Author: David S. White

“When I’m wrong, I say I’m wrong” -from the movie “Dirty Dancing,” when Jerry Orbach, “Baby’s” (Jennifer Gray) father, apologizes to Patrick Swayze for having falsely accused him.

In the excitement after the election last November, right here on the pages of F&HD, on November 7, 2008, I wrongly called the outcome of Prop 8’s passage when it would eventually face future Constitutional challenge before the California Supreme Court.

When that day arrived Tuesday, the California Supreme Court by a 6-1 vote upheld the Constitutionality of Prop 8, the same-sex marriage ban enacted by California voters last Fall. Prop 8 thus lives on to fight another day; at least until another election when there will undoubtedly be another ballot initiative for California voters to mull over, debate about, and supply the Media Talking Heads with wall to wall material to push this amazing cultural power struggle right out there on center stage again.

Imagine a betting window at the racetrack where you can bet any amount that a horse will not win, as opposed to the usual bet on a horse to win. You can make these bets at 30 to 1 odds every time – and you can get all your friends to join in so that your bets go up into astronomical amounts of money.

And, you can make as many bets as you want – with 7 or 8 horse in the race, it is way easier to pick the loser than to pick the one and only winner – so this helps you sell and re-sell these bets, on which, I almost forgot to mention, you are making huge profits and you are telling everybody who will listen that these are virtually risk-free bets. You can bet more money than you have in your bank account and even more money than all of us have in all of our bank accounts, combined.

And then you can keep selling and re-selling those bets on horses to lose, not win, mind you, all over the world – give them fancy French names like “tranches,” or formidable sounding names like “collateralized debt obligations,” (we’ll call them “CDO’s, for short here), including “credit default swaps.”

The latest job loss figures have been greeted by many in the Media as a good sign – only 540,000 (almost) jobs lost! It could have been worse, say the pundits. And look at those bank profits, and the Dow is back up to the mid- 8000’s – why, this thing is blowing over and pretty soon all will be right with America’s and the world’s economies again! Whew, that was pretty dreadful, no?

Not so fast. The Newspeak term for we are seeing is “Green Shoots,” everywhere, signs of Spring, or plants growing back after a devastating fire, like the one ravaging Santa Barbara last week and over this past weekend – their third major firestorm in some 9 months. But, in an economy that needs to add hundreds of thousands of jobs every month just to stay even with population growth, should we really be popping champagne corks over only 540,000 jobs lost in April? 5.7 million Americans without jobs likely did not go shopping last weekend.

In a move that would have its founder, A. P. Giannini, turning over in his grave, the Feds have told B of A that it is undercapitalized to the tune of $33.9 Billion – the amount that the Stress Tests have indicated is needed if the economy takes a turn for the even worse.

B of A could raise this capital by converting the non-voting, preferred stock that it gave the Federal Government in return for the $45 Billion in BailOut bucks it has received through the TARP program (courtesy of your tax dollars and mine). By converting that preferred stock into common stock, the US Government would become one of B of A’s largest shareholders, thus adding to the Fed’s growing portfolio of investments into troubled banks and other financially connected companies as we continue to navigate through the wreckage of our once booming economy.

After months of talk, last week America’s weakest of the Big 3 Automakers, Chrysler, finally bit the bullet and filed its Chapter 11 Bankruptcy Petition. The case (luckily for Chrysler) drew an outstanding Bankruptcy Judge, Arthur Gonzalez, a veteran of the Enron (filed Dec. 2001; Reorganization Plan approved: July 2004 – lightning fast for these monster cases!) and other massive bankruptcy cases, and was a ‘pre-packaged’ one, in the sense that as much as possible has been planned ahead to streamline the proceedings.

The media has reported what sound like overly-optimistic time estimates that would have Chrysler emerging by mid-Summer, after its shotgun marriage with Fiat, who has hungered for decades to have an American dealer network and to re-make its old 60’s and 70’s image for building cars that break and are hard to fix.

We didn’t need this right now. In a year that already feels like the Biblical Plagues, what with a couple of wars, an economic meltdown, terrorism, piracy, threats of nuclear proliferation to bad actors, and a whole host of other things to worry about, now we have news of the evolution of a wholly new flu strain in Mexico City, that has already popped up in California, Texas, New York and, likely, in other places. And this story only broke at the end of last week! What’s next? Frogs falling from the skies, perhaps?

We are treated to endless footage and photos of Mexico City’s frightened residents, walking through that city of 20 million, donned in surgical masks, which Sanjay Gupta, fresh from withdrawing his name from consideration for the next US Surgeon General, says won’t do a damn thing to prevent the very tiny microbes from getting into one’s respiratory system. The World Health Organization met Saturday in Geneva and stopped just short of raising the Pandemic Threat level, but made worrisome statements that sounded like they are holding their breath.

The average American is reputed to have $9,000 in credit card debt. Have you looked at your credit card statements lately? Do you know that the credit card issuers have been stealthily jacking up their rates, adding all kinds of fees, and playing around with other aspects of their warm relationships with credit card holders? Would you finance the wonderful dinner you are going to have Friday night with a lender who charges you 25%, 30% or even 35% interest? You would need to have your head examined, but that is what many of us routinely do.

The Obama Administration, in its headlong rush to pack as much as possible into the first 100 days in the spirit of FDR and while ratings are sky high, took on the credit card industry Thursday, fulfilling a campaign pledge for a Credit Card Holder’s Bill of Rights, among other things.

Michael Hirsch’s recent story “Wall Street Digs In,” in Newsweek, is unsettling, to say the least. He warns that Wall Street has not learned their lesson from the economic debacle last year which continues this Spring amid a stock market rebound of sorts – if you can call leveling off at a mark some 40% below the highs of several years ago, a “rebound.” Specifically, he reports that some of the Wall Street Heavyweights have banded together in a new lobbying effort under one of those charming newspeak names that usually mean the opposite of the title: “Coalition for Business Finance Reform.”

Hirsch says this new lobby with the misleading name, comprised of Citigroup (whose stock has finally cleared 4 iTunes’ songs in value per share and who announced a profit, based on some accounting tricks), Goldman Sachs and JP Morgan, has now dedicated itself to the mission of opposing the kind of regulation that would corral, reign in and tame, for once and for all, those dangerous and wholly inscrutable collateralized debt obligations and credit default swaps which swamped and crashed the world’s economies in the first place. In Hirsch’s words: “Its goal: to stand against heavy regulation of ‘over-the-counter’ derivatives, in other words customized contracts that are traded off an exchange,” which, if achieved, virtually insures a repeat of the nightmare we have all been living through.

Need a diversion from obsessing over the economy? I have just the story for you.

When we last left off, Somali Pirates, actually ragtag Somali teens and twenty-somethings in flip flops and shorts, armed with automatic weapons, boarded the US flagged Maersk Alabama 300 miles off the East African coast, took it over for a bit, then lost control back to its crew but got off the ship and into a lifeboat, taking the Captain as hostage. US Navy destroyer Bainbridge got to the scene and incongruously faced off against a handful of these Somali Pirates in a lifeboat holding the Captain.

The Maersk Alabama went on to its port in Kenya with its load of food and relief supplies and, back at the scene, at night, the Captain made a daring escape from the lifeboat where the Pirates held him captive, but, a couple of Pirates jumped overboard, re-captured the Captain and brought him back onto the lifeboat. Media covered all of this incessantly and we learned that another UD destroyer was, I wanted to say “steaming” toward the scene a few hundred miles off the humid East African coast, but 21st Century US destroyers don’t “steam” anymore, they have ultra high tech propulsion systems now.