Here is a heartening piece from the WSJ:
The U.S. Treasury Department announced Tuesday that 10 of the nation's largest banks have met the necessary requirements to repay funds they received from the government's financial-rescue fund, making way for $68 billion to possibly be returned to Treasury.
"These repayments are an encouraging sign of financial repair, but we still have work to do," said Treasury Secretary Timothy Geithner in a statement.
We don't need a pay Czar now, right Timmy?
The 10 banks are: J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, BB&T, U.S. Bancorp, American Express Co., Capital One Financial Corp. Bank of New York Mellon Corp., Northern Trust Corp. and State Street Corp.
I will be opening accounts with these banks today with my eight dollar tax cut. I might also by some G.M stock through Morgan Stanley as my brokerage firm. If my math is right I could afford 850,000 shares of "Government Motors."
This is my favorite blurb from the article:
Morgan Stanley said Tuesday that it is "pleased to be repaying its $10 billion in TARP Capital with an attractive return for taxpayers." J.P. Morgan Chase said Tuesday it plans to repay its $25 billion in TARP funds. Translated into non BS talk
Morgan Stanley said Tuesday that it is pleased " to be running as far as possible away from creepy Tim Geithner, the new PAY CZAR, and Joe Biden's douchebaggedness."
This should be a good thing, that we now have banks that are feeling comfortable enough with their capital situation and are able to raise private capital. It amazes me that private investors are willing to invest in these banks when they know that Chrysler and GM investors were bent over the barrel. But I digress. The street should be doing a dance today, no more government control, no pay czar, finally bankers can go back to Spago.
But then again will the FEDS let go and return TARP to the dungeon it belongs in along with wage and price controls:
In Tuesday's announcement, the Treasury said much of the money would be returned to its general fund and would "help to reduce Treasury's borrowing and national debt." Mr. Geithner has described plans to reuse TARP funds that come back into the fund, recently announcing that he'd open up the funds to smaller banks.
The announcements comes as large banks have eagerly declared intentions to repay government aid given the restrictions on dividends and executive pay that go along with TARP. Meanwhile, the public and Congress have shown greater signs of bailout fatigue, leaving firms uncertain about what new restrictions they'd have to face for tapping into the financial-rescue fund.
I don't like the " plans to reuse TARP funds that come back to the fund, recently announcing that he'd open up the funds to smaller banks." Me no likey. How about we suck that money out of circulation, or use it for small business tax relief. While things could be much, much worse I tend to fall under the skeptical heading. If this method, propping up zombie banks, or keeping that money available for the next failing institution, which will happen, how are these banks any more free to engage in non coercive market activity. We don't know all of the specifics yet but I think that the Presidents remarks are prescient.
"I've said repeatedly that I have no interest in managing these banks -- or running auto companies or other private institutions, for that matter," Mr. Mr. Obama said. "But I also want to say: the return of these funds does not provide forgiveness for past excesses or permission for future misdeeds. It is critical that as our country emerges from this period of crisis, that we learn its lessons; that those who seek reward do not take reckless risk; that short-term gains are not pursued without regard for long-term consequences."
TARP is not gone, it is only sleeping.
Showing posts with label Tim Geithner. Show all posts
Showing posts with label Tim Geithner. Show all posts
Tuesday, June 9, 2009
Told you so...
China airs fears on U.S. Debt
Senior Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a Republican congressman said.
"We heard across the board -- in private -- substantial, continuing and rising concern," Representative Mark Kirk said after a trip to China that included talks with government officials and central bank chief Zhou Xiaochuan.
This is what happens when you borrow more than you can afford. We have taken out a giant subprime mortgage and it appears that the bank is already contemplating cutting off our equity. Like it or not, China is a larger holder of Treasury debt and is our largest trading partner. We don't want to make them think we are going to inflate our way out of this problem.(Although that is what will happen whether or not the FED does it on purpose.)
Kirk's assessment differed with that of Treasury Secretary Timothy Geithner, who said last week on a separate visit that Chinese leaders had expressed "justifiable confidence" on the future of the recession-hit US economy.
Kirk traveled with Representative Rick Larsen, a member of President Barack Obama's Democratic Party, who also painted a less gloomy picture of Chinese officials' views.
China is the largest creditor to the United States with some 700 billion dollars invested in Treasury bonds. Zhou earlier this year floated the idea of replacing the dollar with a basket of currencies as the benchmark global unit.
Instead of a basket of currencies how about we make the global benchmark Kathie Lee Gifford blouses and copies of Mao's Little Red Book. What we always say, at least me to my friends, is that the Chinese would never call in the debt that we owe them as it would kill their economy which is heavily reliant on exports of cheap plastic shit to sell at Wal-Mart. What we have seen in the past several years since Bush starting running up his deficits is a rise in the Chinese Middle Class, as well as a global middle class which will be competing for ever more scarce resources. Per the Wharton School of business.
China is expected to become the world's third-largest consumer market by 2025 as an expected transition from an investment-led economy to a more consumer-focused model brings about continued growth. The McKinsey Global Institute projects China's middle class will increase from 43% of the population today to 76% by 2025. "The shift from investment to increasing consumption overall -- and as a share of GDP -- is very important to sustainable growth in the long-term. China has maxed out on the input model," says Diana Farrell, the Institute's director. India has been more open to consumption, but like China it has a very high savings rate that Farrell says should be converted to consumer spending to strengthen the overall economy.
So, let's look at this. We have a huge consumer base which has been saving money and being dutiful in a way that the American consumer has forgotten. The global currency which will be in vogue, so long as we don't cave on some kind of supra currency, is the dollar. What is the one thing that runaway inflation kills more than anything else... savings my friends. My hypothesis is that the Chinese will continue purchasing T-Bills, but they are going to want a higher RoR. This will push interest rates up for the average consumer.
Of course, this is just a guess, but then again we never thought that the ChiComs would prattle on about wanting to diversify their portfolio. Time to bring back King Dollar. What I believe that Ben Bernanke will begin to do after the repayment of some of the TARP monies to the FED is gradually raise the FED interbank rates, we need to begin to suck up some of the excess capital that is floating around and get it into circulation. Hopefully, this will satisfy the Chinese as well as bring a little order back to incentives to save money. Investment will come later.
Senior Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a Republican congressman said.
"We heard across the board -- in private -- substantial, continuing and rising concern," Representative Mark Kirk said after a trip to China that included talks with government officials and central bank chief Zhou Xiaochuan.
This is what happens when you borrow more than you can afford. We have taken out a giant subprime mortgage and it appears that the bank is already contemplating cutting off our equity. Like it or not, China is a larger holder of Treasury debt and is our largest trading partner. We don't want to make them think we are going to inflate our way out of this problem.(Although that is what will happen whether or not the FED does it on purpose.)
Kirk's assessment differed with that of Treasury Secretary Timothy Geithner, who said last week on a separate visit that Chinese leaders had expressed "justifiable confidence" on the future of the recession-hit US economy.
Kirk traveled with Representative Rick Larsen, a member of President Barack Obama's Democratic Party, who also painted a less gloomy picture of Chinese officials' views.
China is the largest creditor to the United States with some 700 billion dollars invested in Treasury bonds. Zhou earlier this year floated the idea of replacing the dollar with a basket of currencies as the benchmark global unit.
Instead of a basket of currencies how about we make the global benchmark Kathie Lee Gifford blouses and copies of Mao's Little Red Book. What we always say, at least me to my friends, is that the Chinese would never call in the debt that we owe them as it would kill their economy which is heavily reliant on exports of cheap plastic shit to sell at Wal-Mart. What we have seen in the past several years since Bush starting running up his deficits is a rise in the Chinese Middle Class, as well as a global middle class which will be competing for ever more scarce resources. Per the Wharton School of business.
China is expected to become the world's third-largest consumer market by 2025 as an expected transition from an investment-led economy to a more consumer-focused model brings about continued growth. The McKinsey Global Institute projects China's middle class will increase from 43% of the population today to 76% by 2025. "The shift from investment to increasing consumption overall -- and as a share of GDP -- is very important to sustainable growth in the long-term. China has maxed out on the input model," says Diana Farrell, the Institute's director. India has been more open to consumption, but like China it has a very high savings rate that Farrell says should be converted to consumer spending to strengthen the overall economy.
So, let's look at this. We have a huge consumer base which has been saving money and being dutiful in a way that the American consumer has forgotten. The global currency which will be in vogue, so long as we don't cave on some kind of supra currency, is the dollar. What is the one thing that runaway inflation kills more than anything else... savings my friends. My hypothesis is that the Chinese will continue purchasing T-Bills, but they are going to want a higher RoR. This will push interest rates up for the average consumer.
Of course, this is just a guess, but then again we never thought that the ChiComs would prattle on about wanting to diversify their portfolio. Time to bring back King Dollar. What I believe that Ben Bernanke will begin to do after the repayment of some of the TARP monies to the FED is gradually raise the FED interbank rates, we need to begin to suck up some of the excess capital that is floating around and get it into circulation. Hopefully, this will satisfy the Chinese as well as bring a little order back to incentives to save money. Investment will come later.
Monday, April 13, 2009
Come on Down to Timmy Geithner's PayDay Loans
An excellent piece from the NY Times over the weekend:
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Stephanie Cutter, a spokeswoman at the Treasury Department, said it did not comment about the participation of specific banks in the plan or their efforts to exit the program.
Personally, I could give a hoot in hell that these bankers don't like that the government doesn't want to provide them with a reach-around as they try to escape the government shower room where they have been receiving frequent capital injections. Hank Paulson played Vito Coreleone with these bankers last fall, telling them that they had to take capital injections to keep credit flowing. Now, the banks which have been solvent, and will continue to be solvent are forced to pay a large settlement that is equal to a 60% interest charge on the money that was forced on them to get out from under the government's "protection."
Perhaps when these banks were told that they had to do this they could have said, "no." Would that have been so difficult. Saying no to Uncle Sam and telling them that they would allow the market to sustain or destroy them. That is the problem with the bail-out culture that we see ourselves in now. Us plebians could have told anyone of these titans of industry that by getting into bed with Hammerin' Hank and his capital injections would lead to government control over their operations. These bankers should pay the penalty and take it on the chin, proverbially. Government intervention will only lead to more government intervention, as the wheels of bureaucracy can't react to the market the way that a company without political interests can. That is the rub, since these banks have received TARP money, they are political whether they want to be or not. The best outcome is that these banks pay the fine and run as far away from the FEDS as possible
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Stephanie Cutter, a spokeswoman at the Treasury Department, said it did not comment about the participation of specific banks in the plan or their efforts to exit the program.
Personally, I could give a hoot in hell that these bankers don't like that the government doesn't want to provide them with a reach-around as they try to escape the government shower room where they have been receiving frequent capital injections. Hank Paulson played Vito Coreleone with these bankers last fall, telling them that they had to take capital injections to keep credit flowing. Now, the banks which have been solvent, and will continue to be solvent are forced to pay a large settlement that is equal to a 60% interest charge on the money that was forced on them to get out from under the government's "protection."
Perhaps when these banks were told that they had to do this they could have said, "no." Would that have been so difficult. Saying no to Uncle Sam and telling them that they would allow the market to sustain or destroy them. That is the problem with the bail-out culture that we see ourselves in now. Us plebians could have told anyone of these titans of industry that by getting into bed with Hammerin' Hank and his capital injections would lead to government control over their operations. These bankers should pay the penalty and take it on the chin, proverbially. Government intervention will only lead to more government intervention, as the wheels of bureaucracy can't react to the market the way that a company without political interests can. That is the rub, since these banks have received TARP money, they are political whether they want to be or not. The best outcome is that these banks pay the fine and run as far away from the FEDS as possible
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