seven-year recovery cost for people who build motorsports racetracks. 

How Much? – It will cost the taxpayers $100 Million. 

Pork Addictive #4 – Allow citizens who do not pay state income tax also deduct what they pay in sales tax. 

How Much? – It will cost the taxpayers about $3.3 Billion 

Ok, there is too much to list and I am getting depressed. In all there is about $110 Billion Dollars in pork additives that will put even more stress on a bad situation. 

I think throwing this stuff in is borderline extortion – the “hey, we are not going to help the American economy unless I get some stuff for me” needs to stop. Spending is out of control. 

Stop thinking in terms of Left and Right and start thinking in terms of Right and Wrong! 

What do you think about this? Feel free to comment! 

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Want to see the new Bailout Bill including some $110 Billion in extra added pork thrown in by the Senate?

You get 451 pages of our government in action. Click Here to see the actual Bailout…

Now back to the House…

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It failed in the House on Monday so today the Senate plans to try and rescue the $700 billion dollar bailout. Why don’t you try and rescue Scott Baio’s career while you are at it – it just isn’t gonna happen. 

The bailout is getting messier by the minute. The Senate thinks by throwing in a few “sweeteners” the Republicans and Democrats who were against the plan will now throw all in. 

So what $@&! is getting thrown in? 

Increase the FDIC insurance cap from $100,000 to $250,000. Forgive me if I don’t bother scouring documents to verify this…but I am going to guess that most people don’t have $10,000 cash in the bank let alone over the current $100,000 FDIC insurance level. So who would that help…wait a minute…maybe some fat cat lobbyists or political officials worried about the economy?! 

Additionally in the “sweeteners” is relief from the Alternative Minimum Tax and Renewable Energy Incentives. 

Here is my favorite part… 

Also included? The “Mental Health Parity” provision, which would require health insurance companies to cover mental illness. Yea, I guess some high level executives are a little depressed right now. 

The vote won’t happen until “Sundown” in observance of Rash Hashanah – I have to say, I hope this is the second knockout of the week. It needs to be done right…and without all this other crud thrown in. 

Update: Well, it passed. Want to see it before it goes back to the House? And you have got to check out the “Pork Additives!” 

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Despite President Bush’s requests and John McCain’s last-minute-cancel-the-debate-get-on-a-plane-save-the-world-speech, the bailout package was rejected yesterday (sending the stock market down 777 points). 

Was it close? Not really. The vote was 228-205 after marathon talks from the Bush administration. Matter of fact, only 65 Republicans followed Bush and McCain and voted for it (so much for influence). 

As they pour back to the drawing board today I expect the stock market to go up for awhile. Optimism always seems to follow these types of things. I think today is the Jewish New Year so don’t expect anything to happen for a couple days as the Congress and Senate pass this one back and forth like a hot potato. 

In the end I think the hold on approval is a good move. No matter what happens we are in uncharted territory and need to make some careful decisions here (ie: not decisions made latenight over the weekend whilst full of Mountain Dew and Pizza Rolls). 

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Taking inspiration from Renaissance Guy I decided to make my own list of things the government can buy from me. Obviously they are in a big spending mood lately, with the bailout and the new fiscal year budget, so some of my stuff must be in high demand. 

Here is what I am willing to sell to the Government during this bailout… 

• Two broken PC Computers 

• One-half box of Lucky Charms 

• 210 Data CD’s (don’t know what is on them) 

• 43 VHS Tapes (including Howard the Duck) 

• Original Sony Walkman (broken) 

• One-half bar of Toblerone 

• One Franklin Mint Plate (faded) 

• 3 Dozen Golf Balls 

• One-Half Box of Lego’s 

• One Black Jump Suit (please don’t ask) 

• 2 packs of gum(?) 

• One Scooby Do Lunch Box (should get a good price for this) 

• Something in the Tupperware in the Fridge 

• Two Puzzles (pieces missing) 

• Two Dilbert Calendars 

• One Paintball Gun 

• Six Old Cell Phones 

• Three “Idiots Guide to…” Books (you might need these in Washington).

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You may have missed it and that was probably intentional – it was buried in most newspapers on Sunday. Late Saturday the Senate passed (78-12) a $634 billion dollar measure to keep the government going through the next budget year (which begins on Wednesday). 

Everyone is so distracted by the $700 billion bailout proposal (expected to pass today) no one really noticed the government was out of money (so much in fact that we had to borrow $500 billion from China). So where does some of this newly printed (and approved) money go? 

$25 billion will go to automakers in taxpayer-subsidized loans. 

$488 billion will go to the department of defense (on top of the $70 billion already approved for operations in Iraq and Afghanistan). 

$23 billion in emergency aid for victims of recent hurricanes and floods. 

$6.6 billion for “pet projects” in numerous states. 

The White House spokesperson said this “puts the United States on step closer to ending our dependence on foreign sources of energy.” 

Excuse me? 

Yes the Senate is lifting a ban on offshore drilling and opening up a huge reserve of shale oil in the west, but that is not where any of the $634B goes. 

As if that was not enough…the big weekend did not end there…

The House also approved a pact that would allow the U.S. to provide nuclear materials to India.

I should never check the news on the weekend…

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Although the U.S. economy is showing some signs of stabilization you have to wonder is it real or just another temporary lull in the downward slide? 

What have we done so far? 

• Three-and-a-quarter percentage points worth of Federal Reserve interest rate cuts. 

• A “Stimulus Package” that put some tax dollars in the hands of consumers. 

• The Housing Rescue Initiative 

• The recent bailout of Fannie Mae and Freddie Mac. 

Certainly the government has been creative, but what options do we have left? I suspect not many. So what areas do we need to focus on immediately following the election? Here is my opinion… 

No Rate Cuts: The Fed cannot continue to lower rates unless they truly feel the economy has stabilized. I think some (not all) of the current issues are a result of the Fed lowering rates too quickly in a short time frame. It is possible the Fed could lower rates again but it is also unlikely for two reasons. One, typically they will not just prior to an election and secondly, they are running out of room. 

Real Estate Needs to Stabilize: I think we are just about at the bottom of the Real Estate slide (or at least I really hope we are). There was no way around it. Values went up to quickly and people purchased property based on speculation and greed. Consumers took outrageous loans with the expectation the value would increase. When the music stopped the last one holding the house lost. It appears, for the most part, values have settled back in at an acceptable level. 

Real Tax Incentives: Tax incentives need to be long term, not lump sum. The results of a one-shot windfall, such as the tax checks people received this summer, are short lived. As I have said before I suspect the money disappeared quickly into flat screen televisions and gas tanks – but nothing lasting. Two months later you are in the same position you were before. Lowing taxes over the long haul will provide money each month (in the form of more take-home pay). These smaller amounts will bleed out into the economy and help stabilize the spending. 

Stop the Bleeding: The U.S. Deficit must be addressed. We simply cannot allow our national debt to increase year after year. We need to create trade agreements that encourage the use of our products – not enter in to arrangements where we allow trade freely into our county but the reciprocating county overly taxes our goods. 

I believe we are at a pivotal point – a crossroads if you will. In one direction a continued slide and increased dependence on foreign money. The other road leads to a recovering economy and self-sufficiency for the U.S. 

We only get to pick one road – lets make some good choices. 

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