Hi Everyone:
Well it finally happened this week and it was a long time coming, but deservedly so. So what happened? The Security and Exchange Commission has accused Goldman Sachs of fraud and has filed civil charges against the powerful 140 year old Wall Street firm.
According to Gannet news, the SEC said that Goldman failed to reveal one of its clients helped create and then bet against sub prime mortgage securities that Goldman sold to others. The fraud was orchestrated by a Goldman VP, Fabrice Tourres in 2007 and since then he was promoted to executive director of Goldman Sachs International in London. Tourres even boasted of his ability to put together such deals as the mortgage market was unraveling in early 2007.
The client who helped Tourres is a hedge fund manager. He knew that the bundled sub-prime mortgages were going to fail and bet against them to make an obscene amount of money.
Two European banks that bought the securities of bundled sub-prime mortgages lost nearly $1 billion according to the SEC. The agency is seeking to recoup the huge profits reaped in the deals. Goldman of course denied any wrong doing and said that the charges are unfounded and will contest them. The lawsuit filed by the SEC is the government's most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped to plunge our country into the Great Recession. Selling bundled sub-prime mortgages as Securities that you know will fail is wrong on so many levels. Goldman Sachs will no longer be thought of as a well run company and as a trusted advisor to investment banking clients. Even in recent years, Goldman shifted toward taking more and more risks with their clients and even their own money.
I believe that in order to stop any more big banks and Wall Street firms from entering into such poorly thought out and extremely volatile deals, the only common sense solution is with banking reform. I haven't read enough about the banking reform details to form an opinion as to what the best reforms should be. But doing nothing is not the answer. Doing nothing can not and will not stop any other firm(s) from trying to do either the same thing or something similar. So obviously common sense dictates that something must be done.
Unfortunately, the 41 US Senate Republicans don't see it that way and have signed a letter stating their opposition to any banking reforms. The big banks must never be allowed to do these kind of deals ever again. I know that the Senate Republicans stated after the Health care reform bill was passed to never work with the Democrats again. So instead of trying to help protect the American public with banking reform, the Republicans have showed that their allegiance is with big businesses/banks and let them run unimpeded without any needed regulations. Let's stop bickering like school children and protect the American public. The constitution protects Americans rights and so should banking reform.
Politicians need more common sense in order to realize what the correct solution should be and not about being re-elected or rhetoric or just saying no. Saying no won't go! We should never ever find ourselves in a similar situation caused by greedy banks.
Til next week.
Sunday, April 18, 2010
Sunday, April 11, 2010
NYS Budget Mess
Hi Everyone:
Well NYS is at it again, another late budget. Our state budget was due on 4/1/10. To date the infamous legislators are not even close to agreeing on one yet. Mind you that presently the Democrats control the Congress, Senate and Governorship. When the Republicans were in control they were also late. Even though I have written about this before, the current financial situation is vastly worse. Thanks to the Great Recession, NYS finds itself with a record $9.6 billion deficit for the 2010-2011 budget year. NYS is not the only state with financial difficulties. Unfortunately, there are lots of other states with lessor and greater financial problems. I believe that California has a budget deficit that is about 3 times greater then NYS's.
When this state is in a deficit, again it doesn't matter which political party was or is in control because they both come up with similar ways to try to trim the budget. Let's look at what both parties have done previously and what they are doing or trying to do presently:
Ways to trim the budget Result
-Decrease school funding -Increase in school taxes
-Eliminate Property tax refunds -Increase in property taxes
-Increase state sale taxes -Increase in everything purchased except food
-Start a soda and water tax -Increase in food budgets
-Increase DMV fees -Increase in DMV fees
I could go on and on but the results are always the same. When the state has a budget deficit, the residents end up paying dearly. Taxes and fees can not continue to increase indefinitely as they have for decades. Soon there will be a lot of people taxed out of living in NY and will be forced to move to another state. Then only the very rich would be able to afford living here, if they are willing to pay.
So what can be done? NYS state needs to be really run like a business and not just lip service. Here are my simple common sense ways to trim the budget:
1) Cut waste.
2) Cut waste.
3) Cut waste.
4) Yearly audits of each department to find more waste that needs to be eliminated.
5) If all of the above fail to trim the budget enough, then unfortunately lay offs are needed.
6) Even with all of the above applied and there still is a deficit, let's decrease the legislators highly inflated pay. Let it hurt them as much as their actions hurt everyone in the state financially.
Every Governor since Rockefeller has grown the number of state employees to the point where there isn't enough money (income) to support having them all on the payroll. Businesses would have laid off employees a long time ago and managed the number of employees much better. Neither political party, when in control, wants to do lay offs. That's because they are always thinking about their re-election and not the residents who pay their salaries. Lay offs are an unfortunate consequence in these very troubling economic times.
If the politicians can't get the budget under control and without any new tax increases, which includes massive lay offs this year, I think that each and every politician should be voted out of office and maybe their replacements will have a better understanding of what fiduciary responsibility really means!
Til next week.
Well NYS is at it again, another late budget. Our state budget was due on 4/1/10. To date the infamous legislators are not even close to agreeing on one yet. Mind you that presently the Democrats control the Congress, Senate and Governorship. When the Republicans were in control they were also late. Even though I have written about this before, the current financial situation is vastly worse. Thanks to the Great Recession, NYS finds itself with a record $9.6 billion deficit for the 2010-2011 budget year. NYS is not the only state with financial difficulties. Unfortunately, there are lots of other states with lessor and greater financial problems. I believe that California has a budget deficit that is about 3 times greater then NYS's.
When this state is in a deficit, again it doesn't matter which political party was or is in control because they both come up with similar ways to try to trim the budget. Let's look at what both parties have done previously and what they are doing or trying to do presently:
Ways to trim the budget Result
-Decrease school funding -Increase in school taxes
-Eliminate Property tax refunds -Increase in property taxes
-Increase state sale taxes -Increase in everything purchased except food
-Start a soda and water tax -Increase in food budgets
-Increase DMV fees -Increase in DMV fees
I could go on and on but the results are always the same. When the state has a budget deficit, the residents end up paying dearly. Taxes and fees can not continue to increase indefinitely as they have for decades. Soon there will be a lot of people taxed out of living in NY and will be forced to move to another state. Then only the very rich would be able to afford living here, if they are willing to pay.
So what can be done? NYS state needs to be really run like a business and not just lip service. Here are my simple common sense ways to trim the budget:
1) Cut waste.
2) Cut waste.
3) Cut waste.
4) Yearly audits of each department to find more waste that needs to be eliminated.
5) If all of the above fail to trim the budget enough, then unfortunately lay offs are needed.
6) Even with all of the above applied and there still is a deficit, let's decrease the legislators highly inflated pay. Let it hurt them as much as their actions hurt everyone in the state financially.
Every Governor since Rockefeller has grown the number of state employees to the point where there isn't enough money (income) to support having them all on the payroll. Businesses would have laid off employees a long time ago and managed the number of employees much better. Neither political party, when in control, wants to do lay offs. That's because they are always thinking about their re-election and not the residents who pay their salaries. Lay offs are an unfortunate consequence in these very troubling economic times.
If the politicians can't get the budget under control and without any new tax increases, which includes massive lay offs this year, I think that each and every politician should be voted out of office and maybe their replacements will have a better understanding of what fiduciary responsibility really means!
Til next week.
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