Archive for the ‘bailout’ Category

Endless Obama deficits threaten dollar’s power

May 24, 2009

The bad news is that President Barack Obama is keeping his campaign promises to raise taxes on upper-income families, borrow and spend, bail out car firms and take control of healthcare.

The good news is that President Obama is not keeping all his campaign promises. There has been no precipitous withdrawal from Iraq, Guantanamo is likely to remain the home of terrorists for some time, the promised “trans- parency” is not so all-encompassing as to include pictures of the treatment accorded the bad guys we captured, and we have not lurched into protectionism.

By Irwin Stelzer
The Times, London

Recall that during his run for the White House, Obama opposed the trade agreements with South Korea and Colombia, accused the Bush administration of failing to deal with China’s “manipulation” of its currency and threatened to use “the hammer of a potential opt-out” to force Mexico and Canada to renegotiate the North American Free Trade Agreement (Nafta).

Campaigning is one thing; governing is another. “Obama is subject to the same geopolitical imperatives as was President Bush,” said Rod Hunter, who served as Bush’s senior director of the National Security Council and is now a colleague of mine at the Hudson Institute, a Washington think tank. It is one thing to throw raw meat to the trade-union lions during a campaign but quite another to antagonise Canada, which has troops in Afghanistan alongside our own; Mexico, an ally in the war on drugs and potential source of oil; South Korea, important to our efforts to contain its northern neighbour; and other countries.
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So we have the new Obama. Nafta stays as it is; Treasury secretary Tim Geithner has retreated from his charge that China manipulates its currency; and the president has announced “a plan of action” to obtain congressional approval for pending free-trade agreements with Panama and South Korea, and is in discussions with Colombia’s Alvaro Uribe about getting the agreement with his country through a reluctant Congress. Obama has found he also favours “a strong market-opening agreement for agriculture, industrial goods and services through the Doha round \ and through other negotiations”.

Add to that the repeated statements by the president’s US trade representative Ron Kirk, who has been telling relieved business audiences that trade plays “an important role . . . in creating and sustaining better-paying jobs here at home”. Specifically, Kirk wants to expand trade with the Asia-Pacific region because “there is an extraordinary upside to us” in doing so.

“It is reassuring that Obama’s trade agenda appears to be aligning with those of presidents Bush and Clinton — and to their nine predecessors — rather than to the protectionist positions he took on the campaign trail,” commented Theodore Kassinger, former deputy commerce secretary and now a lawyer with O’Melveny & Myers in Washington.

But before awarding the president the Adam Smith Award For Combating Protectionism, consider this. Obama’s first priority is his domestic agenda: “reform” healthcare, restructure the energy industries, involve the federal government more deeply in education, fight the recession, save the carmakers, control bankers’ bonuses, revise the rules that govern the financial sector, and win what is now his war in Afghanistan. Trade is lower down on the list.

Worse still, there are signs that the president is willing to allow the state politicians in charge of disbursing stimulus funds to adopt “buy American” practices, even though his stimulus bill restricts such practices to those that do not violate our trade agreements or World Trade Organisation (WTO) rules. Local politicians know that WTO bureaucrats don’t vote in their states.

There are also subtle indications that the president will not fight to prevent protectionist measures from creeping into unrelated legislation. Banks receiving bailout money are chafing under rules that prevent them from hiring talented foreign workers. Jamie Dimon, chief executive of JP Morgan Chase, used the company’s annual meeting to denounce these restrictions as a “complete and utter disgrace” that will inevitably invite retaliation against Americans hoping to work abroad.

And Toyota and other foreign firms that make cars here — American jobs for American workers — are in effect discriminated against by the government’s decision to keep GM and Chrysler from meeting the fate to which a free market would consign them.

Nothing Obama will do on trade, either to free up the flow of goods and services, or to tip the scales in favour of American firms, will in the end matter as much as his reckless fiscal policy.

His budgets project deficits close to $10 trillion by 2019 — and that assumes his healthcare plan will cost only the $635 billion “down-payment” he has put in his budget, rather than the $1.2 trillion experts predict, and that he will succeed in almost freezing defence spending.

That means the US Treasury will be peddling billions of IOUs to investors such as China that already have trillions of this paper in their vaults. So far, so good: the recession-induced flight from risk has led overseas investors to seek a haven in dollar assets. But as the printing presses keep running, and the recession eases, investors will find the risk of being paid in dollars that have shrivelled in value too much to bear.

Which is why the dollar hit its lowest level of the year last week and why for a while it cost less to buy insurance against a default by hamburger-seller McDonald’s than against a default by the world’s only superpower. More important, it is why China and Brazil are trying to cobble together a trade deal that will allow them to bypass the dollar completely and pay in their own currencies. This might well be the first step in China’s announced intention to develop a currency to compete with the dollar as the world’s reserve currency.

So, only two cheers for Obama, less of a protectionist than expected, but nevertheless a serious threat to the dominance of the dollar in world trade.

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California’s a Democratic State. ACORN Got Handouts; Where’s Ours?

May 22, 2009
ACORN and SEIU are loyal pawns of the Democratic money grabbig maching.  They have gotten a lot of benefit for their loyalty.  Now you can’t blame California for asking, “Where’s our bailout?”

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Democrats are pushing for federal loan guarantees while Republicans are opposed, leaving Congress’ largest delegation with little power to persuade the White House to come to the state’s rescue.

By Richard Simon
L.A. Times
May 22, 2009

Reporting from Washington — California has by far the largest delegation in Congress, almost 10% of the membership. Nancy Pelosi, the speaker of the House, is a Californian, as are five of its committees’ chairs — a collection of powerful positions unmatched by any state. The state’s two senators chair important committees, and one holds a coveted seat on the Appropriations Committee.

And in terms of electoral politics, California has been among the most reliably Democratic major states, as well as by far the party’s most generous source of campaign cash.

Read the rest:
http://www.latimes.com/news/local/
la-me-delegation22-2009may22,0,3548195.story

Warning to Obama in California Vote

May 21, 2009
California voters sent one heckuva message Tuesday, as they unceremoniously shot down attempts by Gov. Arnold Schwarzenegger and state legislative leaders of both parties to raise their taxes, again. The politicos wanted the additional revenues to cover their $44 billion worth of over-spending, aka the state budget deficit. Voters said no, decisively, with majorities of 60 percent or more against the five tax-and-spend propositions, including a $16 billion “temporary” tax increase approved in April by Schwarzenegger and the legislature. In what cannot be an encouraging sign for advocates in Washington of President Obama’s massive spending increases (and the inevitable tax hikes that will be required to pay for them), the only one of the six initiatives California voters approved was a cap on the salaries of elected officials.
 
All of this came despite endlessly repeated warnings from the same public officials who got California into its present mess that, if the public voted no, their only alternative would be draconian cuts to education and public safety. According to the Tax Foundation, officials in Sacramento have been on a wild spending spree since 2000, the last time California’s budget was balanced without borrowing or resorting to one-time accounting gimmicks. Between 2003 (when Schwarzenegger took office) and 2007, state spending ballooned 31 percent – far beyond inflation (12 percent) and population growth (5 percent). Californians have seen this train wreck coming for many months.

Had the main initiatives passed, it would have imposed additional taxes in a state that already has the sixth highest tax burden in the nation without addressing the real problem, which is the explosive growth of state government.

Editorial
The Washington Examiner

read the rest:

http://www.washingtonexaminer.com/opin
ion/Warning-to-Obama-in-California-vote-45517617.html

Calif Voters Order Govt Pay Cuts; No New Taxes, Gov Starts Slashing Budget, Services

May 20, 2009

Since Governor Arnold Schwarzenegger went to the State House in Sacramento, 50,000 new government workers have been hired by the state and the state budget has exploded.

Yesterday, California voters said enough: rejecting measures to borrow and calling for budget cuts.

Barack Obama, Nancy Pelosi and Harry Reid should take note….

According to the L.A. Times, Schwarzenegger has called for cuts that would hit every corner of the state. He announced plans to lay off 5,000 of the state’s 235,000 workers and has proposed slashing education by up to $5 billion, selling state properties, borrowing $2 billion from local governments and potentially reducing eligibility for healthcare programs.
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“I respect the will of the people who are frustrated with the dysfunction in our budget system,” Schwarzenegger said in a statement from Washington conceding defeat. “In order to prevent a fiscal disaster, Democrats and Republicans must collaborate and work together to address this shortfall.”
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California Governor Arnold Schwarzenegger was dealt a crushing ...

California Governor Arnold Schwarzenegger was dealt a crushing defeat as voters rejected a series of ballot initiatives designed to help plug the state’s spiraling budget deficit.

(AFP/Getty Images/Kevin Winter)

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Only salary curbs survive in a rout of Schwarzenegger’s slate of reforms
By Eric Bailey
The Los Angeles Times
May 20, 2009
Reporting from Sacramento — The “big five” elected leaders — Schwarzenegger and the legislative chieftains from both houses — are slated to begin closed-door meetings today upon the governor’s return from Washington, where he spent election day after casting a last-minute absentee ballot.

On Thursday a small group of Senate and Assembly members will hold the first of what’s expected to be a slew of daily public sessions to wrangle over the details of the budget.
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Schwarzenegger has called for cuts that would hit every corner of the state. He announced plans to lay off 5,000 of the state’s 235,000 workers and has proposed slashing education by up to $5 billion, selling state properties, borrowing $2 billion from local governments and potentially reducing eligibility for healthcare programs.

Los Angeles Mayor Antonio Villaraigosa predicted that the city’s budget could take a hit — but he vowed a fight: “I’m going to do everything I can to protect the city coffers.”

Worst-case scenarios also call for the release from state prisons of up to 19,000 illegal immigrants, who would face deportation, and the transfer of up to 23,000 other prisoners to county jails.

Read the rest:
http://www.latimes.com/news/local/l
a-me-props20-2009may20,0,5134709.story

Michelle Malkin:
http://michellemalkin.com/2009/0
5/19/california-the-poster-child-for-dysfunction/

http://pajamasmedia.com/eddriscoll/20
09/05/20/california-voters-dont-just
-say-no-they-say-no-way/

Obama: “We Can’t Keep Borrowing From China”

May 14, 2009

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

By Roger Runningen and Hans Nichols
Bloomberg
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Related:
China’s yuan ’set to usurp US dollar’ as world’s reserve currency
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Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Credit-Card Fees

Obama also prodded Congress to pass restrictions on credit- card issuers, saying consumers need “strong and reliable” protection from unfair practices and hidden fees.

“It’s time for reform that’s built on transparency, accountability, and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” the president said.

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Credit-Card Fees

Obama also prodded Congress to pass restrictions on credit- card issuers, saying consumers need “strong and reliable” protection from unfair practices and hidden fees.

“It’s time for reform that’s built on transparency, accountability, and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” the president said.

Read the rest from Bloomberg:
http://www.bloomberg.com/apps/news?pid=20
601087&sid=aJsSb4qtILhg&refer=worldwide

New Jobless Claims Rise More Than Expected, as 52,000 Auto Workers Become Unemployed

May 14, 2009

Obama administration: Thanks for the “bailout.”

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From the Associated Press

New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week. 

The Labor Department said Thursday the number of new claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That’s above analysts’ expectations of 610,000. 

The increase comes after initial claims dropped in four of the previous five weeks, which raised hopes that the wave of layoffs announced earlier this year has crested and that the recession was nearing a bottom. 

A department analyst said most of the increase was due to auto layoffs. Economists estimate Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing. General Motors Corp. has said it will temporarily shut 13 factories beginning later this month through July, potentially affecting 25,000 workers. 

New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week. 

The Labor Department said Thursday the number of new claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That’s above analysts’ expectations of 610,000. 

The increase comes after initial claims dropped in four of the previous five weeks, which raised hopes that the wave of layoffs announced earlier this year has crested and that the recession was nearing a bottom. 

A department analyst said most of the increase was due to auto layoffs. Economists estimate Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing. General Motors Corp. has said it will temporarily shut 13 factories beginning later this month through July, potentially affecting 25,000 workers. 

Read the rest:
http://www.foxnews.com/politics/2009/05/
14/new-jobless-claims-rise-expected-aut
o-layoffs-increase/

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See also Reuters:
http://news.yahoo.com/s/nm/20090514/bs_n
m/us_usa_economy;_ylt=AjX5pfSxzEPIczaoA
xx4xiCs0NUE;_ylu=X3oDMTJnMWZlN3FqBG
Fzc2V0A25tLzIwMDkwNTE0L3VzX3VzYV9
lY29ub215BGNwb3MDNARwb3MDMTEEc2
VjA3luX3RvcF9zdG9yeQRzbGsDYXV0b2x
heW9mZnNs

GM, Chrysler to cut up to 3,000 dealers

May 13, 2009

General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.

GM, facing a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy, is expected to send termination notices to up to 2,000 dealers — a third of its roughly 6,000 U.S. dealers, the sources told Reuters.

Chrysler, which filed for bankruptcy on April 30, will also tell up to 1,000 of its 3,189 U.S. dealers that it is terminating their franchise agreements, according to the sources who asked not to be identified because the controversial closure plans have not been yet announced.

The moves to shut down auto dealerships underscores how the economic pain caused by the downward spiral of both automakers — now operating under U.S. government oversight — is spreading beyond their home base in Detroit.

Read the rest from Reuters:
http://news.yahoo.com/s/nm/20090513/bs_
nm/us_autos_dealers;_ylt=ArMSsK0_VWP
XM24VkA7AT_qs0NUE;_ylu=X3oDMTJpYn
JuYmxjBGFzc2V0A25tLzIwMDkwNTEzL3V
zX2F1dG9zX2RlYWxlcnMEY3BvcwM1BHB
vcwMxMgRzZWMDeW5fdG9wX3N0b3J5
BHNsawNnbWNocnlzbGVydG8

Related:
Your “Bailout” Money at Work: GM To Start Selling Cars Made in China in USA
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Obama Calling All The Shots on U.S. Cars: Cuts Advertising
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Fiat threatens to walk away from Chrysler deal unless unions agree to concessions
>
GM: Sayonara Detriot? Car Maker Could Move Out

One Hundred Billion Goes To IMF: Money U.S. Taxpayers Will Likely Never See Again

May 13, 2009

The U.S. Senate will include President Barack Obama‘s request for up to $100 billion for the International Monetary Fund in its bill to fund the wars in Iraq and Afghanistan, Senator Judd Gregg said on Wednesday.

Obama asked Congress for the aid to help countries weather the global economic crisis. He also wants to increase the U.S. contribution to the IMF by $8 billion and is asking for support of the IMF’s planned 13 million ounce gold sale.

Gregg is a Republican on the Senate Appropriations Committee, which is expected to vote on those requests on Thursday as part of a bill to fund the U.S.-led wars in Iraq and Afghanistan, legislation widely expected to pass.

The legislation for the war funding is considered a must-pass measure so including the IMF aid in the bill will ensure the funding gets approved.

The U.S. Senate will include President Barack Obama‘s request for up to $100 billion for the International Monetary Fund in its bill to fund the wars in Iraq and Afghanistan, Senator Judd Gregg said on Wednesday.

Obama asked Congress for the aid to help countries weather the global economic crisis. He also wants to increase the U.S. contribution to the IMF by $8 billion and is asking for support of the IMF’s planned 13 million ounce gold sale.

Gregg is a Republican on the Senate Appropriations Committee, which is expected to vote on those requests on Thursday as part of a bill to fund the U.S.-led wars in Iraq and Afghanistan, legislation widely expected to pass.

The legislation for the war funding is considered a must-pass measure so including the IMF aid in the bill will ensure the funding gets approved.

Read the rest from Reuters:
http://news.yahoo.com/s/nm/200905
13/pl_nm/us_obama_congress_imf_1

What Did We Get for $180 Billion “Bailout”? AIG Still “Toxic”

May 13, 2009

More than $180 billion later, AIG is still a toxic economic site.

That’s what American International Group Inc. Chief Executive Edward Liddy told a House panel Wednesday, saying the insurance giant has reduced but not eliminated the risk its failure poses to the global economy despite getting more than $180 billion in federal bailout aid.

“The assurance I can give you is we will do everything we can to not require more federal money” but that will hinge on how long the worldwide recession drags on and the condition of the financial markets, Liddy told the House Oversight and Government Reform Committee.

Liddy, who the government installed as head of AIG, said the crippled firm is selling many of its foreign assets to repay U.S. taxpayers, but lawmakers questioned whether the plan makes sense and demanded details.

Liddy agreed to provide portions of AIG’s “Project Destiny” restructuring plan to the committee, but said details are sensitive and could hurt the company’s ability to sell assets.

“We will work with you to provide everything that we possibly can,” Liddy told committee chairman Rep. Edolphus Towns, D-N.Y. Main Street Americans were angered over AIG’s secrecy and its payment of millions in bonuses to employees, Towns said.

Read the rest from Fox News:
http://www.foxnews.com/politics/200
9/05/13/aig-ceo-insurance-giant-rem
ains-toxic-b-bailout/