Archive for the ‘banks’ 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.

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

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

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

Top Ten Reasons The Republican Party Will Recover

May 13, 2009

Here’s our Peace and Freedom list of the top ten reasons to expect the Republican Party to make gains over the course of the next two to four years:

1)  The economy: Despite the huge spending measures already enacted by the Obama administration, including the stimulus and the many ‘bailouts,” the economy may not even start any really significant recovery until this time next year.  Voters are already tiring of the recession and showing discontent.

Related:
Bank of England: Recovery will be slow, starting next year
.
New Jobless Claims Rise More Than Expected, as 52,000 Auto Workers Become Unemployed

2)  Democratic leaders like Harry Reid, Nancy Pelosi, and John Murtha.  There is already rumbling that our Congressional leaders are disappointing voters.  Most polls rate congress very poorly even though some 60% like Obama.  Scandals, a lack of integrity and broken promises on transparency can add to the woes of Democrats easily over time.

Related:
Pushy Practices of Pelosi, Murtha Back To Haunt Them?
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Democratic Party a “One Man Show” — After Obama, It’s a “Second-Division Ball Club”
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Pelosi Vehemently Challenges CIA’s Account of Briefings To Her on Waterboarding; Agency “Lied to Congress”
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“Democratic Party is Bought and Paid For By The Unions” Lawmaker Says

House Speaker Nancy Pelosi of Calif. gestures during a news ...

3)  National debt, deficit and spending.

Related:
America’s Ability To Borrow More Questioned, At Risk — Too Much Spending “Breaking the bank”?
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What Did We Get for $180 Billion “Bailout”? AIG Still “Toxic”
.
One Hundred Billion Goes To IMF: Money U.S. Taxpayers Will Likely Never See Again
.
Obama’s Spending, Debt, Taxes Will Lower America’s Standard of Living

4)  Taxes.  Taxes will go up.  There is just no way to support all our current spending let alone the promises of overhauls to health care, education, and the environment without raising more money and that means raising taxes.

Related:
Taxes: People and Business Flee Higher Rates; Why Can’t Obama, Congress Get That?
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Governors of Texas, South Carolina to Host “Tea Party 2.0″ This Week


Gov. Rick Perry, Texas
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5)  Unexpected world events.  Just as nobody could have predicted 9/11, there could well be an event as yet unknown that unfolds to change the game for everyone before long.  Just as Joe Biden predicted last year, this president will be tested….

Related:
Battles over energy may lead to wars, Russian strategists conclude

China’s Navy Grows and the World Watches Warily
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6)  Democratic Infighting.  This is the party that has, for a long time, been unable to get along with itself, for too long, before all hell breaks loose….

7)  Inflation.  With all the borrowing of the federal government, inflation is indeed likely.  Nobody will like that one bit.  Which will hurt incumbents….

8)  Loss of buying power and credit.  Obama’s current campaign to rein in the credit card companies is admirable but it may result in millions of people unable to get the credit they’ve grown used to….Expect retail sales to lag other indicators of recovery…..

Retail sales remain slow in April:
http://finance.yahoo.com/news/Reta
il-sales-drop-apf-15227744.html?.v=3

9)  Broken Promises.  “Green jobs” won’t be as numerous or high paying as once promised and work for good jobs will dry up as GM and Chrysler and others move more jobs overseas….The health care overhaul may actually harm enough people that there could be a backlash that wants to punish lawmakers…

Related:
Latest News On Social Security, Medicare, Debt Show Inability of Government To Make Accurate Financial Predictions
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Obama, Daschle and Socialized Medicine: Care of GE
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Fiat threatens to walk away from Chrysler deal unless unions agree to concessions

10) Desire for Change/Hope (The Pendulum): In our American system, the pendulum has been swinging to and fro; from Republicans to Democrats and back again for almost all of time.  People will tire of our current way of doing business and even the euphoria over Obama will wane.

Related:
Republican Party Dead? Hardly. Polls Show Erosion and Doubt in Democratic Advantage

Bonus:

11) Traditional Republican Discipline.  The Republicans in general have traditionally shown much more discipline and togetherness than Democrats.  The current squabbling over Cheney, Powell, Gingrich, Rush et al can be expected to wind down as elections near.

12)  The law of unintended consequences.  President Obama has changed so much, so aggressively, so often, so soon in his presidency that the effort is unprecedented.  But this could mean that there is trouble lurking that has not been foreseen.  And we know how well our government foresees things: like the current recession….

13)  Bad Obama planning and staff work.  Nobody had time to read the stimulus?  This will come back to hurt the president and the Democrats in Congress.  Many other examples of stupidity an ineptitude come to mind…..

14)  The “Tea Parties.”  “The real genesis of the tea party movement was not taxes, but out-of-control spending and the debts we are leaving our children,” wrote Paul Gessing in the Albuquerque Conservative Examiner.  “The tea party movement (at least in Albuquerque) is not simply a bunch of angry Republicans who don’t like Obama and understand their own self-interest. Rather, the tea party here was organized by average citizens who are terrified of what the government is doing to our economy. The fact is that America can’t live on borrowed money forever.”  The fact that people are taking to the streets — people who are both Democrats and republicans — is unprecedented.John E. Carey
Peace and Freedom
In this photograph released by the White House, Air Force One ...

 

Related:
Republicans Determined to Lose?
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Obama Backs Off Promise to Release Abuse Photos
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If you had told me some of these Obama stories three months ago I would have said “impossible!”
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Obama’s Dumb Moves Getting More Difficult to Ignore? On Friday Mainstream Media Realizes Monday’s Cabinet Meeting Was Laughable, Really

Conservatives Need To Recommit to Conservative Values

Michelle Malkin:
http://michellemalkin.com/2009/05/1
3/big-labors-investment-in-obama-pays-off/

http://hotair.com/archives/2009/05/13/
stupid-rnc-to-pass-resolution-rebrand
ing-democrats-the-democrat-socialist-party/

U.S. Government Borrowing 50 Cents on Every Dollar Spent; Interest Likely To Rise

May 11, 2009

The Office of Management and Budget says for the first time ever, the U.S. government is borrowing 50 cents of every dollar it spends.

Barack Obama and democrats will quadruple the U.S. deficit this year.

The receipts of the U.S. government from taxes paid was down 15% in January 2009 compared to January 2008.  In April, receipts were off a full 30%.

Meanwhile, U.S. government spending is way up: up fully $38 billion in April alone over April 2008.

The difference between receipts and money spent is the deficit and that could exceed $1.8 trillion this year; added to the U.S. burden of borrowed money and interest paid.

The massive budget deficit created by democrats this year represents a massive 12.9% of gross domestic product. President Obama expected the deficit level to be 12% of GDP this year. This puts the US above the UK deficit that runs more than 10% of GDP, and puts the US above troubled states Pakistan and Hungary.

As several commentators have said, the U.S. would not be given permission to join the EU with this much debt….

http://gatewaypundit.blogspot.com/2009/05/w
hite-house-sees-higher-us-deficit-than.html

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From The Associated Press

With the U.S. economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing 50 cents for every dollar it spends this year.

The deficit for the current budget year will rise by $89 billion to above $1.8 trillion — about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall Street bailout, the cost of President Barack Obama’s economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

For the current year, the government would borrow almost half the money it takes to run the government under the administration’s plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.
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Read the rest:
http://finance.yahoo.com/news/White
-House-Budget-deficit-to-apf-15199183.html?.v=8

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What does all this mean?  Well, your taxes will likely go up, and Washington should be looking for ways to spend less and make cuts….

This also means interest rates will likely go up for everyone, across the board, for up to ten years, because individual borrowers will be competing with the federal government for money…

Reactions To Recession: Isreal Wants Huge Spending Cuts; Brits Mulling Huge Taxes; Obama Wants To Totally Fund Health Care, Education, Re-engineered Energy System

Obama’s rich supporters fear his tax plans show he’s a class warrior

May 10, 2009

Some of Barack Obama’s richest supporters fear they have elected a “class warrior” to the White House, who will turn America’s freewheeling capitalism into a more regulated European system.

By Leonard Doyle in Washington
Telegraph (UK)

Barack Obama's rich supporters fear his tax plans reveal him as a class warrior
Barack Obama: some of his rich supporters fear he is becoming a class warrior Photo: AP

Wealthy Wall Street financiers and other business figures provided crucial support for Mr Obama during the election, backing him over the Republican candidate John McCain as the right leader to rescue the collapsing US economy.

But it is now dawning on many among them that Mr Obama was serious about his campaign trail promises to bring root and branch reform to corporate America – and that they were more than just election rhetoric.
.
Related:
Wealthy Democrat Supporters Dumbfounded… Realize Obama Will Take Their Money

A top Obama fundraiser and hedge fund manager said: “I’m appalled at the anti-Wall Street rhetoric. It was OK on the campaign but now it’s the real world. I’m surprised that Obama is turning out to be so left-wing. He’s a real class warrior.”

Chris Edwards of the Cato Institute, a free enterprise think tank, said Democrats in Congress were unnerved by the president’s latest plan to raise $210 billion over 10 years from multinational corporations.

The money is needed to pay for a national debt that will double over the next five years; and triple over the next 10 years to $17.3 trillion. But the crackdown already faces fierce Democratic resistance.

“These big companies are based in New York Boston, Seattle and Silicon Valley, where Democrats dominate,” Mr Edwards said. “Obama’s tax plan is already cleaving him from his big corporate supporters,” he said.

Mr Obama made no secret of his plans to raise taxes on the “working rich” (individuals earning more than $200,000) by imposing a top income tax rate of almost 40 per cent, and there is little surprise that those plans remain on track, even during the worst economic crisis since the Great Depression.

But Democratic opposition is building in Congress to many of the President’s proposals. A plan to reduce tax deductions for charitable gifts by richer people may have to be scrapped, because the charitable sector – which includes hospitals, museums and voluntary service groups – depends heavily on tax-deducted donations.

Charles Rangel, the New York chairman of the Ways and Means Committee, which drafts tax legislation, raised a red flag about the proposal last week. “I would never want to adversely affect anything that is charitable or good,” he said.

Mr Obama also wants to “cap and trade” carbon emissions – seen by business as effectively yet another tax – to tackle global warming.

The president’s plans are direct repudiation of the model of light touch regulation credited with creating economic growth and wealth in America in recent decades.

Setting out his thoughts on the economy, Mr Obama told the New York Times magazine last week: “There was always an unsustainable feel about what had happened on Wall Street over the last 10, 15 years, and it’s not that different from the unsustainable nature of what was happening during the dot-com boom – where people in Silicon Valley could make enormous sums of money, even though what they were peddling never really had any signs it would ever make a profit.”

A senior Wall Street executive who remains an admirer of Mr Obama, told The Sunday Telegraph that the reforms were necessary after years of excess. “I think its refreshing that he has the chutzpah to deal with the previously untouchable abuses of the system like tax dodging and excessive executive pay,” he said.

“We badly need some European style social democracy, and Obama might as well start with health care reform.”

Read the rest:
http://www.telegraph.co.uk/news/worldnews/nort
hamerica/usa/barackobama/5301078/Barack-
Obamas-rich-supporters-fear-his-tax-plans-sh
ow-hes-a-class-warrior.html

TARP “Bailout” Produced Unhealthy Government-Business Relationship

May 9, 2009

AMERICAN capitalism is a house divided.

On one side are those corporations and financial firms dependent on government support, and thus eager to obey the diktat of their political minders. They are part of Obama, Inc., a vast public-private entity pursuing a vision of a greener, more constrained and politicized capitalism.

By Rich Lowry

On the other are those firms that aren’t on a government lifeline and thus can pursue the traditional capitalist imperative of maximizing value for their shareholders and investors. They constitute the liberated economy, but can be forgiven for sometimes feeling as embattled as the forces of the Free French circa 1941.

Consider the self-described “Committee of Non-Tarp Lenders” in the Chrysler bankruptcy negotiations. They are those creditors that loaned funds to Chrysler — the government-supported automaker — without themselves taking government bailout funds like Chrysler’s other, much larger lenders.

When the Obama administration came to Chrysler’s creditors and told them to accept a deal giving the United Auto Workers 55 percent of the company while they took a bath, all the banks that had accepted TARP funds duly said “yes.”

Citigroup  and Goldman Sachs, which wouldn’t exist but for the generosity of Hank Paulson and Timothy Geithner, knew they were expected to salute smartly. The smaller, non-TARP lenders — mostly hedge funds — stood by their contractual rights as “senior creditors” to be paid back first if Chrysler went under.

Wrong answer. A lawyer for the non-TARP creditors says that during negotiations, the leader of Obama’s auto task force threatened one of the lenders with exposure and attack by the White House press corps. The administration denies the story, although the gist rings true.

When negotiations fell through and Chrysler headed to bankruptcy court, Obama angrily denounced the non-TARP lenders: “I don’t stand with them.” Michigan Rep. John Dingell called them “rogue hedge funds” and “vultures.”

The real vulture is the UAW. In a neat trick that any scavenging bird would envy, it bankrupted Chrysler through the years and now will be awarded whatever is left of the carcass. Providing ground troops for the president’s election and giving his political party $25 million during the past decades makes the UAW effectively the senior creditor at every government-sponsored negotiation. It will own a company making government-approved environmentally correct cars.

The offense of the hedge funds was only to lend Chrysler the money it wanted to try to keep itself afloat and then insist their contracts be honored. Such is the roguish, out-of-control behavior of firms that haven’t sucked up billions in taxpayer funds to cover over their massive business miscalculations. The number of holdout non-TARP lenders dwindled from 20 to nine as the date for their public revelation — and yet more presidentially approved obloquy — neared. Intimidation works.

Democrats pride themselves on their independence from business, but industrial policy depends on working hand in glove with industry. The more government regulates, subsidizes and intervenes, the more subject it is to capture by economic interests and vice versa.

Read the rest:
http://www.nypost.com/seven/050920
09/postopinion/opedcolumnists/tar
p__feathered_168345.htm

Obama Crows Of Improving Economy, Prays (In Private) That’s True; But Many Have Real, Serious Doubts

May 9, 2009

These are not the headlines of vibrant recovery: “Layoffs slow,” “Joblessness Less Than Expected,” and “Fewest Job Cuts Since November.”

But you won’t have to read these headlines much longer: the newspapers are going bankrupt.

Have we made any systemic changes to improve the American economic system that will result in high paying, long-term jobs?
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No.

So the ‘recovery” is like a man nearly dead that may, just might, get off his death bed.  For a while.  There is nothing to indicate vibrancy and life.

Paul Krugman of the New York Times wrote this week, “What we’re really seeing here is a decision on the part of President Obama and his officials to muddle through the financial crisis, hoping that the banks can earn their way back to health.”

Obama, Geithner Review Of Banks Says Multiyear Period of Economic Weakness Still Ahead

Krugman concludes, “Actually, a multiyear period of economic weakness looks likely in any case. The economy may no longer be plunging, but it’s very hard to see where a real recovery will come from.”
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Stephen Hester, chief executive of Royal Bank of Scotland, dampened hopes that the economy is bouncing back, declaring that he did not see any signs of “green shoots” of recovery.

U.S. Banks Whisper “Recovery” But Key Brit Bank Doesn’t See it….
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Our American automobile indisurty is now dead.  It will be reborn but will never again produce the jobs and money into American pockets and American government tax coffers that it once did.

We’ve spend billions on “bailing out” the car makers.  And what do we have?  Dealerships will close by the hundreds, GM will make most of its future cars in Mexico, South Korea and China (it says) and Chrysler is in a sort of Frankenstein mating dance with Obama as the Pastor.

Obama-Fiat-Chrysler-Union Plan Includes U.S. Made Luxury Alfa Romeo; Sub-Compact Made in China, Mexico, Korea

Obama has missed a big opporunity to remake our economy.

Dim View Of Near Term Economy

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The economy no longer is in a free fall. Everyone has heard that by now, whether or not they feel that it’s true in their own lives.

Wall Street believes it’s true enough: The winter plunge in stocks has given way to a two-month-old rebound that has pushed most major share indexes up 30% or more, and back into positive territory for the year.

By Tom Petruno
The Los Angeles Times

The market’s job is to anticipate key inflection points in the economy. Sometimes, it even gets them right.

Yet there’s a specter over this market recovery that looms larger as stocks climb: The short-term outlook for the economy has improved significantly. But there is a glaring lack of faith in the longer term.

Many big investors fear that the huge structural problems facing the economy — the ongoing need for consumers to shrink their debt loads, for example — will make it very difficult to foster an expansion robust enough to justify a sustained climb in share prices.

Read the rest:
http://www.latimes.com/busine
ss/la-fi-petruno9-2009may09
,0,3818307.column