Tuesday, October 14, 2008

American Dream Kills Six, Nearly Seven, In One Day

The Karthik Rajaram family was living the American dream in Sorrento Pointe, a gated community in the foothills of the Santa Susana Mountains 23 miles northwest of downtown Los Angeles.

Yet late last week, the dream came crashing in on them. Beset with financial worries after not finding work for months on end and seeing his future evaporate, Rajaram shot and killed his wife, three children and mother-in-law before turning the gun on himself.

As police were announcing the murder-suicide to reporters, Keith Olbermann was telling viewers about Annie Yoke who was about to be removed from her foreclosed Ohio home by Sheriff deputies. So distraught at what had become of her life, she shot herself in the chest. Deputies found her lying bleeding but alive on the floor when they arrived to evict her. She is 90 years old.

At least six people dead and one attempted suicide in a single afternoon as a direct result of Bush-McCain economic policies that ruined the American economy – to say nothing of destroying countless families’ hopes for living the American dream.

"It is critical to step up and realise we are in some pretty troubling times,'' the deputy police chief told the Los Angeles Times.

Welcome to the United States in 2008.

Country Be Damned

Amidst the despair and dismay gripping much of the nation, reports coming from the Treasury Dept. say that yesterday’s meeting between Secretary Hank Paulson and a dozen CEOs of troubled banks turned acrimonious when the bankers balked at giving up their seven and eight-figure bonuses and severance packages in exchange for a government capital infusion.

These already-wealthy men who, with help from the Republican hierarchy, caused the dire financial crisis gripping the world would rather let the nation get flushed down the toilet than sacrifice a bonus. Of course, their salaries wouldn’t be touched; they’ll still earn millions annually. But Congress attached a few strings to the $700-billion it authorized to bail out the Titans of Terrible – among them, foregoing their Midas-sized bonuses and severance packages that will enable their grandchildren’s grandchildren to live more than comfortably.

In effect, they are yelling, “Nation be damned, I want my bonus!”

Life is tough at the top. But it’s not nearly as tough as it is for people in the middle, to say nothing about those farther down.

Middle income investors have withdrawn more than $81-billion from stock mutual funds since the beginning of the year, with nearly 40% coming in the last six weeks, according to AMG Data Services, an industry research firm.

“It is a lack of faith in America,” Pat Emard, 65, of Aptos, Calif., told The New York Times. Recently retired, now she worries she may have to go back to work. “People have lost faith in our government.”

“It’s very hard to have much faith in what the government is doing when they change it every day,” Jane Snow, a 73-year old retired Chicago school teacher says. “As you read more and more about how we got into this situation, you have less and less faith of how we’re going to get out of it.”

Clearly, people such as Jane Snow are living on a very different planet than that occupied by the CEOs who spent Monday whining about giving up their bonus.


To get a sense of how people are coping, I went to Bogelheads.com, a discussion board formed by followers of John Bogel, founder of Vanguard Funds. One of the boards asks people how they are coping with financial stress.

“More meds,” declares Linda.

Judsen is more laid back, writing “Mind over matter is how I do it. If I don't mind it don't matter.”

Tall Grass explains, “I get out in the open air and chase hawks with my Remote-Control airplanes ... never catch 'em, they fly better than I do.”

And Jane writes that she maintains her equilibrium by “Venting all my fear, anger, frustration and guilt here on this site instead of bringing it home to my family!” Too bad Karthik Rajaram didn’t know about the bogelhead site; it might have saved his family.

Meanwhile, John McCain is sounding more like a Bobble Head doll than a bogelhead. On Sunday, he said he would announce a major new financial plan on Monday. By Monday, a campaign flack said no such initiative was in the works. But McCain did use a town hall appearance in North Carolina to talk about his once-abandoned, now-resuscitated plan to do something about mortgages. But unlike previous town hall meetings, McCain scampered off before taking any questions.

While McCain babbled nonsense, Barack Obama was laying out a detailed, seven point economic recovery plan to a Toledo audience. Crucially, he said it should be enacted now, not in 99 days when he would take office if elected. His Senate staff is preparing a piece of legislation based on his ideas.

After yesterday’s market rally, some of the bogelheads may feel better. But the market slid again this morning and Nobel Prize winning economist Paul Krugman notes ominously, “we haven’t yet seen anything like a return to normality in credit markets. TED spread is down but still at nosebleed levels; three-month T-bills at 0.48%, showing that flight to safety remains strong.”

Jane Snow, the retired school teacher, is still worried. “You don’t go through life thinking the bank I do business with could go belly up tomorrow. This is a new feeling people are living with.”