Secretary Pandit?

During last night’s debates, both candidates were posed with the question as to who they would tab to replace Henry Paulson as the next Treasury Secretary.

Both men brought up Berkshire Hathaway’s Warren Buffet – whose lifelong history of sound investment strategies and overall lifestyle of using credit wisely would prove to be an excellent candidate.

Unfortunately Mr. Buffet is 78-years old and probably not looking to spend his twilight years fixing a mess that may take decades to repair.

Senator McCain also referenced Meg Whitman, CEO of eBay, as a possible candidate.  But what kind of banking / investment experience does she really bring to the table?

I’d like to propose a name that has had little traction in this discussion thus far.

Vikram Pandit.

Mr. Pandit is the CEO of Citigroup and has previously spent time as the President and COO of the Investment Banking Group at Morgan Stanley.  After leaving MS and before joining Citi, Pandit started a hedge fund called Old Lane Partners, which was purchased by Citigroup for $800 million.

Mr. Pandit is a rising star in the banking industry, and serves on the boards of Columbia University, the Indian School of Business, Columbia Business School, the Trinity School, and is a former board member of NASDAQ. He holds both a B.S. and M.S. in Electrical Engineering from Columbia, as well as an MBA and Ph.D in finance from Columbia Business School.

At the age of 51, Mr. Pandit has both the educational and professional background to lead the American economy back from the depths of Hades.

Wait, have we even reached rock bottom yet?  No, don’t answer that!

How low can we go?

Today’s federal funds rate cut did little to instill investor confidence in the market, as the Dow plunged nearly 200 points to close at 9,258.10.  Wall Street insiders are claiming that despite the recent sequence of events undertaken by the Fed to bolster the American economy in the short term, it appears that the global economy (not just the U.S.) is headed towards a recession and there is little that can be done to prevent this final outcome.

Nevertheless, economists are predicting that more rate cuts will be on the way, on the heals of Fed chairman Ben Bernanke vowing to take any necessary actions to address the credit crunch that has seized our nation.

Wait a minute.  The rate was cut to 1.5% today.  If the rate is cut any lower at the Fed’s next meeting in late October, won’t we find ourselves staring down the same barrel of a gun that has put a hole in our economy?

Wasn’t it low interest rates earlier this decade that created the environment for easy credit and lending for any and all taxpayers (no matter how qualified they were to pay it back) to qualify for mortgages that created the housing bubble that has burst?

What makes us think greed won’t be a driving factor to cause the same problem to creep up once more, especially since the cast of characters involved is pretty much the same that got us in to this mess in the first place.

There has to be another way.  There just has to.

AIG relaxing on our dime?

Just days after the federal government used our hard-earned tax dollars to bail out American International Group, the company sent executives on a $440,000 spa retreat in California.

Are.  you.  kidding.  me?

After getting an $85 billion loan to prevent from going bankrupt, the company comes up with half a million to treat executives who helped to drive the company into the ground?

Color me disgusted.

While middle class America is suffering by watching its retirement funds and stock portfolios dwindle daily as the Dow continues to drop in record fashion, the parties that were partially to blame for these losses are vacationing on the taxpayers’ dime?

Perhaps when Neel Kashkari starts doling out our $700 billion in bailout money to firms around the naton, he can place a clause in the fine print of the paperwork to prevent those responsbile from spending it on mud baths and manicures?

You’d think from a public relations standpoint that would be common sense.  But apparently not.

Federal Reserve doing its part

Earlier this week President George Bush asked the country to be patient and that the implementation of the bailout money would take time to address our nation’s financial crisis.

Well the Federal Reserve isn’t listening, and instead has taken immediate action through a series of steps designed to instill confidence in the American economy and Wall Street – in hopes of stopping the bleeding of the Dow Jones and reducing the burden of the credit crunch that has seized our nation.

On Monday the Fed doubled its term auction facility in an effort to increase the amount it is able to loan to the country’s central banks.  With the announcement that bailout money could take time to reach such institutions, the Fed decided to take action to increase liquidity within banks to allow for an ease of the credit crunch.

Yesterday the Fed announced that it would begin loaning money directly to major corporations through the purchase of commercial paper.  A landmark decision since the typical buyer of commercial paper, private investors, were afraid of lending money to companies to fund their day-to-day operations as the stock value of such corporations has continued to dwindle.  The Fed used its emergency powers to allow for lending outside of financial institutions for the first time in its history.

This morning the Fed, in a much anticipated move, cut its federal funds rate by half of a percentage point to 1.5% this morning.  The discount rate was also reduced by the same margin to 1.75%.  By reducing these rates, the Fed hoped to encourage more intra-bank lending to address the credit crunch.

All of these steps combined should help allay the credit problem that was the primary fear that caused the passage of the bailout bill – from which the funds to address these programs will likely emanate.

She’s got one-liners!

Sure the media is prone to pile on Governor Sarah Palin as she commits gaffe after gaffe in various interviews with the dreaded mainstream media with their gotcha questions.

But yesterday Palin had a witty retort that was perfect for the situation when she was heckled during a campaign stop in Florida.

McCain v Obama II – Politics as usual

Call it a draw.

That’s right folks.  Nothing new to see here.  Please move on.

Last night’s debate was nothing more than a regurgitation of the same attacks and defenses we’ve heard for months now.

“I want to cut taxes for 95% of Americans.”

“I looked Putin in his eyes.”

“The failed policies of the last eight years, which Senator McCain supported…”

“He was wrong about the surge in Iraq.”

“He received substantial campaign contributions from Fannie Mae and Freddie Mac.”

So were we able to walk away with anything new at all?

Somewhat.

Senator McCain did provide more detail regarding his solution to America’s current economic crisis, which is the first time that either candidate did so while speaking in specifics.  McCain stated that the bailout money should not only be used to gobble up bad mortgage-based securities, but to also purchase the subprime mortgages that borrowers can no longer afford to pay.  By purchasing this bad debt, the federal government could adjust the principal on homes to reflect their true current value and reissue a new mortgage at an affordable interest rate, without the use of predatory lending tactics such as ARM’s with skyrocketing rates after an initial period.

Excuse me?

My taxes are going to be used to help the irresponsible who made stupid investments and agreed to loans they could not afford to pay?  Well hell, why didn’t I buy that $3 million McMansion in Newport Beach, California if I could just have my mortgage padded down?

Why?  Because I’m a responsible American citizen who lives within his means.

McCain’s plan is unfair to the majority of Americans who played by the rules.

Nevertheless, give McCain credit for at least having the stones to propose a solution.  Obama continued his vague rhetoric, as he is prone to do on items that aren’t written out in stone by his campaign (reduction of taxes for those making under $250K/year, universal health insurance, invading Pakistan if Osama bin Laden is proven to be there and the Pakistani government won’t hand him over).

Does anyone really know how Obama specifically plans to fix the economy?

I didn’t think so.

Even when the candidates decided to provide new insight to the viewing public, moderator Tom Brokaw was forced to act like a school teacher in reprimanding the Senators when they went long on time in answering the questions, and that was when each candidate decided to actually answer a question proposed by a member of the audience or from the Internet.  Most of the time we received the same partisan attacks from previous questions, rather than an answer to a current question posed by Brokaw – who got more and more agitated as the night progressed (as did members of the viewing public such as myself).

Finally, the general malaise was not simply resultant of each candidate’s inability to move passed partisan attacks and answer the questions.  No, there was something more.  You could actually feel the tension in the air last night between the two candidate’s and their wives.  Comments got testy, with quips such as:

McCain on Obama’s tax policy: “nailing down Senator Obama’s various tax proposals is like nailing Jell-O to the wall”

Obama on McCain’s attack of his tax policy: “the Straight Talk Express lost a wheel on that one”

McCain on Obama’s foreign policy experience: “We don’t have time for on-the-job training, my friend” (uh-oh, McCain said my friends, time to take a shot!)

McCain on Obama’s foreign policy experience: “Senator Obama does not understand” (yes that one is par for the course)

McCain on the Bush-Cheney energy bill of 2007: “You know who voted for it?  That one.  You know who voted against it?  Me.”

As for the potential first wives, the customary handshake was forgotten, and neither wife acknowledged the other when Obama and McCain shook hands with each of their better halves at their sides.

Looks like the final few weeks are going to keep getting nasty.  McCain continued to drop in the polls this week and needed to come out with guns blazing in an effort to close the gap.  Unfortunately, he did no such thing and Obama’s campaign will continue to prosper off of the economic crisis simply because of the fact that the nation’s financial downturn occurred on President George Bush’s watch – who happens to be a Republican just like McCain.  Though he presided with a Democratic Congress that pushed legislation that more directly contributed to our mess, voters seem to be ignoring that fact.

Thus in order to make up ground, McCain is going to have to step up his game and continue to attack Obama in hopes of chipping away at the false sense of confidence that voters around the nation appear to have on his economic and foreign policy experience and abilities – which are yet unproven.