5 billion more

US To Give GM $5B, Chrysler $500M In Short-Term Aid - Report

Apr 20, 2009 18:50:29 (ET)

DOW JONES NEWSWIRES

The federal government will give General Motors Corp. (GM) $5 billion and Chrysler LLC $500 million in short-term aid, the Detroit News reported Monday, citing a government report it acquired from a congressional source. The report, from the Treasury Department's inspector general, also says that President Barack Obama's administration intends to put aside $1.25 billion to cover warranties on GM and Chrysler vehicles in case the companies file for bankruptcy. Additionally, the government has spent $24.8 billion of a projected $25 billion on the auto rescue program, according to the Treasury findings.

Full story at http://www.detnews.com/article...ler+$500M+in+fed+aid

-Dow Jones Newswires; 201-938-5500

(END) Dow Jones Newswires

April 20, 2009 18:50 ET (22:50 GMT)



With 372,000 cars made in the U.S. so far this year, give or take. And just over 24 billion given you have to wonder if its worth it. For sake of numbers that comes out to about $64,000 per vehicle. Which doesn't include what the customer paid. And they still can't make a profit? Something isn't right.

I'll get you my pretty,.. And you checking account too!



Long Road Seen For JPMorgan, Goldman To Repay TARP FundsFont size: A | A | A1:26 PM ET 4/16/09 | Dow Jones
NEW YORK (Dow Jones)--For two of America's strongest banks, getting out from under the government's thumb is proving a nettlesome situation.

Both JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) grew more vocal this week about redeeming bailout money they received last autumn. Their declarations are seen as a sign of strength, but also a desire to free themselves from government mandates and scrutiny.

But, there's just one problem: The CEOs of both banks don't know who to mail the check to. The government, which has spent some $1.1 trillion in taxpayer money to shock the economy out of recession, has remained tight-lipped about when banks can pay the taxpayer money back.

A growing number of analysts believe it might take much longer than expected before the government accepts repayments. That dashes hopes on Wall Street that banks could repay bailout money once they pass government stress tests, which are expected to be announced in May.

Stalling gives the government a chance to even the playing field for financial companies, and not give Goldman or JPMorgan an advantage over rivals. Also, not allowing the banks to repay maintains the government's broad control over a still-troubled financial system.

"They want to keep the banks in their clutches, without question," said Bert Ely, an independent banking consultant. "The bailout is giving the government leverage, and they don't want to give that up."




If a republican were in charge we wouldn't have this continued recession or attempts by government at nationalization of business.

It's coming soon enough. Once America realizes the promises of a free ride are nothing more than the usual lies coupled with further reductions in freedom a revolt is assured. First a complete overhaul and about face in congress. Then a swift and just impeachment of that person who bows to foreign dictators.

A different approach

UPDATE: Economists Say It's Time To Break Up Large Banks

Apr 21, 2009 11:33:28 (ET)

(Updates to add more comments from witnesses.)


By Maya Jackson Randall
Of DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--Instead of funneling taxpayer money into large, faltering firms, it is time for the government to take the radical step of breaking them up into smaller, more transparent companies, top economists told U.S. lawmakers Tuesday.

"We have little to lose, and much to gain, by breaking up these behemoths, which are not just too big to fail, but also too big to save and too big to manage," said 2001 Nobel Prize recipient and Columbia University professor Joseph Stiglitz, one of the witnesses testifying before the Joint Economic Committee of the U.S. Congress Tuesday morning.

He argued that the U.S. financial sector is simply too large, and gigantic institutions are more likely to take excessive risks that backfire on taxpayers and distort markets. Stiglitz also criticized the Treasury Department's $700 billion financial-rescue program for propping up large firms with subsidies while allowing smaller, community-based banks to collapse.



A slightly different strategy for that individual in his unending quest to socialize our economy. Who would decide what is too big? Antitrust and Monopoly laws were put in place to break up single institutions that crowded out smaller competitors. If this were true in the financial world there would be no such thing as the single branch bank. There are plenty still around. And some of them received TARP money. More B.S. rolling down from the hill.

If the firms were so bad who is the idiot then? They gave them the money. Now they are saying it was a mistake? Who paid for it? We did. How many more multi-trillion dollar mistakes are we going to be asked to pay for?

Today's Tea Leaves


Airlines Soar
Font size: A | A | A
Tue Apr 21 12:30:00 EDT 2009 | Briefing.com

Airlines are performing exceptionally well this session, helping the Amex Airline Index surge 7.6%.

The group's jump comes after Delta Air Lines (DAL 8.02, +1.21) reported a first quarter loss that wasn't quite as bad as feared. Delta's losses totaled $0.84 per share, but analysts, on average, expected a loss of $1.01 per share.

The broader stock market continues to climb higher as well. Rekindled interest in stocks has more than three-quarters of the stocks listed in the S&P 500 trading with gains. Some 95% of stocks in the S&P 500 traded with losses in the prior session.


Yesterday the Dow dropped nearly 300 points. Today everything is going up. No one is flying and the airlines are still losing money but the stock jumped 7% WTH? Yesterday it was doomsday with all manner of dire predictions and government speeches on the 'bad' banks. Today, we have rainbows. Best advise. Don't listen to your adviser. You're paying for an opinion no better than your own. By when everyone is selling. Sell when everyone is buying. That's as good as it gets.

Banks Thinking Twice


Banks To Wait Before Issuing More Non-Guaranteed Debt

Apr 21, 2009 13:22:04 (ET)


By Romy Varghese
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--Don't expect banks to kick away their crutches just yet.

Until the government releases its stress test results on banks on May 4, banks aren't likely to issue many new bonds that aren't backed by the Federal Deposit Insurance Corp.

Banks have relied heavily on the investors' embrace of government-backed debt and have raised more than $200 billion to finance their operations at cheap rates. Before the program started in the fall, investors leery of banks' woes had refused to provide them with essential financing, crippling market recovery.

Although conditions have eased, few financial firms have ventured to test investor appetite and sell non-guaranteed debt. The latest came last week as JPMorgan Chase (JPM), emboldened by its well-received earnings report, raised $3 billion in 10-year notes that weren't guaranteed


The banks are waiting to see if faith in them is enough to cut their ties to the FDIC. With it becoming apparent government intervention of any sort comes with exorbitant costs the banks want to cut the umbilical chord.

With that in mind. Taking into account the governments overbearing desire to control these institutions. Should we trust the stress test reports as being accurate? Can we believe in the admitted tax cheat Giethner?

Words of a tax cheat


Two watchdogs bringing the bailout to heel

By Darrell Delamaide
Apr 22, 2009 15:16:00 (ET)

WASHINGTON (Marke****ch) -- The congressional watchdogs for the bank bailout bared their fangs this week and actually showed a little bite instead of just bark.

The Congressional Oversight Panel, chaired by Harvard law professor Elizabeth Warren, held its first hearing with Treasury Secretary Timothy Geithner. Since the panel has no subpoena power, it is dependent on the good will of witnesses to appear.

Geithner responded to questions from the five-member bipartisan panel with what is becoming his trademark double-talk.

When asked about a specific bank -- Citigroup (C, Trade ) -- he replied that his "responsibilities" precluded him from talking about individual institutions. When asked about stress tests for banks in general, Geithner said the bank regulators were handling that case-by-case -- which of course he couldn't talk about.

When asked about a specific policy, he almost invariably started with something like, "Let's recall our objectives here," and ended with words to the effect, "Trust me, we'll do whatever it takes to achieve that." Yada, yada, yada.

You can listen to the Treasury secretary talk for hours like this and learn very little. The stock market seized on his bromide that the vast majority of banks are capitalized well enough to stage a ****er rally in financials.

Of course they are well capitalized -- regulations require them to be. The question is whether some of our very biggest banks have sufficient capital to sustain the inevitable losses from their toxic assets, and this is the question that the administration and the Federal Reserve continue to skirt.



I guess Geithner forgot his teleprompter.

Obama to Bank of America, An offer you can't refuse


B. of A. says gov't threatened management
Font size: A | A | A
12:18 PM ET 4/23/09 | Marke****ch
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NEW YORK (Marke****ch) -- Bank of America Chief Executive Ken Lewis said that the Treasury and the Federal Reserve threatened to remove him and the firm's board of directors if the company did not go through with a planned acquisition of Merrill Lynch late last year. According to the minutes of a December 22 meeting, which were released Thursday by New York Attorney General Andrew Cuomo, the government made the threat when the bank was considering invoking a "material adverse change" clause to quash the deal after it became clear Merrill's finances were collapsing. According to the minutes, Lewis, told the board that, "the Treasury and Fed stated strongly that were the corporation to invoke the material adverse change clause in the merger agreement with Merrill Lynch and fail to close the transaction, the Treasury and Fed would remove the board and management of the corporation."


What this means is Obama and Giethner forced Bank of America to buy Merrill Lynch even though they knew it was a bad deal. This is the tip of the ice berg. What other threats were made? To whom? Would it be safe to say something similar occurred with Chase and Washington Mutual? Or how about Wachovia and Wells Fargo? How far will this go? Perhaps the CFO at Freddie Mac knew something. Maybe his death was a threat to anyone who opened their mouth. We'll need to monitor the health of the B of A management.

We lead

EARNINGS PREVIEW: German Banks 1Q Hit By Crisis; Some Light

Apr 24, 2009 12:22:48 (ET)


By Ulrike Dauer
Of DOW JONES NEWSWIRES


TAKING THE PULSE: German banks' first-quarter results are likely to show a continuing burden from painful asset mark-downs related to the broadening global economic crisis. However, Deutsche Bank AG's (DB) securities business should at least provide a glimmer of hope, in line with some of its U.S. and Swiss peers who surprised the market with better-than-expected first-quarter results, particularly in fixed income.

In the first quarter, German bank M&A progressed with Deutsche Bank taking a 25%-plus-one-share stake in Deutsche Postbank AG (DPB.XE), and Commerzbank AG (CBK.XE) finalizing the acquisition of Dresdner Bank from Allianz SE (AZ).



Goes to show that a free market is the best answer to economic calamity. Most European countries are by far more socialist. With that, an apparent lagging affect in recovery has become pronounced. Most of the overseas banks are several months from showing little if any recovery while we are already showing significant improvements. We just need keep socialism and their messiah out as best we can.

Obama Pushes Stronger Credit Card Rules
President Wants Law To Eliminate Deceptive Practices Like Sudden Interest Rate Jumps


full story


We will see. Finally starting to do the job that government should do... which is to protect the citizens. In this case protect us from the Bank pirates and predatory lenders.

Stronger rules for who's benefit?

By Aparajita Saha-Bubna

Of DOW JONES NEWSWIRES

BOSTON (Dow Jones)--American Express Co.'s (AXP) well-heeled customers reduced spending by 16% in the first quarter, sending the company's quarterly net income down 56%.

In addition to cutbacks in spending, American Express is also being hit hard by rising delinquencies as higher unemployment and a slumping U.S. economy take their toll on even the company's high-end customers. Rapidly souring credit-card loans forced the company to increase its loss reserve by 49%.


The card issuers have to raise rates since there are so many people not paying their bills. A 49% increase in loss reserves? That means that nearly 1/2 the people aren't on time or defaulted all together.

Obama strikes again



Citigroup CEO Vikram Pandit’s job security is increasingly in jeopardy as momentum grows in Washington to oust him.


With the bank stress tests wrapping up, sources tell The Post that regulators think they might have to make the bold move of removing Pandit to signal Washington is taking as hard a line with the banks as it did with General Motors when it effectively ousted GM CEO Rick Wagoner.



History: In 2004 Obama filed a class action law suit against Citi for not issuing enough sub-prime high risk loans. Which by the way caused this fiasco.

Now Obama in a continual power grab mode wants to tear them down some more. Since when did the federal government have the authority to determine who a company can have as CEO, or any employee?

These people are out of control. The abuses of power are stacking up daily. First GM, now Citi. Tarp was nothing but a trap. Using media driven hysteria to force banks into taking money they didn't even need. In several cases as was with Wells Fargo didn't want. Now the government isn't willing to take the money back. They want control of the banks. To do what? To insure they know of every penny each person has? To take a bigger piece of the pie? It's all about control and the ever growing lust for power and usurping of your rights of privacy and ability to be independent.

NEW YORK (AP) -- Just a few years ago, companies staging annual meetings brought in acts like Paul McCartney and Tony Bennett. At the very least, they offered snacks as CEOs boasted about big profits.
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This year, when stockholder Ram Bijapur decided to show up at the Hilton hotel for the Citigroup meeting because he was angry about the bank's steep losses, what he found was decidedly more sparse.

"They're so broke," he observed, "they can't even give us a bottle of water."

As annual meetings ramp up in earnest for the first time since the economic meltdown, the gatherings are very different affairs. Perks and glitz are out. And, at least in the financial sector, shareholder anger is in.

At the Citigroup meeting, which this year was without the usual coffee and cookies, one shareholder sent off departing board members with a cry of "Thank God you've gone!"

Citigroup investors have been a notoriously noisy bunch for years, but this year took it to the extreme. The meeting went on for about six hours, two hours longer than in recent years.

It's not just the banks. At the annual meeting of The New York Times Co., which is in such bad shape it has threatened to close The Boston Globe if it can't cut costs, stockholder Leotchmen Maharaj told the board it should can the CEO.

"Every year I come to the meeting, and they say the same thing," Maharaj said. "The stock price keeps going down."

It's a far cry from the placid and sometimes festive meetings of years past. Starbucks brought in Tony Bennett and piped in McCartney via video link to impress shareholders in 2006 and 2007. At last month's meeting, there were no stars. It did not even unveil a new product.

This year, CarMax Inc. is scaling back the number of glossy pages in its annual report. Kraft Foods Inc. is forgoing annual report printouts altogether and e-mailing the documents to shareholders instead -- a move Kraft says is greener and will save hundreds of thousands of dollars.

Coca-Cola Co. and General Motors Corp. both usually meet in Wilmington, Del., but this year they're staying close to home and meeting in Atlanta and Detroit, respectively.

To some shareholders, though, the cost savings are peanuts compared with executive pay: The head of Citigroup took home a $38 million pay package last year. Coke's got $20 million, Kraft's $16 million and GM's almost $15 million.

"They should start with themselves," said Evelyn Y. Davis, a corporate gadfly who has been pushing for compensation reform at annual meetings for years. "If they try to say they're saving money by telling shareholders to go to the Internet to get their proxy statement ... what is that compared to the millions in bonuses?"

Still to come in the next few weeks are the annual meetings of some of the most troubled, even infamous, corporate names in America, including bailed-out Bank of America Corp. and American International Group Inc., where big bonuses stirred outrage among the public and lawmakers.

Bank of America faces heavy shareholder scrutiny on Wednesday after its shotgun buy of the troubled investment bank Merrill Lynch last September, and hefty bonuses doled out to Merrill employees right before the deal closed.

The board "transformed a company that was in good condition into one of the most costly casualties of the crisis," said Michael Garland of CtW Investment Group. CtW is trying to get shareholders to vote CEO Ken Lewis off the board.

The chance that Lewis will get the boot is still slim. All of Citigroup's nominated directors, old and new, were elected at its meeting last week. A big obstacle for small shareholders is that brokerages, who typically side with management, make up a large percentage of the voting pool at most banks.

Still, the effort to oust Lewis is getting more support than most shareholder proposals do: RiskMetrics, a research and advisory firm, last week recommended that investors vote for CtW's measure.

Bank of America disagrees. "We believe we have acted legally and appropriately in our disclosures surrounding the Merrill Lynch acquisition, and that the acquisition will ultimately create value for Bank of America shareholders," the bank said in a statement.

As the economy shrinks, not all companies are slashing their annual meeting budgets or curbing the entertainment factor. CBS Corp., for example, is renting out its usual hall in midtown Manhattan and still plans to show its "sizzle reel" of TV clips.

Officials at Warren Buffett's Berkshire Hathaway are saying this year's meeting in Omaha, Neb., will be bigger than ever. In 2007, Jimmy Buffett turned up at the annual meeting with a spoof rendition of "Margaritaville," and in 2008, actress Susan Lucci pretended to take over the conglomerate.

And investors in Coke, whose stock price has fallen from above $60 to below $40 at times in the past year, were at least able to drown their sorrows in a freebie. At the annual meeting last week, the company gave out small gift bags and offered shareholders their choice of a Coca-Cola product.

AP Business Writers Randall Chase in Dover, Del., Harry R. Weber in Atlanta, Lauren Shepherd in New York, Michael Felberbaum in Richmond, Va., Emily Fredrix in Milwaukee, Josh Funk in Omaha, Neb., and Andrew Vanacore in New York contributed to this report

The funny thing about this is that in most cases the share holders could have avoided the majority of their losses by pulling out before the bottom. In some cases, make a profit. By buying back in at or near the bottom they could make some money. Did it with Citi bank, Ford, and a few others. Who they should be pissed at is their brokers who held the stock from 60.00 to 3.00.

An interesting stock to watch over the next few weeks is GM. If you still have any get rid of it now! They are going into BK. No doubt about it. What happens next could make a person a small fortune. But timing is crucial. If in BK and they issue a new version of GM stock the old stock will become worthless. The new stock will more or less be treated as an IPO. The chances of a fast rise out the gate is very good. If they do not issue new stock the old will fall to well under a dollar before rising very fast. As happened to a few other organizations when bad news comes out. They lose up to 40% or more value within a couple days. Followed by a nearly as quick rise. If a new stock is not issued the old will probably bottom out the day after bankruptsy is announced. From there hype and euphoria will cause it to double or triple in a short time. Just as is the case with Ford now. Ford is nearly broke but since they haven't taken a dime from Obama their price has doubled in a short time. All based on a false assumption they are better off. They aren't. All they have that GM didn't was their own money to burn through. They are expected to lose billions this year. Just as they did last year.

B.S.




GENERAL MOTORS CORP.(GM) : As part of its Viability Plan, GM to commence public exchange offers for $27B of its unsecured public notes -- will exchange 225 GM shares for each $1,000 equivalent of principal amount of outstanding notes of certain series of notes. Will phase out Pontiac brand by end of '10, and offer a total of 34 nameplates in '10, down 29% from 48 nameplates in '08. Plans to reduce U.S. dealer count from 6,246 in '08 to 3,605 by end of '10, a reduction of 42%. Plan also reduces volume and market share projections.



On the surface this sounds like GM is giving the appearance of cost cutting. The reality is this does little or nothing to solve their financial blood letting. The dealerships are not a cost consequence to GM. A dealership's staff are a burden to the dealership itself. The real problem is the cost of manufacturing and retirement support of the UAW.

In the long run this will hurt GM by cutting off its ability to sell the cars it makes. Less dealerships equate to less selling opportunities. GM stock jumped from 1.60 to 2.00 within minutes of this coming out. By the end of day or tomorrow at the latest expect most of these gains to disappear. Once investors realize this will result in the opposite affect the price should plunge that much further.

Either way Screwed

Citigroup, B. of A. drop, dragging financials dow
NEW YORK (Marke****ch) -- Shares of Citigroup Inc. and Bank of America Corp. fell sharply Tuesday after The Wall Street Journal reported that the government may force the banks to raise capital.

Citigroup (C) shares fell 6.2% and Bank of America (BAC) shares lost 7.4%.

Shares of Northern Trust Corp. (NTRS) fell 5.3% after the company said it had priced 15 million shares at $50 each, and launched a $500 million share debt offering.

The Financial Select Sector SPDR (XLF), which tracks the S&P 500 financial stocks, fell 3.6%.

Federal regulators in the U.S. have told Bank of America and Citigroup that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, the Journal reported.

Executives at both banks are objecting to the preliminary findings, which were part of the government's scrutiny of 19 large financial institutions, the Journal said, citing people familiar with the situation. See full story...



A few months ago the banks were given short shrift for not loaning enough money. Back then the banks were being what was called 'overly cautious'. That was by government direction. Now that they started lending money Obama and crew are saying they aren't keeping enough in the vault. What gives?

Taking into consideration the government's refusal to accept the return of TARP money it all becomes clear. To the detriment of many people. Loan applicants, stock holders, employees and many others. Obama for sake of control wants to tear our financial institutions down. There is nothing wrong with your bank. Its still there isn't it? The same people are there from last year, aren't they? The so called toxic assets probably included your home that you are still paying for.

Thanks to Obama it's more difficult to apply for a loan. Your credit card rates were increased. That too was a response indirectly forced by Obama. Weren't they told they better start showing a profit by Obama standards? How else can they do that within a few months? They had to raise their fees to appease the messiah.

PHD, Piled High and Deeper

Innoculating the banks

By Marke****ch
Apr 28, 2009 11:01:00 (ET)

NEW YORK (Marke****ch) -- In assessing the major U.S. banks, the Treasury Department and Federal Reserve bank have come to the conclusion that more is more - not only when it comes to loan-loss reserves, but when it comes to confidence.

Over protests from Bank of America Corp. (BAC, Trade ) and Citigroup Inc. (C, Trade ), the government is pressing for more balance sheet cash. Regulators insist the capital would be used to ride out the recession, and loan losses are expected to deepen even if the economy has hit bottom.

The banks claim they have enough cash, having raised money from private sources and the government. Bank of America's chief executive, Ken Lewis, has been adamant that the Charlotte, N.C.-based bank is well positioned.

It's unlikely that regulators will listen to Lewis and his bank CEO counterparts considering the commitment taxpayers have made to the banking system. We are entering an era where the pendulum of safety will swing far away from risk. Banks may soon be over-capitalized.

This new era, regulators suggest, is necessary to rebuild confidence in the financial system. CEOs such as Lewis believe that the worst of the crisis is over and consumers, investors, market participants and the public should consider the industry safe.

Having gambled trillions of dollars in taxpayer cash to back up the system, regulators want to be certain that it was a good bet. If over-capitalizing the banks is the price banks have to pay to avoid panics and runs, then it is a small one.

When it comes to banking these days, more is more.



Getting past all the double speak they are claiming that over capitalization is the way to go. Keep more of the money in the bank. What that means is they want the banks to be more strict when it comes to loans. Translated. You will find it more difficult to get a loan. Thank you Obama.

Retards on the Hill

FHFA Proposes Relaxing Fannie, Freddie Housing Goals

Apr 28, 2009 17:39:36 (ET)


By Jessica Holzer
Of DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--The regulator for Fannie Mae (FNM) and Freddie Mac (FRE) has proposed relaxing the affordable housing goals for the two mortgage finance companies, according to a press release Tuesday.

Citing market conditions, the Federal Housing Finance Agency issued a proposed rule that would return the 2009 goals to levels that prevailed during 2004 and 2006.

In addition, the regulator wants the companies to receive credit toward the goals for loan modifications they complete under the administration's program to help troubled borrowers.

"By giving them goals credit for loan modifications, FHFA further encourages this important activity, which is essential to preventing foreclosures and keeping people in their homes," FHFA Director James B. Lockhart said in a statement.

Fannie and Freddie, which racked up combined losses of about $108 billion in 2008, were seized by the government last September. The companies missed their affordable housing targets for 2008.

A housing law passed last year required that the companies' 2008 housing goals be continued in 2009. But the law gave the regulator flexibility to adjust the goals to reflect market conditions.

For 2009, FHFA has proposed notching down the companies' benchmark for buying or guaranteeing mortgages of low- to moderate- income buyers to 51% from 56% in 2009. Meanwhile, the agency has proposed lowering the goal for underserved areas to 37% from 39%.



Can you believe this. The very thing that caused this mess is still being force fed. 2009 goals, are they out of their minds! Lets not forget one fact. These are democrats that invented this garbage.

A ray of sunshine in GDP


#... The bottom line of this report is simply that the U.S. economy remains rather weak as the ongoing housing correction and financial sector crisis continue to weigh heavily on the domestic economy. However, there were some obvious glimmers of hope in the report as the improvement in consumer spending (which remains the lynch-pin of U.S. economic activity) during the quarter suggests that U.S. household spending may be on the rebound. Also of note is the fact that the massive draw-down in inventory may mean that this component could add favorably to output in the near future. –Millan L. B. Mulraine, TD Securities

# The downward momentum continued into the first quarter. However, the economy was not as soft as the GDP number indicated. Businesses stopped producing goods for a while slashing inventories by a whopping $104 billion. Without the inventory runoff, the economy would have contracted by 3.4% instead of 6.1% as reported. This is good news. With lean inventories, production will be cranked up in order to restock the depleted shelves in coming months. –Sung Won Sohn, Smith School of Business and Economics
# Consumers came out guns a’blazin, but even that wasn’t enough to overcome the downward pressure of the corporate sector. Personal consumption expanded at a surprisingly robust 2.2%, on the combined strength of greater demand for both durable and non-durable goods. This result stands in stark contrast to talk — including that from yours truly — of diminished credit availability leading to lower consumer demand. Still, the first-quarter consumer performance is likely a matter of a bounce from low late 2008 levels, and with a savings rate in the 4% range, significant consumption growth will remain a long run challenge for the domestic economy. –Guy LeBas, Janney Montgomery Scott..



Although there is still an overall downward trend the slope of that decline has lessened. In other words things are improving a little. Most sectors bounced up this morning. I doubt all the gains will be sustainable.

Some problems still exist. The big one is credit. Prior to the crash banks only required the existence of a pulse in a borrower. Creativity in income determination was good enough to secure an approval. The good ole days. Since then lending has taken a decided shift in the opposite direction. You better have a +700 score and lots of loot for a down payment. Not to mention every dime of income be verifiable. This too shall pass. As with most things overreaction in either direction accompanies an extreme change in dynamics. Once the horror of the housing crunch and market collapse subsides the credit markets will return to some level of normalcy. The is predicated on Obama and Geithner keeping their power hungry claws out of the mix. Which may be the biggest hurdle

quote:

The bottom line of this report is simply that the U.S. economy remains rather weak as the ongoing housing correction and financial sector crisis continue to weigh heavily on the domestic economy. However, there were some obvious glimmers of hope in the report as the improvement in consumer spending (which remains the lynch-pin of U.S. economic activity) during the quarter suggests that U.S. household spending may be on the rebound. Also of note is the fact that the massive draw-down in inventory may mean that this component could add favorably to output in the near future. –Millan L. B. Mulraine, TD Securities

Hogwash

Give me the same report in the 3rd quarter and I will believe it.

Those monies being spent were from tax refunds on goods that were at great sale prices. Looking at the time frame is very important.



We are in deep trouble unless jobs come back. The most significant factor PERIOD.

Recent history and why Obama's plan will fail



(CNSNews.com) - Every “green job” created with government money in Spain over the last eight years came at the cost of 2.2 regular jobs, and only one in 10 of the newly created green jobs became a permanent job, says a new study released this month. The study draws parallels with the green jobs programs of the Obama administration...


It gets worse. Prior to Spain enacting their stimulus which Obama mirrored the unemployment rate was around 10%. Not good. 8 months in and its now at a staggering 17%. They are out of money and owe boatloads with no one to cover the tab.

The notion that force feeding green development which costs more and doesn't serve the market is foolish. The market decides what it wants. Right now we are back to basics. Being eco-friendly is nice when you can afford it. In tough times essentials are front and center.

Spain's economy is smaller which serves as a leading indicator of what we should expect given that the same plan is being used. Higher unemployment. An eventual overheating of money printing presses. The hindsight that spending what you don't have doesn't work. It never has.

In fact this is making matters worse. When money is borrowed to create more money. Ie, loans, stimulus, and new jobs. The output should be at least one to one just to stay even. Meaning that for each dollar in you get one back. In the current mix we might get back 30 cents for each dollar of new debt. The debt still has to be paid back, with interest. Once the loan is called we will be left with an additional negative 70 cents on top of the situation that spawned the stimulus.

As the new money floods the market inflation will increase triggering a second perhaps even more gigantic waive of foreclosures. This due to the fed raising rates. They'll have to in order to keep inflation from getting out of control. This will cause a sudden spike downward again and the pendulum will swing to the opposite extreme with deflation. No one buying anything and prices dropping to lure purchasing. We've gotten a taste of this already in the last quarter.

If stimulus were left out the market would correct itself with less oscillations. Not to mention no new debt and a quicker recovery.