Okay Peachtree City...I'll admit I was watching the President address Congress the other night along with millions of other folks. Although I have to say, I kinda felt like a kid waiting for the tooth fairy to come. But instead of replacing one of my pearly whites with a shiny new coin, I was looking to replace the financial woes of the economy with at least a glimmer of hope.
The news media was buzzing as many folks talked about how President Obama has a great plan while
other pundits felt that the Obama Recovery plan was pretty ambitious. His plan to rebuild, recover, and move America out of this depression is a $3 trillion-plus blueprint focused on education, health care, and energy. Not to mention reforms to our banking industry which will include another $250 Billion more on top of the $700 Billion in TARP funds. Hence the introduction of the new Capital Assistance Program! (CAP)
Alright folks, now you know I did my homework. I went to check out the white papers for CAP at www.ustreas.gov/press/releases/reports/tg40. So what the heck is the CAP? Stay with me now....the CAP replaces the TARP! The CAP was developed to allow some transparency and oversight of the banks by auditing the assets of the banks and insuring that they actually have the capital requirements. So what if banks don't have sufficient capital? More on that in a minute! The CAP has two core elements: The first being an assessment to determine if any banking institutions needs to establish additional capital buffers during this period of heighten uncertainty. Secondly, is access to all qualifying financial institutions to contingent common equity provided by the government as a bridge to private capital in the future.
Okay, I'm good with that! If I understand this right....after this assessment, each bank, the Treasury, and more importantly, investors should have some sort of idea what shape banks are in and how much capitalization would be needed. Okay team I'm with you so far......it's making dollars and sense to me now. I'm Mr. Investor and Uncle Sam is going to provide me an audited statement which accurately depicts the financials and status of the banks. Hmmmm! What say you Mr. Private Investor?
What say you Mr & Mrs taxpaying citizen? Well...we are all feeling the pinch! But, just so you know the much needed funds started flowing the other day from the stimulus but as bad as states needs those funds now our Governor Sonny Purdue like Louisiana Governor Bobby Tindal are mulling over whether or not to take the funding. Now before you get up in arms.... this is not about Republican or Democrat politics or agendas. This is an American crisis for God's sake! Ask Governor Arnold Schwarzenegger who just laid off 20,000 workers and was quoted as saying that he would take anyone money that did not want it! Shame on you Bobby, you received all those funds from Katrina and the last time I checked, Louisiana could use the money! Governor Purdue...I know that the Sen. Isakson homebuyer plan was stripped from the recovery package and we can debate the issues...but shouldn't the biggest concern be for the people in Georgia? Ask Mike Thurmond how long he can expect to continue unemployment benefits without taxes being raised?
Folks, the reality is that home sales in the US slumped 5.3% in January, the weakest since July 1997!
Rajeev Dhawan, Director of the Economic Forecasting Center at Georgia State University, predicts Georgia
will lose another 143,100 jobs in 2009. That's almost twice the roughly 90,000 lost in 2008. Even so...with
with housing prices reaching Filene's basement bargain prices, we could actually see home sales on an upward swing.....Well that is if folks could only get a loan!
So where do we go from here now that we have CAP? Is nationalization of the banks and socialize health care next? Dare you say it? Not Chairman Bernanke! But some noted economists think its the only way to deal with the trillions of dollars of toxic assets. Heck the Government is about to own 40% or so of Citigroup and they own large percentages of others entities such as AIG. By the way, it should be noted again that US taxpayers bailed out Citi and got $45 billion of preferred stock which reportedly represented 40% of the company. However, I noted somewhere in my readings and research that if Citi's common is worth $10 billion and the US were to just convert all $45 billion to common, given their current stock price....taxpayers would own just about 80% of the company! Okay, when in doubt...check it out! (Start getting use to doing your own due diligence.) Yes, can you say de facto... So what's really happening Citi? Will public scrutiny provide the can of whup-ass to combat all the skulduggery. Only time will tell!
As Madea would probably say, ..."looks like we taxpayers gettin got!" Certainly she would get the getters before she gets got...or at least confront them with her glock. Just kidding! That thinking got Madea 5 to 10 in jail and even worse a session with Dr. Phil! Anyway, just food for thought. If it would have been my decision I think I probably would have let the banks crash and burn just like other mismanaged corporations that fail. But the great thing about capitalism is that out of the dust and ashes arises another entity more poised to provide better stewardship. However, it does make you chuckle to think that financial institutions can be well managed by government.
In the meantime folks...keep a smile on your face, a kind word on your lips, and hope in your heart. Your resolve as well as your reserves if you have them, will be tested. And no...I haven't seen a "great" plan to assist homeowners who are either on the brink of foreclosure or currently underwater in their homes. But the truth of the matter is that life will go on for us and we will survive and recover from this. Who knows, we may all be better for the simple fact that this was a huge wake up call to us all.
Additionally, what we are finding out is that we all actually have more in common that we think. We all want the American dream...a home, good family life, an education, good job and the hope for a brighter tomorrow! So one by one let's do what we can do. I remember hearing that necessity was the mother of invention. Small businesses and entrepreneurship have been the backbone of this country. This is our country folks....Let's find the good and some common ground. Hopefully some ingenuity, common sense and camaraderie will help clear a path toward recovery.
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