The Bank Plan Delayed Until Tuesday 10.
Wall Street Journal rumors of news that the Obama administration bank rescue plan announcement has been delayed until Tuesday in order to avoid stepping on the melodrama
of the stimulus package voting in the Senate. Meanwhile Reuters publishes a quote that is third-hand from Tim Geithner as he addressed the Democratic retreat last Thursday 5, "Public assistance is a privilege, not a right." The only way to interpret this strange, pugnacious, pithy, confrontational, scolding, disdainful, condescending remark is that SecTreasury Geithner is about to treat the big banks as his welfare clients. There will be rules. There will be discipline. There will be punishment. The welfare bankers. Figure it will be more difficult to try any of the following in the open: first-class travel, $87k rugs, Bespoke, even luxury car services and liquor bills. Certainly corporate gifts are out along with trainers, gyms, clubs, golf, special friends and retirement. The welfare bankers travel to Washington this week on public transportation. By next year, we send a jitney to pick them up from the bus station, and they all stay at Fort Myers in unused BOQs. And mess with them other GIs, except the gang in uniform is not on public dole.. And by next year, the welfare rules should have spread to the law firms and their entertaining and brainless power-dressers (right).
Three-Legged Stool In Place.
Nothing about the preliminary report changes the original big metaphor of a three-legged stool. One leg is the bad banking plan to collect and administer all the bad loan portfolios and other junk on the bank books. A second leg is the home mortgage bailout, perhaps as much as guaranteeing that no one pays more than 38% of monthly income on a mortgage of a primary residence. The third leg is the stimulus package now in the Senate. The Obama administration is duly concerned with the Senate vote. It needs 60 votes to get it to conference with the House bill.
What Risk?
The global markets upticked last week in goofy anticipation that the stool was in place. With the delay, expect noise and selling. None of this is profound. The prices below are from the most traded stocks at FDR's inauguration in March, 1933. The uptick was euphoria, gaming, modest volume, lots of money on the sidelines. The market would bear market rally often for the next few years till it sold off again in 1936. Gloom is a squatter. Right now, the only time that truly matters, eyes are on the Asian markets and commodities. Expecting noise. Speaking to the pithy, bearish Jim Rogers at Singapore on Sunday 8, tonight, midnight Eastern Time. Just now: wonderful wit and smarts from traders posting on CR while watching for the Asia open:
non-TARP haiku writes:
"gotta wonder if this is all a pretext by o for a hard shift to the left later - not like that's a bad thing"
I doubt the market is going to be keen on this uncertainty. I thought last week's rally was based on securing legislation this weekend and a strong speech from Geithner on Monday. In one of the articles linked from the previous thread, it sounded like the Geithner speech might be moved to Tuesday...
O's gotta do what he's gotta do, but the contrast between what appears to be his approach and the old "get it done before Asian markets open Sunday" is pretty stark.
non-TARP haiku | 02.07.09 - 11:44 pm | #Elvis writes:
"The issue is whether this and additional stimuli can give us something like 1935 economic performance, as opposed to something like 1932 economic performance without this or other stimulus packages.
joe shmoe"
History of depressions repeat themselves. We are very 1930 right now. Only 11 years to go (although a strong bull stock market should show up in about 4 years). But, WW III will not take 11 years. I give it 5 years at best.Anonymous writes:
Mr. Market is very neurotic these days. He reads this and he might shed many points on Monday.KR writes:
I was watching the Monkeys for a least a season before i learned they were miming. I felt dumb. I have never trusted people on TV since.
What everybody seems to have forgotten is that the economy was doing just fine until the government got itself involved in it. It didn’t need three legs; or two; or one, even. It levitated the whole bunch of us to become the model and envy of the rest of the world simply by the power of its own infallible logic. The end result of fiscal logic (simply put) is profit. Once the profit motive was usurped by the 'vote' motive, all bets were off. The market got sick and could no longer function. This is where we find ourselves today.
Honestly, Obama’s remedy to regain fiscal stability reminds me of some crazy high school science project with wires, tubes and beakers all over the place. The analogy of three legs on a stool takes it out of the lab and down the hall into Mr. Meyer’s wood shop class. And even there, the dumbed down version is not likely to support the weight of a single normal-sized individual. Perhaps it would work in places like Japan where everyone sits on the floor (to eat) anyway.
Imagine the boon if most all of the State, County, and City services that they try to provide (which has obviously strained their tax base and profiles to insolvency) were in the hands of the professionals who specialize in the services.
It's ludicrous and nonsensical the path we have gone down and noone speaks to the real problems.
How 'bout Bernie Madoff as anti- hero "Greed McDunot"? At least he admitted that he bilched billions from his friends and family.
Brilliant close of KFI show!!
It's astounding to me that after the 20th century's ubiquitous failures of central planning, the US Gov't would at this late date decide to repeat the same failures here. There is an absolute disconnect between historical evidence and the mainstream media and Washington's enthusiasm for these "bailout" schemes.
It's all very simple, and the Austrian economists (Hayek, Von Mises) had it right-- there is no way for a central planning board to quantify the various needs of a society in advance, there is no way for a small oligarchy to predict--let alone effectively provide for-- all of the micro-decisions individuals make on a daily basis which form the backbone of an economy. If the 20th century can teach us nothing else, it has shown repeatedly that central planning always leads to shortages, wasteful surpluses, corruption, and in many cases, often war.
I would say I can't wait until 2010 so we can vote these guys out, but I have no faith whatsoever in the Republican party. There is literally no one in the public sphere advocating small gov't/pro-economic freedom, and the topic itself is not even part of the debate. Try to talk about this stuff with people and they often look at you like you're a John Bircher in a cold war bunker, keeping your eyes peeled for a Commie invasion. The people seem to want the Big Nanny state, history be damned, and that's what they're gonna get.
Well, let them try to make the best of it. They're all either crooks or useful idiots.
pulp - Don't make the mistake of thinking that what you regard as "failure" does not show up as "success" in another part of the ledger. Look at who is driving these policies. It's the government. If the economy should fail, who wins? It's the government.
By the time all this is over, we will no longer have a choice (as in elections). That's why this is so dangerous. The private sector will have been nationalized. Everyone will be equally dependent on government largess. It will be the government that determines what you do and how you go about doing it. As such, the distinction between success and failure will be moot.
The American people have elected to live under one-party rule. They were under the assumption that this one party would be benevolent and work in their best interests. Instead, as is becoming increasingly evident, government is only working in its own (self)interest. What you are now seeing is the systematic dismantling of the any remnant of the opposition. (Fixing the economy is the last thing on their minds.) To them (Democrats), this spells 'success'. We, the people, no longer figure in their calculations. Better start thinking about taking that civil service exam.
Yes, help the welfare bankers, they really need the money. NOT! A CIG CEO made 18 billion dollars in 2001 that is an obscenely amount of money for one person. That is enough to pay off Zibawe's debt.
They created the mess and now the taxpayer has to bail them out...it is crazy.
I was reading The Times, they were talking about bringing back the guillotine to get the greedy bankers in London.
The more things continue in their "downward spiral," "recession" and now "depression." The masses will be looking at the government/bankers heads to pay for their arrogance and decadance.
The International Bankers made this mess and now we have to pay for it...When will it stop!?
Sam--
Let's be clear here. CEO's making those large amount may seem obscene to you, and to me. It seems ridiculous. I've offered time and again to airlines and more recently to bank shareholders that I will ruin them for half the cost of the current CEO's. so far no takers.
However, if those shareholders (another word for OWNERS) want to give an executive $50 million, that is their right. They and you should have the freedom to loose you ass in a financial endeavor.
The real malfeasance and obscenity is that our regulators did not step in when these companies became too big to fail. any company should be allowed to fail by choice or incompetence. But if they become so big that they endanger non-owners, non-employees, non-suppliers, non-lenders etc., then Uncle Sam should break them up as has been done with AT&T, Standard Oil etc.
Let's blame the right culprit. And, Sam, if you decide to hire your brotherin law to run your company, I'll fight for your right to pay him an obscene amount.
Call me Old School, but I just think using "obscene" and "money" in the same sentence is a contradiction. Even if you just think it's a little bit true, that means you're a little bit socialist. And being a little bit socialist is like being a little bit pregnant.
Peter-- I agree with you, naturally, and see it much the same way. I was thinking of the subject more from a mechanistic point of view rather than from the view of the possible motivations of those pushing for this so-called stimulus package.
I intended to characterize those of the political class you refer to-- the ones in favor of nationalizing large chunks of the economy--under the general category of "crooks". And the people marching behind them as "useful idiots".