$700 billion in taxpayer dollars to kill small banks
“Like a thief in the night, it cuts like a knife”
-Marty Brown
I was opposed to the Wall Street bailout from day one.
We were asked to trust the Bush administration, with no track record for truthfulness, to send $700 billion to Wall Street, not Main Street.
Bush, Paulsen and Wall Street want to stick it to Main Street even further.
It appears that the $700 billion will be used for Wall Street banks to take over small banks, in small towns.
Like the one I live in.
The bailout supporters made two arguments. The $700 billion was supposed to stop a financial meltdown. After we bailed out Wall Street, it was supposed to open a floodgate of credit for Main Street.
It didn’t come down that way.
The meltdown continued, even after the bailout.
I’m waiting for that cash flow to come roaring into small towns. Like mine. It hasn’t happened and, according to a stunning New York Times column by Joe Nocera, the money is not coming soon.
The $700 billion may never see Main Street. Unless you count Wall Street banks gobbling up Main Street banks.
Unlike other countries, such as England, the United States did not REQUIRE that banks taking government bailout money lend it out! Lending is not required, just “encouraged.” The banks can do what they want with it.
If I was a running a bank, my primary “encouragement” is to make money for my shareholders. If I can take government money and use it for something more profitable, I am going to do it.
Like any businessperson would.
The most profitable thing banks can do is take government money and buy up another bank. We saw it happen last week and will see it happen many more times.
It’s what Bush and Paulsen wanted all along. They snuck a provision in the bailout bill that gave BILLIONS in tax breaks for big banks to buy other banks.
Bush and Paulsen want to reshape the banking industry to allow only big Wall Street banks to survive. A tax expert, quoted by Nocera, said “It couldn’t be clearer if they had taken out an ad.”
Nocera, who supported the bailout bill, said that the rationale that the bailout would make banks start lending again, is “Treasury’s version of the weapons of mass destruction.”
I feel duped. I feel deceived. I want to vote against a congressman who supported the bailout, but my congressman saw the bailout’s flaws and voted “no.”
I like small banks. They are an important part of my business and my life.
Starting in high school, I’ve always had a personal relationship with my banker. A small town bank put me in business and another kept me in business. I want to know that the person I’m talking to is a final decision maker. I don’t want a committee or a computer in New York to decide for them.
The gang on Wall Street has lost trillions and put the nation in economic peril. I don’t want to do my banking with them.
I’ll take my chances with a banker who knows me, knows my business and knows my family. It’s worked so far. I suspect if you surveyed other Main Street business people (I am actually three doors from Main Street, but close enough), most would feel the same way.
Small town banks have not been hurt as badly as Wall Street banks. Most were not playing the sub-prime game. None of their officers get million dollars bonuses. And I am sure the officers don’t get tens of millions to leave when they lose their stockholders’ money.
In other words, they are personally responsible for the lending decisions they make. Unlike the people on Wall Street, they can’t screw up and expect a golden parachute at the end.
I trust the small bank business model more than I trust what they are doing on Wall Street. I don’t want Wall Street taking over small town banks. I don’t want them to use taxpayer money to take the bank and I especially don’t want the Wall Street banks to get billions in tax credits to do it.
I want them to lend money to people on Main Street. Someone told me that was what the $700 billion was all about.
People say we can fix it when we get a new President and new Treasury Secretary. That is three months. By then dozens of mergers and takeovers will have taken place.
We need to act now.
Once you allow a bank to be gobble up other banks, just like when you invade a country, it is almost impossible to undo the damage.
Especially when that damage was based on misleading information.
Don McNay is the Chairman of McNay Settlement Group and the author of Son of a Son of a Gambler: Winners, Losers and What to Do When you Win the Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com
Monday, October 27, 2008
Sunday, October 26, 2008
2008 - The Year of the Outsider
2008 - The Year of the Outsider
“I come from down in the valley, where mister when you’re young, they bring you up to do, what your daddy done”
-Bruce Springsteen
Just like 1932, 2008 is a year when we will realign “Insiders” and “Outsiders.”
Insiders tend to be white, well-educated males from high income backgrounds. Religion, personality and regionalism narrow Insider ranks even further.
2008 will change things. We will either have an African-American President or a female Vice President. Being a Wall Street hotshot doesn’t carry the weight that it did a few months ago. Lobbyists are losing their clout with politicians who can raise money on the Internet.
Outsiders who eventually become Insiders learned to play the game of Life by different rules. They buck conventional wisdom and knock down the doors that are closed to them.
Obama is a good example. He was encouraged to stay in Congress and wait his turn. Instead, he took the risk of running for President after only three years in the Senate.
It was a risk that paid off.
One of the fascinations of Obama’s campaign is that he got the nomination without a lot of Insiders involved.
Win or lose, his campaign changed how modern campaigns are run.
It reminds me of William Jennings Bryan’s presidential campaign in 1896. Bryan ran a campaign that was different from any presidential candidate before him. But every candidate after him copied his style.
Under the new system, there will be a lot of political bosses looking for someone to boss. Candidates can ignore them and still win.
Some people spend their lives trying to be Insiders. They suck up, toe the line and hope that Insiders will tap them to join the ranks.
It’s uncommon for that ‘tap’ to happen. Once earned, power and privilege are rarely given away. Insider status is often handed down from generation to generation.
Unless you want to stay in the same career that your daddy did, you are going to have to buck the system.
Many of my friends are trial lawyers, journalists, and entrepreneurs. Those are natural professions for people who want to change the status quo.
Almost all great musicians are Outsiders. Rock and roll, country and rap have their roots in rebellion.
Outsiders are the driving forces in almost every profession. It took an Outsider like Bill Gates to go against the establishment at IBM. Then Google came after Gates when Microsoft became the Insider.
There is one group that I have never understood -- people who are Outsiders but think they are Insiders.
I know a young, disabled couple who identify deeply with the establishment. The couple has no money and no hope of getting any. They get every kind of government benefit available.
One of their hobbies is to call into talk radio programs. They rail for lower taxes, despite the fact that they don’t pay any. They get incited about estate taxes, although no one in their family has a taxable estate. They vote for political candidates who want to take away their benefits and their right to the jury system.
There are thousands like them, but I suspect that number is diminishing.
Most people do not like to rock the boat. It is easier to act the same way as everyone around you. It takes a crisis to get people to switch.
1932 was our last great economic crisis. It also broke some long standing political habits.
Up until 1932, African-Americans overwhelming supported the Republican Party. The Republican Party has always been seen as the party closer to Big Money, but that really was the case in the 1920’s.
Although few African-Americans in 1932 had wealth, the Republicans were the party of Lincoln. It took the Great Depression to put a dent in that voting pattern.
Bringing in Outsiders does not always make things better. Insiders have experience and knowledge that is difficult to replace. There is also the chance, like in George Orwell’s Animal Farm, that the Outsiders take on so many of the Insiders’ characteristics that it is impossible to tell them apart.
We will soon learn how it plays out.
Don McNay is the Chairman of the Board for McNay Settlement Group and the author of Son of a Son of a Gambler. Winners, Losers and What to Do When You Win the Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com
“I come from down in the valley, where mister when you’re young, they bring you up to do, what your daddy done”
-Bruce Springsteen
Just like 1932, 2008 is a year when we will realign “Insiders” and “Outsiders.”
Insiders tend to be white, well-educated males from high income backgrounds. Religion, personality and regionalism narrow Insider ranks even further.
2008 will change things. We will either have an African-American President or a female Vice President. Being a Wall Street hotshot doesn’t carry the weight that it did a few months ago. Lobbyists are losing their clout with politicians who can raise money on the Internet.
Outsiders who eventually become Insiders learned to play the game of Life by different rules. They buck conventional wisdom and knock down the doors that are closed to them.
Obama is a good example. He was encouraged to stay in Congress and wait his turn. Instead, he took the risk of running for President after only three years in the Senate.
It was a risk that paid off.
One of the fascinations of Obama’s campaign is that he got the nomination without a lot of Insiders involved.
Win or lose, his campaign changed how modern campaigns are run.
It reminds me of William Jennings Bryan’s presidential campaign in 1896. Bryan ran a campaign that was different from any presidential candidate before him. But every candidate after him copied his style.
Under the new system, there will be a lot of political bosses looking for someone to boss. Candidates can ignore them and still win.
Some people spend their lives trying to be Insiders. They suck up, toe the line and hope that Insiders will tap them to join the ranks.
It’s uncommon for that ‘tap’ to happen. Once earned, power and privilege are rarely given away. Insider status is often handed down from generation to generation.
Unless you want to stay in the same career that your daddy did, you are going to have to buck the system.
Many of my friends are trial lawyers, journalists, and entrepreneurs. Those are natural professions for people who want to change the status quo.
Almost all great musicians are Outsiders. Rock and roll, country and rap have their roots in rebellion.
Outsiders are the driving forces in almost every profession. It took an Outsider like Bill Gates to go against the establishment at IBM. Then Google came after Gates when Microsoft became the Insider.
There is one group that I have never understood -- people who are Outsiders but think they are Insiders.
I know a young, disabled couple who identify deeply with the establishment. The couple has no money and no hope of getting any. They get every kind of government benefit available.
One of their hobbies is to call into talk radio programs. They rail for lower taxes, despite the fact that they don’t pay any. They get incited about estate taxes, although no one in their family has a taxable estate. They vote for political candidates who want to take away their benefits and their right to the jury system.
There are thousands like them, but I suspect that number is diminishing.
Most people do not like to rock the boat. It is easier to act the same way as everyone around you. It takes a crisis to get people to switch.
1932 was our last great economic crisis. It also broke some long standing political habits.
Up until 1932, African-Americans overwhelming supported the Republican Party. The Republican Party has always been seen as the party closer to Big Money, but that really was the case in the 1920’s.
Although few African-Americans in 1932 had wealth, the Republicans were the party of Lincoln. It took the Great Depression to put a dent in that voting pattern.
Bringing in Outsiders does not always make things better. Insiders have experience and knowledge that is difficult to replace. There is also the chance, like in George Orwell’s Animal Farm, that the Outsiders take on so many of the Insiders’ characteristics that it is impossible to tell them apart.
We will soon learn how it plays out.
Don McNay is the Chairman of the Board for McNay Settlement Group and the author of Son of a Son of a Gambler. Winners, Losers and What to Do When You Win the Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com
Wednesday, October 22, 2008
Don McNay on POTUS 08 on XM Radio
I am taping a segment with Tim Farley on XM radio on Thursday morning. It is on POTUS 08, Channel 130. I am not sure what time(s) the interview will air but you can listen on their web site or download the podcast on ITunes.
I'm on to talk about the only political column I have written in the past couple of months, Mitch McConnell and the 24 year itch
I wrote it on October 5, but it went unnoticed with the economic crisis going on. It was based on research I did while I was in graduate school at Vanderbilt. A producer at XM radio is a fellow Vanderbilt graduate (although she noted it was LONG after I graduated) and spotted it.
As Brian Wilson once said, "be true to your school." I am fornutate that so many Eastern Kentucky University and Vanderbilt graduates have wound up in the media.
I'm on to talk about the only political column I have written in the past couple of months, Mitch McConnell and the 24 year itch
I wrote it on October 5, but it went unnoticed with the economic crisis going on. It was based on research I did while I was in graduate school at Vanderbilt. A producer at XM radio is a fellow Vanderbilt graduate (although she noted it was LONG after I graduated) and spotted it.
As Brian Wilson once said, "be true to your school." I am fornutate that so many Eastern Kentucky University and Vanderbilt graduates have wound up in the media.
Sunday, October 19, 2008
When 401k came into our lives
.
When 401(k) came into our lives
“Running on Empty. Running into the sun but I’m running behind.”
-Jackson Browne
Internal Revenue Code section 401(k) is the only section of the US tax code that the average people can cite. They know it has something, and often everything, to do with whether or not they can retire with dignity.
The adoption of section 401(k) in 1982 turned out to be one of those big moments that changed everything.
401(k) plan investments are a primary driver of the investment markets. It is the employee retirement benefit that most companies offer.
These plan investments are also the reason that many people are pacing the floors at night, watching their retirement get delayed or destroyed.
Until 401(k) came along, pension plans were usually defined benefit plans.
A defined benefit pension is one that gives you a set number of dollars for set period of time. It usually pays out over the course of your lifetime after retirement.
With a defined benefit plan, the employer takes responsibility for making sure pension money is safe and properly invested.
With the advent of the 401(k), employees with little or no investment experience were required to pick among investment options offered by an employer.
Employees were put in the position to fail. Many have.
It is up to the employer to pick what investment company handles the employee’s money. If the employer picks a dog, with few options, the employee is out of luck.
Even worse, many companies push their employees to use 401(k) money to buy stock in the company they work for.
If the company goes broke, people lose their jobs and their retirement savings, too.
There are a lot of people hurting. It is sad to watch retired people, or people close to retirement, lose 40 or 50% of their 401(k) plan’s asset value in one year. They will never be able to make that back up.
There is a second major problem -- Not putting enough money in the 401(k) to begin with.
401(k) plans give people too much freedom.
I’ve always encouraged people to put the maximum amount into a 401(k) plan. Few do. Many put in little or nothing at all.
Now they are looking at a bleak retirement.
Defined benefit plans encouraged people to stay at the same company. 401(k) plans do not.
I’ve watched tons of people change jobs and then blow the 401(k) money before they started their new job.
90% of people with a lump sum of money will run through it in five years or less. The same statistic holds true for 401(k) rollovers as it does for lottery winners.
I am appalled that both presidential candidates have proposals that will make it easier for people to blow their 401(k) money.
There are a variety of ideas the presidential candidates are completely ignoring.
One would be to make it easy, and cost efficient, for employers to go to defined benefit plan and guaranteed income plans. That would make sure that our retirees have money for the rest of their lives.
Second would be to change the way 401(k) plans are administered. Take them out of the employer’s hands and let employees invest in whatever, and with whomever, they like. Just like they do with their IRA accounts.
When historians study the cause of the economic meltdown, they will see that the change from defined benefit plans to 401(k) plans in 1982 was a factor. It was one of many shifts where dramatic changes were made in people’s lives and liberties. People didn’t realize just how dramatic until years later.
If we are going to keep from running behind, 401(k) is one of those things that we need to fix.
Don McNay is the Chairman of the Board for McNay Settlement Group and author of the book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com
When 401(k) came into our lives
“Running on Empty. Running into the sun but I’m running behind.”
-Jackson Browne
Internal Revenue Code section 401(k) is the only section of the US tax code that the average people can cite. They know it has something, and often everything, to do with whether or not they can retire with dignity.
The adoption of section 401(k) in 1982 turned out to be one of those big moments that changed everything.
401(k) plan investments are a primary driver of the investment markets. It is the employee retirement benefit that most companies offer.
These plan investments are also the reason that many people are pacing the floors at night, watching their retirement get delayed or destroyed.
Until 401(k) came along, pension plans were usually defined benefit plans.
A defined benefit pension is one that gives you a set number of dollars for set period of time. It usually pays out over the course of your lifetime after retirement.
With a defined benefit plan, the employer takes responsibility for making sure pension money is safe and properly invested.
With the advent of the 401(k), employees with little or no investment experience were required to pick among investment options offered by an employer.
Employees were put in the position to fail. Many have.
It is up to the employer to pick what investment company handles the employee’s money. If the employer picks a dog, with few options, the employee is out of luck.
Even worse, many companies push their employees to use 401(k) money to buy stock in the company they work for.
If the company goes broke, people lose their jobs and their retirement savings, too.
There are a lot of people hurting. It is sad to watch retired people, or people close to retirement, lose 40 or 50% of their 401(k) plan’s asset value in one year. They will never be able to make that back up.
There is a second major problem -- Not putting enough money in the 401(k) to begin with.
401(k) plans give people too much freedom.
I’ve always encouraged people to put the maximum amount into a 401(k) plan. Few do. Many put in little or nothing at all.
Now they are looking at a bleak retirement.
Defined benefit plans encouraged people to stay at the same company. 401(k) plans do not.
I’ve watched tons of people change jobs and then blow the 401(k) money before they started their new job.
90% of people with a lump sum of money will run through it in five years or less. The same statistic holds true for 401(k) rollovers as it does for lottery winners.
I am appalled that both presidential candidates have proposals that will make it easier for people to blow their 401(k) money.
There are a variety of ideas the presidential candidates are completely ignoring.
One would be to make it easy, and cost efficient, for employers to go to defined benefit plan and guaranteed income plans. That would make sure that our retirees have money for the rest of their lives.
Second would be to change the way 401(k) plans are administered. Take them out of the employer’s hands and let employees invest in whatever, and with whomever, they like. Just like they do with their IRA accounts.
When historians study the cause of the economic meltdown, they will see that the change from defined benefit plans to 401(k) plans in 1982 was a factor. It was one of many shifts where dramatic changes were made in people’s lives and liberties. People didn’t realize just how dramatic until years later.
If we are going to keep from running behind, 401(k) is one of those things that we need to fix.
Don McNay is the Chairman of the Board for McNay Settlement Group and author of the book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com
Saturday, October 11, 2008
Expect a Manic Monday
Expect a Manic Monday
“Just another manic Monday”
-Prince (The Bangles)
In A Piece of the Action, Joe Nocera’s classic history of personal finance, Joe cited a mutual fund manager who noted an interesting fact.
If you added up all the Monday’s between 1955 and 1985, the stock market dropped 1500 points. It did fine the other four days of the week.
That makes sense. People have the weekend to read the papers, talk to their neighbors and get negative and fearful. They walk in on Monday morning and sell.
It is the classic example of how emotion trumps reason.
I was in the financial business on “Black Monday” in 1987. The Dow Jones average lost 22% of its value in one day. It took people the weekend to digest the news from the week before.
Bad news kept coming in but people were slow to process it.
Like they have been in 2008.
As the first days of the economic crisis broke, I was stunned at how the average person was disconnected. The local news devoted its airtime to bank robberies and car crashes. People on the street wanted to talk about football or the weather. The problems of Wall Street had not made their way to Main Street.
Then came President Bush and Secretary Paulson’s first effort to sail a $700 billion Wall Street bailout through Congress. As the bill was debated, defeated, revised, laden with goodies and finally adopted, anger and pessimism spilled into the streets. Suddenly Wall Street was the only topic that people wanted to talk about.
The markets have dropped further and each day, and Americans have gotten more anxious.
Now they have an entire weekend to process the news. Negative thinking will turn to panicked selling.
Expect a very “manic Monday”. It would not surprise me if Monday broke records for market declines.
It also would not surprise me if Monday was the day of a great turnaround.
The market needs to hit a bottom so it can rebound.
I’m hoping that a “manic Monday” will get stocks to prices where people start buying again.
I have been deluged by calls and emails, many from people I don’t know.
Most want reassurance or guidance. But many are sitting on the sidelines, itching to buy.
They look at companies like Ford, GM or Apple (none of which I have ever owned) and wonder if there will some be bargains.
I don’t know. But it is a good time to do some research and find out.
If you have done your homework and know your investment, you know when it is at a good price or a bad price.
I’m in the structured settlement business, so my knowledge is focused on annuities and insurance companies. Although I did it earlier in my life, I have not sold stock or mutual funds in a decade. I only track stocks that I own.
People can do well when they take their time to do research. In the era of the Internet, there is a ton of information about anything you might be interested in owning.
After careful research, you may see opportunities that the panicked and pessimistic are missing. You might go in slowly (as I recommend) or go “all in”, like professional poker players do.
Investing is like playing poker. Winners and losers are decided by understanding the psychology of the people involved.
The current psychology ranges from negative to mindless panic. If you are positive and calm, you might be a big winner.
I always start my columns with a song and I was torn between Manic Monday and Rainy Days Always Get Me Down by the Carpenters.
A way to keep this Monday from getting you down is to rationally plot out your financial future Then do the research to understand your investments.
Don’t count on Wall Street to do your research for you. Its track record is pretty weak.
If you have a plan, keep your wits and don’t buy into panic, the expected downturn on “Manic Monday” might be a good day for you.
Don McNay is the author of Son of a Son of A Gambler: Winners, Losers and What to Do When You Win the Lottery. You can write to him at don@mcnay.com or read other things he has written at www.donmcnay.com McNay is the founder of McNay Settlement Group in Richmond, Ky.
“Just another manic Monday”
-Prince (The Bangles)
In A Piece of the Action, Joe Nocera’s classic history of personal finance, Joe cited a mutual fund manager who noted an interesting fact.
If you added up all the Monday’s between 1955 and 1985, the stock market dropped 1500 points. It did fine the other four days of the week.
That makes sense. People have the weekend to read the papers, talk to their neighbors and get negative and fearful. They walk in on Monday morning and sell.
It is the classic example of how emotion trumps reason.
I was in the financial business on “Black Monday” in 1987. The Dow Jones average lost 22% of its value in one day. It took people the weekend to digest the news from the week before.
Bad news kept coming in but people were slow to process it.
Like they have been in 2008.
As the first days of the economic crisis broke, I was stunned at how the average person was disconnected. The local news devoted its airtime to bank robberies and car crashes. People on the street wanted to talk about football or the weather. The problems of Wall Street had not made their way to Main Street.
Then came President Bush and Secretary Paulson’s first effort to sail a $700 billion Wall Street bailout through Congress. As the bill was debated, defeated, revised, laden with goodies and finally adopted, anger and pessimism spilled into the streets. Suddenly Wall Street was the only topic that people wanted to talk about.
The markets have dropped further and each day, and Americans have gotten more anxious.
Now they have an entire weekend to process the news. Negative thinking will turn to panicked selling.
Expect a very “manic Monday”. It would not surprise me if Monday broke records for market declines.
It also would not surprise me if Monday was the day of a great turnaround.
The market needs to hit a bottom so it can rebound.
I’m hoping that a “manic Monday” will get stocks to prices where people start buying again.
I have been deluged by calls and emails, many from people I don’t know.
Most want reassurance or guidance. But many are sitting on the sidelines, itching to buy.
They look at companies like Ford, GM or Apple (none of which I have ever owned) and wonder if there will some be bargains.
I don’t know. But it is a good time to do some research and find out.
If you have done your homework and know your investment, you know when it is at a good price or a bad price.
I’m in the structured settlement business, so my knowledge is focused on annuities and insurance companies. Although I did it earlier in my life, I have not sold stock or mutual funds in a decade. I only track stocks that I own.
People can do well when they take their time to do research. In the era of the Internet, there is a ton of information about anything you might be interested in owning.
After careful research, you may see opportunities that the panicked and pessimistic are missing. You might go in slowly (as I recommend) or go “all in”, like professional poker players do.
Investing is like playing poker. Winners and losers are decided by understanding the psychology of the people involved.
The current psychology ranges from negative to mindless panic. If you are positive and calm, you might be a big winner.
I always start my columns with a song and I was torn between Manic Monday and Rainy Days Always Get Me Down by the Carpenters.
A way to keep this Monday from getting you down is to rationally plot out your financial future Then do the research to understand your investments.
Don’t count on Wall Street to do your research for you. Its track record is pretty weak.
If you have a plan, keep your wits and don’t buy into panic, the expected downturn on “Manic Monday” might be a good day for you.
Don McNay is the author of Son of a Son of A Gambler: Winners, Losers and What to Do When You Win the Lottery. You can write to him at don@mcnay.com or read other things he has written at www.donmcnay.com McNay is the founder of McNay Settlement Group in Richmond, Ky.
Thursday, October 9, 2008
Machiavelli and the Economic Crisis (second draft of column)
Machiavelli and the Economic Crisis
Come on baby, don’t fear the reaper.
-Blue Oyster Cult
I wish one of our economic leaders had been a political science major.
George Bush has an MBA from Harvard. Henry Paulson has an MBA from Harvard. Ben Bernanke graduated from Harvard before he became a Princeton professor.
The crisis is not boding well for the Ivy League.
I used to wish the economic leaders had gone to state schools and owned a corner grocery store. I felt they were out of touch with average Americans.
The problem is simpler than that. None of them understand political philosophy or crowd psychology.
Every aspiring political science student has read, The Prince by Machiavelli. One lesson from the book has stuck with me.
Always give bad news in one dose.
The worst thing a leader can do is dribble out bad news a little at a time. Like the crew in Washington is doing now.
When the $700 billion Wall Street bailout plan was proposed, someone called into a radio talk show and asked me what would happen to the Dow Jones average if the bill did not pass.
I said it would drop 50% in one day. Then we would start over again
If the Washington crew had read Machiavelli, maybe it would have happened that way. .
Instead, Congress passed the bailout bill. The markets continue to decline day by day.
Now people are really scared. I can’t blame them. Each day, there is bad news followed by bad news. No one knows when it will stop.
People need certainty. Even if the news is terrible. It is easier to come back from one big disaster than a series of little ones.
We spent $700 billion and it didn’t give us certainty. I’m not really sure what it gave us.
I’d love to have the money back.
I wish Bush, Paulson and Bernanke had spent less time reading about market theory and more time on philosophy and psychology.
We are past the point where market theory has anything to do with the economic crisis. Decisions are driven by fear and human behaviors.
The kind of behaviors that Machiavelli figured out 500 years ago.
I wish more of our business leaders understood history and philosophy. Too few do.
When you see the current economic crisis, you need to look at world history to get some answers.
Once you do that, you come to the same conclusion as Harry Truman, “the only thing new in the world is the history you don’t know.”
This is not the first, or the last, economic crisis that the world will face. There have been worse. No one is starving or rioting. At least not yet.
We need to draw upon the knowledge of the ages
Machiavelli gave us the first answer. Let bad news happen in one swoop.
The gang in Washington screwed that up. So now what do we do?
Listen to Machiavelli again. Stop trying the “fix of the day.” Let some companies that are “too big to fail,” go ahead and fail.
Get the garbage out of the system at once rather than let things keep sliding.
The government should completely protect savers, home owners and insurance policyholders. No one else.
Wall Street CEO’s, with their million dollar bonuses, would be out of luck.
People were horrified when I first suggested that we let things bottom out. People said, “the Dow Jones will drop 5000 points in a day.”
I would have rather have had it drop 5000 in a day than 5000, in gradual steps, like it did.
Once the markets hit bottom, smart investors, like the Warren Buffett’s of the world, will come back and start buying. We will be back on the way up.
If we had done it my way, we would have still had $700 billion in the till when that happened.
Not learning the lesson of Machiavelli has been a root cause of the crisis. Politicians never want to give bad news.
People can handle bad news. Especially when it comes at one time.
I learned early in my business career that people want you to lead with the worst news first.
If I have to fire someone, I always start the conversation with that fact. I don’t dribble it out over an hour.
I’ve remained friends with most of the people I have fired. Once the shock wore off, the former employees appreciated my candor.
History tells us that we can survive any kind of disaster. The key is to get the disaster completely on the table so we can deal with it.
Which is the lesson Machiavelli taught us 500 years ago.
Don McNay is the Chairman of the Board for McNay Settlement Group in Richmond Kentucky. You can read his award winning, syndicated column at www.donmcnay.com or write to him at don@donmcnay.com. McNay is Treasurer of the National Society of Newspaper Columnists.
Come on baby, don’t fear the reaper.
-Blue Oyster Cult
I wish one of our economic leaders had been a political science major.
George Bush has an MBA from Harvard. Henry Paulson has an MBA from Harvard. Ben Bernanke graduated from Harvard before he became a Princeton professor.
The crisis is not boding well for the Ivy League.
I used to wish the economic leaders had gone to state schools and owned a corner grocery store. I felt they were out of touch with average Americans.
The problem is simpler than that. None of them understand political philosophy or crowd psychology.
Every aspiring political science student has read, The Prince by Machiavelli. One lesson from the book has stuck with me.
Always give bad news in one dose.
The worst thing a leader can do is dribble out bad news a little at a time. Like the crew in Washington is doing now.
When the $700 billion Wall Street bailout plan was proposed, someone called into a radio talk show and asked me what would happen to the Dow Jones average if the bill did not pass.
I said it would drop 50% in one day. Then we would start over again
If the Washington crew had read Machiavelli, maybe it would have happened that way. .
Instead, Congress passed the bailout bill. The markets continue to decline day by day.
Now people are really scared. I can’t blame them. Each day, there is bad news followed by bad news. No one knows when it will stop.
People need certainty. Even if the news is terrible. It is easier to come back from one big disaster than a series of little ones.
We spent $700 billion and it didn’t give us certainty. I’m not really sure what it gave us.
I’d love to have the money back.
I wish Bush, Paulson and Bernanke had spent less time reading about market theory and more time on philosophy and psychology.
We are past the point where market theory has anything to do with the economic crisis. Decisions are driven by fear and human behaviors.
The kind of behaviors that Machiavelli figured out 500 years ago.
I wish more of our business leaders understood history and philosophy. Too few do.
When you see the current economic crisis, you need to look at world history to get some answers.
Once you do that, you come to the same conclusion as Harry Truman, “the only thing new in the world is the history you don’t know.”
This is not the first, or the last, economic crisis that the world will face. There have been worse. No one is starving or rioting. At least not yet.
We need to draw upon the knowledge of the ages
Machiavelli gave us the first answer. Let bad news happen in one swoop.
The gang in Washington screwed that up. So now what do we do?
Listen to Machiavelli again. Stop trying the “fix of the day.” Let some companies that are “too big to fail,” go ahead and fail.
Get the garbage out of the system at once rather than let things keep sliding.
The government should completely protect savers, home owners and insurance policyholders. No one else.
Wall Street CEO’s, with their million dollar bonuses, would be out of luck.
People were horrified when I first suggested that we let things bottom out. People said, “the Dow Jones will drop 5000 points in a day.”
I would have rather have had it drop 5000 in a day than 5000, in gradual steps, like it did.
Once the markets hit bottom, smart investors, like the Warren Buffett’s of the world, will come back and start buying. We will be back on the way up.
If we had done it my way, we would have still had $700 billion in the till when that happened.
Not learning the lesson of Machiavelli has been a root cause of the crisis. Politicians never want to give bad news.
People can handle bad news. Especially when it comes at one time.
I learned early in my business career that people want you to lead with the worst news first.
If I have to fire someone, I always start the conversation with that fact. I don’t dribble it out over an hour.
I’ve remained friends with most of the people I have fired. Once the shock wore off, the former employees appreciated my candor.
History tells us that we can survive any kind of disaster. The key is to get the disaster completely on the table so we can deal with it.
Which is the lesson Machiavelli taught us 500 years ago.
Don McNay is the Chairman of the Board for McNay Settlement Group in Richmond Kentucky. You can read his award winning, syndicated column at www.donmcnay.com or write to him at don@donmcnay.com. McNay is Treasurer of the National Society of Newspaper Columnists.
Draft fo Machiavelli & The Economic Crisis. Column for Friday
Machiavelli and the Economic Crisis
Come on baby, don’t fear the reaper.
-Blue Oyster Cult
I wish one of our economic leaders had been a political science major.
George Bush has an MBA from Harvard. Henry Paulson has an MBA from Harvard. Ben Bernanke graduated from Harvard before became he became a Princeton professor.
The crisis is not boding well for the Ivy League.
I used to wish the economic leaders had gone to state schools and owned a corner grocery store. I felt they were out of touch with average Americans.
The problem is simpler than that. None of them understand political philosophy or crowd psychology.
Every aspiring political science student has read, The Prince by Machiavelli. One lesson from the book has stuck with me.
Always give bad news in one doze.
The worst thing a leader can do is dribble out bad news, a little at a time. Like the crew in Washington is doing now..
When the $700 billion Wall Street bailout plan was proposed, someone called into a radio talk show and asked me what would happen to the Dow Jones average if the bill did not pass.
I said it would drop 50% in one day. Then we would start over again
If the Washington crew had read Machiavelli, maybe it would have happened that way. .
Instead, Congress passed the bailout bill. The markets continue to decline day by day.
Now people are really scared. I really can’t blame them. Each day, there is bad news followed by bad news. No one knows when it will stop.
People need certainty. Even if the news is terrible. It is easier to come back from one big disaster than a series of little ones.
We spent $700 billion and it didn’t give us certainty. I’m not really sure what it gave us.
I’d love to have the money back.
I wish Bush, Paulson and Bernanke had spent less time reading about market theory and more time on philosophy and psychology.
We are past the point where market theory has anything to do with the economic crisis. Decisions are driven by fear and human behaviors.
The kind of behaviors that Machiavelli figured out 500 years ago.
I wish more of our business leaders understood history and philosophy. Too few do.
When you see the current economic crisis, you need to look at world history to get some answers.
Once you do that, you come to the same conclusion as Harry Truman, “the only thing new in the world is the history you don’t know.”
This is not the first, or the last, economic crisis that the world has ever faced. There have been worse. No one is starving or rioting. At least not yet.
We need to draw upon the knowledge of the ages
Machiavelli gave us the first answer. Let bad news happen in one swoop.
The gang in Washington screwed that up. So now what do we do?
Listen to Machiavelli again. Stop trying the “fix of the day.” Let some companies that are “too big to fail,” go ahead and fail.
Get the garbage out of the system at once rather than let things keep sliding.
The government should completely protect savers, home owners and insurance policyholders. No one else.
Wall Street CEO’s, with their million dollar bonuses, would be out of luck.
People were horrified when I first suggested that we let things bottom out. People said, “the Dow Jones will drop 5000 points in a day.”
I would have rather have had it drop 5000 in a day than 5000, in gradual steps, like it did.
Once the markets hits a bottom, smart investors, like the Warren Buffett’s of the world, will come back and start buying. We will be back on the way up.
If we had done it my way, we would have still had $700 billion in the till when that happened.
Not learning the lesson of Machiavelli has been a root cause of the crisis. Politicians never want to give bad news.
People can handle bad news. Especially when it comes at one time.
I learned early in my business career that people want you to lead with the worst news first.
If I have to fire someone, I always start the conversation with that fact. I don’t dribble it out over an hour.
I’ve remained friends with most of the people I have fired. Once the shock wore off, the former employees appreciated my candor.
History tells us that we can survive any kind of disaster. The key is to get the disaster completely on the table so we can deal with it.
Which is the lesson Machiavelli taught us 500 years ago.
Don McNay is the Chairman of the Board for McNay Settlement Group in Richmond Kentucky. You can read his award winning, syndicated column at www.donmcnay.com or write to him at don@donmcnay.com. McNay is Treasurer of the National Society of Newspaper Columnists.
Come on baby, don’t fear the reaper.
-Blue Oyster Cult
I wish one of our economic leaders had been a political science major.
George Bush has an MBA from Harvard. Henry Paulson has an MBA from Harvard. Ben Bernanke graduated from Harvard before became he became a Princeton professor.
The crisis is not boding well for the Ivy League.
I used to wish the economic leaders had gone to state schools and owned a corner grocery store. I felt they were out of touch with average Americans.
The problem is simpler than that. None of them understand political philosophy or crowd psychology.
Every aspiring political science student has read, The Prince by Machiavelli. One lesson from the book has stuck with me.
Always give bad news in one doze.
The worst thing a leader can do is dribble out bad news, a little at a time. Like the crew in Washington is doing now..
When the $700 billion Wall Street bailout plan was proposed, someone called into a radio talk show and asked me what would happen to the Dow Jones average if the bill did not pass.
I said it would drop 50% in one day. Then we would start over again
If the Washington crew had read Machiavelli, maybe it would have happened that way. .
Instead, Congress passed the bailout bill. The markets continue to decline day by day.
Now people are really scared. I really can’t blame them. Each day, there is bad news followed by bad news. No one knows when it will stop.
People need certainty. Even if the news is terrible. It is easier to come back from one big disaster than a series of little ones.
We spent $700 billion and it didn’t give us certainty. I’m not really sure what it gave us.
I’d love to have the money back.
I wish Bush, Paulson and Bernanke had spent less time reading about market theory and more time on philosophy and psychology.
We are past the point where market theory has anything to do with the economic crisis. Decisions are driven by fear and human behaviors.
The kind of behaviors that Machiavelli figured out 500 years ago.
I wish more of our business leaders understood history and philosophy. Too few do.
When you see the current economic crisis, you need to look at world history to get some answers.
Once you do that, you come to the same conclusion as Harry Truman, “the only thing new in the world is the history you don’t know.”
This is not the first, or the last, economic crisis that the world has ever faced. There have been worse. No one is starving or rioting. At least not yet.
We need to draw upon the knowledge of the ages
Machiavelli gave us the first answer. Let bad news happen in one swoop.
The gang in Washington screwed that up. So now what do we do?
Listen to Machiavelli again. Stop trying the “fix of the day.” Let some companies that are “too big to fail,” go ahead and fail.
Get the garbage out of the system at once rather than let things keep sliding.
The government should completely protect savers, home owners and insurance policyholders. No one else.
Wall Street CEO’s, with their million dollar bonuses, would be out of luck.
People were horrified when I first suggested that we let things bottom out. People said, “the Dow Jones will drop 5000 points in a day.”
I would have rather have had it drop 5000 in a day than 5000, in gradual steps, like it did.
Once the markets hits a bottom, smart investors, like the Warren Buffett’s of the world, will come back and start buying. We will be back on the way up.
If we had done it my way, we would have still had $700 billion in the till when that happened.
Not learning the lesson of Machiavelli has been a root cause of the crisis. Politicians never want to give bad news.
People can handle bad news. Especially when it comes at one time.
I learned early in my business career that people want you to lead with the worst news first.
If I have to fire someone, I always start the conversation with that fact. I don’t dribble it out over an hour.
I’ve remained friends with most of the people I have fired. Once the shock wore off, the former employees appreciated my candor.
History tells us that we can survive any kind of disaster. The key is to get the disaster completely on the table so we can deal with it.
Which is the lesson Machiavelli taught us 500 years ago.
Don McNay is the Chairman of the Board for McNay Settlement Group in Richmond Kentucky. You can read his award winning, syndicated column at www.donmcnay.com or write to him at don@donmcnay.com. McNay is Treasurer of the National Society of Newspaper Columnists.
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