March 2009

Friday Movie Night - The Ascent of Money Edition

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It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!

 

This week is Economist and Historian Niall Ferguson's 6 part PBS documentary The Ascent of Money. Niall Ferguson goes through the history of finance and also shows globalization is not new, but simply a very old game, revised. Dr. Ferguson has a book of the same title.

A Break in the Ranks at the Fed - A Most Important Speech

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The Kansas Federal Reserve President, Thomas Hoenig, representing himself, just gave one hell of a speech, Too Big Has Failed. Calculated Risk, (who found this gem), said this is a call for nationalization. Is it?

In the speech, Hoenig states:

we have not defined a consistent plan and not addressed basic shortcomings and, in some cases, the insolvent position of these institutions.

Hoenig then acknowledges while the United States is trying to avoid nationalization, it's happening anyway, slow, painful and piecemeal. He also suggests the current series of actions are adding to market uncertainty.

Hoenig describes current actions on the financial crisis, the results and offers a road map of policy suggestions.

China Importing Electric Cars to the United States

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Classic China. In this government controlled Chinese press is this report:

Shandong Baoya Vehicle Co., Ltd. received orders from the US this year for the purchase of 4,800 electric cars.

Baoya electric car possesses its own core technologies including driveline technology for the chassis of electric cars, as well as adaptation and optimization technologies for drive motors, according to Zhang Haibo, Baoya's General Manager.

"At present, all our products are for export. In 2008, 500 cars were exported to the US, and orders from the US this year have already reached 4,800 units." Zhang said.

Unemployment from 7.6% to 8.1% in one month

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I was thinking of putting a poll up on guessing today's unemployment numbers earlier, but if I had, no one would have gotten it right because I wouldn't have gone high enough.

From the Bureau of Labor Statistics the number of unemployment actively looking for work, 5,645,000. 2.6 million of those people lost their job in the last 4 months.

The number of people who could only find part-time work is now 1,764,000.

So why is it the Government won't even acknowledge they offshore outsource jobs using taxpayer money. That's right, both Federal and State governments ship work overseas. This is especially true in state social services.

Also, the United States brings in about 1.5 million temporary foreign guest workers.

Paris on the Potomac (or) A Tale of Two Cities

Francis Cianfrocca, a/k/a Blackhedd from Redstate, has started his own blog called Markets and Policy. Although our political opinions are frequently poles apart, his purely economic analysis is excellent, and always intelligent. If you are interested in reading well-done analysis from the "other" side, I highly recommend him.

Needless to say, he is opposed to Obama's stimulus plan, calling it Paris-on-Potomac:

Bill Introduced to Loan FDIC $500 billion

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The Wall Street Journal is reporting:

Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.

The Connecticut Democrat's effort -- which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner -- would give the FDIC access to more money to rebuild its fund that insures consumers' deposits, which have been hard hit by a string of bank failures.

Why is this significant? At minimum the FDIC is preparing for a lot more bank failures. Currently the loan limit is $30 Billion and the FDIC is primarily funded by fees paid by banks.

Criminal Prosecution for the Financial Meltdown Players - Rep. Barney Frank

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Barney Frank wants criminal prosecutions for financial wrong doing related to the Financial crisis.

My question is: will they start with Congress?

U.S. House Financial Services Committee Chairman Barney Frank said he wants to see people prosecuted for wrongdoing related to the financial crisis as lawmakers overhaul regulation of Wall Street.

Frank will call on attorneys general, bank regulators and officials from the U.S. Securities and Exchange Commission to outline plans for prosecuting and recovering funds from those responsible for the crisis, he said today at a news conference in Washington.

According to The Hill:

Second Mortgages, no problem

File this under a WTF.

Anybody else getting the feeling of being overwhelmed by the amount of crap coming out of Washington D. C.?

Buried deep in the pages of the current Obama Mortgage Modification Plan is this information.

paragraph vi. Second Liens: While eligibly loan modifications will not require any participation by second lien holders, the program will include additional incentives to extinguish second liens on loans modified under the program in order to reduce the overall indebtedness of the borrower and improve loan performance. Servicers will be eligible to receive compensation when they contact second lien holders and extinguish valid junior liens. Servicers will be reimbursed for the release according to the specified schedule, and will also receive an extra $250 for obtaining a release of a valid second lien.

Shareholders Nationalize Citigroup - Stock Literally worth Pennies

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Citigroup is being nationalized by shareholders as we speak. Nationalization is when the shareholders get nothing, the bank it taken over by the Government, cleaned up, broken up, all executive management tossed out and then the bank is privatized once again.

Bloomberg:

Citigroup fell to $1.03 at 12:32 p.m. on the New York Stock Exchange after reaching 97 cents earlier today, marking an 85 percent decline this year and giving the New York-based company a market value of $5.5 billion. At its peak in late 2006, Citigroup stock was worth $55.70, for a market value of $277.2 billion.

Even more horrific, Citigroup lobbied for their own demise.

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