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$700 billion and happy days are here again....Not likely!

By: Karen J. Allen
Co-Publisher, On the Gay Horizon

Remember the 70's sitcom, Laverne and Shirley? It wasn't my favorite show, but I always wanted to live in that world. A neighborhood where you knew everybody and it was safe to walk (or skip) down the street, the greatest worry being trying to avoid Lenny and Squiggy.

But happy days these are not. It's often not safe to walk down the street.

And the eruptions in our financial sectors have been likened to the plot of a Stephen King novel.  That's not happy.  That's horror.

I never read Stephen King because he scares me --or so I thought.  It seems Wall Street has redefined fear for me.  Since digging into the Wall Street mess and its ramifications, I'm really scared.

A couple of insightful clich├ęs spring to mind:  our financial system is less stable than a house of cards --- or, maybe even more fitting:  the emperor truly has no clothes. In fact, where I grew up, they would have said he's "neked as a jay bird."

I think we all understood that the housing market was a time bomb waiting to blow.  We don't all need a PhD to know someone would pay a price for selling those too expensive homes to those folks who couldn't afford them.

But greed and arrogance can create a special kind of blindness. I think we made the same mistake when we called the Titanic unsinkable.  And our home mortgage insanity is just the tip of this iceberg.

Weapons of Financial Mass Destruction

While busily creating derivatives like CDS's (Credit Default Swaps), MBS's (Mortgage Backed Securities) and CDO's (Collateralized Debt Obligations), the wizards of Wall Street built computer models that hardly anyone really understood, and used them to bundle all of the risky mortgages to use as collateral on other risky deals. Back in 2003, Warren Buffet called these practices, "weapons of financial mass destruction."

At the heart of all of this was a reluctance to reserve....capital.  The banks and Wall Street were allowed to value these securities based on what they might be worth in the future and they were not bound to keep a reasonable amount of reserves.  As home prices fall and foreclosures rise, the value of these securities craters. Today, there is almost no market for them at all.

According to William Isaac, a former chairman of the FDIC, "The SEC has destroyed about $500 billion of capital by their continued insistence that mortgage-backed securities be valued at market value when there is no market."   I love that quote --- doesn't make any sense --- but it just seems to sum up the whole sordid affair.

Now, Treasury Secretary Henry Paulson, former CEO of Goldman Sachs --- one of the most prominent investments banks responsible for this mess --- has been given the keys to the vault.  By who?  Our Congress.  Does that make you feel as good as it makes me feel?

Who Knew We Had an Extra $700 Billion?

$700 billion is a lot to contemplate --- especially since it's our money --- yours and mine. I didn't even know we had that much to loan. Oh, that's right, we don't. We're borrowing it from China --- or are we just putting on another shift at the mints? Either way, it's not a sign of happy days ahead.

And I almost hate to mention this, but if you've looked closely at that bailout bill --- it's a 451 page thriller --- Section 115 says that $700 billion is all that Paulson can request at one time. Is it just me, or does that remind you of Iraq?

If the bailout goes as promised, it will ease the credit freeze and keep more banks from going under. But it's unlikely that it will prevent middle Americans from continuing to lose their jobs and homes. 159,000 jobs were lost in September, the biggest monthly drop in five years. Of the 9.5 million Americans now out of work, two million have been jobless for more than six months and millions more are able to only find part-time work.

Not Even Stephen King Could Write This Stuff!

Add to all of that, the fact that retirement savings are worth far less than before, and it brings us full circle to Stephen King scary.

So, what do we do?

Not make a neat pile of our insurance policies and mortgage papers and shoot ourselves like that 90-year-old woman in Akron did last week while the sheriff was knocking on the door to evict her.

No, it's not that hopeless. But it is time to pay attention. If something sounds too good to be true, you know what? It is. If you believe in things like job security or fool-proof investments or the government taking care of you, then you might need a reality check.  A reassessment.

Time for the Next Step 

I believe our community is at an advantage here. We've always known that we had to take care of ourselves and we learned during the early years of AIDS what we could accomplish when we worked together.

Opening a dialog about how we can build a safety net for GLBT seniors is something I would like to explore in the near future. I would love to hear from anyone with thoughts on this subject. Please email me at karen@onthegayhorizon.com .

 

[Ed. Note: If you are interested in a way to look out for your own financial well-being and to supplement your current income or to continue earning after you retire, check out The Internet Marketing Retirement Plan]

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Palin Reminded Me 

By: Ann-Marie Giglio
Co-Publisher, On the Gay Horizon

The Palin debate performance reminded me that we need to respect our limitations.

If we are trying to do something new --- a new exercise, a new yoga position, a new diet --- a new job --- we need to remember to respect our bodies' and our minds' limits.  Just as Sarah Palin has stuffed her head full of party-lines and consequently cannot really think about anything for herself, so may we have stuffed ourselves with our latest, greatest plan to get healthy, to return to some vision we once had of ourselves.

For example, if we decide to go running and begin with a three-mile run, our bodies will not be able to digest that challenge.  Or if we tried to hold a yoga pose much longer or deeper than ever before, we may strain a muscle.  We would be disrespecting our current limitations.  We would fail.

But if we gradually, little by little, increase our distance or our stretch every day, we would be able to run three miles or stay in plank longer in just a few short weeks --- and we would not be injured by it and have to stop.

Palin's injury came from her glut of undigested information.  Rather than be thoughtful last week, she was just full.  Her entire performance consisted of spilling her party's message, not actually answering questions.

Our injury, too, would come from not being aligned with our abilities.  This is something we cannot afford.

When we align ourselves with our task, when we are clear about our limitations, when we see where to make gradual improvements, our success happens.

Thanks, Sarah, for the reminder.

[Editor's Note: Ann-Marie Giglio, besides being a professional writer and the co-publisher of On the Gay Horizon, is the owner of a fitness studio focused on improving quality of life through the mind/body connection. She is a certified ChiRunning and ChiWalking instructor, AFAA certified Personal Trainer and Group Fitness instructor and SCW certified Pilates reformer instructor. She is currently working on a new book for GLBT baby boomers --- Lighten Up!  How to Exercise Safely and Effectively After 50 ]

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And, if you hurry, you'll get a sneak peak of what's in store for my neighbors, bright and early tomorrow morning.....

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