Sizing Up the Vote Against the Wall Street Bailout

I was trying to have a business lunch while watching the US House of Representatives vote regarding the Wall Street bailout on TV. It wasn't easy. On the one hand, I wanted it to pass. I grew up with two parents who were raised during the Great Depression and the life they lived has had an impression on how I look at things. Generally speaking, I have denounced the philosophy of fear and scarcity that I grew up with, but when they spoke about the problems with banks and the fears of the Stock Market, I had to take notice. On the other hand, passage of this bill would be the abandonment of moral hazard on Wall Street and further promote a financial system growing out of control.

I was a little surprised that the bill didn't make it. I actually expected it to do more than squeak by, let alone crash and burn. It demonstrated how deep the angst of the American voters is and how great the fear is among members of Congress towards those voters. We have an election that is less than six weeks and the more vulnerable a member of Congress, the less likely he or she was going to vote for it. Clearly, many members rightly feel like they are in the cross hair of angry voters.

Most Republicans were making more than a "protest vote." Some felt that $700 billion being voted on in such a short time frame didn't make sense. What could be hidden in a bill that virtually no one had enough time to thoroughly understand it? Most feared there could be plenty and it gave Secretary of the Treasury Henry Paulson carte blanche authority for bailing out other financial institutions (including some outside of this country). Most Republicans wanted a proposal that didn't have taxpayers bearing the lion's share of the proposal. They wanted a system more like the Federal Deposit Insurance Corporation, where the banks have to pay a premium to protect their accounts. They offered a list of other reforms that would have dramatically reduce the final costs of the multibillion dollar bailout by hundreds of billions of dollars.

The Republican proposals didn't even receive serious consideration because they didn't offer quick or simple solutions, would require more pain on Wall Street (and also Main Street) in order to achieve long term reform, and simply didn't have the "panacea effect" that investors are looking for. The bottom line is that Wall Street and Washington wants average Americans to do the hard work that our politicians and financial institutions should be responsible for.

In the end, I'm glad that the House Republicans put the breaks on this proposal. Certainly, we need some type of bill to get us out of this situation, but it should be done with deliberation and not at the expense of future generations.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Suze Orman Could Use a Lesson in Economics

Suze Orman, middle America's favorite financial Advisor, has become the poster child of the Federal Deposit Insurance Corporation. She was on the Today Show on NBC singing the organization's praises and assuring Americans that the government is coming to the rescue in light of the current financial crisis on Wall Street. And it appears she is on the agency's payroll, since she dominates its' MyFDICInsurance.gov home page.

In light of the chaotic frenzy both Wall Street and Main Street are in, it would be nice to have a calming voice. That is exactly the role she tried to play, although I will say she looked extremely stressed out while trying to make her case.

My biggest concern came when the interviewer asked about the economic impact of people having their accounts insured. Orman pointed out that if you have $100,000 in a FDIC insured account, that money is safe. That statement is largely true. But the interviewer than asked "what if this leads to thousands of people needing to cash in on the insurance?" Orman's answer was something to effect that "Americans have nothing to be concerned about, the US Government has a check book and will pay for every account that is covered by the agency. Taxpayers will never have to pick up the bill." That was quite a mouthful.

First of all, that agency (like all government agencies) exists due to taxpayer funding. All taxpayers have already paid into it.

Secondly, and more importantly, is the high costs behind the "checkbook" she spoke so warmly about it. If the costs of accounts going bad exceeds the amount of money in the agency's budget (a very real possibility in light of our current crisis), the government will likely fund (at least) some of it through the simple printing of money. Essentially printing counterfeit dollars to pay for the program. As government prints new money, without an increase in productivity, the value of all money goes down. This is the definition of inflation, which is the worse tax program of all.

I have actually been a fan of Suze Orman and still believe she has advice that is helpful to many Americans. However, this interview on Today makes me question either the extent of her honesty (because of how outrageous her statements are) or the extent of her knowledge (because she should know better). At the very least it would make sense for her to get a basic refresher course in economics.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Congressional Democrats Show Priorities When It Comes to Working "Over Time"

Senator Harry Reid (D-NV), Majority Leader of the US Senate, has declared that he and his Democratic colleagues will work "around the clock" to solve our financial crisis. In a very real sense, this shows where his party's values and priorities are.

Of course it is all good and well that the Congress that played a pivotal role in getting us in this Wall Street crisis, would do something about getting us out, but the same Democratic leaders have not been nearly as interested in helping average Americans with a crisis that has been equally challenging to most. That is the raging rise in gas prices that has seen exponential growth, especially since the Democrats have taken over both Houses of Congress.

During the summer recess, many Republican Members occupied the US House and demanded Congressional action on our energy situation. Drill here, now, every where, and there too. Meanwhile the Democrats were dismissive about it and more interested in pursuing reelection rather than the needs of the vast majority of their constituents. They didn't see an energy crisis, but an opportunity to reduce demand on gas which would help conserve the commodity and lower pollution. It was a "good" problem that the "gasoline addicts" in this country needed. Tell that to the average American who was looking for relief and needed a break.

It is interesting that a party that has marketed itself as the "party of the people" will show up in mass to address Wall Street's concerns, but took a vacation when it came to the biggest issue facing average Americans. To me, it is unconscionable and they do it with a very straight face.

Instead of being embarrassed by their elitism -- going to premiers of Al Gore's "An Inconvenient Truth" in fleets of SUVs and lecturing the rest of us to take a bus -- they behave as though they simply know best and it would be better if we did what we were told. With the Democrats, average Americans get gouged while Wall Street gets a hand out, and they are for the people? You have to be impressed by their unction.

There is plenty of fault to go around in our nation's current financial crisis. Republicans, Democrats, Congress, White House. However, the Democrats hypocrisy when it comes to their treatment of the issues of Wall Street and the average American, they appear to be for the average person in their public relations, but for the elite in DC and Wall Street when it comes to their policies. I hope we remind them of that in November.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Fox Business and News Breaks Bailout Agreement

I just received an email from Jessica Rice of Fox Business who was telling me a story that will most likely be missed by most in the media -- the role of the Fox networks in breaking the federal bailout story, and of Fox Business in particular. She wrote that "this afternoon, FOX Business Network’s senior Washington correspondent Peter Barnes was the only one to obtain the Senate Banking Committee agreement of principle outline that Senator Democrats and some Republicans had agreed upon to propose to the President today at the big economic meeting."

She added that "Barnes... had the first concrete piece of paper we saw on this outline. Additionally, this afternoon at 12:54 PM ET, after a fundamental, initial deal had finally been reached between Democrats and Republicans on Secretary Paulson’s $700 billion bailout plan, FOX Business Network beat all the major cable news networks" with this information.

Finally, Rice indicated that Fox Business "was the first to report news of the deal at 12:54pm ET, followed by Bloomberg, FOX News Channel, CNBC, MSNBC, and CNN."

Some have argued why there was a need for an additional business network and others, because of their ideological agendas, have suggested that Fox wouldn't be taken seriously. News Corp has always been a leader in innovation and journalism. From the creation of a television business news network that pursues the interests of Wall Street to Main Street in Fox Business or in its purchase of the Bible of the financial world, The Wall Street Journal.

The thing I have enjoyed in working with the network is the sense of family I have seen that is so contrary to journalism today. I have had Alexis Glick, David Asman, Jonathan Hoenig, and others from the network on the program and their genuine love for their network is seen in the way they perform their jobs and how they represent the company.

In addition to providing a sense of understanding in its concerns about Main Street it also maintains a commitment to being "fair and balanced" that is similar to its sister station, Fox News. Because we have become so accustomed to a media bias with a driven agenda, we often see Fox as "Conservative." Honestly, it is only in the context of how blatantly liberal much of the rest of the media remains.

I congratulate Fox Business on these firsts as it approaches its very first anniversary. I am expecting even more from the network in the years to come.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

The 50 Richest Members of Congress Might Surprise You

Recently, while taking my boys to Scouts, I indulged in one of my favorite guilty pleasures -- listening to Michael Savage. I admit, I can't handle him in massive doses, but his depth of knowledge is amazing and his candor is off the chart. I often get the next blog idea from listening to his show. Tonight he spent some time discussing the 50 richest members of Congress (source: Roll Call). He focused on how these politicians (whom he referred to as "mobsters") were rich and planning on staying that way through the policies they perpetuate to bail out financial institutions. I will make a few different observations.

• The top ten may come as a surprise to many. Seven of the top ten were Democrats and not Republicans. This included number one, former Democratic nominee for President John Kerry (D-Mass). So much for the "party of the poor" mantra that the Democrats love to rally around. No wonder the American voters had a difficult time buying Kerry's case that he was "for the poor" and worth close to a quarter of a billion dollars ($230.98 million).



• Twenty-one of fifty are in the Senate, although the house out numbers them four to one. The Senate is a millionaires boys club if there ever was one, with one-fifth of them worth at least 7 digits. The list ends at 50, there are probably several more between $999K and $5 million (the bottom of the list) that are among these numbers.



• Some of the richest might surprise you. I would think most Americans had not heard of Jane Harman, Darrell Issa, Robin Hayes, Vern Buchanan, and Gordon Smith. Each are worth $28 million or more.



• Others are household names. John Kerry (mentioned before, the former Democratic nominee), Rockefeller (yes, from that family, a great grandson of the financial giant), and Edward Kennedy (who also enjoys family money).

The bottom line is that both Houses of Congress are homes of enormous affluence and neither party can accurately argue that they are some how "for" the poor because of their personal lives. The Democrats have been postured as the party "for the poor" by both their own communications and by the media for decades. The only true measure is in the policies they promote. And then it isn't money going to the poor or tax breaks for particular groups, it is measured by the impact policies have on poverty.

Ironically the best example of fighting poverty happened when both parties worked together. A Republican Congress and a Democrat President essentially wiped out "poverty as we knew it" by signing bills that put strict limits on how long one could be depended on government, which provided incentive for people to move towards higher incomes and work. As a result of that policy the percentage of poor has declined over the last decade after years of growing in number.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

What Happened to the Democrats?

A few weeks ago November was expected to be a bloodbath for Republicans. Republican members of Congress were choosing to retire rather than face extinction, recruiting new candidates was becoming a nightmare for the GOP, and historians were predicting the biggest landslide victory for the Democrats pursuit of the White House since 1984. On that year, Ronald Reagan won every state except Minnesota, the home of the Democrat nominee. Now, John McCain has a slight lead by virtually every major poll.

So what happened to the Democrats?

Barack Obama. The Democrats have faced buyers remorse ever since they bought into an Obama candidacy. Increasingly it is becoming clear that, if Democrats knew in January what they know now it is highly unlikely he would be their nominee. Reverend Wright’s rampages on the horrors of America, Michelle Obama believing the US is fundamentally “mean,” Barack Obama’s love for everything European and fundamentally low view of those things that make up common America.

Energy. Americans have always had this view that they would never tolerate the ridiculously high gas prices common in Europe, but we have been doing exact that. Furthermore, Democrats have indicated that those prices are a good thing. They believe we Americans are mere addicts and need to be cut off from our supplies and force to conserve. They are more frightened about drilling more here and now than being dependent on countries that sponsor terrorism. In other words, their energy solutions blame Americans when they should blame the policy makers. That is what Republicans have been doing as they occupy an empty House of Representatives and teach Democrats lessons in energy economics. That is what McCain has done in choosing Sarah Palin (the government of Alaska which is home to our best source of domestic drilling). Energy is serving as a huge divider between Democratic candidates and voters.

International affairs. When Russia attacks one of our strongest allies in Eastern Europe, Barack Obama calls for “restraint” on both sides and says that the UN Security Council should handle it. Of course, Russia is a member of that Security Council and has veto power, making it toothless in dealing with Russia. It is these kind of foreign policy gaffes that are making Obama look unprepared verses McCain who looked extremely Presidential as he denounced Russia and said that the US should take reasoned but unilateral action.

Sarah Palin. Palin is arguably the most strategic choice for VP I have ever seen and I have been watching Presidential politics closely since the 1970s. She accentuates Republicans best issue (energy), she electrifies women voters who are angry over the treatment of Hillary Clinton, she is more Conservative than the rank and file could hope for (bringing many of those disenfranchised voters back to the fold), and she is obviously a very savvy campaigner.

A few months ago Republicans looked destined to suffer further loses in both Houses of Congress as well as the White House. I believe the Democrats have their work cut out for them when it comes to the Presidency and we could all be surprised by the make up of the Congress.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Obama Vs. McCain: Battle of the Regulators

Obama is boasting that he is the true regulator and that John McCain is a "Johnny Come Lately" with a history of being a champion of deregulation. Meanwhile, McCain is arguing that he has a long history of being a responsible regulator and being willing to toughen the laws when it made sense.

The problem on Wall Street has more to do with incentives than regulations. Regulations have, by their very nature, serious limits. Regulations are the tactics of paternal government, often forcing businesses to do what is contrary to common sense, but meets government mandates.

When I think of regulations, I think of what was one of the regulatory capitals of the world, the former Soviet Union. In the old Soviet model, the authorities wanted a certain number of plates of glass to be produced and mandated the businesses to produce a high quantity daily or face heavy consequences. So the factories made thin sheets of glass, most of which broke before they left the factory. Will that didn't work, so the authorities demanded that the factory produce glass that was very heavy and would be awarded according. None of the glass broke in the factory, nor in transportation, but they also didn't fit when it reached its destination.

In the formerly Communist Poland, that country produced the largest number of environmental regulations of any country in the world, yet it had the highest pollution levels. In fact, when I travelled there shortly after the fall of Communism, I found it very difficult to even breath. Aristotle spoke of the "tragedy of the commons," in which things decline if they are not owned. Ownership, and the responsibility associated with such, is a necessary element for anything to get better.

This leads to the current arguments about the crisis in the financial markets today. In my opinion, the situation has more to do with an increase in government intervention, not a lack of it. Any changes in law should increase the burden of responsibility on financial institutions rather than facilitate the corporate welfarism that is rampant today.

Amity Shales of Bloomberg has offered three new rules that the financial markets clearly need:

• "First, no more bailouts." We must take the "moral hazard" of businesses being bailed with virtually no consequence seriously and allow companies to swallow the poison they have brewed for themselves. Allow one of these companies to be dwindled to nothing due to bad decision making and be swallowed by a competitor which will fire those who made such horrible choices. Yes, the market will suffer in the short run, but it will have an "enema effect" that will result in a healthier economy in the long run.


• "Second, clean up the rating system so that numbers speak something closer to the truth." The ratings systems on stocks on Wall Street are driven by people who make a living off their selling. It is not unlike the proverbial foxes watching the hens. Consumer Reports is considered the most credible leader in protecting individuals from shady products because they won't take advertising from the companies they monitor. We need a systematic approach to stock by someone (or thing) who doesn't have a vested interest in their performance.


• "Third, make the U.S. more competitive by lowering corporate taxes and other levies so foreign firms will want to fill our new vacuum." Shales points out that "the worst thing about John McCain's new ``crisis'' advertisement is that it suggests a strong man -- and not a strong country -- is the answer. Here President George W. Bush's response, that he had faith in our economy, was more useful." I couldn't agree more. The US already has the highest corporate tax rates of any modern economy in the world besides Japan. Cutting taxes is the fastest way to get the US back on its feet.

Our economy needs more ownership and responsibility, not paternal regulations. We need more incentives to make good decisions and not obstacle courses to avoid bad ones. I am convinced that if these candidates try to win the regulatory game as the solution to our economic woes, the losers will be Wall Street and Main Street.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Cash Flow "Insurance": A Lesson from Ike

On today's Price of Business I interviewed Larry Korkmas, who is an expert on business disaster and recovery (click image for another recent interview on the subject). On today's show -- the first live one since Hurricane Ike -- we talked about the smart things businesses did and are doing to prepare for disaster.

So many individuals discuss the importance of insurance. There is no doubt about it, you want to protect your property and valuables for a situation like Ike. Unfortunately, insurance only protects cash (or property with money), but it doesn't protect the thing most important to keeping a business going and growing, which is cash flow. Cash flow comes by being able to take care of customers while others cannot. When you hire an expert like Korkmas, companies come as close as possible to having "cash flow" coverage.

Disaster preparedness is the business equivalent of playing "small ball" in baseball. It is about making sure the little things are done in order to keep your company online. Here are just a few examples:

* Companies should maintain a traditional dial up Internet plan so that they will have back up for their WIFI.

* Businesses should get additional wireless from their cell phone providers that they can use on their laptop. "Back up" is the name of the game for disaster.

* Companies should consider getting an 800 number that cannot be affected by such disasters so their clients can at least leave messages, regardless of the phone situation.

* They should know, in advance, the capabilities of the building they work in when it comes to disasters. Does the building have generators? How has it held up in past storms? You want to always ask these questions before disaster hits.

* Following a disaster, be prepared to get on the phone and make calls, put information about your business status and how companies can get help from you online.

* If you can't help your clients in the primary service they have you for, help them any way you can so that when they get to normal, they would include working with you as a part of that scenario.

* Redundancy is crucial. Backup everything on your computer and make sure that it is outside of the disaster area.

Most of the items that will keep you available to your customer are not expensive, but are very valuable. Simply being able to be there for your customer is the most important element in your company's long term survival. Many companies will not be going on long after Ike, those that do will be the ones who placed high priority on the little things that kept their lights on, both figuratively and literally.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Do You Have a "Knack" for Business?

Recently a publicist sent me a fascinating book that I believe will help entrepreneurs in their efforts to build their business. It is called “The Knack: How Street Smart Entrepreneurs Learn to Handle Whatever Comes Up” by Norm Brodsky and Bo Burlingham. It is the compilation of the work of other successful entrepreneurs: their life stories, brilliant strategies, and “hands on” experiences.

The book isn’t scheduled for release until October 2, 2008, so you are getting a sneak preview of it in this blog post.

I receive many interesting books every month, several of which fall under the radar screen because of the large number of them. This one caught my attention. Frankly, the destructive power of Hurricane Ike has me thinking I might have to think differently about business.

What I like about it is that it is both profound and quite simple. It isn’t merely lofty strategies on business that you would find in the classroom, but “rubber meets the road” issues such as what to do when your customers stop paying in a timely manner, what to do with the problem of creeping expenses, how to keep customers when your competition pursues serious price cutting, and more.

However, the book is rich in areas that many (if not most) in business think about. In it the authors explain:

Why you should never confuse good sales with good cash flow
Why having competitors is better than being first to market
Why a “sales mentality” is dangerous to your business
Why it is smart to hire sales people from outside your industry
How to judge if your business is viable

What impresses me most about the authors is that they are, on the one hand, serious business writers with years of experience writing a column in Inc. Magazine. On the other hand they are serious entrepreneurs in their own right, having had mentored many successful business leaders.

I read a great deal of business literature for this blog and my radio show and over time it is pretty easy to cut through the rhetoric of those in academics that know little about business in the real world and the true business leaders that know exactly what they are talking about. Brodsky and Burlingham fall in the latter. When October 2 comes, get your copy.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Recovering from Ike

It would be nice to say that this storm is behind us, but its impact will be with us for weeks or months to come. It is the most devastating storm that I have ever seen and its implications are far worse than I have ever experienced (Allison pounded me personally and was horrible for many, but won’t touch the impact of Ike).

Ike is strange. On Saturday I enjoyed the Internet and had water pressure. Now I am boiling water and using almost any means necessary to get information online. A day after writing this post I have full water pressure and the Internet. It is all very interesting. It is clearly a situation of two steps forward, one step back. This creates a sense of vulnerability that I had not felt just on Saturday. You want to feel as though you are only making progress. Storms such as this are not always so accommodating.

We were very fortunate in that we lived just a block or so from a hospital. Our neighborhood was a priority and we are not enjoying power. Most of my friends are without power and have no idea when it will return. Oddly, I actually feel a little guilt. Don’t worry, I will get over it, but it is life after a hurricane.

The long term economic implications are going to be significant. Everyone whose business is Houston has customers at various levels of stability. We are better off than most, but we are only as well off as our weakest clients. We are going to be limping along like our customers.

I have lived in the Houston area since 1990. Since that time the benchmark of a major Hurricane had always been Elisha from the early 1980s. Now people say it is the biggest one since Carla (from the early 1960s), which means Ike will become the most common benchmark. When people in the Houston area talk about “the big one,” it will be Hurricane Ike.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Dispatch From Ike

I have lived in the Houston area for almost two decades and I have slowly become desensitized to those things called Hurricanes. Ike, however, was a big one though and we Houstonians don't like Ike. It actually made me very nervous days before it hit. But my family always stays. We stayed for Rita while others died on the road trying to get away from it. We have decided that if the government wasn't explicitly telling us to leave, we were staying. We weren't part of the evacuation orders and we were not going.

We lost a gate, accumulated a nice body of water in the back, have limbs and leaves all over the front yard and that is about it. But the surrounding area looks like something out of a sci-fi movie. Most stores remain closed and those that are open remind me of the old Soviet Union where the lines were long and the product choices were short. It isn't pretty. We were told to expect up to four weeks to get power restored . We lost ours around 2 am and it was back by 8.30 pm. It helps to live a block from a hospital. Millions, I am told, are still without power and we have a curfew that begins at 7 pm.

Still, there was an upside to the storm, especially on a personal level. I didn't lose anything, unlike the situation with Allison who took my home and car in 2001. But there is also the sense of community that comes from such a storm. Neighbors helping neighbors. People outside and talking to each other because it is more comfortable than being in the house. Parents spending more time with the kids and siblings actually playing together rather than video games, because electricity is out. It is all very nice and reminds me of the good old days that we all miss.

Then again, we couldn't be happier when we saw the truck from the power company come down the street. It was already pitch blank and we gave collective applause we saw that multi-light, crane connected, dream machine cruise down our street. Quickly we were on the quest for the remote and dying to get to the refrigerator that we needed to keep close all day because of our power problems. So much for simpler times! We did all enjoy fighting over the remote though. Together.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Lehman Brothers: Another Government Bailout?

Many from the world of business are concerned over the situation at Lehman Brothers and for good reason. It was announced this week that the finance giant has gone from being interested in an appropriate suitor to looking dangerously close to needing a fire sale. No worries though, Uncle Sam appears poised to bail them out. Yes, the government is getting ever deeper in the finance industry, with the latest news that Lehman Brothers is in crisis mode and the company's stock continues to shrink in value (over forty percent in the past week). The mortgage situation that has pounded so many companies is now hitting another financial giant.

Lehman Brothers' situation was centerpiece of a discussion on Fox Business this week. Here are some comments from Dick Bove, analyst with Landenburg Thalmann, on the finance company (for more see the video above):

The possibilities of a deal for Lehman:

“I think that there will be a deal and I think that the Treasury’s very interested in seeing that a deal occurs because if there is no deal and if Lehman has to come back to the market on Monday and Tuesday…then Lehman will be in deep trouble and the Treasury will have to step in.”

The type of "deal" we are talking about:

“I actually think that one big bank will do it and I do believe that you change the whole economics of running Lehman if a big bank acquires it.”

WaMu vs. Lehman Brothers

“I have a different opinion on Washington Mutual. I actually think that Lehman is a very good company and I think it has a lot of quality assets. WaMu does not. This is one that I think the U.S. Treasury is going to have to get involved in. I think there’s going to have to be an assisted merger, and I think the Treasury is going to have to come up with money on this one.”

I personally think Bove is only half right. WaMu is a mess as is Lehman Brothers. Lehman is suffering from the continued fall out from the sub prime mortgage crisis and has lost a record $2.8 billion in the second quarter of this year alone. The only way Lehman survives is with government intervention and, with what we have seen from Washington as of late, we can expect it.

However, this is the kind of corporate welfare that average Americans should be alarmed about. Such acts on the behalf of the government were "precedents" a short time ago and are evolving into common practice. Unless there are consequences for such behavior, the "moral hazard" only grows for those on Wall Street and leads those on Main Street to simply scratch their heads.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Poll Show Obama Wins by a Landslide

It's true that McCain and Palin should probably give up. Obama wins by a landslide. This is the story from BBC of a survey of the 22 countries they provide news service to. That list includes Australia, Brazil, Canada, China, Egypt, France, Germany, India, Indonesia, Italy, Kenya, Lebanon, Mexico, Nigeria, Panama, the Philippines, Poland, Russia, Singapore, Turkey, the UAE, Britain and the United States. Unfortunately for Obama, the United States is in the survey, but on its own now leans slightly towards McCain (at the time this was written). Also unfortunate for Obama, it is the only country that matters.

Here are a few results from the survey:

* At the time of the poll, all the countries surveyed wanted Obama over McCain. Again, the results have changed recently where it matters, with US surveys showing a dead heat or a slight lead for McCain.

* 17 of 22 countries expect improvements in US relations with the rest of the world under Obama.

* America's NATO allies and Australia were most optimistic about what an Obama Administration would do for US relations (61 percent).

The reasons for such results outside of the US may be attributed to several different reasons. He is the least American (in the traditional sense of the word) of any candidate in our country's history. Even he has discussed the contrasts between him and other Presidents (a tactic that has backfired). For quite some time the non-US world has often been hostile to Americans. Furthermore, he tends to demonstrate an elitism that is common among European politicians, but doesn't resonate very well in this country. His recent remarks about the inability of most Americans to speak any French may have went over well in Europe, but angered people here who wonder why he is concerned about our French, but not about the huge foreign population here that doesn't know English. It is that some what strange incongruity that has many here less excited than those around the planet.

Than there is the bad news for Obama found in the results. In addition to the fact that his weakest level of support is in the only place where surveys such as this matter, Obama isn't the only candidate to have had similar favor and less than satisfactory results. ABC notes that "a similar BBC/Globescan poll conducted ahead of the 2004 U.S presidential election found that, of 35 countries polled, 30 would have preferred to see Democratic nominee John Kerry, rather than the incumbent George Bush, who was elected." Isn't there a famous statement to the effect of "what does it profit a man to gain the whole world but lose the Electoral College?" It is something like that.

Kevin Price accurately predicted that Joe Biden would be the VP candidate of Obama three days before the announcement. He predicted a woman would be McCain's VP days before as well. Get his commentaries in your email box by contacting Info@HoustonBusinessShow.com.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Is Buffett Bearish on Banks?

It appears that Warren Buffett and his Berkshire Hathaway, Inc. have become more than a little concerned about the health of banks. Reuters reported this morning that his insurance firm has "told one of its units to stop insuring bank deposits above the amount guaranteed by the U.S. federal government, the Wall Street Journal reported. The subsidiary, Kansas Bankers Surety Co, is notifying about 1,500 banks in more than 30 states that it will no longer offer a program called "bank deposit guaranty bonds."

This is a fairly far reaching move. After all, companies offer insurance products as a means of making profit. Furthermore, firms such as Hathaway are in the risk management and assessment business. This sends the message that this insurance company believes that the risks are greater than the profit potential, when it comes to this form of policy.

Typically before ending a product, insurance companies usually raise rates first. There is no word if Hathaway pursued such first. Also, there is no word yet if this is going to be an industry trend, since there is a small group of other companies who offer similar policies and no announcement from them on future plans or recent increases.

This policy was very important to banks that pursued wealthy customers who found insurance from the federal government of up to $100,000 in deposits inadequate. Much of the concern stems from the fact that the US has seen eleven banks fail in 2008 alone, the most since 2002 which some attributed to larger national financial problems following September 11th. More banks seem poised for failure, which only adds fuel to concerns.

This will force some of those wealthy depositors to do more research on where they bank, strengthen the positioning of smaller community banks (which tend to keep a closer eye on banking activities), and require customers to continue to pursue alternatives to banks for larger deposits (which often bring higher risks, costs, or both).

This policy change follows the federal government's bolstering of mortgage lenders Freddie Mac and Fannie Mae. This move by the government led to a huge rally on Wall Street, but appears to have done little for Buffett in placating his concerns.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Get his commentaries in your email box by contacting Info@HoustonBusinessShow.com.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

A Tale of Two News Sources

When it comes to the popular television news media, there really are only two sources. Fox News and virtually everyone else. Don't get me wrong, MSNBC and CNN have different personalities and they each have shows that are entertaining and informative in their own right. However, when it comes to ideological slant, CNN and MSNBC are largely Twiddle Dee and Twiddle Dum. The only difference is that MSNBC tends to be more liberal than CNN, but they are both remarkably similar.

Usually I watch Fox News and Fox Business as my primary TV information source. As I do that, I wonder how anyone could vote for the Obama and Biden ticket. It isn't that these networks simply rant against liberal politicians, but they tend to methodically review both sides and allow viewers to come to their own conclusion. Further, there is no glorification of individuals or philosophies, but typically a balancing act between various ideologies. It is true, most of the hosts have backgrounds that indicate they lean to the right, but certainly not all of them. Furthermore, when there is a larger panel of more than two or three, the voices tend to lean to the right. However, generally speaking, they seem to strive towards their motto of "fair and balanced."


There are shows I enjoy on CNN. I, of course, like Glenn Beck (who is certainly more libertarian than conservative), News to Us (which is an excellent showcase of the convergence of media), and several other programs that make up my normal news intake. However, the network's hard news shows virtually always have a liberal bent. They simply interpret news from a liberal worldview as if they were the facts. Recently my friend Jessica Colon (Young Republicans) was on the Larry King Show to talk about the McCain campaign versus Obama. The panel had her -- the sole Republican -- on with five Democrats (not including King). I have never seen that on Fox and it did not reflect well on CNN.


Things may be even worse at MSNBC. Although I love its documentaries and the network does have a token conservative, Tucker Carlson (he seems to have a shrinking role at the network). The only other member of the news team who leaned to the Right was Joe Scarborough. The former Republican Congressman use to be one of the only prominent conservative voices on the network, but he has moved slowly to the left in the minds of many since he has begun his Morning Joe program. The situation at the network has gotten so bad that Chris Matthews and Keith Olberman, both very passionate and obviously liberal in perspective, are no longer to anchor political programming because they have gotten carried away in the past sitting in such chairs. What is funny about that is these two have been replaced by David Gregory, who has been President Bush's strongest media nemesis. At least MSNBC has a sense of humor.

So what is the moral of this tale? Friends of Fox, beware, because if you think your side is going to win in November you need to be checking out the views of other networks. Ditto to viewers of MSNBC and CNN. There is a huge audience that is getting a different perspective on the candidates from your preferred news sources. In the end, I am not surprised by the wild differences in attitudes between those who have opinions based on a specific network. In fact, I am surprised there isn't more disparity of opinion.



Kevin Price accurately predicted that Joe Biden would be the VP candidate of Obama three days before the announcement. He predicted a woman would be McCain's VP days before as well. Get his commentaries in your email box by contacting Info@HoustonBusinessShow.com.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Why Obama is Offended by Palin

It is a classic example of "bait and hook." John McCain has brilliantly chosen a Vice Presidential candidate who begs the question of experience. I know, that seems contrary to conventional wisdom, but I believe that it has huge strategic value to McCain's chances of getting elected President.

Palin's relatively thin experience for such a high office creates a huge temptation for the Democrats to go on the attack. However, it is the type of temptation that they can't afford to give in to. McCain knows it and, thus the choice.

* If Obama/Biden attacks Pailin too harshly on any grounds, it will garner the Republican a huge amount of sympathy from people who are tired of seeing female candidates getting mugged. Wounds from the Clinton race are still fresh in the minds of many.

* The media has already made people sensitive about the criticism that Sarah Palin might receive. Ridiculous questions that journalists would have asked during the time of "Leave it to Beaver" and "I Love Lucy" -- about a "woman's place is at home" has everyone on the left and right up in arms. This alone should have the Democrats proceed with extreme caution.

* The biggest reason Obama shouldn't bite into the temptation is because her experience is actually more substantive (includes executive power) than the Democrat's nominee. This is also why Obama is so offended that Sarah Palin was chosen.

Obama is, without question, the least experienced candidate to receive a major party's nomination for President. Obama likes to talk about the youthful John F. Kennedy and his staff enjoys the comparison. But Kennedy was a man who was "tempered by war" and an actual hero in his own right. Furthermore, he had six years of experience in the US House and a full term in the US Senate. Obmama does not want to beg that type of comparison. Obama's complete national legislative experience is less than Kennedy's in the Senate.

Obama's reaction and his inability to avoid the temptation to attack is rooted into the same reasons why he and his team reacted to the controversial New Yorker magazine cover. You remember it. The cartoon that characterized Obama and his wife as Muslim radicals who are trying to overthrow our freedoms and disregard our traditions. Was it inflammatory? Of course, just like the same magazine implied that George Bush and Dick Cheney had a "Brokeback Mountain" relationship. The publication assumed that no one would take it seriously. Obama did because it hits too close to home.

The appointment of Palin works in a similar fashion. "How dear the Republican's dismiss me by choosing such an inexperienced VP?" is the cry from Obama. You can almost hear it when he talks. The sad thing for Obama is that Palin's executive experience makes her better poised to take the chief executive spot than Obama. That is why the Democrats should avoid attack in this area. My instincts tell me they won't take that advice.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.

Obama, Wealth, Work, and Poverty

We should want a tax code that rewards wealth to create work. Not a tax code that rewards work, instead of wealth. The latter would “succeed” only if the government was the primary source of job creation. That describes societies with command economies, such as what we saw in Eastern Europe and the former Soviet Union before the fall of Communism and in struggling developing countries today that have yet to figure out why their economies haven’t worked. Such hostile views towards wealth creation should not be found in free market economies, such as the United States, but it is exactly what we saw and heard during the Democratic National Convention (DNC).

Its funny, in my circle of friends, decrying the engines that create wealth is the equivalent of economic blasphemy. At the DNC, it was a virtue. The message of “we need a tax policy that rewards work, not wealth” wasn’t merely seen on the signs of delegates or alternates. It wasn’t the occasional mentioning of one of the many speakers that passed in front of the microphone. It came from the keynote address of the Party’s nominee for President. Barack Obama.

This sentiment of wanting to bite the hand that feeds the economy (wealth created by corporations and small businesses, not revenue confiscated by taxpayers) stood in contrast to the message heard by the candidate that I hoped would get the Republican nomination and who spoke at the his party’s Convention on behalf of Sen. John McCain, former Sen. Fred Thompson of Tennessee.

Thompson uses a Southern charm and has a disarming approach to speaking that made the logic of what he said perfectly clear, regardless of party affiliation or philosophy. Paraphrasing the Senator, Thompson pointed out that the Democrats only want to increase the taxes on a small group of people – the top 5 percent. This, we are told, has no effect on the common person. Unless you buy milk, bread, or any other consumer product at the store. Or if you have a job that is dependent on someone (or company) subject to that top five percent. The Democrats like to bemoan “trickle down economics” (where the government ostensibly benefits the wealthy, which in turn creates opportunities for others). But the trickle can be seen in more than one way. The trickle can be policies that hurt the rich and, out of simple self interest, they share the misery with everyone else. Thompson did an excellent job of warning us of that possibility.

According to economist Stephen Moore of the Wall Street Journal, the US already has the second highest corporate tax rates of any developed country in the world after Japan. That, more than cheap wages, has led to the flight of jobs and manufacturing to other countries. Barack Obama promises to push us further in that direction through tax increases.

Ronald Reagan use to say that “you can’t help America’s poor by making America poor.” Obama disagrees. He intends to help America’s poor by making more people poor, so they will have more company. An Obama administration will be very interesting indeed. I doubt, however, we can afford it.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.

Palin is the Poster Child of America

I am watching Sarah Palin as she introduces her beautiful family to the Republican National Convention and I was struck by how much she and her loved ones are so much like the rest of us. She is a woman from a small town who became the mayor of that city. Later she went on to become the governor of the state that town is in.

* Among her five children, she has a child with Down Syndrome and had to make a life changing decision and she seems rightly proud and happy with that choice.

* She has a daughter who, at the age of 17, became pregnant and made the choice to keep it (and to marry the child's father).

* She has a son in the Army who is about to be deployed to Iraq and a nephew who is already in the Navy is in the Persian Gulf.

* She has a husband who is a member of a union. That husband exercised bad judgement some two decades ago and got a DWI. He has clearly rehabilitated himself.

* She was a runner up for Miss Alaska and being a young forty something, you can still see that beauty.

Then there are things that make her decidedly unique.

* This tough minded "hockey mom" use to play strong on the ice and her attitude that made her feared on the rink is seen in the way she legislates.

* She is a life time member of the National Rifle Association and can handle a gun quite well. Enemies beware.

* She brought down a political machine in Alaska that had a governor (of her own party) enjoying a luxury private plane, personal chef, and a limo (with a driver). She prefers to drive herself, sold the airplane (rumor has it on eBay), and the family prepares their own meals. For this tough minded governor, financial responsibility in government begins at home.

* She is plain spoken and clear. She doesn't "hedge her bets" with rhetoric to amass as many votes as possible. With Palin, what you see is what you get.

It is this "known factor", seen in both McCain and Palin that you never see from Obama and Biden. The Democratic ticket changes their messages to accommodate the audience they are addressing and they provide a dangerous shell game of which we won't see the results until after November. The stakes are too great for such a choice. We need this poster child for our Republic on a Presidential ticket. I think millions of other Americans will come to a similar conclusion upon watching Palin speak.

Remember When Liberty Mutual Commercials Were Memorable?

I am as much of a fan of quality advertising as the next person and have written several articles about effective and less than effective commercials in this blog. One of the ones I have liked was the early Liberty Mutual insurance company commercial.

You know the spot, the lady prevents the man from walking out in front of cars, a man holds the door for someone who is about to drop things, another woman stops the ball from going out in front of the truck. The message is, when individuals do such it is being responsible. When it is an insurance company, it is Liberty Mutual.

Like many of the better commercials, I had to watch it a few times before I got it (yes, I can be slow when it comes to advertising). I was often too intrigued by the message. It was implying that people should be looking out for the needs and interests to others. You got to love it. When I finally got the totality of the message, I thought, “yes, that is the insurance company I want for me.”

Liberty Mutual is abiding with the adage that, if it isn’t broke, don’t fix it. As a result we are seeing them produce a more similar themed commercial. Same message, just different stories and characters. Unfortunately, they are not nearly as effective as the original. First of all, the characters aren’t as endearing, in my opinion. They are not as warm as the ones in the initial ads. Also, people are inspired by the kindness of others to do the right thing. You don’t get this in the new ad. A person witnesses a man at an amusement park giving a boy a teddy bear. In the eyes of the casual observer, the boy probably had just won. In another situation, the choice of being nice is simply obvious where a lady hands photos to a man and his son that obviously belong to them. There is little inspiration there.

The bottom line problem with the new ads is similar to the problems the entertainment industry has with movies. The sequel is rarely as good as the original. A better ad campaign would have had characters going a little deeper in individual story lines. Instead, the new spots beg criticism. You can see the movie review show hosts ready to put thumbs down. “It isn’t a new program, it is the continuation of the first one!” The other critic: “this is a complete waste of film.”

Sure, the ads still have a positive and helpful message. But they simply are not as special any more.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.

Among the Reasons I Like Fox business

I have been a faithful viewer of Fox News for years and I was giddy as a young teenager at a Hanna Montana concert as I waited for the launch of Fox Business last October. I have not been disappointed. Fox Business has made extraordinary strides in bridging the divide between Wall Street and Main Street, it has developed a personality driven network (versus purely an issue focus) that is necessary in producing quality programming, and it has more resources available on finance and business than any other network (aided recently with its purchase of the Wall Street Journal.

Fox Business is also very entrepreneurial. In spite of the vast resources of its parent company, News Corp, the network has used some good old fashioned guerilla marketing to get the word out on the network. Recently, I wrote a post about Neil Cavuto's absence at Fox Business due to his battle with MS (fortunately he is back). Within a day of that post I received a call from Fox Business thanking me for the article and to see if I would be interested in having Cavuto and other personalities on my show. My decision required very little deliberation.

Before I received that call I had already enjoyed visits with Jonathan Hoenig of Capitalist Pig (a regular on Fox's popular Cashin' In) and Charles Payne of Wall Street Strategies (and a regular on Money for Breakfast). Everyone associated with the network is eager to get the word out to others. Since the network has contacted me I have had great interviews with Alexis Glick (Vice President of Business News and an anchor of Money for Breakfast) and David Asman (Forbes on Fox and America's Nightly Scoreboard). In the next few weeks I am scheduled to interview Neil Cavuto (Managing Editor of Fox Business and anchor), someone whom I have long been interested in having on the show.

Besides being an innovative approach to marketing, the contacting of Fox Business to our media only reinforces its commitment to Main Street business, because that is what my show is largely about. Just one more reason Fox Business is one of my favorite networks.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.

Why TV May Sweat the Future

There have been numerous changes in the way people find the news, entertainment, and information they want over the last decade and most of the volatility is driven by one thing, the Internet. The Internet has required every media to innovate or become obsolete and very few traditional media maintain only one presence. Virtually everyone wants to be seen online.

Still, in spite of the best efforts to become current, television is beginning to assess its future. Recently, Mediabistro.com indicated that the ratings game is giving people a future glimpse at the long term viability of TV. It noted: "The adults 18-49 demographic remains the gold standard among advertisers -- yet TV audiences keep getting greyer. According to Nielsen's 2008-09 national universe estimates, the 55-plus age bracket is by far the fastest-growing TV audience demo -- accelerating at twice the rate of the overall TV audience."

This is very grim for TV. That demographic is usually no longer accumulating wealth, but instead preserving. They don't plan on dramatically increasing income, but trying to hold on to what they have. Advertisers worship that group that is just out of high school and up to the late 40s. They are making money and they are spending. It seems to make sense that this group will only continue to grow older and those who are behind it in age will only shrink as they become even more web savvy.

Why is this happening? Because people are finding what they want, when they want it, on the Internet. I don't need to tell you that you can find all the video you can possibly consume, audio you want to hear, and articles you need to read, online. Furthermore, you usually have absolute control of the access.

TV costs money (if you want enough channels that are worth watching) and if you want to control the times you watch programming, you have to pay extra for it (in the form of a DVR or TIVO). Increasingly, TV seems so "yesterday". In spite of its bets efforts to get more TV content on the web, most people see it limping behind the web.

Even as I prepare to give my radio show a more national presence and a TV "feel" (via video) I wouldn't even bother pursuing such if it weren't for the Internet. However, because of the Internet, the fact we own a web platform with a presence in virtually every major US city, we will have a national news program in the preferred media of the younger generations. I believe the massive shift from TV to the web will only continue.

TV won't go away, but it is going to have to continue to adapt to remain relevant.

Kevin Price's articles are found daily in national publications such as USA Today, Chicago Sun Times, and Reuters. Subscribe to his newsletter here.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review.