These are truly historic times.  Not only are we experiencing diversity in the White House – FINALLY – but the economic meltdown is one for the ages.  I keep thinking that if I was a young man I would be watching all of this even closer – because the learning that could take place is phenomenal.  You can’t get this kind of education in a classroom.  I’m soaking as much of it in as possible, but at my age it probably won’t do much good in the long term.  Watching the stock market and those who survive gambling on it is quite fascinating to me.  I can kind of relate because there was a time in my life when I was training horses at the race track as an expensive hobby.  It was a hobby that put me right in the middle of a group of people who liked to say they were making a living gambling on the “ponies.”

I even remember having a couple really good days and suddenly thinking that working for a living was for ordinary people.  Temporarily, I thought I was smart enough to make a living gambling.  Fortunately for me, I figured out pretty soon that the only ones at the race track who consistently make money are the track owners.  And I think Wall Street is somewhat the same.  The ones who make the money consistently are the brokerage houses who get $10 or whatever when someone buys or sells a stock.  They make money whether or not the market is going up or down – or at least that is what it seems like to me – because people are buying and selling millions of shares daily one way or the other.  I even got into the stock market a bit, only enough to figure out it was gambling as well.  They like to call it investing because the euphemism sounds better – but it’s gambling – and millions of Americans are finding this out in “spades” during the present economic crisis.

Watching the politicians during this crisis has been fascinating as well.  I remember listening to George W Bush speaking to a bunch of Wall Streeters a couple of years ago and then giving one of his rare “impromptu” question and answer sessions.  I believe he was “turned loose” on this occasion because he was “speaking to the choir” and there wasn’t much chance of his remarks making it to the main stream media where his foopahs were often ridiculed.  When Bush’s remarks were  finished I took a good look at the economic situation (The DOW was approaching 14,000) and said to myself, “oh my gosh, this guy is virtually clueless!”  I can’t remember exactly what he said, but the crux of it was that he didn’t even come close to answering the questions posed to him – I mean his remarks were TOTALLY disconnected to the questions.  It was right after that when I pulled all of my (not much) money out of the stock funds and put them into savings – getting about 4.7% ever since – during the ensuing period the DOW has dropped about in half.  The thing that really struck me was that the chief executive of our country was pretty much clueless about what was happening with our economy.  My assumption was that someone else was in control because he couldn’t possibly be – and putting 2 + 2 together, I thought THIS IS NOT GOOD!

Obviously, this was one of the few good moves I’ve made, financially, in my lifetime (I’m a a teacher, that should explain my financial situation) and I’ve been watching the “managers” (Greenspan, Bernanke, Paulsen, and now Geitner) very close since then.  What has really struck me as interesting is how the so-called free market “capitalists” – those who stood with Clinton as he attempted to eliminate “welfare” in the 90’s – have been looking to the government they fleeced of regulations to help them out of the mess they essentially created ( you know they now apparently believe in – welfare – only corporate welfare, which I guess is OK).  Some of the Banks involved have been labled “too big to fail” as has the insurance giant AIG.  These are all corporations who have invested heavily in the Republican party that was mainly responsible for eliminating the regulations which kept these companies in “check” as much as possible.  And now, they are – one by one – unashamedly holding out their collective hands for government “bailout” money.  Already, the Wall Street companies have received well in excess of half a trillion dollars and there seems to be no end in sight.  It’s like the government believes it would be worse to let them fail than to pore probably what will amount to in excess of a trillion dollars onto their balance sheets in a bid to keep them afloat.  And what does the government get?  Evidently they are getting shares in these companies.  That in itself brings up some even more interesting questions.

I looked the other day and one of the companies being propped up by Uncle Sam (Citigroup) had a market cap of about thirteen and a half billion dollars – based on the value of the stock.  The government has already poured $45 Billion (yes that’s already almost 4 times what the company’s stock – all of it – is worth) and they’re talking about a lot more.  To me that’s not gambling – that’s stupid!  Is Citigroup really that important? Wouldn’t it be a much better investment to allow them to fail and then pick up the pieces?  And then there’s AIG.  This is beyond ridiculous.  Their market cap is less than 2 Billion dollars and the government (remember this was Henry Paulsen – I hope someone at some time investigates the connection he had with this company) has already put up $150 Billion (yes 75 TIMES THE WORTH OF THE COMPANY) and they’re coming back for more!  What did we get?  An eighty percent stake in the company.  That’s 1.6 Billion for an investment of 150 Billion.  Even I can figure this one out.  Again, to me this is stupid!

And then the people who keep telling us that these companies are too big to fail turn around and fight giving a loan to General Motors for 20 or 30 Billion dollars.  The message I’ve gotten from all of this is that the government officials believe the fat cats on Wall Street are much – exponentially so – more important than the blue collar workers who have made this nation great (the ripple effect of the demise of GM would be about 6 million jobs – mostly blue collar jobs).  Remember, the auto workers and those affiliated with them (parts manufacturers, etc.) MAKE STUFF.  The Wall Street execs – GAMBLE WITH OTHER PEOPLE’S MONEY.  What’s really interesting is that when they lose – and in this case they have lost in the trillions – they still consider themselves to be irreplaceable and apparently there are many in the government who agree.  The fight over bonuses and executive salaries of CEO’s who have led their companies into virtual bankruptcy has also been fascinating.  Once again, we have seen the image of people who believe – despite the fact they’ve brought an entire nation, the richest nation in the world, to its knees – they think they are so important that we can’t solve the problem without them – their high salaries must be justified because if the government “caps” their salaries they will have to  go elsewhere (they can’t live on $500,000 per year with no bonuses).  That is such a ludicrous argument to me – I mean where would they go?  Are things so absurd out there that a CEO who left a company which had lost tens of billions of dollars due to mismanagement – because his multi-million dollar salary got “capped” at half a million – can find another company to pay him that same multi-million dollar salary so that he can help them lose tens of billions of dollars for their stockholders?  Are these guys who are demanding accountability for me in my classroom trying to tell me they are so important that they should have no accountability?  These really are interesting times.

The reality, as I see it, is that the major banks in this country went so far over the edge during the Bush years that they will very likely fail, no matter what the government does (yes, there really is a free market out there).  I’m sure that the brilliant minds in Washington have figured out that it’s cheaper to keep propping them up until they eventually become profitable again – but it seems that the government is going to pretty much “own” them one way or the other.  I’m going to keep watching closely whichever way this thing plays out – and I recommend anyone who might happen upon this site do the same – especially younger people.  I believe that what caused me to pull what little money I have out of the stock market before all this happened was my experience in the 80’s during the Reagan years when we had the last Banking “crisis.” (If you remember that one, John McCain was right in the middle of it – and not in a good way – can you imagine where we’d be right now if we were depending on him to figure a way out of this present mess?)  Watching the housing prices soar by over 20% per year for several years was enough of a red flag for me (along with the realization that my President was clueless regarding the economy) – signaling that I  get to as safe a place as possible with what little I had.  I know that the government (under Obama) will get things turned around at some point, but the damage from this “meltdown” will be felt for years and years to come.  I get the sense that many of the “gamblers” on Wall Street are just waiting for the “green light” so they can go back to “business as usual,” but I believe that day, if it comes back, is a long way off.  The mentality of these guys on Wall Street was pretty well summed up by the CNBC guy who had the incredibly selfish rant the other day about any attempt by the government to help regular homeowners during this crisis.  I guess the commentator, Rick Santelli doesn’t want the government helping his neighbor with their mortgage, but he’s OK with Uncle Sam keeping his bank afloat!