Savago Says!

Welcome to the one spot where you will find the truth (in my opinion) about current events and the state of our Country. Please read at your own risk, I am not one to worry about being "PC" and I dont care about anyone's feelings. This is the real world where politics are corrupt, life is not fair, and the world aches for change but no one is actually willing to work to make a difference until now! I am Savago and this is......Savago Says!

Thursday, May 28, 2009

Regional Policy Forum

Yesterday I had the opportunity to attend the Regional Policy Forum hosted by the Greater Washington Board of Trade. First, I must say that it was an excellent event and I would like to thank the GWBOT for the invite. The panelists for the discussion were:

1. Secretary Ric Brown, Office of Finance Commonwealth of Virginia
2. The Hon. Peter Franchot, Comptroller of the State of Maryland
3. Dr. Natwar Gandhi, Cheif Financial Officer of the District of Columbia.

All three of the panelists are very distinguished and highly educated individuals. Frankly, I enjoyed listening to all three speak. They were very honest and upfront, although very gloomy, about the issue facing the local economy. Below are a few points that were made:

MD, The Hon. Peter Franchot

- April tax revenue is down 32% compared to April of last year.
- MD's $1.8 billion dollar deficit will grow.
- Unemployment in MD has doubled.
- 2 more years of a downturn expected
- MD is required to present a balanced budget to legislature, however when it comes out of legislature it may no longer be balanced.
- Currently MD needs to cut an additional $200 - $300 million from the budget.

DC, D. Natwar Gandhi

- The economy is a mess and is very concerning
- Tax revenues are down $400 million in 2009, will be down $900 million in 2010, and down over $1 billion in 2011 and 2012.
- DC is required to present a 5 year balanced budget.
- DC added 4,500 new jobs this year, although an interesting fact is that DC has a 37% illiteracy rate and its citizens are not qualified for these new jobs.
- Unemployment will hit 11.5%
- Office vacancy is 7% now, and will grow to 11% in the next 2 years

VA, Ric Brown

- Estimates were for a 2009 decrease in tax revenue of 7.3%, however, currenlty it is tracking at an actual decrease of 8.6%.
- Between now and June 30, 2009 VA is predicting a shortfall of $195 million in tax revenue.

All three candidates had very interesting things to say about the Federal stimulus money. Maryland was excited to say that it is one of the first states to actually receive money because they had "shovel ready jobs". DC and VA will both receive stimulus money as well. Dr. Gandhii went as far as to say there will probably be another stimulus package. The interesting thing is that all three candidates agreed the stimulus money wasnt fixing anything but was filling holes in the budget and was preventing some layoffs.

All three candidates said there is very little interest in raising taxes. They balked at a gas tax and did not want to institute any other taxes in an election year.

Here is what all of this means:

- The economy is still in shambles. There will be much more pain to come.
- The Federal Government's stimulus plan has done nothing more than delay the inevitable and will have to be done again until we are ready to face our economic day of reckoning.
- All of our elected Politicians completely understand the only real way to get out of us is to do some serious belt tightening, slash the budget (making very serious decisions on many programs), and raise taxes. There is one problem, it is an election year and all they care about is getting re-elected. They have chosen to use stimulus money to fill the gaps in the budget until they are re-elected then they might do there job.....but lets see how things are looking then.

I must say, I think this is crap. When I run for office, and one day I will, I will base all my decisions on what needs to be done for the good of my constituents and not what will get me re-elected. When you become an elected official you take on the resposibilty to do the right thing, which sometimes is not the popular thing. Sitting around and watching our state goverment go bankrupt and not doing anything about it because you are worried about your re-election is completely unethical and in my opinion is failure to serve the public.

We need to address all of these issue NOW!!!! Someone must take a long look at the budget and make cuts where necessary and if we are running at a deficit then we need to raise revenue (taxes) or rethink certain programs. Throughout this recession our government has preached how Wallstreet was out of control and that Americans are using to much debt and dont save. I think the goverment, both Federal and State, need to take a long look in the mirror and realize they are no different.

As a side note I find it hilarious when I got into my office a paper was sitting on my desk and the front page article read.

"D.C. cuts $27.5 million from the school system."

Dr. Gandhi I know you are a brilliant man but I dont think this will help that 37% illiteracy rate.

Saturday, April 4, 2009

Executive pay and bonuses a failure before they were paid

One of the most controversial topics in the news right now is Executive pay and bonus. First, in order to perform a full analysis we need to break Executive pay into two buckets; those that got money from a bailout and those that haven't.

Any company that came to our goverment and asked for a bailout using my hard earned money should have very intense oversight and Executive pay should be regulated. You see if you are an executive and are at the helm of a company and that company has performed at the same level as if say my dog was running the company. Don't bitch and complain about your pay being limited. The truth of the matter is you are dumb, a horrible manager, a failure as a leader, and why you still have your job baffles me. Your shareholders and board should have thrown you out on your ass and shamed you for life. An executive's job is to lead an organization and to improve its operations, if you need a bailout then obviously you did not meet your job description. This is so elementry, so why are bailout executives still getting huge bonuses and pay?

As embarrassing as it is to say it is because of our elected government officials. Now, even I have to take some ownership in this. We live in a democratic society the most popular candidate wins. I voted, although not for many of the jokes we have in office, so therefore I am somewhat accountable. You see when we are signing and moving forward on all of these bailouts ie. $700 BILLION TARP, almost $800 BILLION second spending I mean stimulus plan, $1 TRILLION TALF, your elected officials didnt even take the time to read the bill. The second spending bill of almost $800 BILLION was a 900 page bill. Here is how it works our elected officials never read this. They have some 22 year old new college graduate, who got hammered at "Off The Record" the night before, write a brief summary of the bill. Our officials read the summary and ensure their personal piece of spending is still in the bill. Then they for for it. So basically we are making $800 BILLION decisions based on a 1 pager from a drunk 22 year old. Here is an idea how about holding our gov't officials accountable for their decisions. Everyone is bitching and complaining about things such as AIG bonuses. Well these wouldn't even be a problem if it was addressed before the money was handed out. We could have put any restrictions we wanted on the bailout money, companies didnt have much of a choice. The everyone in congress just dropped the ball on that.

The second bucket of executive pay is for companies that didnt need a bailout. When it comes to these individuals it is none of your business unless you are a shareholder. If you are a shareholder you elect the board of directors and they decide pay. It is a competitive free market and that is what salaries are based on. If you dont like the compensation decisions your company's Board of Directors is making elect a new board or simply sell your shares. That is your choice.

Some would say that the outrageous pay still effects them as it might encourage an individual to commit fraud or to utilize risky business decisions to meet preset goals. They worry this is in fact a risk to the entire economy and they should have a say in pay matters. What you dont understand is we have the most highly regulated markets in the world. There are several things in place to ensure that business are safe including, SEC, PCAOB, OTS, Public Audit Firms etc. etc. That is who should be held accountable in this instance. The oversight agencies that are in place should catch all of these things. I mean Enron, Worldcom, Madoff all easily should have been caught. Basic audit and oversight procedures should have caught all of these issues. We do have the controls in place, however, once again our gov't and its agencies failed us and proved they are asleep at the wheel!

Next time I will give you my opinion of our current governmental officials!!

Wednesday, April 1, 2009


For my first post I am going to tackle a big issue: The foreclosure crisis in America and who is responsible. I might be the biggest supporter there is of a free market and capitalism so it should come as no surprise that I am sick and tired of hearing about how the big banks got us into this and how everyone is a victim. Here are the actual facts

1. You and the bank entered into a contract they gave you money to buy a house and YOU are responsible to pay them back.

2. No one forced you to sign the contract (otherwise it wouldn't be enforceable) and you should have read the fine print.

3. Ignorance is no excuse!!!! Every mortgage application should have a big disclaimer on it that reads: If you need someone to explain how a mortgage works then you are DENIED and are deemed too stupid to ever buy a home!!! THANK YOU PAY ATTENTION IN SCHOOL IN YOUR NEXT LIFE!!

All of these contracts were different, some were 30 year fixed and some were adjustable. Now in a good market everything was gravy the people with 30 year fixed mortgages kept paying and if they fell behind they sold their house. The people with ARM's paid a lower rate and then refinanced when they needed to because the homes were worth more.

In a bad market there is trouble, people lose jobs and struggle to pay and ARM's can't be refinanced because there is not enough equity in the underlying asset. Now I understand the recession is bad and I feel for everyone out there struggling. My family has been hit just as hard as everyone else. However, what happened to personal integrity and pride. How is it that it is viewed as OK to walk away from your home. What has happened America? Are we satisfied with being a nation of deadbeats?

The other problem is our Country's sense of entitlement. I admit I come from the generation that has a very bad case of it. As my mother always says "if you want something, work for it"! I mean honestly you are 27 and make $70,000 a year (I live in DC I know it sounds crazy) do you really think you can afford the $800,000 home you financed 100%, the Beamer in the driveway that you put nothing down on, or how about the furniture and TV you bought at Best Buy with no payments for 12 months. Seriously, I mean $70,000/ year minus $48,000 in home interest, 12,000 in principal, $600 a month for a car payment, plus regular are BROKE!!!! If there is anything about this that is a shocker, you should probably never have children.

Now I will be honest the bank bailouts piss me off too. Banks got overly aggressive and gave credit to way to many people. I honestly think they should suffer too. However, the loans the banks made were typically good loans. You see it isn't the loans that were bad. If people held up there end of the contract then this would never be a problem. It is us the American people that are the problem, banks failed to realize that there has been a major culture shift in the U.S., Today people will take a loan and as long as it benefits them will pay it. However, when things get tough it is socially acceptable to just walk away. In my grandfather's day (the age of the great U.S.) he would starve himself before he would have defaulted on a loan and was shamed. Where is the shame America? Now don't get me wrong I am a proud American, I love my country and I am doing my part to hold up my end of the bargain. But is it really a shocker that we are beginning to fall behind other countries and it is predicted in the future the U.S. wont be the super power?!?

In my next segment you can hear me rant and rave on what is wrong in corporate America, particularly Executive Pay, and what is wrong with Politics!