Many people have been affected by the ravages of cancer. I was speaking with a friend of mine, Danielle, and we were talking about how her Mom beat breast cancer. However, now her Aunt has breast cancer as well. Breast cancer is a pervsasive disease, and seems to be getting worse. I had the privilege of meeting with Gina Andrews, and Gina is a breast cancer survivor. What's most amazing is that Gina was diagnosed when she was 29 when the cancer was diagnosed! I often like to use the phrase: "fight or die".
Gina just did that, but she went one step further. Gina started Sacramento Breast Cancer Resource Center, which is a non-profit designed to "foster hope and inspiration among women facing breast cancer". Please take a moment to read Gina's story below, and, if you are an agent looking for a non-profit to pay it forward to, please support Gina Andrews and the Sacramento Breast Cancer Resource Center. Gina turned a negative experience like breast cancer into a positive - the positive is called the Sacramento Breast cancer Resource Center:
"Breast Cancer is not hereditary, racial, or age specific. It does not discriminate on any of these things. Before my mom was diagnosed with breast cancer I believed that Asian people were less at risk for it. Then when I was 29 I thought there was no way this lump is cancer, “I’m too young for cancer.” The first thing people ask me when I tell them I’m a breast cancer survivor is “ did someone in your family have it”…and then when I say yes my mom is a 12 year survivor “oh I see”, as if the reason why I got cancer is because it’s a family disease. There are many young women who have been diagnosed with breast cancer that have no family history. And though this is not an accurate description of the world, the young survivor support group I attend averages 10 attendees and 4 of those are Asian. The reality is that cancer is none of these myths. It is completely nondiscriminatory. It can and will attack anyone regardless of family history, age, or ethnicity.
According to the American Cancer Society, only about 5% to 10% of all cancers are the inherited type. And according to the National Cancer Institute one in every 229 women between the ages of 30 and 39 will be diagnosed with breast cancer within the next 10 years. My mother and I both had cancer. My mom was diagnosed at the age of 47 and I was diagnosed at the age of 29. Both of us were diagnosed at early ages but the cancers we had were completely different, and I tested negative for the BRCA, the only known cancer gene. These myths of breast cancer need to be changed. Because people believe they are not at high risk for breast cancer, they are disregarding the lumps they find in their breast. As a result of this disregard the disease can be found at a later and more deadly stage.
If you are an agent or a charity, please join Agentspayingforward.com. There are many great causes that I want to help, so please feel free to contact me at tomash@surewest.net. I'll be happy to include your information in this blog. We are a community, and we all need to work together to help great people do great work. Agentspayingforward.com is a great way to network for both business, and for charity: join today - it's free for both the agent and charity to join!
Follow us on Twitter! @agentspayforwrd
Many people have been affected by the ravages of cancer. I was speaking with a friend of mine, Danielle, and we were talking about how her Mom beat breast cancer. However, now her Aunt has breast cancer as well. Breast cancer is a pervsasive disease, and seems to be getting worse.
I had the privilege of meeting with Gina Andrews, and Gina is a breast cancer survivor. What's most amazing is that Gina was diagnosed when she was 29 when the cancer was diagnosed! I often like to use the phrase: "fight or die". Gina just did that, but she went one step further. Gina started Sacramento Breast Cancer Resource Center, which is a non-profit designed to "foster hope and inspiration among women facing breast cancer".
Please take a moment to read Gina's story below, and, if you are an agent looking for a non-profit to pay it forward to, please support Gina Andrews and the Sacramento Breast Cancer Resource Center. Gina turned a negative experience like breast cancer into a positive - the positive is called the Sacramento Breast cancer Resource Center:
Breast Cancer is not hereditary, racial, or age specific. It does not discriminate on any of these things. Before my mom was diagnosed with breast cancer I believed that Asian people were less at risk for it. Then when I was 29 I thought there was no way this lump is cancer, “I’m too young for cancer.” The first thing people ask me when I tell them I’m a breast cancer survivor is “ did someone in your family have it”…and then when I say yes my mom is a 12 year survivor “oh I see”, as if the reason why I got cancer is because it’s a family disease. There are many young women who have been diagnosed with breast cancer that have no family history. And though this is not an accurate description of the world, the young survivor support group I attend averages 10 attendees and 4 of those are Asian. The reality is that cancer is none of these myths. It is completely nondiscriminatory. It can and will attack anyone regardless of family history, age, or ethnicity. According to the American Cancer Society, only about 5% to 10% of all cancers are the inherited type. And according to the National Cancer Institute one in every 229 women between the ages of 30 and 39 will be diagnosed with breast cancer within the next 10 years. My mother and I both had cancer. My mom was diagnosed at the age of 47 and I was diagnosed at the age of 29. Both of us were diagnosed at early ages but the cancers we had were completely different, and I tested negative for the BRCA, the only known cancer gene.
These myths of breast cancer need to be changed. Because people believe they are not at high risk for breast cancer, they are disregarding the lumps they find in their breast. As a result of this disregard the disease can be found at a later and more deadly stage.
Gina's organization is having a fundraiser here in Sacramento tonight at 7:30 at the "Lounge on 20", click here for more info. If you are an agent or a charity, please join Agentspayingforward.com. There are many great causes that I want to help, so please feel free to contact me at tomash@surewest.net. I'll be happy to include your information in thsi blog. We are a community, and we all need to work together to help great people do great work
I am a firm believer in giving, and I also am a firm believer in capitalism. Agentspayingforward.com is designed to facilitate business for you as an agent, and also to help so many charities. Below you will find the step by step instructions on how to join, and also to use Agentspayingforward to increase your business - by giving it away! It's a little long, but I think it's worth your time.
New "Agent" goes to Agentspayingforward.com to join the Network.
Click on "Agents: click here to join the network". Agent is intentionally a very ambiguous term (representative might be a similar term). You can be a: travel, real estate, loan, marketing, or any other kind of agent to join. Just be some kind of agent!
Agent will be directed to a box that will request: username (you choose); password (you choose again). Make sure to keep both pieces of information in case you want to change your listing. You will then fill in your contact information where requested, and then you will be asked to provide a description of yourself, and I would also suggest a description of you chose to be your "pay it forward" recipient. After all, you are their advocate. You should tell why you chose them as the recipient of your donation.
If the charity is already included in the Agentspayingforward.com Network, you can go to the drop down box, and select them (you can select up to three in the drop down boxes). The information will be saved for the "listing" you are creating. If the charity is not already on the Network, go ask them. After all, why wouldn't they want to be a recipient of your assistance? The goal is to assist non-profits, schools, and churches. However, there may be other charities that you may want to choose - it's up to you. (We do reserve the right to remove charities and agents that are involved with activities that we may deem unfit for this site: they can choose another venue to donate to charity - which they should)
If the charity you want to support is not already included on the site, please ask them to join. The charity will have steps similar to the steps the agent takes when they click on "Agents: click here to join the network. Instead, the charity, will go to: "Charities: click here to join the network"
Tell your charity (and others involved with Agentspayingforward.com) to promote you and other "agents" to their database. After all, the more business you do the more donations they receive. You may also want to help with the promotion, and/or help in other endeavors that show you truly are "of service" to their mission (many charities are concerned that you may be "leveraging" their good name for your own - not their - personal gain) In short you believe and prove in the concept of "paying it forward" - like the charity is already doing!
Tell your clients that you are part of Agentspayingforward.com, and tell them that you would love their assistance in helping with your charity - or theirs. If you are truly "of service", why wouldn't you want to help your client in their charitable endeavors (can we really have too much charity?). I believe in the Law of Attraction, which states that people gravitate towards successful people. Not being afraid to support your clients charity shows that you have faith in your clients, and will probably lead to more referrals for you! More importantly, it will give you the ability to provide more charity to groups that desperately need help in today's tough economy.
Once you have successfully joined Agentspayingforward (it really isn't that tough), Repeat steps 6 and 7as many times as possible (you could also include 5 if you are ambitious!). I strongly believe that people will realize that you truly are of service through Agentspayingforward. People don't want to be "sold". People want to make sure that they have entrusted their well being with people of service: not self serving individuals. In short, "the more you give the more you get".
To prove that paying it forward really works, I would like to offer an example. I recently directed a donation to the Wounded Warrior Family Support Group at the request of a client that closed a loan with me. If you are not familiar with the Wounded Warrior Program, I would encourage you to support either group. The Family support group, and the Wounded Warrior Project. Both, as you can probably tell from the writing have different "missions", but both do great things. Should you choose to join Agentspayingforward, I would encourage you to consider either of these wonderful organizations.
When I contacted Wounded Warrior Family Support, I was able to speak with Kate Mccauley, one of the people who works at the organization, and told her I had a donation for her. It turns out Kate is also a Realtor. I explained the program to Kate, since Colonel Hackett, the founder of the Wounded Warrior Support Group, was(and is currently) serving in Iraq. Kate was not familiar with Agentspayingforward, but after my poor attempts to explain the concept (which is why I'm trying to write the step by step instructions above), Kate got the idea.
Kate informed me that donations year over year in December, most likely because of the soft economy, were down substantially. Kate indicated that they can use the money that I was so happy to be instrumental in directing towards their organization.. The most fun part of the story is that Kate, the Realtor, joined Agentspayingforward.com. Kate also directed a loan to me. The more you give the more you get!
Please feel free to contact us at Agentspayingforward.com should you have any questions. After what I have written here, doesn't it seem like a "no brainer"? Come on: Let's change the world - one transaction at a time!
A while back I wrote a post about Nick and Millie stasuc. Nick and Millie were the ones who came from Romania around 25 or 30 years ago now. They had bought a home in Lincoln, CA for $250,000 around 1986, and had put down $50,000 (back when $50,000 meant something). I had done a loan with Great Western Savings for them, and the lender could not believe somebody could make $60,000 a year selling produce at Denios. Nick and Millie just laughed when they spoke with the underwriter, and said how easy it was for them to make money here - it just takes work (something to think about).
I was greeted by this message from Active Rain (I"m deleting the person's contact info):
Hello there ! My name is Mike Nula and i am from Romania ! I have found on a google search your story about Nick and Millie Stasuc ! They are my godmother and my godfather and i would like to keep in touch with them ! I didn't saw them since year 1999 i think ! If you can help me with their adress to send them a Christmas letter or if you can send me their yahoo messenger id or their e-mail i would be very happy ... this is my e-mail adress : (deleted for security) , and this is my yahoo messenger id : (deleted for security)... if you still are in touch with them please give them my e-mail adress so they can contact me ! Thank you very much for your time and i wish you Merry Christmas and a Happy New Year !
I have to admit, that I'm constantly amazed at technology. This morning was one of those days that I was kind of dragging, but still got up early to go for a bike ride. Anyway, before the bike ride, I got a cup of coffee at Starbucks and went to check messages. I just started a new venture called ShortRefiServices.com (shameless plug) dealing with loan modifications, short refinances, and also networking with Realtors for Short Sales - please take a look and let me know what you think of the idea.
Anyway, I was hoping to see some new messages when I saw the one from Mike. It's a true testimony to the efficacy of the internet and Active Rain. I have to admit, the message just changed my whole demeanor. I went from dragging, to totally psyched that I could touch a life in Romania. I wrote a note to my Mom, and she is going to bring the information over to Millie at Denios where she still works. Pretty good way to start the day, and it gives you confidence that Active Rain can help you do business - and maybe even bring families back together (that's paying it forward too).
I'm really excited to announce that Agentspayingforward.com provided it's first donation last week to New Life Community Church in Fair Oaks, California (aboutnewlife.com).Dwight and Christy Palmatier are Re Max agents in Fair Oaks, California (dwightpalmatier@cwo.com or (916) 879-4998). Both are parishioners of New Life, and chose to "pay it forward" to the church. Dwight and Christy were able to provide $600 for the church, and the donation will go towards a youth retreat coming up this month.
In the picture shown above, Dwight and Christy Palmatier, real estate agents with Re Max Real Estate in Fair Oaks, CA. present Jeff and Angela Pitnikoff from New Life Community church with a check for $600. The donation is to be used by the church to help the church provide funds for a church youth group.
The whole premise of Agentspayingforward is that you are able to profit when you help others. When New Life Church heard about the Palmatier's donation, their response was: "were going to refer them all the business we can, since they are helping us out: why wouldn't we?". Half of the money that the Palmatier's donated came from a program that my company has called the "Sharing Advantage Program. The program is part of Wells Fargo Mortgage's commitment to help the communities in which they do business.
Simply put, Wells can provide a donation of up to $300 to a non-profit organization, school, or church when you close a loan with Wells Fargo Mortgage. Since I work for Wells Fargo, I made sure that Dwight and Christy were able to give it to their charity: I hope that shows that I want to be a partner in their success.
I'm proud of the fact that I can give to the community, and I'm also proud of the fact that I can leave a legacy behind me. I want as many people to join Agentspayingforward, so that they can do business with a purpose that transcends just making money: changing the world one transaction at a time!
I hope that when I die people will say that Tom's actions showed that he truly was of service. You don't have to do business with me or Wells Fargo, but certainly it's great if you do. However, I hope you do business with the purpose of helping others out: you might be surprised what happens!
I saw this today in Drudge, and was struck by the fact that there isn't an uproar. Read it, and you be the judge. If you are in one of the coal states, good luck.
Please read update about the San Francisco Chronicle neglecting to mention Obama's willingness to bankrupt the coal industry at bottom of this blog.)
Imagine if John McCain had whispered somewhere that he was willing to bankrupt a major industry? Would this declaration not immediately be front page news? Well, Barack Obama actually flat out told the San Francisco Chronicle (SF Gate) that he was willing to see the coal industry go bankrupt in a January 17, 2008 interview. The result? Nothing. This audio interview has been hidden from the public...until now. Here is the transcript of Obama's statement about bankrupting the coal industry (emphasis mine):
Let me sort of describe my overall policy.
What I've said is that we would put a cap and trade system in place that is as aggressive, if not more aggressive, than anybody else's out there.
I was the first to call for a 100% auction on the cap and trade system, which means that every unit of carbon or greenhouse gases emitted would be charged to the polluter. That will create a market in which whatever technologies are out there that are being presented, whatever power plants that are being built, that they would have to meet the rigors of that market and the ratcheted down caps that are being placed, imposed every year.
So if somebody wants to build a coal-powered plant, they can; it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted.
That will also generate billions of dollars that we can invest in solar, wind, biodiesel and other alternative energy approaches.
The only thing I've said with respect to coal, I haven't been some coal booster. What I have said is that for us to take coal off the table as a (sic) ideological matter as opposed to saying if technology allows us to use coal in a clean way, we should pursue it.
So if somebody wants to build a coal-powered plant, they can.
It's just that it will bankrupt them.
Amazing that this statement by Obama about bankrupting the coal industry has been kept under wraps until this time.
UPDATE: NewsBusters' Tom Blumer has found out that the San Francisco Chronicle story published on January 18 based upon this January 17 interview did not include any mention of Obama's willingness to bankrupt the coal industry which you can hear on the audio. You can read the story here when you scroll down to the "In His Own Words" section. Way to cover up for The One, SF Chronicle!
-P.J. Gladnick is a freelance writer and creator of the DUmmie FUnnies blog.
Like many people, I've been following the election. I can't recall so many people involved in the election, and, of course, everybody is saying this is "the most important election in my lifetime". I know I sound cynical, but I'm old enough to have heard that before. For many years election turn outs have been less than 50%, so I think the passion is a good thing. Passion helps motivate us, and helps us get nostalgic for what we used to dream about when we were younger.
When I was younger, I had any number of dreams. I dreamed that one day I would be a photographer, and take all kinds of great pictures. Another time I dreamed that I would be a luxury car dealer, since, like many young boys, I thought cars were pretty cool. As time went on though, the dreams turned to other things. The dreams turned into doing well in school (that never really panned out!), and then getting together with some of the "hot chicks" (that never really panned out either!).
Many people are following the election, and saying that "our prayers have been answered", or "it's a dream come true". I can't get there. It's not that I don't support a candidate, I did. It's also not that I don't believe one candidate is better than the other: I do. However, I refuse to believe that my destiny is going to be impacted by the election of one or many candidates: I don't believe that. My dreams may have changed, but they have never changed to the point that I dreamed that one politician is going to live my dream: I am. No politician is going to manifest my dream: I am.
My destiny, and the destiny of all American's have been tied to the individual effort of each of us. Collectively America has accomplished many great things, but all of those great things were the result of somebody's individual efforts. Whether it be the man who decided I'm going to take the perilous journey to try and strike gold out west, or to the man who said I'm going to fly to the moon. Those dreams were made by the individuals that lived them: not a government that mandated them.
For two politicians right now, one of them is going to achieve a dream: to be President of the United States. If it's Barack Obama, he will have achieved one or many of his dreams, and God Bless America for letting that happen. If John Mccain is elected, God Bless him for what he sacrificed to get here. God Bless America for, in effect, paying him back for the sacrifice he (and so many others) made. Either way, two men have been able to achieve the "American Dream".
Here's where I have a challenge with either of these two men, and many politicians: they are trying to impose their dreams upon on a whole lot of us Americans. I never voted for any President, so that he could make me dependant on the government. I voted for a leader of the government. I never voted for somebody who told me how much I could achieve, I voted for somebody who would protect the system that allowed me to achieve whatever I was capable of achieving.
The leaders of today are taking away our dreams, and replacing them with their dreams. I believe in the good intentions of either man, but I don't believe their prescriptions are what are best for the citizens of this country. Collectively we have become so reliant on our "leaders" that we have sacrificed our dreams. People are so afraid that the government won't rescue them, that they become paralyzed. The government has to "stimulate" the economy with money, so that people will spend again. Never mind that our government is adding debt to the future generations, so that they can stimulate the economy now. It's not fair to the future generations, and it only avoids confronting a problem that eventually will have to be confronted - by generations that may or may not yet exist.
Are we so selfish that we are willing to "screw" future generations of children, so that we don't have to make sacrifices today? Are we willing to give up our dreams of success, and become reliant on a government that has mismanaged Vietnam, Iraq, social security, medicare, Katrina, etc., and, in the process, forego those feelings of success when we achieve our dreams? Remember that first escrow closing, and the feeling that your hard work led to a commission? Remember the satisfaction of achieving that dream?
I have virtually no faith in the leadership of today, and I'm not sure how that is going to change. You have leaders who claim to say they are going to look out for us, but are all too often turning a blind eye against people who are lobbying them. Whether it be the likes of a Ted Stephens or a Christopher Dodd (one a republican and one a democrat), our leaders will tell us that they will take care of us. Both men were bribed, and the pork continued to flow. We follow these fools, and our dreams continue to fade away. Democrat or Republican, we are being betrayed by humans who are all too often proving their human frailties, but at the expense of all of us: it sure as hell isn't them since much of the crud is swept under the rug.
There is much that is right with America, but there is much that is wrong. People are using the government for their own selfish interests, and taking away the ability of future generations to achieve their dreams. I don't know what it will ultimately take to realize that our dreams are what our government should be fighting to save, not theirs. I'm confident that America will once again flourish, but I'm quite confident that the answers to America's problems are not being offered by our current leaders - either side of the aisle.
I want leaders who will fight to make this a country that a place where every individual has the ability to achieve what he wants: not what he is allowed by the government. Find me the leader who believes that an individual should be free to achieve without interference of the government or somebody who "knows better" what is best for that individual. Should you find that leader, clone him or her: because we need a whole lot more than that. After all, it's our dreams: not theirs.
I received this email this morning, and was once again reminded how generous we are as a country. We have soldiers who fight and die for this country, and people who appreciate it so much that they give of themselves to thank them. Here's a chance to put the election aside for a moment, and celebrate what we Americans do so well: we give over and over again.
There are some good people among us.
The Sack Lunches
I put my carry-on in the luggage compartment and sat down in my assigned seat. It was going to be a long flight. 'I'm glad I have a good book to read Perhaps I will get a short nap,' I thought.
Just before take-off, a line of soldiers came down the aisle and filled all the vacant seats, totally surrounding me. I decided to start a conversation. 'Where are you headed?' I asked the soldier seated nearest to me.
'Chicago - to Great Lakes Base. We'll be there for two weeks for special training, and then we're being deployed to Iraq'
After flying for about an hour, an announcement was made that sack lu nches were available for five dollars. It would be several hours before we reached Chicago, and I quickly decided a lunch would help pass the time.
As I reached for my wallet, I overheard soldier ask his buddy if he planned to buy lunch. 'No, that seems like a lot of money for just a sack lunch. Probably wouldn't be worth five bucks. I'll wait till we get to Chicago '
His friend agreed.
I looked around at the other soldiers. None were buying lunch. I walked to the back of the plane and handed the flight attendant a fifty dollar bill. 'Take a lunch to all those soldiers.' She grabbed my arms and squeezed tightly. Her eyes wet with tears, she thanked me. 'My son was a soldier in Iraq ; it's almost like you are doing it for him.'
Picking up ten sacks, she headed up the aisle to where the soldiers were seated. She stopped at my seat and asked, 'Which do you like best - beef or chicken?'
'Chicken,' I replied, wondering why she asked. She turned and went to the front of plane, returning a mi nute later with a dinner plate from first class. 'This is your thanks.'
After we finished eating, I went again to the back of the plane, heading for the rest room. A man stopped me. 'I saw what you did. I want to be part of it. Here, take this.' He handed me twenty-five dollars.
Soon after I returned to my seat, I saw the Flight Captain coming down the aisle, looking at the aisle numbers as he walked, I hoped he was not looking for me, but noticed he was looking at the numbers only on my side of the plane. When he got to my row he stopped, smiled, held out his hand, an said, 'I want to shake your hand.'
Quickly unfastening my seatbelt I stood and took the Captain's hand. With a booming voice he said, 'I was a soldier and I was a military pilot. Once, someone bought me a lunch. It was an act of kindness I never forgot.' I was embarrassed when applause was heard from all of the passengers.
Later I walked to the front of the plane so I could stretch my legs. A man who was seated about six rows in front of me reached out his hand, wanting to shake mine. He left another twenty-five dollars in my palm.
When we landed in Chicago I gathered my belongings and started to deplane. Waiting just inside the airplane door was a man who stopped me, put something in my shirt pocket, turned, and walked away without saying a word. Another twenty-five dollars!
Upon entering the terminal, I saw the soldiers gathering for their trip to the base. I walked over to them and handed them seventy-five dollars. 'It will take you some time to reach the base. It will be about time for a sandwich. God Bless You.'
Ten young men left that flight feeling the love and respect of their fellow travelers. As I walked briskly to my car, I whispered a prayer for their safe return. These soldiers were giving their all for our country. I could only give them a couple of meals.
It seemed so little...
A veteran is someone who, at one point in his life, wrote a blank check made payable to 'The United States of America' for an amount of 'up to and including my life.' That is Honor, and there are way too many people in this country who no longer understand it.'
I was cleaning out my inbox this afternoon (aka procrastinating), and came across a publication called the Patriot Post. Many have stated that Barack Obama is a great communicator, and he certainly reads a speech well. Notwithstanding the speaking skills, many people don't support Obama. I don't support Obama for a number of reasons, and they all relate to the policies that he espouses: I think they are bad for the country on a number of levels. Mccain nor Obama is the best that America has to offer, but I would submit that Obama is the worst of the two choices.
However, I came across a quote from the latest Great Communicator: Ronald Reagan (Winston Churchill and FDR would certainly qualify as great communicators as well). I know a lot of people don't like President Reagan, but some do not even know his history. However, friend and adversaries all respected him for who he was. President Reagan reminded me of my Grandfather. Both men could disagree with you, and still be civil with you at the same time: they had no enemies only people who disagreed. Anyway, the quote is enclosed below. And as you'll see, the quote is the essence of what I think we as a nation should strive for: the world collectively progressing upwards:
"The major issue of this campaign is the direct political, personal and moral responsibility of Democratic Party leadership... for this unprecedented calamity which has befallen us. They tell us they have done the most that humanly could be done. They say that the United States has had its day in the sun; that our nation has passed its zenith. They expect you to tell your children that the American people no longer have the will to cope with their problems; that the future will be one of sacrifice and few opportunities. My fellow citizens, I utterly reject that view. The American people, the most generous on earth, who created the highest standard of living, are not going to accept the notion that we can only make a better world for others by moving backwards ourselves. Those who believe we can have no business leading the nation. I will not stand by and watch this great country destroy itself under mediocre leadership that drifts from one crisis to the next, eroding our national will and purpose. We have come together here because the American people deserve better from those to whom they entrust our nation's highest offices, and we stand united in our resolve to do something about it." -Ronald Reagan
I've commented on the bailout a couple of times, and there is a lot of confusion about why this bill became law. There are a number of posts regarding the issue of fault, and, in my opinion, there is plenty of blame for both parties. However, I do my best to read information that is important to my mortgage business. One of the people I read is a man named John Mauldin, and his most recent post was pretty enlightening. Based on what I read, I don't think there was an alternative to this bailout bill.
I've included the post from Mr. Mauldin's newsletter, and I would encourage you to read it - it's a little long, definitely sobering, but useful information:
The Curve in the Road
When you are out driving on a strange new road, you can't see around the curve ahead. But you can read the warning signs to get an idea of what might be coming. And while we can't really know how the developments in the economic world will actually unfold, there are some signs we can point to that might give us a few ideas.
First, let's look at the "rescue plan" as passed by Congress. As I pointed out last week, this is a bad bill. But it was necessary to pass something, and soon. Earlier this week I sent out a report that reviewed a study of 42 major baking crises. The conclusion: navigating them successfully depended upon quick action.
As everyone should know, the credit markets are almost completely frozen. LIBOR is bid only, no offers. Commercial paper markets are imploding. And what is trading is often at rates that are much higher than they were a few months ago. Corporations are being strangled on high rates. Corporations have little or no access to normal credit markets, and they will face massive problems when it comes time for them to roll over short-term debt.
LIBOR has gone crazy. This is not an orderly market.
Look at the following chart from friend Greg Weldon. For most readers, the commercial paper market is something you don't think about. But it is the lifeblood of business. We have seen this market drop by almost 30% in a year and by 10% in just the last three weeks! I simply cannot overstate how serious this is. Left unchecked, business activity in the US would soon slow enough to bring thoughts of the Great Depression. It will not be left unchecked.
The credit crisis is not simply a Wall Street issue. It has fast become a Main Street issue. And Main Street is where jobs are created and maintained.
As I have said repeatedly for months, the problem is that financial institutions are having to deleverage. They have massive losses and simply have to raise capital in order to survive. If you can't raise equity capital (and most can't), one of the ways you do that is to make fewer loans and to take less risk. You also charge more for the loans you do make.
Larger institutions cannot raise capital on competitive terms. GE is an AAA-rated company. Yet they had to pay Warren Buffett 10% to get $5 billion, plus in-the-money warrants worth at least another 10%. Buffett is likely to double his money on this deal over 4-5 years. A short while ago, GE could get short-term commercial paper for a few percentage points. That difference is going to significantly impact GE's bottom line. But they had no real choice. They took the money.
As did Goldman Sachs. Yet another Buffett $5 billion preferred-share purchase (with more warrants) at a rate that even Goldman will find it hard to make money on. But they had to raise capital quickly, and they had little choice.
I had lunch with Michael Lewitt and Joe Harch yesterday. They were in town to meet with a client, and we took the opportunity to get together and share notes. They run (among other things) a collateralized loan obligation fund. They buy bank and corporate debt. They now have the opportunity buy well-collateralized loans from rated companies at prices well below par. They related story after story of debt from quality, highly rated companies selling below $.90 on the dollar, and some much lower.
If GE and Goldman are paying 10%, what do you think it costs a firm with "only" a B rating? 15%? More? Junk bond yields have simply gone ballistic. Firms which used the credit market to access capital now are simply shut out. If they are a small public company, they can go to what are known as PIPE hedge funds (Private Investment in Public Equity) and sell equity at usurious rates (which is what Buffett does but on a larger scale). But a small or medium-sized private company? It is a hard time to go looking for money.
Left alone for the markets to work out, the economy of the US and the world would be in a depression within two quarters and would need years to recover. Think Japan.
Necessary but Not Sufficient
Now for the bad news. The Rescue Plan was necessary but not sufficient to fix the crisis. There is going to have to be more heavy lifting, I am afraid. Let me offer a few ideas about what possible actions might be taken in the future. I am not advocating these actions, I am simply telling you what might happen. These are possible, because authorities will do whatever they deem necessary to avoid a systemic economic meltdown and a potential depression.
If you are a large investor or sovereign wealth fund which put money into banks last year, you are down anywhere from 35-50% (unless you invested in Washington Mutual, and then you are down 100%). You are unlikely to invest more in any financial institution without some very real understanding of what is on the balance sheet of the bank that is asking for your money. What the Paulson plan potentially does do is remove the questionable debt. The bank may have to write down assets in order to sell the debt to the government, but they end up with a transparent balance sheet with hopefully known risks. Then they can go to the market and try and raise capital. Shareholders will get diluted. Such is the way of the world.
Sidebar: taxpayers really must demand that someone like Bill Gross of PIMCO and/or other savvy market specialists run this new government operation. He offered to do it, and I think we should take him up on his offer. Taxpayer losses should be kept to a minimum, and I believe someone like Gross would do his best to see that would be the case. The point of this exercise is to restart the frozen credit markets, NOT to bail out banks. Some banks may get bailed out in the process, but it should be at a cost to their shareholders and management, not to the taxpayer.
I am asked, why can't private money solve the problem? Because there is simply not enough private money. Buffett offered to take 1% of the new government pool. If that is all the largest pile of free money in the world can take, why does anyone think there is enough private capital to take the other 99%? Insuring the mortgage bonds is not sufficient, because there is not enough money to buy them in this market. When things have sorted themselves out in a few years, I think the bonds can be insured and sold, and likely at a profit if bought correctly. But we do not have the luxury of waiting a few years.
Between the relaxation of the mark-to-market rules and removing ambiguously priced loans from financial institutions at prices which allow the government pool to make a small profit, if held for five years, that part (the lack of a known price) of the problem can be solved. Banks can hopefully buy themselves time in which to work their way out of the problems they created.
It is much like 1982, when every major US bank thought it was a good idea to loan lots of money to Latin American countries. It was a most profitable business, right up until the countries decided to default. Then every US bank was more than just technically bankrupt. In a mark-to-market world, every large US bank would have collapsed. It would have been the end of the world as we knew it.
What did they do? The Fed let the banks keep the loans on their books at face value. Over time, they worked their way through the debt, making enough money to be able to write down the loans. That was done simply to give the banks the ability to buy time.
We are in a very similar situation. We have to buy some time in order for financial institutions to heal.
Why the Government Had to Step In
I had a lot of readers write me very nice letters this week, starting out with how much they like my letter, my insights, etc. Then they (mostly - but not all - and politely) launched on me for backing the rescue plan. Many of you had much better ideas than what was passed by Congress, which is not surprising.
I really do hate the idea of having to support a rescue plan. It goes against my every instinct. But I also know that doing nothing would result in an economy which would blow right through 10% unemployment within a few quarters, and take years to recover. The stock markets and the savings of millions of retirees would be wiped out. Home values would really go into a tailspin. Being right in theory is not worth seeing that kind of devastation.
Herbert Hoover sat by and decided to let the market solve the problems of 1929. He decided to run budget surpluses and ignore collapsing institutions. Combined with disastrous Federal Reserve policy (raising rates in a recession) and Smoot Hawley (which caused major trade wars and a slowdown in global trade), what should have been a serious recession turned into the Great Depression and resulted in the conditions for World War II.
The rescue plan does not address the need for the increased levels of capital needed by banks. As noted above, it simply creates the conditions under which capital might be raised. Banks have already raised $440 billion. They have written down $590 billion. Losses are estimated from a mere $1 trillion to as much as $2 trillion. About half of those losses would be in banking institutions worldwide. That means anywhere from $200 to $400 billion more must be raised in order for banks to get back to capital adequacy. It is probably closer to the latter number.
Until banks are adequately capitalized, they are not going to be able to do normal business lending. Further, large deposits are fleeing banks. Even with the new level of $250,000 of FDIC insurance, there is $1.9 trillion in uninsured deposits. These are mostly deposits of small to large businesses and financial institutions, which can leave a bank at the push of a button.
Nouriel Roubini tells us that there are 800 billion dollars deposited in US banks by foreign counterparties. Up until this week, if you were a foreign operation, would you rather be in large money-center US banks or European banks? Tough choice, but on balance you would pick the US. Then this week Ireland decided to simply insure every deposit in Irish banks, no matter the size. Predictably, money started flowing from all over Europe into Ireland. National banks and finance ministers are furious with Ireland.
However, Ireland may have no choice but to backstop its own depository institutions to keep them from losing deposits and becoming insolvent from a bank run by corporations acting in their own best interests. Belgium, The Netherlands, and Luxembourg each took 49% of their respective parts of Fortis Bank in return for a massive injection of capital, declaring the bank too big to fail - also wiping out a lot of already diminished shareholder equity. Europe has its own quite serious problems.
But what if the various countries, one by one, decide to guarantee deposits in order to protect their own banks? If you are an international corporation, especially if you are outside the US, do you want your $10 million in Europe or the US if Europe guarantees your deposits with no limit? Could we see silent runs on US banks?
I think it is about an even chance that the government will have to guarantee for a period of time (say 6 months to a year) every bank deposit, regardless of size, in the US.
That is a staggering thought. The potential will be large for almost-insolvent banks to pursue risky behavior to try and work their way through problems. If such a policy is pursued, tight controls must be administered so risky banks do not offer high CD rates in order to garner assets. The FDIC must closely monitor such activity. Perhaps such guarantees should be for existing depositors and not new customers. Insolvent banks and those on the edge must be shut down quickly in such an event, to prevent risky behavior.
Unthinkable? I bet you there is a working committee of government and Fed officials thinking about just that very thing and how to do it. It would be even more scary if there is not one. We are in completely uncharted waters, and every contingency needs to be thought through well in advance. We simply don't need more last-minute Paulson plans.
In the next few weeks and months, I think you can count on more extraordinary actions by the Fed and Treasury to try and jump-start the credit markets. Actions which were highly improbable a few months ago will be on the table. Will the Fed open its balance sheet to non-banks? Possibly. If they can guarantee money markets, will there be a scheme to insure commercial paper at some price? Not out of the question. Will European governments take more equity in large European banks? Very likely. Will the Fed and/or the Treasury invest even more capital in larger financial institutions? Given that We the People now own 80% of AIG and 100% of Fannie and Freddie, it is certainly within the realm of possibility that we will be the proud owners of even more private institutions.
Again, this is not just a US issue. We will likely see similar actions in Europe and some of the developing world. This is a worldwide crisis, and the response will be from central banks all over the world.
Understand, I am not advocating these actions. I am simply trying to help you understand what actions might be put into place by the various government of the world in an effort to avoid systemic economic collapse.
All The King's Horses
The reality is that the rescue plan does not fundamentally alter the US economic landscape. There can be no doubt we are in a recession. I think it will be dated from the beginning of the year, notwithstanding the odd 2nd quarter growth. The manufacturing ISM was a dismal 43.5 (under 50 means a contracting US manufacturing industry). Such a level is typically associated with recessions, as the chart below shows. Given the financial crisis and the freefall in auto sales, this index is likely to fall further.
The "good news" is that the service portion of the economy is right at 50, which means that at least that important area is not contracting.
Unemployment rose by 159,000, with nearly every sector affected. Almost 1,000,000 jobs have disappeared over the last 12 months, and it is likely that we will lose another 1,000,000 jobs in the coming year. Since December, the ranks of the unemployed have grown by 1.8 million, and those not in the labor force but wanting a job by 370,000. Almost 3/4 of the increase in the unemployed have been job losers, with half the increase from permanent job losers (not temporary layoffs). (The Liscio Report)
Next week we will explore the economic landscape in detail, but let me provide a few thoughts. As I have said for a long time, we will be talking about deflation this time next year. Recessions are by definition deflationary events. Given that we have had two bubbles burst (housing and credit), there is even more potential for deflationary pressures. Add into the mix the deleveraging process, which will take years to finally abate, and the recent bout of price inflation caused by energy and food will pass, as demand destruction for oil will hold oil prices in check.
As I have said for a long time, the next move of the Fed is likely to be a cut. We are now close to such an action. A 1% Fed funds rate is again a real possibility. I am not sure it will help as much as some market participants think, but I think it likely the Fed will move before the end of the year, if not much sooner.
Europe and Japan are also probably in recession, and it is likely we are going to see a worldwide global slowdown. It would be nice if the European Central Bank, the Bank of England, and the Fed could coordinate a joint rate cut to signal that they are working together on the problems. I would not want to be short the markets that day.
At the beginning of the year, I was predicting a small recession with a lengthy and slow recovery period. I now think that the recession could be deeper than a 1% contraction. I think we could see a rather lengthy recession. Quite simply, the credit crisis has been allowed to spin out of control. That Congress almost failed to act is beyond belief. Given the above circumstances, it is not out of the realm of possibility that a recession lasts through the middle of 2009. As recessions go, that is a long time. But trust me on this, it will pass. The recovery will be a slow Muddle Through affair, though. It will be a few years before we are growing at a sustained 3%. Over the next few weeks, we will look at what that means for earnings and the stock markets. Investors who utilize a traditional 60% stocks, 40% bonds portfolio are not going to be pleased. We will look at alternatives.
Stay tuned.
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
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