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Tuesday, November 18, 2008

Credit Crunch Roundup — November 18, 2008

All the President is, is a glorified public relations man who spends his time flattering, kissing and kicking people to get them to do what they are supposed to do anyway.
— Harry S. Truman
Items of Interest:

Reuters:
Lawmakers, Treasury lock horns on foreclosures -- Treasury Secretary Henry Paulson and members of Congress clashed on Tuesday over the best use for the $700-billion financial bailout fund, with lawmakers demanding money to stem a national wave of mortgage foreclosures.

At a House of Representatives Financial Services Committee hearing where he was grilled over his handling of the program, Paulson said the bailout plan wasn't "a panacea for all our economic difficulties" and would be more effectively used by investing in financial companies to shore up the system.

"The rescue package was not intended to be an economic stimulus or an economic recovery package. It was intended to shore up the foundation of our economy by stabilizing the financial system," the Treasury chief insisted.

Under stiff questioning from lawmakers who charged Treasury was making up strategy as it went along, Paulson conceded he hadn't totally ruled out using bailout funds to help homeowners, but said he had "reservations" about a proposal put forward by the Federal Deposit Insurance Corp...
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Deborah Solomon / Wall Street Journal:
Paulson Will Keep Reserve to Stay Flexible for Future — WASHINGTON — Treasury Secretary Henry Paulson is unlikely to use what remains of the $700 billion Wall Street rescue fund to launch substantial new programs, preferring to keep money in reserve for unforeseen emergencies and to preserve flexibility for the Obama administration...
discussion: NO QUARTER and European Tribune
related:
Stephanie Kirchgaessner / Financial Times: Bloomberg:
Bush Said to Tell Aides He Won't Seek Bailout Funds
discussion: The Huffington Post
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Eric Lipton /NY Times:
The Reckoning: Deregulator Looks Back, Unswayed -- Phil Gramm pushed laws that he says unshackled businesses from restraints but critics say contributed to the financial crisis.
discussion:
Rachel / Small Business Brief: Keeping Your Rivals From Minding Your Business
Portfolio.com / Economics Roundtable: Dr Phil's Deregulatory Prescription
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Eric Dash / NY Times:
Citigroup Plans to Sell Assets and Cut More Jobs -- The banking giant announced Monday that it would cut another 24,000 jobs, bringing its total reductions in the coming months to 52,000.
discussion:
BankersBall / BankersBall: Citigroup: Getting Fit - Fast!
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NY Times:
Clout Has Plunged for Automakers and Union, Too -- When the leaders of the three Detroit auto companies and the United Automobile Workers union travel to Washington to make their case for a federal bailout, they will be flying into stiff headwinds of public opinion...
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StarTribune.com:
Auto bailout prospects darken as GOP, Democrats clash; automakers say they're desperate-- Prospects dimmed on Monday for the $25 billion bailout that U.S. automakers say they desperately need to get through a bleak and dangerous December...
related:
Robert Tracinski / RealClearMarkets
Auto Bailouts Will Give Us Detroitsky -- He hasn't even been sworn in yet, and Barack Obama is starting to reveal what his mantra about "change" really means. It means that we will reject the discredited old model of free-market capitalism and embrace the very promising, progressive new model of Soviet-style central planning...

Michael Levine / Wall St. Journal
Why Bankruptcy Is Best Option for GM -- Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout...

Ohlemacher & Davis / SFGate:
Stalemate dims prospects for $25B auto bailout — Prospects dimmed Monday for enactment of a $25 billion bailout for the faltering auto industry before year's end, as congressional Democrats and the Bush administration seemed headed for a stalemate. Help for Detroit's Big Three, which have been battered by...

Michael Shedlock / Mish
Stop The Auto Bailout Campaign — Enough is enough. Congress is about to waste more money attempting to prop up ailing dinosaurs GM and Ford. We need to do something about this and we will. Please read this and act. First let's go over the background information. Time is reporting Pressure for a New Bailout Grows . Executives of GM, Ford and Chrysler met with House speaker Nancy ...
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NY Times:
A British Lesson on Auto Bailouts -- A faltering auto giant whose brands are synonymous with the open road. Hundreds of thousands of unionized workers with powerful political backers. An urgent plea for the government to write a virtual blank check.

This is not the story of Ford and General Motors, but British Leyland, a car company that went through £11 billion of inflation-adjusted British taxpayer money, or $16.5 billion, in the ’70s and ’80s before going out of business. All that is left of the company now are memories of cars like the Triumph, and a painful lesson in the limited effectiveness of bailouts....
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David Prosser / The Independent:
The buy-to-let dream has turned into a nightmare-- Pop. There goes another housing bubble. Two years ago, you could barely move without bumping into someone who'd given up on pension plans and other conventional ways to save for old age in favour of bricks and mortar. The buy-to-let boom was the single most important contributory factor to the meteoric rise in UK house prices. Now the hopes of ...
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.....Dude, where's the Dharma?:
The TARP Fund? and Empire -- My view is not that those at Treasury and the Fed are operating under some grand plan but rather that they are fumbling, partially in the dark, trying to maintain US$ supremacy between the two ever narrowing, by virtue of the ever increasing imbalances, constraints of a crippling depression and a hyper-inflation that makes international use of the US$ as reserve undesirable.

After Bear Stearns collapsed, the chosen policy seemed to me to be $ depreciation, but this soon led the international community, Europe in particular, to complain about "beggaring thy neighbor." The inflationary constraint of loss of US$ supremacy had been reached. Accepting loss of US$ supremacy is part of what I mean by embracing inflation in the same way a chemo patient in embracing his treatment must accept the loss of hair and otherwise ill health...
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CNNMoney:
Builders' confidence sinks to new low -- A survey of homebuilders' assessment of the housing market shows the industry's sentiment fell in November to yet another low...
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Reuters:
Japan warns of long slump-- Japan's recession could last even longer than feared, the country's economy minister warned on Tuesday, and reflecting increasing efforts by governments to provide a cushion against a global downturn, Taiwan said it would give its citizens $108-worth of shopping vouchers...
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