Session 1 - Q & A

The following post is a bit of question and answer. I think that sometimes the best influences, educators, and thought-provoking people are family members and friends. Sometimes those people lend a helping hand in counseling you, other times they provide the necessary lessons that help a young intellect seeking individual shape their mind. And finally, more often than not, they will ask thought-provoking questions that make you examine what you think you know, and rethink what you ought to know. This particular blog post is a question and answer session between my Grandmother (Hi Grandma) and myself. The fact that we have different experiences and see in separate light on occasions causes in depth conversation to occur. These types of questions call for complete, open and honest answers. And hey, at least she reads my blog! Below she asks some very good questions on current political/economical snippets in the news, and I try as best I can to provide good and educated answers. AS A DISCLAIMER, I AM NOT A POLITICIAN, I AM NOT A MASTER OF POLITICS, HOWEVER I DO ATTEMPT TO TACKLE THE SUBJECT MEEKLY WHEN IT IS DUALLY NOTED AMONGST NEWS INVOLVING THE ECONOMY, INVESTING, AND THE REALM OF ALL THINGS BUSINESS.....

1. What is your viewpoint on the use of Acorn/The Service Workers Union members to protest outside the AIG execs houses?
In response to the use of Acorn/The Service Workers Union protesting outside the houses of AIG execs, I'm not completely familiar with all of that. What I do understand is that the claims made by ACORN, and the reason for their protest is to, "Show America the opportunity to see what kinds of lifestyle billions of dollars in credit-default swaps can buy."

Unfortunately in this country there is too much finger pointing. Yes, there has been a lot of corruption in the banking system over the past few years in regards to loans, insurance, so on and so forth. But that is not entirely the government's fault. The only thing the government is at fault for is not stepping in sooner and intervening is such practices. What I like about the Obama administration is that there is a sense of accountability. They are beginning to hold people responsible for their actions.

One of the problems with the economy right now is from lack of government intervention years ago. Nobody wanted the FDIC getting into banks' business, and nobody wanted the government getting into the "banking business." So you end up with a very very corrupt banking system, a flawed credit ratings system, and fraudulent lending system. There were not enough regulations early on, there were not enough people held accountable for certain financial decisions made by banks and CEOs; Now we are at a point where an intervention is a must.

2. Do you feel AIG execs should be forced to give the (bailout) money back?
I do feel that the AIG execs should be forced to give the money back. First off, offering that money with a high tax rate is indeed justifiable. Then, by saying that if they didn't give the money back it would be taxed upwards of 90%, in my opinion is also fine. I understand that it's a very dangerous precedent Obama is setting by saying such things, and his opposition are calling it a "defacto" decision making process, but unfortunately it's come to the point where that precedent must be set. The money given to AIG was not for bonuses and the CEO made promises that couldn't be kept, so Obama is saying "look, here's what's going to happen now" - and has learned to add much tighter provisions on giving out money. Obama isn't just handing out money like many people think. It's not his administration's fault for what AIG did. A good example of making tighter provisions is with the auto industry. The heart of American manufacturing lies in the domestic auto industry. GM and Ford want money and Obama replies by ordering action in order to receive help. My opinion on the banks is quite conservative, cut them up, sell off their assets, and it's a done deal. Regardless, AIG is giving back the money, so the precedent has been set, loud and crystal clear.

3. What is your opinion on our movement closer to a global currency?
Global Currency - I understand that the UN is backing a global currency reserve. How close it is to really happening I don't know. I don't think I would venture to say we have "moved closer to a global currency." The ideals behind a global currency is that allows for global exchange without effecting the worth of the US dollar. China has a big say in it, but China also holds a lot of our debt. A global currency would replace how the strength of the dollar is perceived in global exchange. The truth is blatantly revealed in most articles on the topic, there's a risk of hyperinflation in the US with the current economic problems. I don't know enough about it to say anything more than it's a interesting idea, it's not the first time its been proposed, it would serve in the best interest of China, and the US and Europe have said no so it doesn't matter at this point in time. It is in no way feasible to migrate to a global currency in our lifetime. It would take decades to implement such a thing. The whole idea came about because China is concerned with our economic situation and is afraid that if the dollar flops, they will see negative results on their own economy.

4. How do you feel about Timothy Geithner's desire to have control to nationalize private companies at the directive of Obama?
On Tim Geithner - It's not that Geithner wants to have control to nationalize private companies at the direction of Obama, what he wants is there to be provisions written that say the FDIC can take over banks to avoid disorderly liquidation that (w)could effect the US economy significantly. Geithner feels the regulatory processes are too weak. I agree. The FDIC does not have enough power over banks like Citigroup and Bank of America. However, the FDIC only needs such power in certain situations, like the current economic state. If you properly liquidate these banks, and close more that should NOT be allowed to operate, then the FDIC doesn't need such powers when the aforementioned is completed (until such situations possibly arise again). That's why I am anti-nationalization, but that's OK because we now have the "Resolution Authority for Systemically Significant Financial Companies Act of of 2009" - which is a new strong regulatory provision over such banks and financial institutions. There needs to be, as Dr. Galbraith states, an independent investigation of these banks and financial institutions.