I am not a fan of FDR, however, his programs were lot smarter than of Bush and of the current govt and Congress and Senate. Yes, it was govt programs, but at least they produced something and kept men employed. Current programs, do not produce any thing and kept men unemployed. It is an ugly shame; and just plain stupid.
Bail outs for the banks and Wall Street. Nothing for the people.
Govt is to be of the people for the people. But money rules and the people are fooled.
From Stock Tiger:
In March 1933 president Franklin D Roosevelt issued an executive order establishing the Civilian Conservation Corps CCC. This was an incredibly smart and useful thing to do at the time and one that would reap rewards over all the years that have followed. The program was planned to employ 250,000 young men from 18 to 20 years old to work in the areas of soil erosion, flood control and other manual labor that could in the long run greatly benefit the country and in the short run help to relieve some of the unemployment problem. They were given housing, food and medical attention and were paid $30 per month with a mandatory $22-$25 of that sent to their family. By July of that year there were already over 1400 working camps with 250,000 workers. Because of favorable public opinion of this program, by 1935 the program was expanded to the age of 28 and over 500,000 enrollees were employed in about 2900 camps with 82% of Americans in favor of this program. Over the years this program was expanded to include a mandatory minimum of 10 hours a week of vocational and academic training to prepare workers for work once they left the program. Generally, workers signed up for a minimum of six months work with the possibility of staying for up to two years. The official program ended in 1942 but this became like a model which is still used today in various conservation programs throughout the country. During the time of this program the workers planted about 3 billion trees to help reforest America and they constructed more than 800 parks nationwide with thousands of miles of public roadways. America now has some incredibly beautiful national and state parks with thousands of miles of well constructed trails produced during this period. Though this program ended over 60 years ago the benefits continue. There are over 30 million RV enthusiasts supporting a myriad of businesses basically made possible by the work done in these programs.
Since the current economic crisis began the Fed has spent over $3 trillion in loans, bailouts and stimulus programs. The Fed is run by the banks so it is logical that they used this money for their own members' benefit instead of doing something that would directly help the country's citizens but congress has allowed this. In 1933 the country had a much smaller population and the economy was such that the $30 per month payment was agreed upon. If the government established a temporary worker program today perhaps they would have to pay $3000 per month but this money instead of going to banks, for them to use investing in the stock market, would go directly to the people and then into the the general economy benefiting everybody, including the banks. Goldman Sachs who received TARP money makes up to $100 million a day in stock trading profits benefiting no average American and certainly not benefiting the millions of unemployed and over 40 million living in poverty. It is difficult to get a reliable figure as to how many people are unemployed at the moment. There will always be a small percentage that are unemployed by choice, maybe temporarily or maybe due to health reasons. If the government were to now establish a work program for temporary relief of course not nearly all people could qualify for various work due to skill set sets and other reasons. For illustration purposes let's use the 14 million figure which is about how many are currently unemployed. To pay each of them $3000 per month would cost $504 billion per year or about $96 billion less than the Fed is proposing to spend only through June in buying government treasuries. If they used this money in a productive way, as seen here, you would have immediate results, at least temporarily. This money instead of being hoarded by banks would go directly into the economy and over time spark many new businesses which would then be in competition with the government for workers. It is a shame and so typical that the government does the opposite of what it should do when faced with a problem.
The US imports oil while natural gas sits unused as they say there is not a good piping distribution system to deliver it where needed. Perfect - a work program to create a nationwide delivery system and say goodbye to imported oil. President Kennedy launched an industry to put a man on the moon in 10 years creating hundreds of companies and thousands of jobs and some of that was really rocket science. Laying some pipes around with the help of some of the 14 million unemployed is not but the administration and congress instead extended payments to unemployed people with no work requirement so the country sees no lasting benefit.
Through all this the stock market though is up......which IMMHO does not make sense....but it will in time and then everyone will be surprised.
Showing posts with label Govt spending. Show all posts
Showing posts with label Govt spending. Show all posts
Sunday, December 19, 2010
Tuesday, February 24, 2009
Is It Any Surprise that More Bailouts are Required?
Hey....it should not be a surprise....business will all line up for as much hand outs / bail out funding that they can get.
As long as the government is funding them...they do not have the requirement to fix their problems.
So....it will continue..
******************
U.S. Is Pressed to Add Billions to Bailouts
By EDMUND L. ANDREWS, ANDREW ROSS SORKIN and MARY WILLIAMS WALSH
The government faced mounting pressure on Monday to put billions more in some of the nation’s biggest banks, two of the biggest automakers and the biggest insurance company, despite the billions it has already committed to rescuing them.
The government’s boldest rescue to date, its $150 billion commitment for the insurance giant American International Group, is foundering. A.I.G. indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance as losses have mounted.
Separately, the Obama administration confirmed it was in discussions to aid Citigroup, the recipient of $45 billion so far, that could raise the government’s stake in the banking company to as much as 40 percent.
The Treasury Department named a special adviser to work with General Motors and Chrysler, two of Detroit’s biggest automakers, which are seeking $22 billion on top of the $17 billion already granted to them.
All these companies’ mushrooming needs reflect just how hard it is to stanch the flow of losses as the economy deteriorates. Even though the government’s finances are being stretched — and still more aid might be needed in the future — it is being forced to fill the growing holes in the finances of these companies out of fear that the demise of an important company could set off a chain reaction.
The deepening global downturn is dragging down all kinds of businesses, and, with no bottom to the recession in sight, investors sent the the Dow industrials down 250.89 points, or 3.7 percent, to 7,114.78, a 3.7 percent drop for the day and a loss of about 50 percent from their peak in the fall of 2007. Asian markets followed suit on Tuesday by flirting with the lows they hit last October, with stocks in Hong Kong dropping more than 3 percent, and Japan's Nikkei 225 index dropping more than 2 percent before rebounding slightly.
In an unexpectedly assertive joint statement after two weeks of bank stock declines, the Treasury Department, the Federal Reserve and federal bank regulatory agencies announced that the government might demand a direct ownership stake in major banks that do not have enough capital to weather a deeper downturn. The government will begin conducting a test of the banks’ financial health this week.
Administration officials emphasized that nationalizing any of the major banks was their least favorite solution to the banking crisis, but they acknowledged that some banks might be both too big to fail and too fragile to endure another round of shocks without substantial help.
Banks that fail the test will have to raise additional capital. If they are unable to raise capital in the private market, they would have to take money from the government in exchange for preferred stock that would be convertible into common shares, thus giving the government a bigger stake.
The administration is debating how big a role to play in the auto businesses, what concessions the companies should make in return for aid and whether bankruptcy should be considered, though it prefers a private sector solution.
On Monday, Steven Rattner, co-founder of a private equity firm, the Quadrangle Group, was named an adviser to the Treasury on the auto industry.
As the administration takes bigger stakes in companies, the value held by existing shareholders is being diluted, which could make it even harder to attract private money in the future.
Timothy F. Geithner, the secretary of the Treasury, recently outlined a bank recovery plan that included a program to attract a combination of public and private money to buy troubled mortgages and other assets.
A.I.G. serves as a cautionary note about the difficulty of luring private investors when the size of the losses is unknown. In the months since the government initially stepped in last fall to take an 80 percent stake in the insurer, the company has suffered deepening losses and has been forced to post more collateral with its trading partners.
The company, according to a person close to the negotiations, is discussing the prospect of converting the government’s $40 billion in preferred shares into common equity.
The prototype could turn out to be Citigroup, which is negotiating with regulators to replace the government’s nonvoting preferred shares with shares that are convertible into common stock.
“We absolutely believe that our private banking system is best off being in private hands and we are trying our best to keep it that way,” said one senior administration official, who spoke on condition of anonymity. But, he continued, the government is already deeply involved in propping up the banking system and may have no choice.
Officials said they were bracing for the possibility of new problems that might indeed require the government to take a more aggressive stance.
“Given our involvement at this particular stage, there is an element, a possibility over time, that we will end up with some ownership of these institutions,” the official said. “This is really about aggressive anticipatory action. It is an acceptance that the future is uncertain, but that we can plan on a certain basis for it.”
Acquiring common stock would give the government more control, but expose it to more risk. Armed with voting shares, government officials would have more power to replace management and change company strategy. But the Treasury would lose its claim to dividend payments, which in Citigroup’s case amount to more than $2.25 billion a year.
A.I.G. declined to provide details of its new financial problems, citing the “quiet period” just before it issues fourth-quarter results. But some people familiar with A.I.G.’s negotiations said it was on the brink of reporting one of the biggest year-end losses in American history.
Such losses lead to a bigger problem. A further credit rating downgrade would force the company to raise more capital, according to a person involved in the negotiations. The losses appeared to be across the board, unlike the insurer’s losses of last September, which were confined mostly to derivative contracts called credit-default swaps.
A.I.G. has not been writing new credit-default swap contracts, and had tried to put the swaps disaster behind it. In November the company worked out a relief package with the Federal Reserve Bank of New York, in which the most toxic of its swap contracts were put into a kind of quarantine, so they could no longer hurt its balance sheet. But A.I.G. had written several other classes of credit-default swaps, which it kept on its books.
If the latest round of losses severely weaken A.I.G.’s capital and its creditworthiness, then its swap counterparties may be entitled to demand that A.I.G. come up with a large amount of cash for collateral — precisely the problem that brought the company to its knees last September.
“They stand, unfortunately, to bring others down with them if they go down,” said Donn Vickrey of Gradient Analytics, an independent research firm.
The difficulty of shoring up A.I.G. must weigh on the administration at this moment. The administration’s banking statement amounted to a plan of action demonstrating a way to demand a major and possibly a controlling stake in systemically important banks like Citigroup and Bank of America.
“They are desperate to not nationalize the banks,” said Robert J. Barbera, chief economist at ITG. “They know what happened when they took Iraq and they would just as soon not take over the banks, because if you own it, you gotta fix it.”
As long as the government is funding them...they do not have the requirement to fix their problems.
So....it will continue..
******************
U.S. Is Pressed to Add Billions to Bailouts
By EDMUND L. ANDREWS, ANDREW ROSS SORKIN and MARY WILLIAMS WALSH
The government faced mounting pressure on Monday to put billions more in some of the nation’s biggest banks, two of the biggest automakers and the biggest insurance company, despite the billions it has already committed to rescuing them.
The government’s boldest rescue to date, its $150 billion commitment for the insurance giant American International Group, is foundering. A.I.G. indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance as losses have mounted.
Separately, the Obama administration confirmed it was in discussions to aid Citigroup, the recipient of $45 billion so far, that could raise the government’s stake in the banking company to as much as 40 percent.
The Treasury Department named a special adviser to work with General Motors and Chrysler, two of Detroit’s biggest automakers, which are seeking $22 billion on top of the $17 billion already granted to them.
All these companies’ mushrooming needs reflect just how hard it is to stanch the flow of losses as the economy deteriorates. Even though the government’s finances are being stretched — and still more aid might be needed in the future — it is being forced to fill the growing holes in the finances of these companies out of fear that the demise of an important company could set off a chain reaction.
The deepening global downturn is dragging down all kinds of businesses, and, with no bottom to the recession in sight, investors sent the the Dow industrials down 250.89 points, or 3.7 percent, to 7,114.78, a 3.7 percent drop for the day and a loss of about 50 percent from their peak in the fall of 2007. Asian markets followed suit on Tuesday by flirting with the lows they hit last October, with stocks in Hong Kong dropping more than 3 percent, and Japan's Nikkei 225 index dropping more than 2 percent before rebounding slightly.
In an unexpectedly assertive joint statement after two weeks of bank stock declines, the Treasury Department, the Federal Reserve and federal bank regulatory agencies announced that the government might demand a direct ownership stake in major banks that do not have enough capital to weather a deeper downturn. The government will begin conducting a test of the banks’ financial health this week.
Administration officials emphasized that nationalizing any of the major banks was their least favorite solution to the banking crisis, but they acknowledged that some banks might be both too big to fail and too fragile to endure another round of shocks without substantial help.
Banks that fail the test will have to raise additional capital. If they are unable to raise capital in the private market, they would have to take money from the government in exchange for preferred stock that would be convertible into common shares, thus giving the government a bigger stake.
The administration is debating how big a role to play in the auto businesses, what concessions the companies should make in return for aid and whether bankruptcy should be considered, though it prefers a private sector solution.
On Monday, Steven Rattner, co-founder of a private equity firm, the Quadrangle Group, was named an adviser to the Treasury on the auto industry.
As the administration takes bigger stakes in companies, the value held by existing shareholders is being diluted, which could make it even harder to attract private money in the future.
Timothy F. Geithner, the secretary of the Treasury, recently outlined a bank recovery plan that included a program to attract a combination of public and private money to buy troubled mortgages and other assets.
A.I.G. serves as a cautionary note about the difficulty of luring private investors when the size of the losses is unknown. In the months since the government initially stepped in last fall to take an 80 percent stake in the insurer, the company has suffered deepening losses and has been forced to post more collateral with its trading partners.
The company, according to a person close to the negotiations, is discussing the prospect of converting the government’s $40 billion in preferred shares into common equity.
The prototype could turn out to be Citigroup, which is negotiating with regulators to replace the government’s nonvoting preferred shares with shares that are convertible into common stock.
“We absolutely believe that our private banking system is best off being in private hands and we are trying our best to keep it that way,” said one senior administration official, who spoke on condition of anonymity. But, he continued, the government is already deeply involved in propping up the banking system and may have no choice.
Officials said they were bracing for the possibility of new problems that might indeed require the government to take a more aggressive stance.
“Given our involvement at this particular stage, there is an element, a possibility over time, that we will end up with some ownership of these institutions,” the official said. “This is really about aggressive anticipatory action. It is an acceptance that the future is uncertain, but that we can plan on a certain basis for it.”
Acquiring common stock would give the government more control, but expose it to more risk. Armed with voting shares, government officials would have more power to replace management and change company strategy. But the Treasury would lose its claim to dividend payments, which in Citigroup’s case amount to more than $2.25 billion a year.
A.I.G. declined to provide details of its new financial problems, citing the “quiet period” just before it issues fourth-quarter results. But some people familiar with A.I.G.’s negotiations said it was on the brink of reporting one of the biggest year-end losses in American history.
Such losses lead to a bigger problem. A further credit rating downgrade would force the company to raise more capital, according to a person involved in the negotiations. The losses appeared to be across the board, unlike the insurer’s losses of last September, which were confined mostly to derivative contracts called credit-default swaps.
A.I.G. has not been writing new credit-default swap contracts, and had tried to put the swaps disaster behind it. In November the company worked out a relief package with the Federal Reserve Bank of New York, in which the most toxic of its swap contracts were put into a kind of quarantine, so they could no longer hurt its balance sheet. But A.I.G. had written several other classes of credit-default swaps, which it kept on its books.
If the latest round of losses severely weaken A.I.G.’s capital and its creditworthiness, then its swap counterparties may be entitled to demand that A.I.G. come up with a large amount of cash for collateral — precisely the problem that brought the company to its knees last September.
“They stand, unfortunately, to bring others down with them if they go down,” said Donn Vickrey of Gradient Analytics, an independent research firm.
The difficulty of shoring up A.I.G. must weigh on the administration at this moment. The administration’s banking statement amounted to a plan of action demonstrating a way to demand a major and possibly a controlling stake in systemically important banks like Citigroup and Bank of America.
“They are desperate to not nationalize the banks,” said Robert J. Barbera, chief economist at ITG. “They know what happened when they took Iraq and they would just as soon not take over the banks, because if you own it, you gotta fix it.”
Wednesday, February 18, 2009
$263,000 per worker....now that is Stimulus!
Stimulus: Say this for the $787 billion behemoth that Congress voted on Friday -- never in our history has a more important vote been cast on legislation with so little scrutiny. Couldn't they at least read the thing before voting on it? The 1,434-page bill is, in a word, massive. It's full of details that deserve to be given a close look before anyone votes. ... The bill that President Obama called 'the largest change in domestic policy since the 1930s' was jammed down Congress' throat, breaking almost all the promises of bipartisanship and transparency along the way. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid vowed to give members of Congress at least 48 hours to look at the historic legislation before them. After all, the bill will spend the equivalent of nearly 9% of our GDP while adding $1.2 trillion to our national debt. Obama vows to 'create or save' 3.5 million jobs at a cost of $263,000 per job. Shouldn't it get even a little bit of scrutiny? Apparently not. ... Why the haste? Surely one reason is the bill is stuffed with pork and short of real stimulus. Its authors don't want the details out. They shouldn't be surprised, then, when voters bridle at what they've been saddled with." --Investor's Business Daily
Quote....The real destroyer of
"The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits." --Roman historian Plutarch (c.45-125 A.D.)
Saturday, February 14, 2009
Update: yes, the Paulson Plan was just theft
Fabius Maximus | Feb 14, 2009
Opening of “The Paulson Plan will buy assets cheap, just as all good cons offer easy money to the marks” (30 September 2008):
“Buy this because it is extraordinarily cheap. The owner must sell right now because…
This is the opening line of a thousand confidence games. Stories told by well-dressed, smooth-talking grifters. Like many of those sent out to sell the Paulson Plan (which is not dead, as Congress will certainly reconsider some form of it later this week).
The government can buy financial assets from the world’s leading financial firms at prices so low that substantial profits are likely.
Read those words. Confidence tricks require marks, people who believe preposterous statements about promised gains if stated authoritatively and backed with a slick story.
* “The Paulson Plan Will Make Money For Taxpayers“, Andy Kessler, Op-ed in the Wall Street Journal, 25 September 2008
* “Bailout May Be Granddaddy of All Carry Trades“, John M. Berry, Bloomberg, 26 September 2008
* “Taxpayers can still benefit from a bail-out“, Lawrence Summers, op-ed in the Financial Times, 28 September 2008
Now the Congressional Oversight Panel tells us the tab after the first few months of the “THEFT TART (Troubled Assets Relief Program): $78 billion. Don’t worry, the money was not lost. It’s just moved from your pockets to those of people with great political influence.
Only fools expected any other outcome. And the meter is still running, with the losses mounting day by day. To read the unpleasnat details see “Congressional Oversight Panel Releases Third Monthly Oversight Report: Valuing Treasury Acquisitions“, 6 Feburary 2009 — Excerpt:
The report acknowledges that Treasury may have had valid policy reasons for making these transactions, and that it is possible that the value of the investments may eventually be worth more than the amount Treasury paid—or they may be worth much less. The report does not take a position on whether Treasury pursued the correct strategy, instead focusing on the contrast between the quantitative results of the study and the statements made by Secretary Paulson last year.
Last fall, Treasury sold the American public on the TARP program by claiming that it would help banks while protecting taxpayers. Secretary Paulson described the transactions as ‘at or near par’—that the value the assets Treasury received was roughly equal to the money being spent. But that didn’t happen. Treasury got less than it spent.” said Elizabeth Warren, the Chair of the Oversight Panel. “Treasury should have leveled with the American people about the purpose of the program. It’s time to explain what’s happened so that we can have a good, old-fashioned debate about whether this is the smartest way to spend our money.
********************
Paulson ripped us off... he was good at it..but wait, the lesson still has not been learned.
How long will taxpayers allow govt / congress to move funds from the people to give more to big business and special interest groups?
Opening of “The Paulson Plan will buy assets cheap, just as all good cons offer easy money to the marks” (30 September 2008):
“Buy this because it is extraordinarily cheap. The owner must sell right now because…
This is the opening line of a thousand confidence games. Stories told by well-dressed, smooth-talking grifters. Like many of those sent out to sell the Paulson Plan (which is not dead, as Congress will certainly reconsider some form of it later this week).
The government can buy financial assets from the world’s leading financial firms at prices so low that substantial profits are likely.
Read those words. Confidence tricks require marks, people who believe preposterous statements about promised gains if stated authoritatively and backed with a slick story.
* “The Paulson Plan Will Make Money For Taxpayers“, Andy Kessler, Op-ed in the Wall Street Journal, 25 September 2008
* “Bailout May Be Granddaddy of All Carry Trades“, John M. Berry, Bloomberg, 26 September 2008
* “Taxpayers can still benefit from a bail-out“, Lawrence Summers, op-ed in the Financial Times, 28 September 2008
Now the Congressional Oversight Panel tells us the tab after the first few months of the “THEFT TART (Troubled Assets Relief Program): $78 billion. Don’t worry, the money was not lost. It’s just moved from your pockets to those of people with great political influence.
Only fools expected any other outcome. And the meter is still running, with the losses mounting day by day. To read the unpleasnat details see “Congressional Oversight Panel Releases Third Monthly Oversight Report: Valuing Treasury Acquisitions“, 6 Feburary 2009 — Excerpt:
The report acknowledges that Treasury may have had valid policy reasons for making these transactions, and that it is possible that the value of the investments may eventually be worth more than the amount Treasury paid—or they may be worth much less. The report does not take a position on whether Treasury pursued the correct strategy, instead focusing on the contrast between the quantitative results of the study and the statements made by Secretary Paulson last year.
Last fall, Treasury sold the American public on the TARP program by claiming that it would help banks while protecting taxpayers. Secretary Paulson described the transactions as ‘at or near par’—that the value the assets Treasury received was roughly equal to the money being spent. But that didn’t happen. Treasury got less than it spent.” said Elizabeth Warren, the Chair of the Oversight Panel. “Treasury should have leveled with the American people about the purpose of the program. It’s time to explain what’s happened so that we can have a good, old-fashioned debate about whether this is the smartest way to spend our money.
********************
Paulson ripped us off... he was good at it..but wait, the lesson still has not been learned.
How long will taxpayers allow govt / congress to move funds from the people to give more to big business and special interest groups?
Wednesday, February 11, 2009
Spending a Trillion? Really!
"[W]hat could possibly be more reckless than spending a trillion dollars you don't have on a plan that you have no evidence will work? What could be more irresponsible than doubling the generational debt for your partisan pet projects in a time of crisis? And what could be more selfish than stifling debate by deploying fear to induce voters into supporting it all?" --columnist David Harsanyi
****************
It is pretty poor leadership! Think it is based on fear, one that is not really seeking answers and solutions. But IMHO....this is only brought and paid for "leadership" that is for those that will benefit from the grap from the people.
****************
It is pretty poor leadership! Think it is based on fear, one that is not really seeking answers and solutions. But IMHO....this is only brought and paid for "leadership" that is for those that will benefit from the grap from the people.
Monday, February 9, 2009
US Govt Bailouts and "stimulus" spending - $9.7 trillion so far
Should Congress pass the stimulus bill in its current form, the U.S. government will have dedicated $9.7 trillion to this bail out....
According to Bloomberg, that would be about $1 trillion in stimulus bills, over $3 trillion already spent or loaned trough financial rescues, and over $5 trillion committed or promised via some sort of backstop or aid agreement. We’re sure you could come up with some interesting ways to spend that much money… here are a few of ours:
- $9.7 trillion could have bought 90% of all U.S. mortgages
- The same amount would cover all but a trillion of our national debt
- The government could have written a $1,430 check to every living person in on planet Earth
- $9.7 trillion would even buy you every single stock on the New York Stock Exchange.
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