Almost lost among the momentous events of the GM denouement are the international trade implications. GM, of course, is a multinational company. In 2008, according to GM's annual 10-K report, GM made almost half of its $148 billion in revenue outside of the United States.Err, make that they made lots of money on cars they used to build outside the US.
GM had recently informed Congress that it planned to produce roughly 50,000 subcompacts per year in China to sell in the U.S market in the near future. However, on Thursday, UAW President Ron Gettelfinger said that GM had agreed not to import the cars from China and to produce them in the United States instead as part of its deal with the UAW.Because they're now bankrolled by anyone holding a dollar in their hands*, there's no reason to make decisions based on profits. Instead, they will make decisions based on political forces. After the unions and the state consume and digest GM and Chrysler, they'll begin to eye Ford hungrily. When they see Ford do things not in the interests of the unions, laws will be passed, marketing budgets increased, and all manner of tricks will be played to crush Ford and bring them under the control of the state.
So how did we get from there to here? Here, according to media accounts this week, is an imminent transformation of General Motors into a government-owned company, infused with upward of $50 billion in federal money. The United States will accept stock in lieu of the cash the company owes, and Washington -- that is, you, the taxpayer -- will become the owner of 70 percent of the new GM.You the taxpayer may be the owner, but you'll have no more say in it than the residents of Buenos Aires did when the Argentine government took over various businesses. All will be handled within the palace of el presidente.
When might the company stand on its own, to paraphrase Mr. Obama? When would the government exit the stage?Never and never. If they wanted to spin the thing off, they'd get it making a profit as soon as possible. That would mean big cars and low wages for the union. That's the exact opposite of what they're doing.
But is a massive, unbounded federal commitment to a company that evidently still can attract no private capital really the only option? It doesn't take much imagination to forecast the political pressures that will buffet the government-as-auto-executive.They're not concerned about these political pressures, they're counting on them. With much of the industrial midwest in thrall to the government after this takeover, they can hand out goodies to their supporters.
When the Bush administration first assessed its unpalatable options, Congress played an active and constructive role. Where are the legislators now?They're licking their chops, baby. If you thought Michelle Obama's gig where she doubled her pay after her husband was elected to the Senate was sweet, just imagine the vast patronage that will be possible now. Family members eight levels removed will be able to get cushy jobs in auto parts manufacturers three layers removed from the government-controlled company. Just try tracking those down and accusing people of corruption.
later.
The Government is handing out 400,000 tonnes of free spuds in rural towns. It says that it is merely distributing the surplus from a bumper crop, but Mr Ahmadinejad’s opponents accuse it of bribing the poor. “Death to potatoes,” they chant at rallies.What's with these people? How does everything have to end up in a chant of "Death to ______!" What kind of conversations do they have?
Iranian 1: Man, today was a bad day on the road. It took me 30 minutes to get home.Death to potatoes. Maybe they're doing this to make themselves too difficult to parody. Ya think?
Iranian 2: I know what you mean. Death to traffic! Did I tell you about how my insurance company accidentally billed me for my doctor's visit?
Iranian 1: No, really? Death to insurance!
Iranian 2: I hear you. Well, I gotta run. Going bowling tonight.
Together: Death to the pins!
Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.We are the ones we've been waiting for to pay the debt because the rest of the world has had enough.
The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.
That's the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.
The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.
For the first time since another Democrat occupied the White House, investors from Beijing to Zurich are challenging a president’s attempts to revive the economy with record deficit spending. Fifteen years after forcing Bill Clinton to abandon his own stimulus plans, the so-called bond vigilantes are punishing Barack Obama for quadrupling the budget shortfall to $1.85 trillion. By driving up yields on U.S. debt, they are also threatening to derail Federal Reserve Chairman Ben S. Bernanke’s efforts to cut borrowing costs for businesses and consumers.Dave Ramsey, please call your office!
Take a look at abortion. The Catholic Church calls it murder, yet our feminist calls it ‘oppression of women.’ There have been 44,000,000 abortions in the US since Roe in 1973. Around 22,000,000 of these have been females. And nothing so oppresses a female as murdering her. The Church has been one of a few voices—the others being Islam, conservative Protestant Christianity and Orthodox Judaism— defending the rights of all those unborn girls. All those 22,000,000 slaughtered females, never to grow up to be oppressed by the Church—or for that matter, to be indoctrinated into the joys of radical feminism.Lucky for them, those dead girls won't ever have to suffer through the male hegemony of a world where the Catholic Church is allowed to exist.
Chris Ripke is a well-known artist in the city. His studio is near a mosque in Insuindestraat. Shocked in 2004 by the murder of director Theo Van Gogh by an Dutch Islamist, Chris decided to paint an angel on wall of his studio and the biblical commandment "Gij zult niet doden," thou shalt not kill. His neighbors at the mosque found the words "offensive," and called the mayor of Rotterdam at the time, the liberal Ivo Opstelten. The mayor ordered the police to erase the painting, because it was "racist." Wim Nottroth, a television journalist, camped out on the spot in protest. The police arrested him, and his film was destroyed. Ephimenco did the same in his own window: "I put up a big white sheet with the biblical commandment. Photographers came, and the radio. If you can no longer write 'do not kill' in this country, then you are saying that we are all in prison. It is like apartheid, whites living with whites and blacks with blacks. There is a great chill. Islamism wants to change the structure of the country." For Ephimenco, part of the problem is the de-Christianization of society. "When I arrived here, during the 1960's, religion was dying, a unique event in Europe, a collective de-Christianization. Then the Muslims brought religion back to the center of social life. Aided by the anti-Christian elite."Civilization arises from married families. They pay the taxes, raise the productive members of the next generation and provide stability for society. Whatever its warts, Islam has married families. The secular Dutch have this:
President Obama's energy adviser has suggested all the world's roofs should be painted white as part of efforts to slow global warming.Why stop there? Let's eliminate everything dark! Dark animals, dark leaves, dark dirt, it's all got to go!
Professor Steven Chu, the US Energy Secretary, said the unusual proposal would mean homes in hot countries would save energy and money on air conditioning by deflecting the sun's rays.
More pale surfaces could also slow global warming by reflecting heat into space rather than allowing it to be absorbed by dark surfaces where it is trapped by greenhouse gases and increases temperatures.
GM, propped up by $19.4 billion in emergency U.S. loans, will file for bankruptcy protection after failing to get 90 percent of bondholders to swap their debt, Chief Executive Officer Fritz Henderson has said. The exchange offer was opposed by both institutional and individual investors, who said they’ve been treated worse than a union retiree-medical fund.Corrections mine. The People have spoken, Gary. You need to pay your Fair Share.
“The offer probably cost them more to print out than the offer is worth,” Gary Thomas, aretired auto mechanicvicious, greedy tycoon and GM bondholder, said in a telephone interview from Kingston, Tennessee, before the results were announced.
"There are a number of creditors that are not happy with the preferential treatment afforded to the United Auto Workers at the seeming expense of creditors," said John Lonski, chief economist for Moody's Investors Service ...It's getting harder and harder to find investors for these kinds of firms.
The GM and Chrysler bankruptcies may be unique situations in a long-politicized industry, but they also could mark "a new period of uncertainty for the debt recoveries of favored-political-class companies," Garman said in his report.
As GM teeters toward a bankruptcy filing and Chrysler attempts to restructure in bankruptcy court, the Obama administration is offering most of the recovery value of those companies to "a favored political class, in this case the United Auto Workers, leaving creditors with very slender debt recoveries," Christopher Garman, founder of Garman Research in Orinda, California, said in a report released late on Friday ...Wait a minute! That's not working out well at all. It's clear that Amerikkka (thanks, Rev. Wright!) is filled with reactionary forces that are struggling to prevent the president from ushering in a glorious, new paradise.
To gauge whether those cases have made debtholders wary of other companies with so-called favored political classes, Garman compared spreads, or bonds' extra yields over U.S. Treasury yields, for companies with collective bargaining agreements with the high-yield bond market as a whole.
While the two performed in line with each other since 2003, they diverged sharply in February, with spreads on companies with organized labor gapping nearly 11 percentage points higher than the market as a whole, according to Garman's research.
The US Treasury is facing an ordeal by fire this week as it tries to sell $100bn (£62bn) of bonds to a deeply sceptical market amid growing fears of a sovereign bond crisis in the Anglo-Saxon world ...Sounds like we'll need another Stimuloid Porkgasm™ to deal with this!
The US is not alone in facing a deficit crisis. Governments worldwide have to raise some $6 trillion in debt this year, with huge demands in Japan and Europe. Kyle Bass from the US fund Hayman Advisors said the markets were choking on debt.
"There isn't enough capital in the world to buy the new sovereign issuance required to finance the giant fiscal deficits that countries are so intent on running. There is simply not enough money out there," he said. "If the US loses control of long rates, they will not be able to arrest asset price declines. If they print too much money, they will debase the dollar and cause stagflation.
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds.At least Rick's got his finger on the real problem.
Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."
"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.
"This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them," he said.Us.
Read the whole thing.
- Happiness has very little to do with income or social position.
- Happiness has everything to do with relationships.
- Just because someone is behaving a particular way at one point in their life doesn't mean they'll continue to act that way throughout the remaining years--either for good or bad.
- Perhaps the greatest inhibitor of happiness is ease and lethargy.
- Don't count someone out, we all mature and progress at different speeds.
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?First, you start with the truth. "We're out of money." You then move on to a conclusion you want. "We need health care for all." The connection in between is strictly grammatical - that is, it's there so that you recognize the prose as English. Other than that, there's no connection at all.
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care over the last several decades.
The quotes were published in 1942 by William J. H. Boetcker, a Presbyterian minister. He released a pamphlet titled Lincoln On Limitations, which did include a Lincoln quote, but also added 10 statements written by Boetcker himself.Whatever the source, they're pretty apt quotes for today.
Peronism endured, and indeed endures: Argentina’s current president calls herself a Peronist, and so did her predecessor, who happens to be her husband. One reason is that, in a limited way and under its own distorted terms, it succeeded. The state had become strong. The government owned and ran not just natural monopolies such as water and electricity but anything that looked big and strategic – steel, chemicals, car factories. The economy did industrialise. But it was still falling behind. In 1950 Argentine income per head was twice that of Spain, its former coloniser. By 1975 the average Spaniard was richer than the average Argentine. Argentines were almost three times richer than Japanese in the 1950s; by the early 1980s the ratio had been reversed. Argentina’s was a fragile and superficial progress that masked relative decline.
Treasuries rose yesterday after minutes of the Fed’s April policy meeting showed some officials are considering increasing debt purchases. Policy makers announced the buybacks on March 18, promising to buy as much as $300 billion of the securities by October to reduce consumer interest rates.For those of you to whom this is Greek, it means that the US Government will print $300,000,000,000 more to pay its bills. Those dollars are backed up by ... nothing. No taxes, no debt, no sales, nothing. It's money created out of thin air.
May 21 (Bloomberg) -- Britain may lose its AAA credit rating for the first time as government finances deteriorate in the worst recession since World War II.Hungary is a little bit further out in front.
Standard & Poor’s lowered its outlook on Britain to “negative” from “stable” and said the nation faces a one in three chance of a ratings cut as debt approaches 100 percent of gross domestic product.
May 21 (Bloomberg) -- Hungary’s government is committed to overhauling its budget and expects austerity measures to boost investor confidence, paving the way to a potential international bond sale, Finance Minister Peter Oszko said ...OK, that's enough for today. I think.
The European Union member needed a 20 billion euro ($27.2 billion) emergency loan from the International Monetary Fund, the EU and the World Bank last October to avert a default after its bond market froze.
May 19 (Bloomberg) -- China and Brazil are researching how the two nations can conduct trade in yuan and real, the latest signal that developing nations are seeking to reduce their reliance on a weakening U.S. dollar.... or maybe into Chinese Yuan.
“The discussions have focused on how to improve the financial service system,” Celso Amorim, Brazil’s foreign minister, said today at a briefing in Beijing. “In terms of what currency to use, we are still discussing.”
China is seeking to promote the yuan as an international currency after signing 650 billion yuan ($95 billion) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in recent months. The Chinese yuan has gained 21 percent against the U.S. currency since a dollar peg was abolished in 2005, eroding the value of exporters’ dollar- denominated profits.
“The process of moving away from the dollar will be faster than expected,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “A few years from now we will see the dollar having a reduced importance in international trade.”My prescription for this: more US government spending!
May 18 (Bloomberg) -- President Barack Obama is counting on Iran to accomplish what six decades of diplomacy haven’t: forge a regional Mideast peace that includes a resolution of the Israeli-Palestinian conflict.So what we're hoping is that if one set of homicidal maniacs gets the ability to incinerate entire cities with a single weapon, other sets of homicidal maniacs, some aligned with the first set of homicidal maniacs, will be encouraged to give up terror, mayhem and slaughter.
It isn’t Iranian diplomacy the U.S. president is banking on; it’s the widespread unease over Iran’s nuclear program and its support of militant Islamic movements, which U.S. officials say may motivate Israel and the Arabs to finally overcome their antipathy in the face of what both perceive to be a long-term threat.
And more evidence how this (the Tea Parties) isn't a G.O.P. thing:My best example is the health care reform craze that's sweeping the nation. Every time you hear some Republican talking head discuss it, they always say something like, "Yes, we need it, but we don't want it in the form Obama is suggesting ..."Something hugely significant just happened here at the Sacramento Tea Party. Organizer Mark Meckler singled out GOP opportunists who wouldn’t give him the time of day weeks ago — and then wanted to hitch their wagons to the Tea Party bandwagon at the last minute.
Meckler said he heard that California GOP chair Ron Nehring was in the audience. Meckler invited him to say hi to the crowd — and then ripped him for waffling on the massive tax hike ballot measures (particularly Prop1A - $16 billion tax hikes).
Massive boos from the crowd of thousands here against the Calif. GOP establishment.
A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama's book royalties came through and Michelle received her 260% pay raise at the University of Chicago ...Of course, there was always the data point from Obama's stint running the Annenberg Foundation Challenge where he and William Ayers blew something like $150M on useless education projects in Chicago.
In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.
Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.
This means they spent perhaps $80,000 beyond their income from 1999 to 2004 ...
The Obama family apparently had little or no savings during this period since there was virtually no taxable interest shown on their tax returns.
I would suppose that, being patient and deliberate, China’s CB managers would like to come near to finishing their conversion out of Agencies before they take on any other potential conversion, say from longer-dated Treasuries to short-dated ones ...That's a brilliant comment. I'd never looked at it that way. If he's right and the Chinese are slowly unwinding themselves from the Dollar, we're going to be in real trouble as Obama burns through mountains and mountains of money.
You task China’s leaders to put their money where their mouth has been recently - you just might get what you asked for when their conversion from Agencies gets sufficiently far along. Once they get into the short-dated Treasuries, it’s much easier to sprint from there to somewhere else that’s more desirable from a safety and/or return perspective. While short-dated Treasuries are certainly the safest and most liquid financial assets around, there might turn out to be other assets (not necessarily financial assets) that are even more desirable, going forward. Conversion from short-dated Treasuries into such other assets could be the planned 3rd leg of a 3-leg strategy. 1. Get out of Agencies and into short-dated Treasuries. 2. Get out of a significant measure of long-dated Treasuries and into short-dated ones. 3. Expend a large measure of short-dated Treasuries for other non-dollar assets.
All over time - not too suddenly. China’s leaders probably know they have a couple of years or so to get this all done to a sufficient degree so as to measurably decrease China’s exposure to the dollar.
California Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner on Wednesday to authorize assistance for his state from the federal Troubled Asset Relief Program, warning that depressed tax revenues may cut into basic services and halt the building of infrastructure.Rather than confront their problems, the California Legislature is turning to the Federal government to hand them
In a letter, Lockyer asked Geithner for TARP assistance for California and "other financially strapped states and local governments which face a severe cash flow crunch."
"If we cannot obtain our usual short-term cash-flow borrowings, there could be devastating impacts on the ability of the State or other governments to provide essential services to their citizens," Lockyer wrote.
Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.We need a Congressional committee to start looking into Moody's. They can't be allowed to stop our march to a glorious new future based on Hope and Change!
That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.
We are going to try tweeting on the FY-2010 budget hearing with the House Transportation and Infrastructure Committee's Subcommittee on Coast Guard and Maritime Transportation. The hearing starts at 2 p.m. You can follow user iCommandantUSCG.Now that's the way for a modern executive to communicate to his workforce.
(California) State Controller John Chiang made a similar point Friday in releasing his cash balance report for April. Through the first 10 months of the fiscal year, revenue is $2.1 billion below budget estimates.The Obama Administration responds with this.
"Beginning this summer, we face a cash problem unseen in nearly eight decades, and the magnitude of that problem grows with every projected revenue dollar that fails to appear," Chiang said in a statement. "The state's last shortage and the resulting payment delays in February hurt California taxpayers, businesses, local governments and public works projects - and yet the crisis looming could be at least three times as bad."
Reporting from Sacramento -- The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.Luckily, the days of borrow and spend are over.
You Are STOP |
 When you're confronted with a problem, you drop everything else you're doing at the time. You need to take a moment and collect yourself before you proceed. Once you've taken a quick break, you're ready to tackle almost anything that's come your way. But if you're not given time to figure things out, then the likely result is chaos. |
Washington always has been a thermonuclear cliché generator. But the Obama administration, with all its super-smarts, has taken the exploitation of the euphemism to spectacular new heights.There's lots more at the link.
This week, we learned a bit more about what the terms "sacrifice" (do what we want, you filthy, unpatriotic swine), "era of responsibility" (double the "sacrifice," half the prosperity) and "investments" (we squander money so you don't have to) really mean.
Footprints in the SandGod sent me this little cat to carry me through those dark times.
One night I dreamed I was walking along the beach with the Lord. Many scenes from my life flashed across the sky. In each scene I noticed footprints in the sand.
Sometimes there were two sets of footprints, other times there was one only. This bothered me because I noticed that during the low periods of my life, when I was suffering from anguish, sorrow or defeat, I could see only one set of footprints, so I said to the Lord, “You promised me Lord, that if I followed you, you would walk with me always. But I have noticed that during the most trying periods of my life there has only been one set of footprints in the sand. Why, when I needed you most, have you not been there for me?”
The Lord replied, “The years when you have seen only one set of footprints, my child, is when I carried you.”
Peron pushed redistribution policies throughout his country in an earnest desire to improve the lot of the working classes that made up the base of his supporters. The problem, a significant amount of wealth was stolen by people around him, capital flight began as international business looked for safer pastures, and the workers themselves began to demand more pay for less work, a totally natural desire but when taken to an extreme capable of destroying a nation's economy. Even worse was the dramatic expansion of the state as government owned enterprises became corrupted by massive featherbedding and incompetence.
The benchmark 30-year bond yield climbed 16 basis points, or 0.16 percentage point, to 4.26 percent at 1:22 p.m. in New York, according to BGCantor Market data ... Thirty-year bonds yielded 3.64 percent at the last sale, on March 12.For those of you keeping score at home, that's more than a half point rise in interest rates in the last two months. The debt tsunami is just beginning.
The Istituto per la Ricostruzione Industriale, Institute for Industrial Reconstruction (IRI) was an organization set up by the Italian fascist government in 1933 to combat the global depression. Its function was to rescue floundering companies which could no longer afford to repay their creditors.Obama:
Although set up as a temporary measure, the IRI continued to run for as long Mussolini was in power. It was able to reorganise companies so that production was maintained. The main action of the IRI was to buy shares of failing companies from banks. In 1937 the IRI's powers were extended so that it could nationalise companies, although no effective nationalisation were carried out. By 1939 the IRI controlled 20% of the Italian industry through government-linked companies (GLCs)
Apparently, the $34 billion figure (in additional funding to bail out Bank of America) is good news because BAC (Bank of America) has all those preferreds at Treasury that can be converted to common stock, leaving Treasury with $34 billion of common and $11 billion of preferreds. But Joe Weisenthal asks a good question:If this is how the conversion goes, and the bank does pay off the remaining $11 billion over the next year or so, are they considered to have repayed TARP? How does a bank that's taken the conversion ever actually repay the TARP?This is troubling, because it's now clear that the worry many of us had at the time of the bank bailouts has come true: the government is using its intervention in the banking system to pressure banks to give special deals to the government's special friends.
