Well, this will be a key test of our new Senators. There appears to be a Republican lead vow to stop the second $350 Billion of TARP money released.
Obama has vowed to veto this resolution to stop the additional money from being released.
So, that said one question I have is how many newly minted Freshman Democrats will stand by their campaigns and also vote no release?
Under the bailout legislation approved by Congress in October, unless Congress passes a joint resolution rejecting the request within 15 days, Treasury can begin tapping the funds. Obama has vowed he would veto a resolution denying him the funds.
What a political football too. If Congress does the right thing and doesn't allow the other $350 Billion to be given to banks, they hand Obama a very crappy inauguration gift.
This morning the Bureau of Labor Statistics reported that Producer Prices declined (-1.9%) in December. Annual PPI for 2008 was (-1.2%), the first decline since 1950.
In the last 5 months, producer prices have declined (-8.2%). This far eclipses the dot.com decline of (-3.2%) in 2001-2, and the post-WW2 decline of (-6.2%) in 1949-50.
We are witnessing the biggest price collapse since the Great Depression.
The world of economics is every moving, ever changing. What was true 65 years ago, or even 38 years ago, is no longer true today. The world has moved on.
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century.
...
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.
The Bretton Woods system was created during the final days of WWII and we still live with its legacy today. However, it has morphed into something very different since then.
A previous foreclosure and eviction suspension to last until Jan. 9 was announced in November by government-sponsored entity Fannie Mae 2008 and later — on Jan. 8 — extended to the end of January. Originally said to be a pause to allow time for the streamlined modification process (SMP) to activate on Dec. 15, the suspension also appears to have been the precursor for a new program announced Tuesday — a national real estate-owned (REO) rental policy through which property managers and brokers may collect rent on Fannie’s behalf — and a move by Fannie to essentially become a giant, government-controlled landlady.
One of the most troublesome aspects of Obama’s stimulus plan is the lack of attention to rail transport. Just look at this graph to see why.
So, I consider this article by Phillip Longman one of the most important articles of the new year, because it clearly points to the one of the most effective means for moving the economy off the basis of “oil-for-paper.” There are enough references to other studies, going back to a 1970s National Academy of Science project that identified the specific lines most suitable to electrification (electrified railroads, which are common in Europe, are twenty times more fuel efficient than trucks).
The Bureau of Labor Statistics reported that import prices declined (-9.3%) in 2008. This is the biggest annual price decline in the 25 year history of the series.
Import prices are back to where they were two years ago.
The Census Bureau reported this morning that retail sales fell ~10% in real terms from one year ago. This is the worst decline in the history of this series.
Even leaving out gasoline sales (which artificially inflated sales earlier in 2008, and were down 36% on an annual basis, retail sales still fell ~6.5% YoY in real, inflation-adjusted terms.
The economy has fallen off a cliff, but there are at least some hopeful indications that we might not have too much further to fall. Both Calculated Risk and Econbrowser have posted graphs indicating that the severe credit crunch evident during September has eased, and while the indicators haven't gone back to normal, they are at least out of the panic zone.
In addition to those, both monetary indicators I have been tracking now point to recovery.
The banks are saying that they need more cash or the economy gets it.
Banks have received $200 billion in fresh capital from the Treasury since last fall and have borrowed hundreds of billions of dollars more from the Fed. But in the meantime, the economy fell into a severe downturn last fall that is likely to continue until at least this summer.
Industry analysts estimate rising unemployment and business failures will lead to another $500 billion to $750 billion of losses in coming months. That could bring total losses from the credit crisis to $1.5 trillion to $1.8 trillion, twice as high as earlier estimates.....
“More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets,” Mr. Bernanke said in a speech to the London School of Economics.
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