Did HP CEO Mark Hurd deserve to be ousted?

What are your thought about this video and big banks?

"Interest-only" mortgages, which enabled borrowers to defer principal payments for several years, thus keeping their monthly payments temporarily artificially low, were used during the boom years to get folks into homes they couldn't really afford.

An analysis undertaken for The New York Times by First American Core Logic, a real estate information firm, revealed that in the next 12 months, $71 billion of interest-only loans, "which put off the principal payments for five, seven or 10 years," will reset.

During the latter half of 2010, another $100 billion will come due and borrowers will have to begin to repay the principal. After the second half of 2011 (less than two years away), another $400 billion will reset. The Times' story indicates that there are "2.8 million such loans on lender banks' books totaling $908 billion."

Since most of the loans are "under water" (the properties are now worth less than the amount of the loan on them), it is highly unlikely that the homeowners will stay in their homes. It is highly probable that they will default as the interest-only period expires and the payment jumps substantially (payments on many loans will soar by as much as 75 percent).

David Sisko, a director at Deloitte, who advises mortgage services, "expects foreclosures to continue to soar as job losses make it more difficult for services to modify loans." Sisko recently told Dow Jones that "the industry is trying to turn lemons into lemonade."

This will set off a catastrophic tsunami. Prices will fall, not only for the homes being foreclosed upon, but also those in their neighborhoods, since there will be so much more product on the market. RealtyTrac, which reports monthly foreclosure data, indicated that in August, there were 358,471 foreclosures filed in the United States (an increase of more than 18 percent from last August).

In the meantime, the banks involved with the initial foreclosures will take a significant impact to their balance sheets due to the regulatory mandate that they be written off as "non-performing assets." The other banks (or other lenders) for the remaining homes will see their collateral drop, since these homes will lose value as the appraisal process works its way through the neighborhood.

There is another way, one that will keep existing homeowners from automatically defaulting. It will also keep the lenders from writing down their loans.

That is simply continue with the same program of allowing the current homeowners to pay interest only, on their loans, thus avoiding a default. Extend this condition for another five years. Most of the homeowners have jobs and are dutifully making interest payments.

In five years, most people believe home prices will firm up. Wages will rise and those very same homeowners will be in a better position to begin paying down their debt. In addition, as times get better, the huge inventory of homes that banks currently possess because of foreclosures will be reduced, as they are gradually sold off. In the meantime, the banks will avoid massive write-offs and the neighborhood will be stabilized.

While the banking industry will have to accept a somewhat slower repayment schedule, this can easily be mitigated by reducing the typical new 30-year mortgages to 25 years, thus speeding up repayments on all new mortgages issued. There are many other such structural solutions to the problem, but the key today is to forestall and defuse the potential problem that exists now from such a meltdown in the near future.

This will keep people in their homes, keep banks from writing off loans, and avoid affecting other homes within the neighborhood. Clearly, this approach is better than triggering another time bomb of defaults as the interest-only period expires and payments jump dramatically.

We should reach out to our local representatives, both federal and state, to be sure this simple solution will be heard, giving it maximum exposure. There will be a lot of push-back from those who will cite "contract law" and the idea that, once an agreement is made, it should be adhered to.

The fiscal landscape has changed dramatically. Other "rules" have changed. Other accommodations have been made that are too numerous to cover in this piece. Certainly, we can execute this common-sense approach to keep our citizens in their homes during these temporary but very trying times.

Martin Tuchman is CEO of the Tuchman Group and vice chairman of First Choice Bank.

Randall Stross's article in the New York Times, “Only the Rich Can Afford It”, regarding Tesla Motors seems to miss the bigger point.

In it he criticizes, Tesla, an automotive manufacturer, that has not only designed one of the few electric cars made today, but is actually manufacturing and currently selling these vehicles.

He attempts to make the argument that only the very rich, i.e., billionaires can afford this car and rails on about the unfairness in helping Tesla Motors to get to the next stage.

Just to give some background on Tesla, they have designed not just a beautiful automobile but one that is functional as well. It is interesting that they have taken a “concept car" design, something in the past we have seen presented in Detroit, but by the time it hits the production line, the only thing representing its original concept is perhaps the headlights.  Even GM's much vaunted Volt does not look like its original, on the contrary, it is bland, to say the least.

What Stross does not understand is that here is an opportunity to demonstrate to everyone what can be accomplished. When the Tesla begins coming off the production line and hits the streets, I sense the general public will collectively look to the automotive industry and ask, “Why can't you do this?”

Why not reward success? Tesla is not asking for a bailout. Not only have they proven that the technology works, they already have a product that people are buying. What they are requesting, is the funding to take the technology to the next level, thus making it possible to make cars that would be affordable to the general public. And since we are talking about affordability, please keep in mind the gap between acquiring a gas guzzling SUV and the Tesla today is about 50 -60 thousand, while not an insignificant amount certainly not a pre-requisite only for billionaires and the like.

This is a great product. It works. It's selling. We should reward the company that has been successful and not the ones who only deliver empty promises.

In her blog, "Princeton Comment," Barbara Figge Fox covered Paul Krugman's April 18 presentation at Princeton University. She reported that the Nobel Prize winner in economics said, "Technology creates demand for new stuff ... if you can get dramatic, technological change ... regardless of how badly we screw up, we will recover if we do have radical technologies that spur lots of investment. Extremely cost-competitive green technologies ... would be perfect right now."

Krugman is on the mark. Typically, countries extricate themselves out of severe economic slumps by increasing their exports. This is not going to be the case this time.

As Krugman indicates, "We can't all export our way out of it unless we can find a planet to sell to." Nor is there much support for ramping up consumerism. Everyone seems to agree that Americans need to spend less and save more. If we are going to spur wide demand for products, they will need to be necessities, not luxuries.

Getting the economy out of the doldrums has historically taken an extraordinary occurrence. In the case of the Great Depression, it was to a large extent World War II. It takes something special in order to get people to part with their hard-earned money in difficult times. Early on, the automobile was such a driver. After a war, a pent-up demand drives the economy. People want things. They are willing to build them and pay for them over time. The homebuilder and the automaker get paid up front. It is the banks and other financial institutions that provide the "upfront" cash to pay these products. Then, the consumers promise to repay the debt over time.

To accomplish the above, people who are acquiring products must have jobs. That's really what is meant by "confidence" in the economy. In this regard, government grants to state and local governments for shovel-ready projects under the economic stimulus program is the right medicine for our ailing economy.

Currently, aside from the lack of confidence, there is a lack of interest on the part of the consumer and on the part of business, and lethargy on the part of government. There are only so many iPods people will purchase and only so many songs they will download.

Products are needed that can be made by workers working in this country and consumed in this or other nations, e.g. solar panels, solar systems, turbines that generate electricity through wind power, hybrid electric vehicles as well as all-electric vehicles.

Nowadays, very few people argue against alternative energy -- only the cost, effectiveness and efficiency are discussed. What we need is a "Put a Man on the Moon"-like green technology initiative that embraces a series of well-thought-out energy grants, investment tax credits, accelerated depreciation; sensible "energy sell-back" legislation could provide a great deal of employment and is the way to go. Surely, a country that dreamed up the "securitization" model and complex hedges against floating rate changes can come up with a plan to put Americans to work producing electricity.

The nice thing about such an initiative is that it would accomplish several things simultaneously. It would provide work for unemployed Americans and manufacture a real product vs. just having a plan of simply throwing money at something and calling it "stimulus," and it very well may be a product we can export to other nations.

It is one thing for politicians to declare themselves for alternative energy while chastising automakers, utilities and our own citizens for being insensitive to the environment; it's another thing to lead by example. It is time to mandate that the postal service use hybrid vehicles. Not just a token amount in a "test area," but a sweeping declaration that this is what should be ordered across the board.

Since utilities are regulated by various government agencies, a mandate can impose that all their vehicles be hybrids. The same approach should be taken with regard to every branch of government. It is only then that the American people will get behind the program and purchase hybrids themselves.

The same is true for the alternative energy scenario. Why is the government attempting to encourage its citizens to acquire solar paneled roofs when we don't see them on government buildings? The message has to be there for all to see.

There also has to be a different mandate when it comes to selling back electricity to the "grid." There are some regulations in place that discourage the production of surplus electricity over and above that which is currently used by the addressee. This means there is no incentive for anyone to build a larger facility so as to earn credits.

By setting an example, combined with funding alternative energy as a method for job creation, this nation will be more prosperous, less dependent on foreign energy and experience a greater sense of homeland security. The Obama administration should provide bold leadership on this issue, which could be transformational for our nation.

The news media are replete with stories about those who have allegedly lost more than $50 billion as a result of investing with Bernard Madoff, in what may turn out to be first worldwide Ponzi scheme scandal in history.

According to Wikipedia.com, "A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of money paid by subsequent investors rather than from profits." The scheme is named after Charles Ponzi, the Boston swindler who became notorious for using the technique after immigrating to the United States in 1903.

Ponzi and Madoff paid their investors a small amount of money derived from a large pool of money. It is often explained that, in a Ponzi scheme, the new money coming in is used to pay off the older stakeholders, but this is not necessarily true.

The money is being distributed to all stakeholders. For example, if there is a pile of surplus cash available one month and no new money comes in that particular month, a "distribution" can still be made. What really happens is a "return of capital," rather than a distribution of a dividend from earnings generated from the enterprise. The problem with this model is that it is not sustainable.

How many companies in corporate America have similar situations?

Look at companies distributing cash in the form of "dividends" that are greater than their earnings. Some even tout the positive aspect of this, claiming the stakeholders need not pay taxes on the distribution, or a portion thereof.

All banks paying dividends that are reporting losses are really operating a similar scheme. Other than using buzz-words such as "transparency" to hide behind, these companies are executing, economically, the same activity: distributing funds from a pool of assets belonging to the stakeholders themselves, to the very same stakeholders, without creating new wealth.

Ever wonder about a stock buyback program? If a company is buying back stock in an amount greater than its earnings, its similarity to a Ponzi scheme is that it, also, is not sustainable in the long run.

A better approach for a company that is intent upon distributing a dividend would be for the company to make a "stock dividend." While the entity receiving this piece of paper can recognize an amount of cash if it so desires, it can only do so by selling the stock on the open market. In this case, the company itself is not diminished, since it issued shares, not cash. Once a real "cash" profit is made, a distribution can be made on all the shares outstanding.

For the past several years, companies have been operating a simple variation of a Ponzi scheme: paying out that which was not really created. The reason it has morphed into a true disaster is due to the addition of leverage, or borrowed funds, to acquire stock and equity positions in entities that are claiming to make such superlative returns.

With debt so cheap, it became a tantalizing opportunity to borrow in order to take advantage of the "spread" between what a Madoff-like return would be vs. the low cost of borrowed funds. So, individuals and corporate investors end up losing not only everything they have, but also what they don't have.

What should be done about what has occurred? At the very least, corporations should spell out in bold type, with complete transparency, the "return of capital" in their quarterly and annual reports. "Return of capital" data should be required whenever comparing one company with another.

Clearly, good corporate practices dictate that companies should not be buying back stock in amounts greater than their earnings and should not be paying a dividend if they are operating at a loss. Whether these "good corporate practices" should be guidelines or regulations is a topic for full and transparent discussion.