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Monday, February 9, 2009

Great Recession Roundup — February 9, 2009

Items of Interest:

Frank Newport / Gallup:
Obama Has Upper Hand in Stimulus Fight — Obama's 67% approval rating on the stimulus is more than twice that of Republicans...

discussion:
Chris Orr / The New Republic: Letting the Game Come to Him
Mitchell Bard / The Huffington Post: Republicans Say They'd Support the “Right” …
Mark Silva / The Swamp: Tax cuts vs. government spending
Mark Blumenthal / Pollster.com: Lessons in Declining Approval?
Taegan Goddard's Political Wire: Obama Approval Remains Very High
David Weigel / The Washington Independent: Barack Obama: Still Popular
Chris Cillizza / The Fix: Democrats Launch Poll Offensive
Robert Stacy McCain / The Other McCain: Random freaking adults!
Michaelscherer / Swampland: Obama Coming To Conference?
Eric Earling / Sound Politics: IMPLICATIONS OF POLLING THE “STIMULUS”
related:
Taking Apart the $819 billion Stimulus PackageWashington Post:
Taking Apart the $819 billion Stimulus Package -- An analysis by the nonpartisan Congressional Budget Office tallies the tax-cut portion to be significantly less than the one-third Democrats claim it to be...
discussion:
Mish's Economic Analysis:
Stimulus Spending Over Time -- The chart depicts the Obama shotgun approach of spraying bullets in multiple directions hoping that something, somewhere hits a target...

It is impossible for government to spend one's way to prosperity. Proof can be found in the failed practices of Russian and Chinese central planners over the years, and more recently the failed policies of Japan...
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Washington Post:
Republicans See Long-Term Victory in Defeat on Stimulus Plan — Three months after their Election Day drubbing, Republican leaders see glimmers of rebirth in the party's liberation from an unpopular president, its selection of its first African American chairman and, most of all …
discussion:
Domenico Montanaro / MSNBC: FIRST THOUGHTS: BACK ON THE ROAD
Justin Fox / The Curious Capitalist: Can the GOP renew itself by being against everything?
Ben Pershing / Capitol Briefing: DCCC Steps Up Stimulus Pressure on GOP
Michael Falcone / The Caucus: The Early Word: On the Road Again
Publius / Obsidian Wings: The Media's Nero Problem
CNN:
Obama's approval is high — but the stimulus isn't as popular — A new national poll suggests that three out of four Americans approve of the job Barack Obama's doing as President — but the economic stimulus package he's trying to push through Congress is not nearly as popular...
discussion: Washington Monthly, The Moderate Voice and Hotline On Call
Pew Research Center:
Support for Stimulus Plan Slips, But Obama Rides High
Senate Minority Leader Mitch McConnell a happy camper?Byron York / www.dcexaminer.com:
The Happy Party — They took a beating in November, but now, in the stimulus fight, Republicans are smiling again...
David M. Herszenhorn / New York Times:
Senate Clears Path for Vote on $838 Billion Stimulus — WASHINGTON — Senate Democrats on Monday advanced the $838 billion economic stimulus bill, clearing a major procedural hurdle by a razor thin margin with the help of just three Republicans. A vote on final passage of the bill is expected on Tuesday...
discussion:
Bloomberg:
U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes — The stimulus package the U.S. Congress is completing would raise the government's commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation's home mortgages...
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Floyd Norris / NY Times:
U.S. Bank Bailout to Rely in Part on Private Money -- Administration officials said the new bailout was likely to depend on private investors to purchase the toxic assets that wiped out the capital of many banks...
discussion:
Matthew Wurtzel / Dealscape : Feds could throw bones to PE, hedge funds

Fred / A VC: When Greed Is Good -- Gordon Gekko said:
Greed, you mark my words, will not only save Teldar Paper, but also that malfunctioning corporation called the USA.
That's the first thing I thought of when I read this morning in the NY Times that the bank rescue plan that Geithner will announce tomorrow relies in part on private investors...

Charles E. Kirk / The Kirk Report: On Hold
Karen Tumulty / Swampland: Fixing TARP

David Cho and Michael A. Fletcher / Washingtonpost.com:
Bailout Plan Delayed as Stimulus Pitch Absorbs Agenda — Senior Obama administration officials sought to intensify pressure on Congress yesterday to pass a massive stimulus package for the crumbling economy, warning lawmakers of the consequences of delay while rescheduling the unveiling of their financial rescue plan to keep the spotlight on Capitol Hill...

StarTribune.com Business
Official: Bailout overhaul likely to include private-public partnership to buy bank assets — "the plan would use government money to support private sector purchases of bad assets that are weighing on banks' balance sheets and … read more keeping them from resuming more normal lending." This is what got us in this mess in the first place. I don't want to buy bad assets!! If you want to help the banks let them write these bad ...

thedeal.com:
Geithner delays bank bailout plan — The Obama administration is delaying the announcement of its multibillion-dollar bank rescue plan until Tuesday, as it presses lawmakers to settle their differences over the $800 billion economic stimulus package.

NPR:
U.S. May Back Private Buys Of Bad Bank Assets — The government's $700 billion financial rescue program is likely to include a partnership with the private sector to buy troubled assets, an Obama administration official said Monday...
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MarketWatch.com:
More than 1,000 banks may fail in coming years, analyst says More than 1,000 banks may fail during the next three to five years as the recession intensifies and loan losses climb, an analyst at RBC Capital Markets estimates...
related:
Flexo / Consumerism Commentary
Nine Banks Have Failed in 2009 So Far — Three more banks failed on Friday, bringing the 2009 tally to nine. When banks fail, the deposits (bank accounts) are transferred to another bank, sometimes with the FDIC facilitating the transition. Regardless of the process, bank accounts are generally insured by the FDIC up to $250,000 per depositor, so you won’t lose your money [...]
----
NY Post:
'DIRTY' DEEDING -- Embattled Execs Hand Swanky Pads to Wives

Disgraced Lehman Brothers CEO Dick Fuld isn't the only embattled corporate bigwig to pass off a pricey house to his spouse - Chrysler CEO Robert Nardelli and ousted Merrill Lynch chief Stanley O'Neal did it, too, property records show...
discussion:
Gawker: Rich Losers Giving Houses to Wives: Retroactive Trend
----
Justin Fox / The Curious Capitalist:
Comparing this recession to the last five — The dramatic chart Nancy Pelosi's office put out comparing job losses so far in the current recession with those in 2001 and 1990-1991 has gotten a lot of play in the Internets. As well it should-it paints a dramatic picture (job losses in the current recession have been much more severe)....

Job losses in last six recessions
discussion:
Karen Tumulty / Swampland: How Bad Is It? (Monday Edition)
Barry Ritholtz / The Big Picture: Job Losses in Post WWII Recessions
Alan Reynolds / New York Post: It's a Recession, Not a 'Catastrophe'
----
Market-to-Market Accounting Good or Very Bad??

Lloyd Blankfein [CEO Goldman Sachs] / Financial Times
Most of All, Don't Destroy Risk Catalyst - For Goldman Sachs, the daily marking of positions to current market prices was a key contributor to our decision to reduce risk relatively early in markets and in instruments that were deteriorating. This process can be difficult, and sometimes painful, but I believe it is a discipline that should define financial institutions...
discussion:
Paul Kedrosky / Infectious Greed:
Blankfein vs Blankfein --Goldman Sachs CEO Lloyd Blankfein gets into an argument with himself in the FT today... So, having conceded that risk models do a terrible job of predicting the likelihood of outcomes, Blankfein now wants us to buy the idea that those same models can differentiate between 100-year and 1-year-storms. Am I the only one who sees a material inconsistency here?

David Goldman / Inner Workings:
Chutzpah from Goldman Sachs -- “Chutzpah” is a word that might have been invented for the sole purposes of qualifying Lloyd Blankfein, the CEO of Goldman Sachs. He argues slyly for the maintenance of mark-to-market accounting...

Goldman is a clever house, and cleverly reduced risk ahead of others, which it accomplished by selling risk to less-clever institutions. If everyone had been as clever as Goldman Sachs, everyone would have tried to sell at the same time and the market would have crashed in a Krakatoa-like explosion. Everybody can’t be cleverer than the rest, which is what mark-to-market accounting incentivizes everyone to be: first in, first out...

Bloomberg:
Goldman’s Blankfein Says Banks Shouldn’t Abandon Mark-to-Market

related:
Jesus Huerta de Soto /Mises.org:
Financial Crisis: The Failure of Accounting Reform -- acceptance of the International Accounting Standards (IAS) and their incorporation into law in different countries (in Spain via the new General Accounting Plan, in effect as of January 1, 2008) have meant the abandonment of the traditional principle of prudence and its replacement by the principle of fair value in the assessment of the value of balance-sheet assets, particularly financial assets...

David Goldman / Inner Workings:
The mark-to-market problem: Michael Milken’s wisdom about market inefficiency -- Let’s put the question practically: why was the multi-trillion-dollar universe of structured securities vastly overpriced before July 2007 and vastly underpriced by the middle of 2008? ...
----
American Dream in high reverseDamien Cave / International Herald Tribune:
From boom to bread line in a Florida exurb -- LEHIGH ACRES, Florida: Desperation has moved into this once-middle-class exurb of Fort Myers, where hammers used to pound.

Its straight-ahead stare was hidden amid the chatter of 221 families waiting for free bread at Faith Lutheran Church on a recent Friday morning, and it had appeared a block away a few days earlier, as laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold.

"I knew it was coming," said Gloria Chilson, 56, the former owner of the house, as she watched strangers pick through her belongings. "You take what you can; you try not to care.

Welcome to the American dream in high reverse...
----
Alan Abelson / Up & Down Wall Street / Barron's:
Mission Impossible -- The president's hunt for someone who loves to pay taxes.

Now, as one who has long felt that “smart banker” is an oxymoron, we might be expected to gush happily that bankers, if they scrounge for money from the government, have to learn somehow to get along on half a million bucks a year. But, in fact, it worries us.

Not because it is going to deprive the financial industry of uncanny and irreplaceable leadership (who else could have so cleverly contrived to make the sector what it is today?). No, the reason we are all for the fat cats keeping their bountiful bonuses and not being lured away by greener pastures is far more transcendent.

What inspired this unwonted generosity on our part, we readily admit, was a letter in the New York Times which warned that, absent those bonuses, investment bankers and their ilk would be impelled to seek employment elsewhere. And, the writer asks, do we really want them building our houses, teaching our children or driving our cabs? We wholeheartedly agree: Obscene bonuses are a small price to pay to forefend such dread prospects.” ...
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