Monday, November 24, 2008

SAR #8329

$250 billion & no management changes.

Any of this legal?


Correction: No matter what the folks at CNBC and WSJ claim, Friday's late inning rally was not a tribute to Geithner's nomination as Treasury Secretary; it was applause for Sheila Bair's open-ended promise of a trillion bucks or more to cover the debts of US banks.

Sooners: In a massive re-enactment of the Land Rush of April 1889, China, Japan, Kuwait, Saudi Arabia, South Korea and others have been rushing to buy or lease millions and millions of acres of arable land throughout Africa - a place that routinely cannot feed itself, much less the billions in Asia.

The Swamp: Analysts claim the government has to cough up another $1.3 trillion (on top of the $2.8 trillion already poured into morass) "to improve liquidity." Who needs it? GE, Wells Fargo, Citigroup, AIG, Goldman Sachs... Stop right there, that's the magic word.

How Deep ? Investors have been pummeling Citigroup, but JPMorgan appears to need capital even worse; more than GE and even more than AIG's $180 billion or whatever they're up to now.

Undependable: Crude oil exports from Mexico, the third largest source of oil for the US, have fallen 17% in 2008, while production dropped 10%. Google "Export Land Model".

The Truth About Bailouts: Bailouts will fail as long as they ignore the consumer. Until the consumer can spend again, there will be no economic recovery. It's obvious that the debts of the US customer cannot possibly be paid back with earnings of the present population; thus no amount of money or promises will keep The Collapse from continuing.

Short Answer: Why would the Paulson bail out Citigroup and not GM? GM is about jobs. Citigroup is about money.

Out of Town Tryout: An unruly mob gathered outside Reykjavik's main police station to protest the terms imposed as part of Iceland's financial rescue. It is reported they shouted and stomped. Later on more practiced folk will show them how it should be done.

Grammar Quiz: According to Mr. Paulson, the American banking system "has been stabilized." That statement (a) occurred some time ago, (b) may occur sometime in the future, (c) is way past tense, or (d) things are closer than they appear.

Technology Won't Save Us: The alternative energy caucus claims the US can convert to non-polluting technologies within 10 years. It took 60 years or more to build the current thermal-powered system - mostly during times of an expanding economy.

Same old Sleaze: The folks who got us into the current mess are working hard to make FHA-backed loans the next crisis. Over the next 5 years inapropriate FHA-backed mortgage holders will begin defaulting about the time the Option and Alt-A folks taper off. This will go on nearly forever.

Connections: Something to worry about one day next week: FEMA has failed to make contingency plans for a drastic nationwide reduction in electric power supply if an influenza pandemic caused serious disruption in the coal industry.

Clarity Award: Ilargi's introductory comments over at Automatic Earth on Saturday are exemplary. Go read them.

Definition: Bankruptcy fraud: A Federal crime occasionally prosecuted if the amount of money involved is small and the perpetrators are not politically connected. As an example, not AIG.

Porn O'Graph: Delinquency rates, real & commercial

3 comments:

The Anecdotal Economist said...

The hits just keep coming...

Chalk up this weekend's Citi bailout/rescue/shareholder enhancement program to maintaining good and friendly relations with our goods friends in the Kingdom of Saudi Arabia, who, conveniently, provide a good slug of the crude oil we need daily for gasoline to buy cheap plastic crap from China using our Citibank credit cards.

Thankfully Prince Alwaleed bin Talal al Saud, who heads the Kingdom's investment holding company and is the single largest shareholder of Citi shares, was able to complete the additional share purchases of Citi on Friday before the weekend's rescue/bailout/shareholder enhancement news.

Mere coincidence, of course...

Anonymous said...

The big difference between the Bush Administration and Hugo Chavez of Venezuela: Chavez only nationalizes companies that are profitable.

CKMichaelson said...

Anon - Most excellent, will promote that to the front of the line...
ckm