South Ogden City - Too Much Spending? Standard Examiner Reports.

I have not been able to attend a city council meeting for sometime due to my schedule; however I wish I had attend this last meeting to have heard the explanation for our current situation.

According to the Standard Examiner and reporter Gentry Reinhart, South Ogden City has some budget issues. South Ogden City has spent a monster $700,000 with no revenue to match it. Brent Litz of Litz & Company, performed the audit and said,

"You're in a challenging position for the general fund. You haven't got a revenue stream that's going to support all of your cost structures you've got in the general fund, and so it's going to be a challenge for you to play that game of balancing revenues and balancing costs and making sure that you keep the equation appropriate."

Some points of concern - Maintaining Facilities and also paying for a new recreation center.  OH WAIT!  If you remember from our previous meetings, the City Council told us this isn't a recreation center it is a gym facility!  Which even back two years ago they predicted we would lose money and few people would use.  See My Posts Here: Gym Facility and Rec Center Meeting (Mayor Garwood admits he will never use it.) 

It will be intersting to hear the cost cutting ideas the city has and how we will get back on budget.  So far, the city has been dipping into their general fund to make things work.  But this is not an endless pool of cash.  We need some better budgeting skills and maybe reconsider how we are going take advantage of our $2.5 Million money pit of a gym facility that we all are paying higher taxes for.

Goodbye Barnes Banking Co.

This weekend Barnes Banking Co. aka Barnes Bank closed its doors. After 119 years of business the bank is no more. Where does that leave us here in Utah or the Weber County? Barnes has a branch in South Ogden, as well as a many other places, so this story does hit close to home. Through this event I have realized two things: First, the devastating greed that caused the current financial mess is not isolated only to Wall Street but to Utah as well. Second, the economic woes of the country are just beginning to hit our state and more is to come; therefore we need to me prepared than ever.

The FDIC projects losses will reach $271 Million from the failure of Barnes. These kinds of losses can cripple a community and my heart goes out to the people of Kaysville. I was there first hand watching people coming out, with only $500 of the maximum Saturday withdrawal, wondering what they were going to do next. I saw people boxing their office up and talking about the past 20 years of their life and how they had nowhere to go. What is next? The FDIC will take over for the next 30 days allowing people to pull out their money and then they are gone forever, leaving many without a job and huge hit to our economy.

Folks, you know where I work. I work for a credit union. But never before have I seen a bigger need for people to move their finances to somewhere safe. Credit Unions are non-profit, meaning our primary goal is to make the member [customer] money. Our profits go back to the member in the form of low rates, higher interest; not to mention a 7 percent bonus dividend that we paid this year. At a credit union, you own the financial institution. You get a vote, as a shareholder, on how things should be done.

Though I am inviting you all to come to Goldenwest Credit Union; my real purpose for this post is to bring to light how horrible this bank failure is to our community and how irresponsible this bank has been in letting it happen. I feel the worst is not over in Utah and we must be prepared. If your financial institution isn’t in the top 10 percent in financial strength or isn’t highly rated on websites like bankrate.com, then it is time to move.

Other posts of interest:

http://www.abc4.com/content/news/state/story/Barnes-Bank-shuts-down-Zions-Bank-to-assist/roQDUnceIkWHAzhNcEVpjQ.cspx?rss=1451

http://www.fruitheightsfriends.com/2010/01/barnes-bank-closes-after-119-years-in-business/

http://www.ireport.com/docs/DOC-392710

http://cuesskybox.typepad.com/nexus_connection/2010/01/go-get-em-goldenwest.html

Standard Examiner Op-Ed - Missing info?

In today's Standard-X there is an interesting op-ed titled "Magical Thinking and Republican economics."   Mr. Patricio Ortega lays the blame of our economic crisis entirely on the Republican lead government from 2000-2006.  You have to love an author who insults his audience in the opening line.  Though he probably wrote this piece more to appeal to the liberal reader and make them proud to be a democrat.  I do not disagree many mistakes have been made by Republicans over the past eight years.  Many mistakes which only amplified and some ways caused many of the problems we are in today.  But I think we need to come down from Otrega's dream land and remember a couple points.

1.  Gramm-Leach-Biley Act.  Mr. Ortega lays blame to this peece of deregulation completely on the Republicans.  However he carefully omits that the Democrats Chris Dodd and Chuck Shummer saved this bill from demise.  The bill was struggling and was destined to fail.  The Democrats salvaged the bill and negotiated support for revisions to the Community Reinvestment Act.  The Community Reinvestment Act in itself pushed banks to lend more in lower-income areas and also added to our crisis. In end, Bill Clinton gladly signed both bills into law.

2. Commodity Futures Modernization Act.  Yes this is the act that allowed credit-default swaps to go unregulated.  Which was co-sponsored by democrats and republicans, then signed into law by...wait for it..President Bill Clinton.

Mr. Ortega's thesis is that Republican rule between 2000-2009 got us to the economy we are in.  Yet his first argument is about laws and acts that were created before 2000.  He completely omits serious problems in the Community Reinvestment Act and credit-default swaps have had on our economy. I am not saying his entire piece is wrong, nor am I saying Republicans didn't have a hand in the cookie jar.  But he should take a closer look at what really got us here.  No one side is fully to blame here and playing the name game (especially this late) isn't going to fix the problem.

The Economy, South Ogden, Keynes vs. Friedman

South Ogden's economy has been on mind a lot lately. Recently we talked about the deficit spending South Ogden is headed for. Though most people are saying we are headed for better times and it may appear that is true. There is still much debate on the two schools of thoughts in economics. For those who took Econ 202 you will remember the ideas of John Maynard Keynes vs. Milton Friedman. In the previous years we have been attempting to follow the free-market ideas of Friedman. We are now following a Keynesian model of thinking. I have been in support of a mixture of these ideas for sometime but looming in the back of my mind has been the future consequences of our actions today. What will these be?  If what we are doing doesn't work, what will be the result?  The following article was in Bloomberg yesterday and got me thinking:

"Federal Reserve Chairman Ben S. Bernanke is siding with John Maynard Keynes against Milton Friedman by flooding the financial system with money.

If history is any guide, says Allan Meltzer, the effort will end in tears. Inflation "will get higher than it was in the 1970s," says Meltzer, the Fed historian and professor of political economy at Carnegie Mellon University in Pittsburgh. At the end of that decade, consumer prices rose at a year-over- year rate of 13.3 percent.

Bernanke's gamble that the highest jobless rate in 25 years and the most idle factory capacity on record will hold down inflation is straight out of the late British economist Keynes. Should late Nobel-prize-winner Friedman's dictum that "inflation is always and everywhere a monetary phenomenon" prove right, the $1 trillion or more in liquidity Bernanke has pumped into the financial system by expanding the Fed's balance sheet may leave him to cope with surging consumer prices.

So far, investors and economic data both back up the Bernanke-Keynes view. The market in Treasury Inflation-Protected Securities as of April 6 indicated long-term inflation expectations of 2.5 percent, below the 2.8 percent average inflation rate of the past 10 years.

Again, it appears we are headed for success, but I am scared we could go too far and end up worse than before. How will this all turn out? I am personally preparing for the worst and hoping for the best. I am excited that South Ogden city has a lot of reserves left, nearly 18 percent. But the worst may yet have come. Spending our rainy day funds should not be done now. Instead we should trim our budget to balance.

Looking back to nearly five months ago, Councilman Bradley talked about how we are doing well and how we are on budget. Now we are headed for deficit spending. I am scared to death to see inflation of 13+ percent. I am hoping for the best; but now is not the time to spend our rainy day funds.

South Ogden - Recession Proof?

Join the Glorious Revolution!: Thank you KSL!

Another local blogger, Kirk from Ogden, has recognized that South Ogden appears to be left untouched by the current economic crisis that is sweaping through Weber and Davis county. In his blog post about KSL and their ability to manipulate the news, he opines:

"Maybe KSL should do a news story about how there seems to be no recession or slow-down in spending in an isolated area of South Ogden Utah."

(See full post here:)

Though his post wasn't specifically about South Ogden, he does point out how amazing this is--if it is true.

Have a great Thanksgiving everyone.