High Altitude Thinking

Yeah $12 trillion……..As the national deficit approaches $40,000 per person, one wonders how far we will take this burden.  Not to mention the deficit that substantially all states have accumulated.  Where will it end?

The administration has mentioned their concern of our continued borrowing and the possibility of it triggering a double-dip recession.  While a real concern, I am also concerned about the longer term impacts of our continued deficit spending in an effort to preserve our current American way of life.  For families with children, I would hope that they are even more concerned.  How much risk are we putting them in by continuing the high risk strategy of “kicking the can down the road” – as they say?

We have almost developed an obsession with maintaining our lifestyle status quo without giving due consideration to the possibility that we may need to tighten our belts today in order to keep our pants on for the long-haul.  The real likelihood of a shrinking tax base and a rising deficit is a disaster in the making.  We would all be appalled if we were discussing a commercial business in the same light.  Ah, I guess we have – GM and Chrysler are cases in point.

We have a real problem with our consumption mentality.  It stretches from the smallest family to our entire system of government.  I supported many aspects of the government intervention and stimulus.  Without it the wheels would have completely fallen off.  But we need to step back and let rational market forces take shape.  Will there be some pain and suffering to do this?  Absolutely.  It surely cannot be as painful as if we allow government spending to continue to run amok.  Continued deficit spending could run the risk of taking the choice from our own and putting it in the hands of others (e.g. China) who continue to buy our debt.  In the worse case, they may not be as compassionate towards our woes.

BA

I have been months with my mortgage company trying to resolve a relatively straightforward issue.

Despite property tax payments being “escrowed” in our monthly mortgage payments, someone in our family (can’t say who) paid the property taxes in full when we received the assessment in January.  I rang up the mortgage company in March explaining the issue and was advised that this would be resolved once they received settlement back from the county for the “overpaid” property taxes.  They said it could take 3-4 months to resolve and write us a check.  (Come to find out they had received the refund on March 27.)

Seven months later;  two work orders; numerous phone calls with the mortgage company; three phone calls with the county treasurer; and receipt of a check for 1/2 of the amount – I finally spoke to someone who I could explain that they had failed to credit my escrow account for the monies that had been returned from the county.

While she initially offered to open a work order, I pointed out to her that I had already been served up two of those by her company and that they were leaving a bad taste in my mouth.  She promised to speak to her supervisor and call me back within an hour.  (Noteworthy – She was the first customer service representative that had offered to call ME back on the issue.)  Problem solved, right?

Well, it has now been more than a week.  No call.  No resolution.  The only action I have seen from this $25 billion TARP beneficiary is the execution of their automatic monthly withdrawal from my account.

In his 256-page report to Congress on October 21, it only takes to page 8 for TARP Inspector General Neil Barofsky to note:

“Unfortunately, several decisions by Treasury — including Treasury’s refusal to require TARP recipients to report on their use of TARP funds, its less-than-accurate statements concerning TARP’s first investments in nine large financial institutions, and its initial defense of those inaccurate statements — have served only to damage the Government’s credibility and thus the long-term effectiveness of TARP. Notwithstanding TARP’s role in bringing the financial system back from the brink of collapse, it has been widely reported that the American people view TARP with anger, cynicism, and distrust. These views are fueled by the lack of transparency in the program. The beliefs of some, for example, that TARP funds went into a “black hole”; that TARP was created in secrecy to transfer wealth from taxpayers to Wall Street insiders (exacerbated by the announcement of billions of dollars of profits and record-setting bonus pools at TARP recipients while unemployment and foreclosures continue to rise); or that Treasury is just too closely aligned with the interests of Wall Street are only reinforced by Treasury’s failures of transparency.”

No wonder the “too big to fail” banks don’t want to be held accountable for the stimulus monies received.  Seems that transactions that are not “automatic” leaves them scratching their head.

This experience reinforces my views towards our larger financial institutions:

• They don’t always get it right.  You need to watch out for yourself.
• Maybe they are just “too big”.

BA