Rewarding Bad Business Creates Many Problems

Some powerful Wall Street CEO's testified on Capitol Hill today and for the most part they defended the huge pay packages they receive for running public companies. I have no problem with paying CEO's millions of dollars per year if they earn a good return for stockholders on investments, but when they lose money for those same investors they should not be rewarded for bad business. Over the past twelve months, some major banks and mortgage investment firms have lost billions of dollars. While these losses grew ever larger, some of the CEO's for these companies earned huge bonuses and the few that were asked to resign were paid tens of millions of dollars in severance pay know as 'golden parachutes'.

Former CEO's Stan O'Neil of Merrill Lynch and Angelo Mozillo of Countrywide are just two of many company leaders that lost money for their stockholder and were rewarded for their bad business practices with multi million dollar 'golden parachute' packages. Like many politicians, I believe CEO's live in their own world and they give little thought to how their bad business decisions effect the lives of thousands of other people. When Barack Obama was campaigning here in Texas for the democratic nomination for President, one of his television commercials talked about the disconnect between Wall Street and Main Street in America. He said in one of those commercials that some company CEO's earn more in 10 minutes than some of their employees earn in a year.

While the US Congress was grandstanding for the folks back home today about CEO pay being too high, once the cameras were turned off in the hearing room most likely many of these same representatives were lobbying these same CEO's for campaign contributions. The world of high paying CEO's and Members of Congress are intertwined in many ways. That is the reason that regular Americans are so under represented in the halls of Congress. It takes big money to stay in political office and the people that give the most money to politicians are the very CEO's that were being grilled by Congress today.

Until real campaign finance reform is enacted into law, the close and often times too close relationship between politicians and corporate CEO's will continue. It's not just Congress that has kept too close of a relationship with large company leaders, President Bush has seen his share of problems because of the lobbying efforts of others as well. For most Americans the free flow of money into Washington D.C. for access and sometimes favors when it comes to new laws has had a bad smell about it for a long time. This close relationship between politicians and CEO's will not be changing any time soon. What people witnessed today in Congress was nothing short of a show trial for the voters back home to show that their Member of Congress is on their side.

Read more about the Economy:

It's The Economy, Stupid All Over Again
Stock Markets Crash As US Recession Fears Increase
Tuesday Could Bring Big Trouble For US Stock Prices
Grim Economy In 2008, Fed Chairman Bernanke
Is Citibank In Financial Trouble, China/Kuwait Rush Cash?

March 07, 2008 Archives

Democrat Self Destruction Possible Before November

Right now, the democratic party is in a better position to win the White House than at any time during my adult life. However, as the race between Hillary Clinton and Barack Obama drags on - there is an increasing chance that the democratic party could self destruct before November's general election. It's not just the daily mudslinging between Barck Obama and Hillary Clinton that could lead to this problem, but the hardheaded position of Howard Dean in regards to the important decision on what to do about disqualified delegates from Florida and Michigan.

Right now, most Democrats that support Barack Obama and Hillary Clinton will find it easy to switch their loyalties to fight John McCain in November. However, the longer the fight between Clinton and Obama goes on, the more bad blood there will be among each ones supporters. Both Obama and Clinton will be forced to go increasingly negative against each other in order to win the democratic nomination for President. Each time either candidate throws mud at the other, both candidates become dirty in the process and die-hard supporters on both sides will get angry. While all of this infighting inside the democratic party is going on, John McCain will be forming his November strategy and raising money to beat either Clinton or Obama this fall.

Now to the problem in Florida and Michigan. DNC chairman Howard Dean has made it clear that unless Florida and Michigan hold another primary or caucus, the delegates from those two key states will not be seated at this summers Democratic National Convention. In the absence of a new primary or caucus in these two states, the 'rules committee' at the convention will decide if some or all of Florida or Michigan's delegates will take part in deciding the ultimate nominee. While I can understand Mr. Dean's anger at Michigan, the circumstance in Florida are completely different. In Florida a Republican governor and Republican lead legislature set the primary date by law. Democrats in Florida has no say so as to when Florida's primary was held, but they were punished just the same by Howard Dean and the DNC.

I have said before and I will say it again that Democrats have become world famous at snatching defeat out of the arms of victory and once again in 2008 they may do exactly the same thing in the presidential election. The political tone between Hillary Clinton and Barack Obama will increasing get more negative over the next month or so and with the every looming Michigan and Florida delegate situation still simmering in the background, there is a good chance the united democratic party could fracture and allow John McCain to win in November. If that self destruction happens it will go down in history as one of the most stupid things that has ever happened in politics.

Read more about 2008 Elections:

Obama/Clinton Ticket Likely As Race Continues
Rain/Wind/Cold Could Effect Texas Voter Turnout
Democrats Do The 'Texas Two Step' Tuesday
Democrats In Florida Might Vote Again
Cleveland Fight Night, Obama/Clinton Square Off

March 07, 2008 Archives

File 2007 Tax Return To Get Federal Tax Rebate

Some time around June of 2008, the US federal government will start mailing out tax rebates to US citizens. Unlike the previous rebate when only people that paid in taxes received the rebate, this time most Americans will receive the rebate, but they must file a tax return to get it. There are hundreds of thousands of people, especially senior citizens, that do not file tax returns anymore. Major tax preparation services like H&R Block are running advertisements trying to encourage these folks to file a 2007 income tax return so they will receive the federal tax rebate this summer.

It is still an open question as to whether this summers federal tax rebates will help the US economy avoid falling into a recession. However, these tax rebates that range anywhere from $300-$600 are a step in the right direction. The only problem I see with the US federal government mailing out these rebate checks is the fact that they will need to borrow the money to fund them. It is a crying shame that with more than a trillion dollars flowing into Washington D.C. each year that Congress and President Bush still find ways to spend more than that amount to run the federal government.

Most experts agree that the US economy is not only slowing down, but they also believe that a recession is on the horizon for later this year. One only needs to look at the ever rising price of crude oil or the astronomical price of gold to know that something is just not right in the US economy. Just today, the government announced a sharp drop off in the number of jobs created in the US and I personally think that this is just the first sign of worse things to come. The US capitalist system is fantastic when the economy is running fast and smooth. However, it can be very cruel when times turn to recession and sometimes depression.

So, if you want to receive a federal tax refund check - you must make sure and file a federal tax return before April 15th this year. While it has been difficult to find out if these tax rebate checks will be taxable and thus add to your 2008 income for tax purposes next year. The best strategy is to expect that these federal tax rebates will be treated as 2008 taxable income when you file taxes again in 2009. As a child I remember being taught that there was no such thing as a 'free lunch' at least in regards to the federal government. Any time the federal government gives anything away to it's citizens there are always strings involved in that gift and many times people wish in the end that these gifts with strings attached were never given in the first place.

Read more about the Economy:

Nervous Stock Market Climbs Wall Of Worry
Mortgage Crisis Going From Bad To Worse
Citibank In Bad Financial Condition
Oil Price $105 Per Barrel As Economy Slows
Rich Get Richer While Most People Suffer

March 07, 2008 Archives