SigTarp Neil Barofsky has just released the most scathing critique of all the idiots in the administration, with a particular soft spot for Tim Geithner.
On the failure of TARP to increase lending:
As these quarterly reports to congress have well chronicled and as Treasury itself recently conceded in its acknowledgement that "banks continue to report falling loan balances," TARP has failed to "increase lending" with small businesses in particular unable to secured badly needed credit. Indeed, even now, overall lending continues to contract, despite the hundreds of billions of TARP dollars provided to banks with the express purpose to increase lending.
On TARP’s sole success of boosting Wall Street bonuses:
While large bonuses are returning to Wall Street, the nation’s poverty rate increased from 13.2% in 2008 to 14.3% in 2009, and for far too many, the recession has ended in name only.
On TARP’s failure in general:
Finally, the most specific of TARP’s Main Street goals, "preserving homeownership" has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only approximately 207,000 ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.
On the Treasury’s scam in minimizing publicized AIG losses, and on Geithner as a Wall Street puppet whose actions are increasingly destroying public faith in the government:
While SIGTARP offers no opinion on the appropriateness or accuracy of the valuation contained in the Retrospective, we believe that the Retrospective fails to meet basic transparency standards by failing to disclose: (1) that the new lower estimate followed a change in the methodology that Treasury previously used to calculate expected losses on its AIG investment; and (2) that Treasury would be required by its auditors to use the older, and presumably less favorable, methodology in the official audited financials statements. To avoid potential confusion, Treasury should have disclosed that it had changed its valuation methodology and should have published a side-by-side comparison of its new numbers with what the projected losses would be under the auditor-approved methodology that Treasury had used previously and will
Whether one believes in inflation or deflation, one thing is certain: in many ways the current US experience finds numerous parallels to what has been happening in Japan for not one but two decades. While major economic, sociological and financial differences do exist, the key issue remains each respective central bank’s failed attempts to reflate its economy. While long a mainstay of Japan, if the first failed version of our own QE, which pumped $1.7 trillion of new liquidity into the system, is any indication, future comparable efforts by our own Fed will be met with the same outcome (and hopefully with the same political result: the half life of an average Japanese prime minister is 6 months – if only our career politicos knew their tenure in office could be capped at half a year…).
There is of course the "tipping point" optionality discussed earlier by Ambrose Evans-Pritchard, when comparing the hyperinflationary timeline during the Weimar republic, which noted that it took just a few months for the economy to slide from a period of price stability to outright hyperinflation. Either way, for an ironic look at the Japanese deflation scenario, targeted more at novices although everyone will likely learning something from it, we present the following informative clip from, ironically, the National Inflation Association, which asks whether Japan is a blueprint for America’s imminent lost decade(s).
GM today reported that they will reinstate over half, 600 of the 1,100 dealership franchises they told to get lost last year- in an effort to keep the other some 5,000 dealerships "healthy and profitable." The lucky 600 will be getting letters asking to stay with the automaker, that’s if they haven’t already closed their doors forever due to the fact that 1) car sales suck despite an upbeat report earlier in the week 2) some people would argue that GM cars suck and finally 3) the GM brand may be discontinued forever a la Pontiac, Saturn, and Hummer.
A consortion of dealerships have been fighting the Detroit giant, citing they’ve been treated unfairly and that GM was vague in their decisions and thoughts on what dealers are actually profitable, and which ones are not.
Chrysler too, which slashed almost 800 of it’s franchises is also reconsidering the cuts; according to the Associated Press "the decision was a compromise meant to avoid federal legislation that would require that the showrooms be kept open."
Under the revised cutting procedures, dealers would "get face-to-face reviews, binding arbitration and faster payments to help dealers slated for shutdown."
As published by the Associated Press on Yahoo!:
"Congress-brokered talks between dealer groups and the automakers began in September. But those talks stalled over disputes about the review process for targeted dealerships and other issues. Looming over the fight has been the threat of federal legislation to deal with the closures. Lawmakers warned that if a deal wasn’t reached, that legislation would move forward.
The White House has opposed the legislation over concerns that it could hurt GM’s and Chrysler’s efforts to rebound from their government-led bankruptcies."
I guess Congress figures, they’re not done launching torpedos at Toyota- better keep some of these domestic dealerships open to sop-up the overage from Toyota’s once ivory, and now bloodied domestic tower of safety and reliability.
A recent CBO report estimated that the government spends about $300 billion to intervene in the housing market each year. That’s based on a range of activities, from direct subsidies to homebuyers, to the mortgage interest tax deduction, and the backstop of Fannie and Freddie.
And thus it’s no surprise that the housing market doesn’t work like other markets, and that we had a major bubble there. Even now, Goldman Sachs estimates, the government is adding at least 5% to the cost of each home, through its various "affordability" measures.
But it’s not just housing. Virtually every important sector of the economy is being manipulated in some way.
Used car prices are going up – is this a sign of recovery and inflation or a complicated symptom of a deflationary environment? This debate illustrates, perhaps, why the same economic data can be interpreted in opposite manners by intelligent people. – Ilene
Scott Grannis, of the blog California Beach Pundit, is quickly becoming my new favorite blogger to disagree with because he:
Provides intriguing data
Has a strong opinion
Supports his opinion well
These opinions run counter (in almost every case) to mine
In general he believes in the recovery and inflation, whereas I don’t and believe deflation is a real possibility.
One example was yesterday’s post regarding ISM Prices. In his view, the jump in ISM prices (by jump I mean they finally didn’t fall month over month) means deflation is no longer a threat. On the other hand, I believe that may be a result of the temporary jump we saw in commodities. He continues his ‘don’t worry about deflation’ message with yesterday’s post that (again) gave me the exact OPPOSITE initial reaction. Here goes:
According to Manheim Consulting, used vehicle prices jumped 16.4% in the first half of 2009 on a seasonally adjusted basis. Once more we are reminded that a weak economy and rising unemployment do not necessarily create deflationary conditions.
In other words, an increase in the price of used cars (off a large previous fall) proves that deflation is no longer an issue and we should (if anything) worry about inflation.
I think the rise in prices also has something to do with the return of money velocity. Consumers retrenched violently in the fourth quarter of last year, hoarding cash and repaying debt in the face of tremendous uncertainty. Money velocity collapsed. Now that confidence is returning, money is getting spent again. The economy is recovering some of the ground it lost.
Using what I refer to as the logic test, this makes no sense. If people are trading down (i.e. increasing demand for a cheaper / used good) this has deflation written all over it (not necessarily for that good, but for the broader economy). My logic and posted in
Depending upon your philosophical bent, this is either good news or another sign that the Apocalypse is near.
The WSJ is reporting that Toyota is slated to take over the title as the number 1 seller of light vehicles in the U.S.
The bankruptcies of General Motors and Chrysler are changing the landscape of the auto industry. The two U.S. companies are shuttering plants, shedding dealers and reducing their product lines.
As a result, Toyota Motor will become the largest seller of light vehicles in the U.S. It has held the top spot globally since last year.
The Japanese auto maker won’t be the only beneficiary of the two companies’ woes. But in terms of status, market clout and bragging rights, Toyota will be the No. 1 winner.
Its share of the North American light-truck and car market probably will rise to around 20% from 18.4%. GM will end up in second place with 13% to 16% — with Ford hot on its tail.
Although Toyota stock doesn’t change hands directly in the U.S., the company’s American depositary shares (TM), which represent them, are listed on the New York Stock Exchange.
And, at a recent price of around $76 — about $30 below their 52-week high — they’re a good bet for long-term investors.
The Journal suggests that the stock might be a good long-term buy. They point out that analysts suggest it could hit $115 and that it hit $137 a couple of years ago. Maybe, but just a caveat. Toyota and others now have the most fearsome of competitors – government owned companies. In the long run that probably means success for the competitors as political decisions trump business common sense. In the short run it could be formidable as the government does whatever is necessary to prove it didn’t make the stupid decision that everyone acknowledges it did.
U.S. auto-parts companies plan to ask the Obama administration for as much as $10 billion in new aid as the General Motors Corp. and Chrysler LLC bankruptcies deepen the suppliers’ troubles.
Trade groups will meet Wednesday with President Barack Obama’s auto task force at the Treasury Department to warn that hundreds of parts companies could collapse without the aid. They are mainly requesting that the government guarantee $8 billion to $10 billion in loans so banks will lend to the suppliers.
The parts companies account for more than three-quarters of auto-sector employment in the U.S., according to a Chicago Federal Reserve study, with employment of about 600,000—roughly five times as many workers as are expected to be employed by GM and Chrysler’s domestic operations once their government-subsidized restructurings are done.
Stabilizing the supply base is critical to ensuring the long-term viability of GM and Chrysler, said Neil De Koker, president and chief executive of the Original Equipment Suppliers Association.
“We could end up having all that money go to waste because they won’t be able to start up without suppliers,” Mr. De Koker said, referring to the taxpayer-funded assistance. “If there’s just one key part missing on a car, you can’t build it.”
His group, along with the Motor and Equipment Manufacturers Association, has prepared a 71-page presentation arguing that as many as 500 parts suppliers could be forced to liquidate this year. They cite several independent studies.
Make no mistake, the aid will be forthcoming. Once the government chose to go all in with the auto companies they committed themselves to preservation of the entire chain. All that remains to be seen is whether any sort of rationalization of the suppliers will take place. With a downsized GM and Chrysler there is arguably too much capacity upstream.
This is where the Obama commitment to a hands off approach to the industry will run founder. In order to rationally allocate assistance the auto task force will have to parse the vast list of suppliers, try and make some sense of what an efficient network would look like
Seth Klarman's comments on "The Truman Show" market and "born bulls" appeared to upset the status quo today on CNBC leaving none other than Joe Kernan and then later, Jim Cramer questioning Klarman's credentials with a passive-aggressive "when did Klarman turn negative? We should look into that..." question. We found it intriguing and wondered how much the investing public weights the differing views of these veritable titans of stock market wisdom. The answer - a market-based answer - lie in the purest measure of all... the cost of acquiring their knowledge.....
Today was the beginning of “spring break” for the market. At least it seemed that way with a very low trading volume of only 600M shares on the NYSE. Either the college crowd does more trading than we imagined or parents are taking the week off as well.
The market barely woke up for the session with the S&P 500 down 0.05% and the NASDAQ down 0.03%. However, the DJI must have gotten extra sleep this weekend as it was up 0.21%. Small caps took a bigger hit with the Russell 2000 dropping nearly 0.50% percent. There was nothing major in the news other than a disappointing trading figure from China. Indeed, the whole week will only include a meager four major economic reports with Wholesale Inventories tomorrow, Retail Sales and Jobless Claims on Thursday, and Producer Price In...
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Imagine that you are speeding down one of those long and lonesome stretches of highway that seems to fall off the edge of the horizon. As the painted white lines become a blur, you notice a sign that says "Warning." You look ahead for what seems to be miles of endless highway, but see nothing. You assume the sign must be old therefore you disregard it, slipping back into complacency.
A few miles down the road you see another sign that reads "Warning: Danger Ahead." Yet, you see nothing in distance. Again, a few miles later you see another sign that reads "No, Really, There IS Danger Ahead." Still, it is clear for miles ahead as the road disappears over the next hill.
Here is a chart showing the number of transactions that involve acquisitions of an asset management business by year. It tells us about a couple of trends developing in recent years.
1. Increasingly asset managers are bought by other asset managers in strategic acquisitions (and to a lesser degree by financial sponsors).
2. Banks have stopped acquiring asset management businesses. In fact what the chart doesn't tell us is that banks have been actively selling their asset management businesses (especially in alter...
The dramatic moves in fuel cell related stocks continues this week, with shares in Plug Power (Ticker: PLUG), FuelCell Energy (Ticker: FCEL) and Ballard Power Systems (Ticker: BLDP) beginning the trading week with explosive gains ahead of FuelCell Energy’s first-quarter earnings report after the closing bell, and following on the heels of a large order from Walmart for Plug Power, which the company confirmed in a press release on February 26th.
Shares in PLUG rose as much as 38% to touch $11.41 this afternoon, marking a near 150% move to the upside in the price of the underlying since Monday morning of last week when the stock opened at $4.60....
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This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
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Nuverra Environmental Solutions (NYSE: NES) (“Nuverra” or “the Company”) today announced that it has entered into a definitive agreement to divest the Company's Industrial Solutions segment, Thermo Fluids Inc. (“TFI”), to VeroLube, Inc. (“VeroLube”). VeroLube is developing two re-refineries with a patented technology, and focusing on a consolidation of the used oil industry.
Under the terms of the agreement, Nuverra will receive $165 million in cash and $10 million in VeroLube shares. The cash portion of the transaction is subject to adjustment based on the actual working capital conveyed at closing. The sale is expected to close in the second quarter of 2014, subject to customary conditions, including regulatory approval and final confirmatory legal and enviro...
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Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
Welcome to the fouth update of the IRA Virtual Portfolio. First I am going to summarize the current state of the Portfolio then I will get into all the activity we had during September expiration.
Profit and Loss – Net of closed positions the portfolio is up a total of $769
Market Commentary – Last expiration I said, "I would like to put a total of $20,000 to work by the end of SEP expiration. If the VIX pops up to around 20 I plan to put about $50,000 total to work." The market didn't quite reach the goal but I did manage to deploy $15,000 of buying power. I still feel the market is too high and expect a correction during October. If the vix pops up to around 20 I still plan to put about $50,000 to work. If a correction doesn't happen I still plan to have a total of $25,000 in buying power put to work by October expiration. Now on to the act...
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