Falling Shoes and a Reader’s Question

A reader has asked about the potential damage to our global economic system from another “derivative” financial product (beyond the mortgage-back security we have already talked about) – a credit default swap (CDS) instrument. In this strange derivative, the buyer makes a series of payments to the seller of the CDS in exchange for an upside upon the occurrence of a specific event (usually a default, bankruptcy, insolvency, or other such carefully defined event), usually tied to the credit risk attached to a specific company (versus, say, an individual mortgage holder).

It’s a bet, but it is also a widely traded instrument in the banking world as a hedge against corporate default (default insurance, if you will), but any seller (CDS issuer) who has to pay the upside on default can truly get tanked if a massive series of defaults occur and lots and lots of payments become due at the same time. CDS instruments are fully tradable securities, bought and sold just like stocks and bonds, and their trading value is based on a complex risk analysis against the value of the income flow, market interest rates and other variables. You pay premiums in good times, get paid off in bad times. Lots of math.

In other words, the CDS market is just another side of the credit default crisis we are seeing in the financial markets, from financial institutions holding lots of bad mortgages to corporate loan defaults. Lots of folks bet that the bad mortgages and bad loans would not be catastrophic and they made money selling this form of default insurance. Lots and lots of profits. The money was good while it lasted, but surprise, surprise, the massive wave of defaults hit, and the call on the CDS sellers was and continues to be massive.

For folks used to trading in fundamental values, these manufactured instruments were and are floating time bombs. Wikipedia noted that: “Warren Buffett famously described derivatives bought speculatively as ‘financial weapons of mass destruction.’ In Berkshire Hathaway's annual report to shareholders in 2002, he said, ‘Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses--often huge in amount--in their current earnings statements without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen).’”

How bad is it? Well this “little market segment alone,” even back in March of this year when the stock market was well over 11,000 (we’re at around 9,100 now), here’s how Time Magazine looked at the problem: “The CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the U.S. stock market (which is valued at about $22 trillion and falling [see the note above]) and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market, notes Harvey Miller, senior partner at [the New York corporate law firm of] Weil, Gotshal & Manges.”

So in answer to the question as to whether this is the “next” shoe to drop, I have to say that this shoe is off the foot and on the floor. The $700 billion bailout was seen as a drop in the bucket by the global financial markets even as it was signed into law. Bottom line, a lot of financial institutions issuing CDS instruments and companies relying on the underlying “insurance” value will go under, unsalvageable in this meltdown. Others will be saved. And a whole lot of these derivatives won't be called, because the underlying credit will be repaired or really isn't threatened beyond the short-term credit freeze.

But while the government may try and stem the tide of “events of default,” so that many CDS values will not be called, there are limits to what it can do. The government has to focus on saving individual jobs (payroll-related liquidity), stemming the fall of housing values, sustaining and creating jobs and leaving enough solid financial institutions to restart the economy. The resulting consolidation will put an awful lot of power in the hands of fewer institutions. The trade-off has to be vastly superior oversight and regulation.

I’m Peter Dekom, and I approve this message.

Priorities

As California searches the credit markets for $7 billion in interim loans and increases its budget deficits way beyond any state deficits in history, Virginia and Maryland join a host of additional states in “being forced” to trim educational budgets, and as most states and the federal government have recognized that they will lose many billions of dollars in lost property taxes from reduced housing values, foreclosures and lower revenues from all forms of income and capital gain taxes – something’s gotta give.

Watching the Presidential debates, it’s hard to understand exactly what our priority spending ability will actually be in the next fiscal year – maybe it’s because we really don’t know. We have massive interest obligations to nations around the world with a $10 trillion (and growing) national debt. We could default, but then we could never have another deficit again (no one would take our debt), and we would see some dumping of dollars in the international market that would create inflation at a level we have never seen before (think $20 Burger King burgers). Maybe the silver lining of the government’s taking stakes in the institutions they bail out will produce unexpected longer term values.

But we have “now” to deal with. And there is a little German word that we have borrowed that should be addressed as well: schadenfreude. It is the perverse delight in the misery of others – pretty much for the sake of watching suffering. It is often accompanied by a “savior” complex – to be the hero after you let the misery of others continue and step in with a magical solution well after you could have helped solve the problem. Why do I mention this here? Because politicians from both sides of the aisle often delight at the failures of their opposition, letting things get worse, not cooperating to help with solutions until they can appear as heroes before their constituency and replace the evil incumbents who failed so badly. For many, this is simply, “politics as usual.”

There’s a catch – if things get so bad that no one can fix them, if the misery factor extends to the vast majority of constituents of both parties, “politics as usual” can be fatal. I believe that we can repair this economy, restart our financial institutions and ignite our workforce, but it cannot be done with “politics as usual.” We need to understand what patches we need to get to a growth period, and what investments are absolutely necessary if we are indeed going to have growth sooner rather than later.

The patches are keeping people in jobs, keeping people in homes and supporting the institutions the enable both of the above. It looks like a bailout, but unless we waste the money on executive pay and perks, rewarding the idiots who got us here, it is actually a necessary investment – a repair to foundation of the house we are rebuilding.

But given the budget restraints of paying interest on national debt and the moral imperative of stopping genocide anywhere it occurs, we also have differentiate between (i) state and federal programs of limited value to Americans (money down the drain) versus (ii) governmental investments that make our economy more efficient (highways that work, dams that hold, levees that don't break costing us billions in emergency relief, bridges that do not fall – how we more goods and services from place to place, plus a more efficient use of energy – from buildings to cars), create a work force that can create more valuable products and services (clearly every form of education in the system), eliminate waste from the system (from pork barrel politics to reducing the $1,500-$2,000 of health care in every car we sell, stopping the drain on emergency medical services and focus on prevention, making sure Americans are healthy enough to fix the problem) and seeding invention and research that will create new jobs in the future – from new energy exploration and alternative energy creation, better batteries, better medical and biotech research, etc.

And that means we have to look at everything else with a big question mark. We're not going to win a civil war in a country where we are not even a party, and if we have to deploy military resources, let it be where it helps keep Americans safer or where we stop mass murder. While we should not kill our future by failing to invest in it, we likewise cannot kill our future by spending on failed policies (throwing good money after bad), failed bureaucracies and programs that having nothing to do with our future or our survival. Can America change its divisive ways and rally to rebuild our greatness? We must.

I’m Peter Dekom, and I approve this message.

Writing a Paper on What Should have Been Done to Fix the Great Depression

Federal Reserve Chairman Ben Bernanke has spent his life studying banking and economic cycles. From his days as a graduate student at the Massachusetts Institute of Technology to his 2004 book, Essays on the Great Depression, he has drilled down on managing economies in a crisis. Two days ago, he agreed to buy up short term commercial paper (discussed in my last blog) to ease the credit freeze, and this morning, he presided over an emergency cut of a half point in the rate that the Fed charges banks. How did the markets respond? The NYSE dropped 5% after the first decision, and the markets remained down after the second. He’s clearly not reading my blog… or that of anyone else who has made these suggestions.

Who am I to tell the Fed Chairman that despite his best intentions, the failure of both the Department of the Treasury and the Congress to reach down to the grassroots of America and address the first line of attack – helping human beings with homes (even renters… nothing like renting from a homeowner who is being foreclosed!) who need to know they are not losing their homes – is only making things worse? I somehow feel morally obligated to try. We do not need more houses dumped into a market that cannot sell what’s there now – because no one has money to buy houses and there are almost no loans to support even these low values. The real estate market does not need to be further depressed. Home value is how most folks look at their net worth.

And we need cash at level where small businesses can meet their payrolls. I’m sounding like I am beating a dead horse, but no one seems to be addressing the obvious! When businesses cannot borrow money against stuff that their customers already bought and are paying for, when then cannot meet payroll because of this huge factor, someone has to step in before all the people who need to get paid are laid off instead. Fund that market now!

This mess hurts horribly. We need to stem the tide and address the human beings in the middle and at the bottom who can’t afford lobbyists, who cannot wait for a trickle down from the lending institutions that are getting “bailed out.” According to Peter R. Orszag, director of the Congressional Budget Office, addressing a House subcommittee, our pension plans have loss over $2 trillion in the past 15 months! People cannot retire, and the young folks waiting for new jobs are seeing fewer vacancies, beyond those caused by the meltdown, because fewer people are leaving their jobs for retirement.

It almost seems as if those in Congress, from both sides of the aisle, and the Executive Branch are intentionally leaving a mess that cannot easily be rectified for years to the next President and the next Congress. In the end, where everyman stares blindly at those with “golden parachutes” wondering why that can even happen, perhaps our elected representatives can help us with a lousy old mattress to land on in a world where they seem to have shoved us out a plane door.

I’m Peter Dekom, and I approve this message.

Answering Two Readers’ Questions

1. One comment referred to the abundance of well-paid job listings on Internet job and career placement sites as possible evidence that the economy is more robust than either I or the unemployment statistics suggest. Interesting observation until you look behind the listings.

First, even when the economy is good, a sizeable number of those listings are “in form only.” Many employers, who have already decided to promote from within or have already picked the person they wish to hire, often use these job sites to prove that they are in compliance with contractual open hiring requirements (often required of government vendors, for example) and/or as evidence that they have complied with Equal Opportunity laws. By showing these online advertisements, whether or not they generate resumes, these ads offer proof that the company opened the job description to all qualified candidates.

Second, in tough economic times, companies may be focused on more than taking down online job postings as the positions are filled. Many employers are remiss in this task. The proof of the pudding is to apply through these sites and watch what happens. There’s not much real employment coming out of those sites these days.

2. Another reader noted that if the Fed (the Federal Reserve) further drops the interest rate they charge banks, this will stimulate the economy by making lending easier. In normal times, this may have been more true than today (although, look at what cheap money did to our borrowing addiction). In fact, lowering interest rates can actually backfire. Let’s look at a recent example.

Australia’s central bank (the Reserve Bank of Australia) dropped its lending rate to banks by a full percentage point (what bankers call “100 basis points”) a few days ago, but after a very brief stock market rally, the Australian dollar fell into a tailspin against other currencies. Lower rates meant that investments in Australian currency would experience a lower rate of return – hence the currency dropped in relative value. The move that was intended to make borrowing easier actually reduced the buying power of the Australian dollar, pushing the cost of necessary imports like oil to a higher level.

In the United States, the big issue is not interest rates anyway (although it is easier for banks to borrow money from the Fed when rates are low, theoretically giving them more access to funds to lend to consumers and businesses) – it’s the lack of money in the system that can be lent (a “liquidity” crisis); the money available for loans is just not there because it was sucked out of the marketplace by bad home loans and all of the heavily borrowed institutions (who had used what were now clearly a huge number of “bad mortgages” as collateral – companies like Lehman, Bear Stearns, AIG, etc. – that literally inhaled all of the available borrowing capacity into the vortex of their own destruction). Sure the government could just print more money (a figure of speech, because lots of cash moves without real paper currency anyway; the government instead increases the “money supply”), but take a wild guess what that does to inflation.

And while the “rescue plan” (Emergency Economic Stabilization Act of 2008) has provisions to allow the Treasury Department to move money into place to be used to create that liquidity (and the Fed is helping by buying up “commercial paper” – literally corporate promissory notes that have legitimate trading value, usually with larger, established entities), there are real questions as to whether this bill provides enough money to “unfreeze the credit markets,” and whether the timing of the release of the money is going to be fast enough. After all, if a worker is laid off because the boss can't borrow against goods sold but not yet paid for, getting a loan two weeks after a job is gone is not particularly comforting.

In the end, most economists don't see a depression, but there appears to be a strong consensus that recession will be with us for a while. On the other hand, the average American seems to expect much worse; according to a CNN/Opinion Research Corp. poll of a thousand people taken this past weekend, “21 percent of those polled say that a depression is very likely and another 38 percent say it is somewhat likely.” Since “trust” is needed to restart this engine, from a pure psychological perspective, we've got a lot of work ahead of us.

I’m Peter Dekom, and I approve this message.

Comes Now the Night - Doing It Right (Part 2)

As we watch markets falling at levels reminiscent of the Great Depression, and states attorneys general implementing direct actions against corrupt banks and implementing moratoriums against foreclosures that have not appeared from the feds, it does appear that we need some federal action immediately, before the markets freeze up so badly that lay-offs become permanent job losses. Fire!

1. Impose 120 day federal moratorium on foreclosures of residential real estate.
2. Until a bigger plan can be implemented, provide instant federal guarantees to banks operating under their reasonable and standard business practices in providing “receivable” financing to small business owners (those with fewer than 1000 employees) consistent with past practices (this means lending against sales that have been made but not yet collected). This will stop unnecessary bankruptcies and layoffs, perhaps permanent job loss, that will vastly exceed the cost of the guarantee. Begin looking at growing the credit markets to bigger companies as the economy justifies.
3. Ask the Department of Labor (with input from other federal agencies like Energy, Interior and Transportation) to submit a plan to create a massive job corps to rebuild our nation’s bridges, dams, highways, levees and comparable infrastructure under the supervision of the existing building trade unions, but at entry-level wage rates. Prepare to submit that plan to Congress and the President within 60 days. Since this represents a productivity investment, the fact that it may strain the federal budget must be ignored. It will pay for itself many times over and will put a huge cadre of unemployed workers in paying jobs.
4. Ask the Department of Education to prepare a budget and an action plan to: a. retrain laid off workers into fields where growth clearly exists (traditional and alternative energy, health care, etc.), and b. to add one additional hour per day to junior and senior high schools in math and quantative science (can be applied math, such as is standard in manufacturing or construction) to upgrade our national schools to provide competitive job skills (another productivity increase).
5. Invoice and collect the $79 billion of oil revenues sitting in the Iraqi government, and give them their wish of an accelerated withdrawal starting now (muster out 2/3 of the returning troops and send the other 1/3 to Afghanistan), to stop the drain on our budget – whether you are for or against the war, we just do not have the money to pay for it (this is not a productivity investment). The civil war will continue as we depart – it would no matter when we left.
6. Phase out water-wasting and unproductive ethanol farm subsidies over three years and all other farm subsidies (which mostly benefit large corporate farmers, whose commodity values are soaring in this market) over five years. Terminate the oil depletion allowance.
7. Train local and federal investigators and prosecutors in the prosecution of the white collar crimes that gave rise to this debacle. Go after the folks who lied on their loan applications, the lending officers who told them to do it, the financial wizards who having done the numbers still insisted on creating the “derivatives” that pushed us over the edge, and the senior managers at banks and other financial institutions who either encouraged this misconduct or chose to look the other way as it fell beneath their feet. Make them pay – in cash, assets and, perhaps in serving time.

I am sure that what I have written will offend one special interest or another, but what is at stake is the America I know and love. Time is not on our side. We need action. Now!

I’m Peter Dekom, and I approve this message.

Foreign Government Reassurances - “We’ll be Alright; It’s an American Problem”

The international finger of blame is pointed at America as the under-regulated “free market” economy with loopholes drafted and designed by the special interests that benefited from the massive over-borrowing, fully sanctioned by the government. “It can’t happen here,” cry the nations of the world with their figures outstretched. Because the U.S. has been viewed as arrogant – trying to win a civil war in Iraq where it is not even supporting either faction (how do you win a war when you’re not a party?), telling the world that “you’re either for us or against us,” and in international opinion, an unbridled cowboy doing whatever it wants as a self-appointed global policemen (incurring massive military bills paid for with deep and unprecedented borrowings in the international market) – this is sadly being taking in as the payback for American hubris, something we just plain deserved.

But the international impact is just settling in. The European Union, which suffers from a lack of general EU oversight on financial institutions (still, for the most part, a local national matter), is beginning to see the ripples from our meltdown tsunami their way across the ocean. Many European banks drank at the toxic glass of over-leveraged American securities, and are shuddering near collapse as a result. Germany just issued an edict guaranteeing the safety of their bank deposits, and has moved to take over more than one financial institution. England is forcing sales of financial institutions and moving shaky banks to stronger players. Luxembourg , Belgium , Ireland , Sweden are all implementing ad hoc or overall “bailout” policies of their own.

Across the world, regulators are taking one more look at their “it can’t happen here” mentality and finding banking and financial institution anomalies within their own sacred cows. Further, as U.S. consumer demand drops like stone in a flurry of survival instincts, as small businesses shut their doors or postpone deliveries, the manufacturing economies of the world are gasping at the magnitude of the impact this reality is having or clearly will have on their financial viability. Financial capital Dubai is watching real estate values plummet and deal flow subside as oil prices have fallen mightily from their pinnacle a few months ago. The Singapore stock market plunged on Monday trading (along with its Asian brethren), a trend that carried over to Wall Street this morning.

While the U.S. market remains the shakiest, because the majority of toxic securities were born and consumed locally and the underlying consumer-homeowner market is hitting extreme negative growth, the harsh reality is that this is a global problem that is going to require global solutions. “Smug” is rapidly being replaced with “Oh my, it is happening here!”

All eyes are now on how America implements her bailout, and many overseas analysts know that if the Department of the Treasury focuses first on the big financial players, postponing the micro solutions until later – leaving bleeding small cash-strapped businesses (employers!) to writhe on the floor of the economic emergency room – many in economic death throes (since most working Americans are in small businesses), to allow the acceleration of real estate value-killing foreclosures to continue unabated without a moratorium, the tipping point taking us to a super-recession or even a depression is still out there.

If the soaring U.S. unemployment rates (which mask under-employment and those who have given up; they’re probably vastly higher) aren’t clear enough, then our leaders need a massive voter campaign to sound the alarm. The Treasury can deal with both issues at the same time – what it cannot do without dire consequences is take care of the big boys first and believe that the solution on Main Street will trickle down later. That option is no longer on the table, if it ever were.

I’m Peter Dekom, and I approve this message.

Common Sense - The Missing Ingredient

If it walks like a duck, talks like a duck, it probably is a duck. If it sounds too good to be true, it probably is. Do unto others as you would have them do unto you. The aphorisms and common knowledge, our basic moral teachings, seem to have been placed in the ice box of “everybody else is doing it” or “that guy at the mortgage company said that it was okay.” Our government embraced “deregulation” but created loopholes that benefited the big contributors… they deregulated greed, and left the rest of us with the bill.

We need to find the good folks out there, Republicans and Democrats, and get to work together. Hey, there are lots of folks who strongly believe that the government needs to be structured so that their point of view, economic, religious or political, becomes the point of view imposed on everyone else. What happened to tolerance, freedom of religion, respecting divergent views – even fighting to make sure each American can express free thoughts? We have never had to work together like this since Pearl Harbor .

How in the world do you create a cohesive society, a solution to a litany of problems that require Americans to be on the same page – assuming that the educational system actually provided enough of an education to read a page?! How do we punish the liars, the frauds, those who fostered the necessary dishonesty to fuel a market where those who could not afford to buy homes were given the tools to buy them anyway, those who benefited with cash in their deep and soiled pockets… without dismantling the economic system necessary to rebuild America as the greatest economic power on earth and take care of citizens who are worried about losing their homes or are actually losing them?

Tough balancing act, and it is not going to happen in the near term. But we do need to expand the search for the managers, executives, brokers, dealers, fraudulent mortgage applicants who stretched the truth to make a buck. If someone has to lose their home or their savings, let’s focus on those who made it happen – not the just institutions that actually provide the jobs we need – but the INDIVIDUALS who made the decisions. And what happens if a CEO, not willing to take the pay cut that is mandated if his or her company gets a governmental buyout which might benefit some innocent homeowners, opts to let this or her company tank just to get the pay?

The “Deciders” – in government, in office towers and those people who thought it was acceptable to change the government’s rules to permit flagrant and unjustified borrowing, or the persons who believed it was just fine to fabricate a loan application and lie about their income – owe the taxpayers of this nation one hell of a lot of money. Let’s start collecting it. File the suits, begin the prosecutions, and collect the money that the rest of us are now being asked to shoulder.

And let’s help the individuals, the families, who did nothing wrong, but cannot borrow money for life, for their non-fraudulent business, for their kids’ educations or need some relief from mortgage and home-value crisis that they had nothing to do with. And let’s be proactive in a fight to create individual and corporate responsibility where it has been dormant for way too long! We have a rescue bill; let’s see if government actually implements a rescue plan!

I’m Peter Dekom, and I approve this message.

Doing it Right (Part One)

With money in hand, oversight provided in at least a limited way, it is time to see what the Federal government, notably the Department of the Treasury, actually does to implement the rescue plans. Money is still much too tight and there are still accelerating foreclosures. The market fell as the bill passed, as the financial world expressed its skepticism that what was passed is what will work. We all knew “something” had to pass or what we’ve seen so far would seem like the “good ole days.”

If the $85 billion AIG bailout which preceded the $700 billion “rescue” plan is any indication, we have some serious work to do. AIG is that mega-huge insurance company that slorped up those flimsy mortgage-backed securities (those “derivatives”) like a dehydrated athlete sucks down Gatorade. Insurance companies don’t make money from the premiums they charge – they make money from the investments they make with those premiums, and let’s just say AIG totally blew it. But since they insure lots of people, the government gave them cash to tide them over.

Trouble is, we gave them that money to repackage the various businesses within AIG and sell these units off in an orderly, non-panicked manner, and no one has got the money or the borrowing power it seems to buy these pieces. So AIG has already sucked down $61 billion of that “bridge” loan from the government, but it’s using that cash to survive – about $53 billion to shore up the side of the company that made the stupid financial decisions, and the rest for operations. They weren’t supposed to use that much that fast. More tea leaves to read: the credit rating agencies – like Standard and Poor’s – have downgraded AIG based on that excessively huge slorp of $61 billion. In short, this one isn’t going well.

So Dekom, the broken record, speaks again. The Treasury has got to drill down fast and stop the mortgage hemorrhaging ASAP. Foreclosures make those “derivatives” worth even less, and the government is planning on buying them with the bailout money. We, the taxpayers, need the government to buy assets than can be made to be worth more… not dwindling down as time passes. Let’s make them shore up home values that support those “bad” mortgages by placing an immediate moratorium on foreclosures, just long enough for us to create better oversight (so AIG blunders don’t happen) and a real plan on how to reawaken the sleeping and snoring giant of an economy we once had.

I’m Peter Dekom, and I approve this message.

Bail or Fail?

So is the “rescue” plan a good one? Are we going to be fine now? No and no! But I’m glad they did “it.” The value is that Congress did a “something” that the markets needed, but the financial world is still looking at a longer term mess. Had our lawmakers not passed “some relevant” legislation, the frozen credit markets would have killed the payrolls of thousands and thousands of businesses, forcing them to close and miss payrolls. And missing those payrolls, laying off workers, would have been a tipping point – probably of no return. We would have seen a ripple effect as laid-off workers, just before a Christmas shopping season, would have accelerated the foreclosure debacle and killed the economic reality of America ’s most significant retail season. We would have had an instant severe, very deep and long term recession, maybe even a depression.

When the government’s Securities and Exchange Commission (the SEC), a an administrative agency within the Executive branch of government under the control of the President, horribly deregulated our financial institutions in 2004 (allowing such institutions to carry debt loads equal to 33 times their equity – imagine if we “ordinary people” lived like that), and Congress knowingly let that market slide into this deregulatory abyss without insisting on or applying any necessary oversight… when funds pushed mortgage lenders to lower their standards to create more deal flow (and more fees to Wall Street traders) in the housing market (and home prices went up because more buyers – the demand side – fought for a fixed set of homes)… well those problems still exist to some very significant extent.

What this means for the rest of us is that there will be some letting loose of the harsh impact of the real costs of borrowing after “teaser rate” mortgage structures expired and that more homeowners should be able to negotiate their way to stay in their homes, even though Congress did not provide what I perceived to be a highly desirable moratorium on foreclosures to give people time to take advantage of this new system. There will be a bit more lending going on, but the standards for loans might still prevent qualified borrowers from accessing that capital. Some kids are not going to get money for college based on their parents’ ability to take equity out of their homes, and some businesses are not going to get the capital they need to grow and create new jobs. Getting money for a new home purchase is not going to be easy enough so that housing prices are going to recover any time soon.

So how do we think of all this? First, and this is essential, if you think of the $700 trillion as a write off, you might as well find another country to live in. Assuming that our government is even mildly competent (a big assumption), that sum has to be viewed as a longer term investment, supported by underlying assets (mostly real estate and the mortgages that are still working). In time we should be able to generate most of that “investment” back, and we may even make a small profit. So we really have to swallow hard and ignore this as a huge black hole.

That means, with fiscal restraint, the government must now shift to creating a platform for viable growth in the near term. I still think we're going to be in a recession for no less than 15 months, but the government has opportunities to incentivize growth though encouraging job creation in the places we need it most: infrastructure, alternative energy and health care. The government also has to stop playing with words in the educational arena. If we want to stop exporting jobs, we need to up the ante in our vested skill-sets, and that means education has to become and remain a priority. Our representatives have to figure out how to make this happen under the perception of the impact of a $700 trillion bailout. And we as taxpayers and citizens have to help them get there.

I’m Peter Dekom, and I approve this message

Can This Really be Happening?

Not the financial meltdown; we know that it is and the recovery is going to take a lot of time and effort! I’m talking about Republicans and Democrats saying nice things about their mutual efforts in securing the overwhelming passage of the Senate version of the bailout bill on this first day of October. Could America actually work like that? Or are we like the petty and shameful voices of the House of Representatives that eroded in mutual derision and over-simplifications that drew justifiable criticisms in the same effort earlier in the week?

Are we looking for the differences between and among us or trying to find the “tie that binds”? Are we trying to impose our religious or doctrinaire views on others or willing to respect that others may disagree? Exactly who are we? And if the “other party” wins the election, what is our commitment to the United States of America ?

How will Americans behave after the bailout legislation, in whatever form, passes (I believe it will) and after the November elections? We're not going to step into a world of fat jobs, juicy paychecks, easy credit and ever-escalating real estate prices. Prosperity is not just around the corner. This time, we have to earn it, each and every one of us.

So as we watch candidates promise what they probably cannot deliver and see others “getting away with murder,” do we throw up our hands bitterly and walk away or do we pull together to make it work? The Senate today gave America what it really wanted: Unity and Leadership. They didn't promise this as the complete fix, but they also didn't stare into the cameras pointed at them and tell us that the world would end.

We need our citizens to have at least two goals: 1. fix themselves and 2. help others who need help in dealing with this crisis. It’s selfish, really, helping others… it is what makes it all work so that the whole becomes where we really want to be, where we want our sons and daughters, our grandchildren, to live and grow. It’s what makes America … well… America again. Remember how that felt? I want it back.

I’m Peter Dekom, and I hope you approve this message.