The Economy, stupid

[bmags]

If Geithner goes 2:1 we get Summers. Color me less than pleased.

[Balta1701]

If only he hadn't of paid his taxes, or thrown up some other red flag...

Am I the only one who remembers which part of the country was ridiculously excited when Geithner's nomination was announced? Wall Street got a guy they could live with, and he's done nothing so far other than protect Wall Street.

[NorthSideSox72]

Am I the only one who remembers which part of the country was ridiculously excited when Geithner's nomination was announced? Wall Street got a guy they could live with, and he's done nothing so far other than protect Wall Street.

Well, it would be awfully hard to find a guy qualified for that post that isn't associated with "wall street". But you could do a lot better than Geithner.

 

Actually, I am surprised they didn't get someone from the Chicago financial scene. First, obviously, Obama's connections to Chicago. Second, getting away from New York would seem to be a good PR move.

 

But the biggest reason takes some explanation. In the past year, a lot of hedge funds and trading firms have failed or gotten in deep holes. There is a lot of talk about risk management. In the trading world, there are two schools of thought - New York and Chicago. New York is higher risk and higher reward, Chicago is more conservative. And guess what? Hedge Funds, trading firms, and other investment groups have been failing at a much higher rate in the NY crowd than the Chicago crowd. Heck, ask people in the NY crowd, often they seek out Chicago people for areas like compliance and risk management, because the Chicago crowd is known for that.

 

Look at some examples. While AIG is foundering, Allstate (Chicago area based) is doing reasonably well. While many investment giants like GS, ML, etc. are failing (NY based), one of the ones faring best (though not great still) is Northern Trust (Chicago based).

 

So... who in the Chicago crowd is a good candidate for the job?

 

[Balta1701]

Well, it would be awfully hard to find a guy qualified for that post that isn't associated with "wall street". But you could do a lot better than Geithner.

Geithner was picked because of where he was last year, in the NY Fed, where he was hands on in dealing with every single major wallstreet bailout, most notably the Bearstearns one.

 

The President picked a guy who was familiar with all the processes they'd set up to allow the government to shovel money in to the big pile of burning money wall street has created, because doing anything else would anger wall street and the demon they are hoping to appease by burning all that money.

[Cknolls]

SOB. CK and I just agreed on something.

 

 

[Balta1701]

This should go over well.

Citigroup Inc. plans to spend about $10 million on new offices for Chief Executive Officer Vikram Pandit and his lieutenants, after the U.S. government injected $45 billion of cash into the bank.

 

Affidavits filed with New York’s Department of Buildings show Citigroup expects to pay at least $3.2 million for basic construction such as wall removal, plumbing and fire safety. By the time architect’s fees and expenses such as furniture are added, the tally for the offices at the bank’s Park Avenue headquarters will be at least three times as high, according to a person familiar with the project who declined to be identified because he’s not authorized to comment. Citigroup said the project will help it save money over time.

 

Pandit, criticized by lawmakers over Citigroup’s use of U.S. bailout capital, canceled an order for a company jet in January and told Congress on Feb. 11 that, “I get the new reality and I’ll make sure Citi gets it as well.” Of the biggest U.S. banks that received federal aid, only Citigroup has turned to the government three times for rescue.

[NorthSideSox72]

This should go over well.

There is a difference between hundreds of millions for bonuses paid to people who caused the problem, and $10M on offices that are part of normal operating business. This one doesn't upset me that much.

 

[southsider2k5]

This should go over well.

 

Its the Citibank stimulus package! Think how many jobs they are saving and creating in the contstruction and Amish communities!

[lostfan]

There is a difference between hundreds of millions for bonuses paid to people who caused the problem, and $10M on offices that are part of normal operating business. This one doesn't upset me that much.

Yeah, it's going to be really annoying if the media is just going to take every really big operating cost of any company that's taken bailout money and framing it in the context of taxpayer fraud to provoke more unnecessary populist outrage.

[kapkomet]

Yeah, it's going to be really annoying if the media is just going to take every really big operating cost of any company that's taken bailout money and framing it in the context of taxpayer fraud to provoke more unnecessary populist outrage.

Oh my Gosh... you have the White House and Congress coreographing this s***. I told you once that this is class warfare. That's what's happening before our very eyes.

 

[Iwritecode]

There is a difference between hundreds of millions for bonuses paid to people who caused the problem, and $10M on offices that are part of normal operating business. This one doesn't upset me that much.

 

If this is normal and they've already asked the government for help 3 times I think they may need to change what's "normal".

[lostfan]

Oh my Gosh... you have the White House and Congress coreographing this s***. I told you once that this is class warfare. That's what's happening before our very eyes.

Edited March 19, 2009 by lostfan

[mr_genius]

Throwing endless money into a failed enterprise doesn't work. I think AIG spending $10,000,000 in new offices is bulls***. They should be out of business.

[mr_genius]

Some Senator: "would these bonuses have been paid without the bailout?"

 

New AIG guy: "No, we would have gone into bankrupcy and restructured those contracts"

 

 

but why restructure, you have hundreds of billions in free money. bravo AIG, lets toss in a couple trillion more. More bonuses!

Edited March 19, 2009 by mr_genius

[Rex Kickass]

Some Senator: "would these bonuses have been paid without the bailout?"

 

New AIG guy: "No, we would have gone into bankrupcy and restructured those contracts"

 

 

but why restructure, you have hundreds of billions in free money. bravo AIG, lets toss in a couple trillion more. More bonuses!

 

It's like that dude is reading my own suggestions here.

[Cknolls]

How did Dodd get the bonus provision put into the bill when he was not a conferee on the bill? Was it Reid, Inouye, or Baucus? They were the Senate reps to the conference.

[Balta1701]

How did Dodd get the bonus provision put into the bill when he was not a conferee on the bill? Was it Reid, Inouye, or Baucus? They were the Senate reps to the conference.

Dodd inserted a stronger version of the provision in the actual Senate bill and it passed solidly. It was not in the House bill. The conference committee was the one who came up with the final, weakened compromise, with input from the White House and the Senate, presumably including Dodd because he's the writer of the original provision.

[NorthSideSox72]

Dodd inserted a stronger version of the provision in the actual Senate bill and it passed solidly. It was not in the House bill. The conference committee was the one who came up with the final, weakened compromise, with input from the White House and the Senate, presumably including Dodd because he's the writer of the original provision.

Yeah, this one falls mostly on Treas, specifically SecTreas, and by proxy some of the blame goes to Obama.

 

[Cknolls]

WASHINGTON (AP) — Sources say the Obama administration will send

 

$5 billion in aid to troubled auto suppliers.

 

 

 

 

And it continues.....

[mr_genius]

WASHINGTON (AP) — Sources say the Obama administration will send

 

$5 billion in aid to troubled auto suppliers.

 

 

 

 

And it continues.....

 

 

more free money

 

 

[NorthSideSox72]

WASHINGTON (AP) — Sources say the Obama administration will send

 

$5 billion in aid to troubled auto suppliers.

 

 

 

 

And it continues.....

Rewarding failure. I don't like this one at all.

 

Ford has managed to pick themselves up by the bootstraps, and not only survive, but also catapult to the top of many quality lists. And they are well ahead of GM or Chrysler in hybrids. And they are not taking any grants, aren't even taking the loans offered, though they did say they may want the line of credit just in case. Meanwhile, GM and Chrysler have failed to adjust, again, and are getting assistance that the SUCCESSFUL company isn't getting.

 

This is crap. GM should be allowed to go bankrupt, then you offer special credit lines and loan conditions to them IF they remove the entire management team and tear up all existing labor contracts and start new. Chrysler can be offered same, but, they probably should be allowed to die. Then, you need to do something to reward Ford for actually being more responsible. Maybe some grant money towards alt fuel research for cars or something.

 

That's the NSS version of an auto stimulus package.

 

[Balta1701]

Rewarding failure. I don't like this one at all.

 

Ford has managed to pick themselves up by the bootstraps, and not only survive, but also catapult to the top of many quality lists. And they are well ahead of GM or Chrysler in hybrids. And they are not taking any grants, aren't even taking the loans offered, though they did say they may want the line of credit just in case. Meanwhile, GM and Chrysler have failed to adjust, again, and are getting assistance that the SUCCESSFUL company isn't getting.

 

This is crap. GM should be allowed to go bankrupt, then you offer special credit lines and loan conditions to them IF they remove the entire management team and tear up all existing labor contracts and start new. Chrysler can be offered same, but, they probably should be allowed to die. Then, you need to do something to reward Ford for actually being more responsible. Maybe some grant money towards alt fuel research for cars or something.

 

That's the NSS version of an auto stimulus package.

The problem down the line, especially with this one is...if GM goes bankrupt, or if Chrysler goes bankrupt and they actually shutter their doors, many of the companies down the line that manufacture parts for companies like Toyota, Honda, and yes, Ford, also manufacture parts for GM and Chrysler. Thus, if one of the big 3 shuts its doors, it kills the companies down the line, the costs for Ford/Honda/Toyota go up significantly because they have to find new suppliers for their parts, and the healthy companies fall apart as well. This money in particular is going to those very suppliers. You may not like the fact that GM is basically the Works Progress Association now, but to borrow a phrase from another bailed out sector, this is a case of systemic risk. You can't kill one without killing all.

 

If you can suggest a way around it, I'd love to hear it.

[Balta1701]

House vote on 90% tax on AIG bonuses (no idea how exactly its written or whether it covers any other TARP recipients).

Democrats:

 

Yea: 243

Nay: 6

 

Republicans:

 

Yea: 85

Nay: 87

Edit:

* HR 1586 will recover the bulk of these bonuses by applying a separate income tax rate of 90 percent to bonuses received by individuals from companies which have received at least $5 billion from TARP. It would also apply to bonuses paid by Fannie Mae and Freddie Mac.

 

* For this purpose, bonuses will be defined as any retention payment, incentive payment, or other bonus which is in addition to regular employee compensation payable on a periodic basis.

 

* The special tax rate only would apply to individuals and families with overall income (including income other than bonuses) in excess of $250,000.

 

* The bill applies to bonuses paid after December 31, 2008

[NorthSideSox72]

The problem down the line, especially with this one is...if GM goes bankrupt, or if Chrysler goes bankrupt and they actually shutter their doors, many of the companies down the line that manufacture parts for companies like Toyota, Honda, and yes, Ford, also manufacture parts for GM and Chrysler. Thus, if one of the big 3 shuts its doors, it kills the companies down the line, the costs for Ford/Honda/Toyota go up significantly because they have to find new suppliers for their parts, and the healthy companies fall apart as well. This money in particular is going to those very suppliers. You may not like the fact that GM is basically the Works Progress Association now, but to borrow a phrase from another bailed out sector, this is a case of systemic risk. You can't kill one without killing all.

 

If you can suggest a way around it, I'd love to hear it.

I said bankrupt for GM, not fail outright. There is a difference.

 

For Chrysler I said shutter its doors, but on that one, I defintiely concede your point - it would have major ripple effects. I'd be fine with a bankruptcy and rebuild under the conditions I mentioned.

 

[Balta1701]

I said bankrupt for GM, not fail outright. There is a difference.

Simple question...would you buy a car from a bankrupt company?

 

I'd love an explanation of how exactly a car company survives bankruptcy. And especially how it would do so in this particular credit market where financing is so hard to get from anyone except the government.