A No-Cost Solution To Fix The Economy

So anyway, ladies and gentlemen, boys and girls, I know you’ve been reading the blog with real intensity over the last few weeks. I know this because of the comments that you’ve been sending in via email. The inbox is filled with good stuff. Some of you told me that I’m mad. Some of you told me that I’m right. Some of you have told me that I’m wrong. Others have just said, “Get me off the list, G-d damn it!” Well, anyway, here’s my thoughts on how to solve this black hole of an economic crisis that has paralyzed the nation and the world.

The first thing I should tell you is that this solution is not my original thought; I want to tell you I heard it from a colleague who heard it from some radio personality who probably heard from his four-year-old kid in between watching episodes of "Wow Wow Wubbzy" and "Dora The Explorer". But nonetheless it sounds good to me and after thinking about for a few days, running it by some people who are smarter then me and some who are not as smart as me, I’ve come to the conclusion that it’s the right thing to do. Again, like my other comments a couple of weeks back, it will cost the country absolutely nothing. We would not have to spend these 800 billion-odd dollars on something that we know will do absolutely nothing but expand the one thing we don’t need – both the federal and state bureaucracy.

Are you ready? Sit down and pay attention, because here's the solution: a one year moratorium for all mortgage payers.

To be clear - every mortgage payer in America gets a one-year moratorium on payments. If you as of March 1, 2009, have 20 years left on your mortgage, you next payment is not due until March 1, 2010, and on that date you still have 20 years to maturity. Of course if you want to continue paying, you can as usual – good for you, by the way!

If you choose not to pay however, you can use the money for other bills, pay tuition, buy stuff, do what you want with it. Invest in the market or maybe use the money to get your teeth cleaned. It’s up to you. You have one full year to get your house (no pun intended) in order.

If you want to pay you can still pay; it’s fine – good for you! If you choose to pay for the next two months, let’s say to May, you still have the option of taking a year off. know it sounds crazy, but it’s got to be better then what we are currently planning on doing.

The banks will do better under this plan then operating as they are now, because there will be breathing room and everyone can work without pressure.

I believe this will stimulate the economy by doing something that will truly affect people’s lives, and, more important, will solve our problems while limiting the growth of the bureaucracy and wasting money, which is where we are going with this stimulus package that was passed last week.

The current thought process in Washington is quite scary to me, that the whole country, everybody I know, regardless of their economic status, is tightening their belts, and yet the government is expanding its expense side of the ledger. Their solution is to just keep spending, spending, spending with a little more spending. It makes no sense to me whatsoever that friends, family, and others are all operating in a better-safe-than-sorry mode and Congress and the President are acting like drunken sailors in Times Square for the first time.

We need to save ourselves from the government; we don’t need to be saved by the government. The people of America are resilient. We are able to downsize our spending not because the government tells us to but because we realize that we need to do it. These are desperate times, and desperate times call for desperate measures, but they don’t call for spending for spending’s sake. I know that the stimulus package has been passed and there is nothing I can do about it. That does not mean, however, that we should be silenced.

On the hedge fund front, I don’t really have any news to report except that I find the conversations I’m having with many managers to be extremely amusing. Everyone in the industry is saying that they can’t raise money, that there’s nobody willing to put money to work, blah, blah, blah. I’m sort of sick of hearing about it all day. I think the reality is if these managers started delivering on their promises of good, solid performance with steady returns that is uncorrelated to the market then they would have no problem raising money.

Maybe instead of blaming the market for their inability to raise money, they need to look inward and question the long-term viability of their offering. Hedge fund managers need to wake up and realize that the way to raise money is not by giving people a better deal on the fees or reducing lock-up periods. These things are not the problem, ladies and gentlemen; the problem is the managers themselves don’t know that they way to raise money is not by selling pie-in-the-sky performance but rather their ability to deliver on their promise of performance.

THINGS THAT DRIVE ME CRAZY

Once again I have come the conclusion that Comcast really does not want me as a customer. In the wake of last week’s fiasco, I was called by a “Customer Service Representative” to confirm the service was installed. My question was don’t you know that the service was installed. His response was that the company wanted to check. In my mind I thought, hmm, if I say no does that mean, I won’t get a bill next month? I asked again if he knew about the installation as I pondered saying no and his response was – “Look, can you please just tell me if the phone was installed and is working” I said no I can’t but thanks for calling and hung up. Am I wrong here or does it seem that this company is really screwed up in the customer service or lack of customer service department. Maybe they’re thinking “Customers? Ah, who needs ’em!”

American People 1 - Washington Insiders 0

The good news to come out of Washington is that one tax cheat is gone and another one or two or their significant others seem to be on the way out. I want to personally thank President Obama for doing the right thing and applaud his apology for the Daschle mistake on national television; I can only hope he continues to do the right thing. I also truly appreciate that he and his staff seem to be taking my words to heart and acting on them. Of course this is pure speculation on my part, but hopeful none the less.

Still, I am confused about one thing that came out of the Nation’s Capital this week about use of tax dollars for unnecessary expenses. Thursday evening, the big story was the President’s speech at the annual Congressional retreat. I believe it was his first official flight on Air Force One and expect it and the retreat cost quite a bit of money. Why is this use of tax dollars tolerated during these times while similar expenses incurred by firms that accepted bailouts are not only questioned but vilified? I don’t get it: The bailed-out companies only recently went on the dole, while Congress and the Government have been on the dole for more then 200 years. Shouldn’t we cut the private sector a little bit of slack?

On the hedge fund front, the big news of the week was of course Senators Carl Levin (D-Michigan) and Charles Grassley (R-Iowa) introducing a bill titled “The Hedge Fund Transparency Act.” If enacted, hedge funds and private equity funds would be forced to become investment companies registered with the Securities and Exchange Commission when they hit $50 million in assets under management. In doing so, they would be required to disclose all sorts of stuff, blah, blah, blah and a little more blah. I am sure it is supposed to do something other then add to the bureaucracy but I haven’t figured it out yet. One thing is for sure: The lawyers win with this – lots more billable hours dealing with registration and all that good stuff.

I find it funny that these two Senators and probably many other members of Congress, the press, probably even President Obama and others believe that registration will correct all that ails the hedge fund and private equity worlds. We all know that this just another example of Washington window dressing. After all, the Treasury Secretary’s recovery and stability plan includes using hedge funds and private equity funds as sources of capital to get us out of this mess!

One thing is for sure, though: A lot of journalists, both print and broadcast, are secretly hoping the bill doesn’t pass, because if it does, they will no longer be able to lead all their hedge fund stories with the phrase : “The highly unregulated and secretive world of hedge funds”!

THINGS THAT DRIVE ME CRAZY!

I am tired of people not taking responsibility. Over the past week, my wife and I scheduled to have our phones switched from one carrier to another. It seemed rather simple, but, as is everything these days, it turned out to be a headache. The real problem turned out to be Comcast Operator No. 441 – Debbie. She’s a really terrible employee and in my opinion should be fired. Not only did she accuse me of lying to her but, to throw fuel on the fire, when I asked to speak with a supervisor, she responded “The supervisor does not want to speak with you now” and then hung up. This drove me crazy, not because she hung up, but because I can only believe that this is corporate policy at Comcast. “Get rid of the callers who expect something” seems to be their motto. After all, what do they need me for, I’m just a customer.

With Cabinet Secretaries Like These...

If the recent confirmation of Tim Geithner and the pending confirmation of Tom Daschle are not examples of inside baseball, I don’t know what is. Besides the fact that President Obama was elected on a platform of change and that he has named practically no one who doesn’t have a twenty-page Washington resume to any position of importance, now we are expected to accept that the only people with experience, substance and hope of creating change are not capable of paying their taxes on time.

People have complained about my recent anger. Well, come on, how can thinking people not be angry with this administration? Again I ask as I did last week: Where is the outrage? How come people aren’t as angry as I am that the government has seemed to swap one do-nothing, self-serving leader for another?

One of the greatest aspects of this country is our simple, safe, secure and on-time transition of power at all levels of government, from the highest office to the lowest. (Sorry, Mayor Giuliani!) The structure and order of the Republic is not only the envy of freedom seekers everywhere but the true bond that holds this country together. Yet we still elect and appoint people who laugh at the thing that put them in office in the first place.

I do not believe the current Secretary of the Treasury is the only person to lead us out of the economic weeds we find ourselves in, and now that I know that he’s someone who seems to be less then forthright about paying his taxes, I question his appointment even more. But what is a greater concern is that no one else besides Rush Limbaugh and Sean Hannity seem to be concerned that a Democratic Senate confirmed him by a vote of 60 – 34. Now we hear that the incoming Health and Human Services Secretary, a veteran of the Senate leadership, has also had problems paying his taxes on time.

The President said after the Treasury Secretary was sworn in that “We can’t waste a day” and that there has been “a devastating loss in trust and confidence” in the U.S. economy in the wake of the credit crisis and Wall Street woes. While this all may be true, I think the first way to restore trust and confidence, not only in the economy, but in the United States itself is to make sure that the people in power and the people these people appoint to powerful positions make sure to pay all the taxes they owe and pay them on time, the way the rest of us have to. Seems simple, right?

THINGS THAT DRIVE ME CRAZY!

Shocking as it may be, nothing else drove me crazy this past week. Again I am sure that this won’t last. Something surely will provide the right level of ire deemed necessary for these pages before the week is out.