Tag Archives: TARP

Those Damn Banks!

We’ve heard it before.  I’m sure we’ll hear it again.

Wall Street banks and their greed caused the Great Recession.  And what’s more, it’s those same banks, sitting on our money given to them via TARP, that are KEEPING us in recession because they won’t lend money!

Greedy bastards!

But is it true?

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So Much For The GM Love

So the other day I gushed about my man crush with GM.  I love Chevy and have always rooted against Ford.  But with the government bailout of GM and the destruction of 100 year old bankruptcy law by the administration, I left my love on the side of the road and embraced Ford.

I was only too happy to have GM pay back their money.

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Ford vs. Chevy

Finally!  I can go back to rooting for my old favorite.  GM was able to pay back their loan from Uncle Sam nearly 5 years early.

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This is Where Obama is Getting His Jobs

Zero Sum Game

A Lesson in the Tender Mercies Of Organized Labor

November results for car makers:

Ford’s U.S. sales surge 33% in December

GM handed in a 6.1% sales decline

Chrysler…reported a 4% dip

Toyota Motor Corp. said its U.S. sales increased 32.3%

Gawd, it is SO nice to be right.

Freddie and Fannie: Just the Beginning

I am convinced that Fannie and Freddie were the causes that led to the current recession.  I am sure that when incentives were created to give people money who had no or little ability to pay that money back, bad bad things were going to happen.

But somehow all of that got lost in all of the fall out.  What we heard was how evil those greedy corporations are.  What we heard was how Wall Street doesn’t look after Main Street.  What we heard was that it was Big Corporations that are somehow “Too Big To Fail” that brought this country to its knees.

What we didn’t hear was the story behind Fannie and Freddie:

NEW YORK (Reuters) – Freddie Mac, the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a “prolonged deterioration” in housing.

And why is the company losing so much money?

delinquencies worsened on loans it guarantees.

Well, heck, what can ya expect?  The little brother of Fannie Mae is surly the runt of the litter and can only look on as big sister excels, right?  Right?

Its larger rival Fannie Mae on Thursday said it would need $15 billion from the U.S. Treasury after a whopping $18.9 billion third-quarter loss.

Whoops!  Didn’t see THAT one coming.

But hey, Fannie and Freddie–ya know, they are players but really, they aren’t THAT big; are they?  Or are they?

Results at Freddie Mac and Fannie Mae are widely watched as a barometer of the U.S. housing market since they own or back nearly half of outstanding mortgages.

Jeepers.  By golly, they ARE that of a player in the market!  And maybe, just maybe, when those two players begin to change the way in which they do business, the rest of the market attempts to adapt?

In other words,  I guess what I’m saying is that when Fannie and Freddie, backed by good Ol’ Unc [that’s the USofA to you and me], begin too incent market forces to provide mortgages to people who can’t afford mortgages, you end up with a bunch of:


But hey, what’s $51.7 billion between friends?  Or even $60.9 billion?  At least your good for it, right?

Starting in 2010, the company will begin accounting for $1.8 trillion in mortgage-backed securities it guarantees on its balance sheet to meet new guidelines. This will increase interest income and interest expenses, and could have a significant negative impact on net worth, it said.

Hmm, something smells in the State of Denmark.

Shares of Freddie Mac were flat at $1.23 in light after-hours trading following the results.

And if you’ll buy shares at a buck 23, I have some fertilizer for your garden…

A Breeze – Not Wind – of Change

This can’t be good news for Obama.

AT FIRST sight, the idea that Europe has anything to teach America about tackling unemployment seems preposterous. America has some of the most flexible labour markets in the developed world, while continental Europe, in the popular imagination, is a sclerotic place with powerful unions, rigid labour markets and high entrenched joblessness. Over the past quarter-century America’s unemployment rate has averaged 5.8%, compared with 9.5% in France and 9.1% in Germany.

This picture may be changing. Although output in the euro area has fallen as much as in America, the unemployment rolls have not grown as much. The euro-wide jobless rate is up by less than a third, compared with a doubling across the Atlantic. At 9.7%, euro-area unemployment is high, but slightly lower than in America, where new figures due on November 6th were expected to show joblessness hitting double digits.

Unemployment Comparison

Well, then again it might.  I am convinced that our President is out to build a more left leaning European socialist state than the right leaning socialist state that we have now.  So really, it’s hard to tell.  But what I mean, really mean, is that The Economist is actually calling him out on it!

The United States has put in place a hefty fiscal stimulus, but relatively little of that money has gone into labour-market policies—schemes to slow firing, boost hiring or support the jobless.

Europe’s policymakers, in contrast, appear to have a more coherent strategy: one which uses government money to subsidise a shortened work week, cuts labour costs and, in a few cases, offers tax subsidies to support new jobs. The OECD says 22 out of 29 of its member countries have extended support for workers on furlough, and 16 have cut payroll taxes and other social contributions

Now, before we get all “crazy talk” here, I wanna point out that shortened work weeks and paid furloughs are NOT my ideas of economic good ideas.  And as I was reading my edition of The Economist at my favorite Thai place, I just about lost my belly.  See, I mostly think that The Economist calls itself The Economist because they wanna trick conservatives into reading leftist views.  Almost as if…. But then, in a last second Hail Mary, The Economist pulls off the improbable:

Consider the subsidising of shorter work weeks, continental Europe’s most dramatic innovation. By in effect paying firms to hoard workers, governments have slowed the rise in joblessness and helped prop up consumer confidence and demand. In a vicious temporary slump, driven by a credit crunch and the collapse of global spending, such subsidies make short-term sense. But they prop up demand by fossilising a country’s job structure and preventing the shift of workers from industries with excess capacity (like carmaking) to more promising ones. That ossification will surely come to haunt continental Europe. And in an economy like America’s, where the end of the debt-fuelled consumer-spending binge is forcing big structural shifts, it would be insane.

And the revolution over at The Economist continues:

That is why Europe’s governments are right to focus on waiving or reducing their high payroll taxes, especially for additional hires. And it is why American proposals to finance an extension of unemployment insurance with payroll taxes are misguided. Heavy labour taxes are one reason why Europe entered the downturn with far higher unemployment than America. Lightening that burden would do most to boost jobs—on both sides of the Atlantic.

Thai tasted a whole lot better today.  And it was just some more bad news for Obama.

12,000 Jobs Created

Minnesota is reporting that they have saved or created nearly 12,000 jobs due to the stimulus package. That’s more than 1 per lake, and Minnesota has a lot of lakes!

So, how much stimulus money did Minnesota get? About $4.7 billion.
How much has Minnesota spent? About $1.6 billion.
So, at this rate, how many jobs is Minnesota predicting? 35,000.
And the White House, how many did THEY predict? 66,000.

So, even using their own numbers, the White House and Minnesota is falling short by 47% of the predicted total, or 31,000 jobs.

And the jobs that WERE created? Let’s see:

  • $16.6 million to put 5,800 youth to work over the summer.

So, let’s see.  The state spent $16.6 million to hire a bunch of kids for the summer?  And that counts as a job saved or created?  So, really, what Minnesota is saying is that they saved or created 6,200 jobs.  5,800 high school kids having summer jobs doesn’t count.

Way to go Minnesota!

Money as a Signal

I run another blog that is basically a conversation between a real good friend of mine.  We end up talking lot’s of politics.  And my latest entry kinda sums up on how I feel about money.

I thought it would be good to double post that entry here today.

The Cost of Money

The Two Best Laughs of the Day

And both are right here:

This has to be the best URL ever!


LOL.  Serious.  LOL.

I mean, really.  If someone sent that to me in email, I would think it was a hoax.  But the URL is only the second best laugh of the day.  The top laugh of the day is the page display when you actually go looking for financialstability.gov: