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
Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling "invested" -- unchanged from last month. Two of the five of the Ivy Portfolio ETFs, the Vanguard FTSE All-World ex-US ETF (VEU) and the PowerShares DB Commodity Index Tracking (DBC, are signal "cash" -- also unchanged from last month.
If a position is less than 2% from a signal, it is highlighted in yellow.
Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, ...
The following are the M&A deals, rumors and chatter circulating on Wall Street for Tuesday November 25, 2014:
Visteon Confirms Discussions with Hahn & Co. Regarding Potential Sale of Halla Visteon Climate Control Corp Stake
The Talks: Visteon Corporation (NYSE: VC) confirmed Tuesday, it is currently engaged in discussions with Korea's Hahn & Company regarding a potential sale of Visteon's ownership interest in Halla Visteon Climate Control Corp.
to the private equity firm. Reuters reported on Sunday, that Visteon was preparing to sell its 69.99% stake in Halla Viste...
The cold war took another twist last week when a Senior German Politician Endorsed Russian Takeover of Crimea. Former state premier Matthias Platzeck, chairman of the German-Russian Forum business lobby and erstwhile Social Democrat (SPD) chief, is the first high-ranking German to say the West should endorse the annexation as a way to help resolve the Ukraine crisis.
Platzeck, 60, told the Passauer Neue Presse newspaper: "A wise man changes his mind - a fool never will... The annexation of Crimea must be retroactively arranged under international law so that it's acceptable for everyone."
Platzeck, Brandenburg's popular state premier from 2002 to 2013, struck a nerve in eastern Germany where there is far less support for sa...
With warmer weather arriving to melt the early snowfall across much of the country, investors seem to be catching a severe case of holiday fever and positioning themselves for the seasonally bullish time of the year. And to give an added boost, both Europe and Asia provided more fuel for the bull’s fire last week with stimulus announcements, particularly China’s interest rate cut. Yes, all systems are go for U.S. equities as there really is no other game in town. But nothing goes up in a straight line, not even during the holidays, so a near-term market pullback would be a healthy way to prevent a steeper correction in January.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based Sector...
By Rod Garratt and Rosa Hayes - Liberty Street Economics, Federal Reserve Bank of New York
In June 2014, the mining pool Ghash.IO briefly controlled more than half of all mining power in the Bitcoin network, awakening fears that it might attempt to manipulate the blockchain, the public record of all Bitcoin transactions. Alarming headlines splattered the blogosphere. But should members of the Bitcoin community be worried?
Miners are members of the Bitcoin community who engage in a proce...
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I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).
Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.
A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...
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Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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