Markets tank on uncertain future….GM & Chrysler futures dim as Obama drops ‘Czar’ model for French Revolution Model, ‘Committee on Public Safety’ next?

Well, we tanked right out of the gate, DOW down 245 now, breaking the November 20 bottom….we escaped the global damage yesterday as we were closed when Japan released the worst economic data in 35 years....

Japan’s economy, the second-largest in the world after that of the United States, shrank at an annual rate of 12.7% in the final three months of last year, the government said Monday. It was the biggest contraction since a surge in worldwide oil prices precipitated an economic crisis in 1974.

but we are in the thick of it today, GLD is up, and so is the US Dollar which is not supposed to happen, lol….in other headlines, Obama will sign the stimulus in Denver and the markets could care less, we want a financial plan for the banking system and a HOUSING plan

Arizona as the backdrop to announce his housing plan, Obama is choosing a state hit hard by foreclosures. In January, more than 4,500 homes in Arizona were repossessed, third highest in the nation, according to RealtyTrac, a company that collects foreclosure data. Last month, California ranked first.Obama has dropped hints about the outlines of his housing plan, estimated to cost from $50 billion to $100 billion. Speaking in Elkhart last week, he said he would push for a law that allows judges to rewrite the terms of a mortgage for homeowners who land in bankruptcy court.

Without such a law, people are being forced into “foreclosure who potentially would be better off, and the bank would be better off, and the community would be better off if they’re at least making some payments, but they’re not able to make all the payments necessary,” Obama said.

The BIG 3 are also in the minds of traders as Chrysler and GM prepare to present phase one of their feasibility plan to Team Obama. UAW walked away from talks this weekend when GM and Chrysler offered to fund the retirees with stock shares, methinks they know a government run bankruptcy is a-coming….

And I have to say now it looks like Team Obama has no one at the top calling the shots…

Truman said the buck stops here, the buck doesn’t seem to stop anyplace at Team Obama, every single issue has a TEAM a COMMITTEE, no one person calling the damn shots! We need a leader not a frakkin committee!!! Governing by committee is dangerous….

The mysterious and menacing figure of Maximillien Robespierre; "The government of liberty is the despotism of liberty against tyranny." Robespierre's legacy of "despotism" was not to bloom fully until the pogroms of the 20th century. Of course, Robespierre himself was guillotined during the Terror. (cr-Rich Geib)

"The government of liberty is the despotism of liberty against tyranny." Robespierre's legacy of "despotism" was not to bloom fully until the pogroms of the 20th century. Of course, Robespierre himself was guillotined during the Terror. (cr-Rich Geib)

From the wonderful blog of Rich Geib: Gresham’s law of political morality: the bad drives out the good as everyone becomes corrupted while political life becomes not unlike the Hobbesian war of all against all in “a perpetual and restless desire for power, that ceaseth only in death.”

Gibby describes the newest flip flop from a Car Czar to a Committee a la Robespierre, and who will  get a seat? Why the US Steel Workers Union Staffer!! BWAAAHAA!! Ahh man it is so terrifying you have to laugh!

thehomer

GM big executives are ‘retiring’ ahead of the blitz by Pelosi and Waxman:

Lutz departs– Mr. Lutz’s frank statements have also drawn attention. A few years ago he referred to some of GM’s makes as “dead brands,” and last year he called global warming a “crock of s — .”

General Motors Corp. product chief Robert Lutz will give up his post for an advisory role April 1 and retire at year’s end, concluding a chapter in his colorful, 46-year career in the car industry and signaling a shift in emphasis at GM.

Mr. Lutz, a former Marine pilot known for his blunt manner and a love of “muscle cars” brimming with horsepower, was brought to GM in 2001 to liven up its vehicles. He is credited with improving the look and feel of its passenger cars and pushing the development of the Chevrolet Volt, a battery-powered car GM aims to launch in 2010.

“It just seemed to be the right time,” Mr. Lutz, 76 years old, said by email Monday. “As they say, ‘My work here is [largely] done.’ The fun and excitement have become fairly rare commodities, and others are temperamentally better-suited to dealing with this increasingly regulation-dominated product future.”

Exactly ‘regulation dominated’ ie Der Kommissar Pelosi is in town….and she is heavily invested in Boone Pickens’ natural gas plan

General Motors Corp. said Wednesday that William E. Powell, North America vice president of industry-dealer affairs, will retire on March 1.

Powell, 61, began his career at the automaker in 1977 at the company’s Buick Motor Division in Flint, Mich., and moved through several sales assignments. He has been in charge of the company’s dealer development group and regional general manager of GM’s southeast region for vehicle sales.

and Sen Lugar, good buddy to Obama,  came out endorsing a GAS TAX just what American families need right now, but the leadership we have right now is all about the theme of green and not so much what American families can AFFORD to do right now, none of us are going out to buy a new green car I can tell ya that!

Another quote quite appropos from Rich’s page:

“Robespierre, with his cruel moral relativism,
embodied the cardinal sin of all revolution, the heartlessness of ideas.”

Paul Johnson “The Spectator”

February 17, 2009. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Big 3, Cabinet, CITI, Economy, Entertainment, Finance, Foreclosures, Housing, Music, Obama Administration, Politics, Popular Culture, TARP, Terrorism, Unemployment Statistics, Wall St. 2 comments.

GMAC gets 5 billion in TARP aid…

Ladies and Gentlemen, start your car-buying engines….A few days after receiving the newly coveted ‘bank-holding’ status from the FED, GMAC has now been approved for an additional 5 billion in aid via the TARP as well as an additional 1 billion directly to GM…

Via Politico:

Stepping into deeper waters to help the auto industry, Treasury Monday night added $6 billion to the $17.4 billion bailout announced Dec. 19, chiefly to help the financial arm of General Motors Corp.

Using financial markets rescue funds, Treasury will purchase $5 billion in senior preferred equity from GMAC LLC, and up to $1 billion more will be lent to GM itself so the automaker can participate in a rights offering at GMAC, which has wanted to reorganize itself as a bank holding company.

GMAC won approval from the Federal Reserve last week to become a bank holding company, but that was contingent on the auto and home loan provider raising at least $30 billion in capital. Treasury’s announcement would appear to move GMAC closer to that goal, and a GM spokeswoman was optimistic Monday night.

Still nada, zip, zilch for homeowners from Paulson…I would suggest anyone wanting a vehicle free of Congressional engineering standards buy now…HA!! Or take your chances on getting a Homer post Pelosi take-over….take a drive down your Miracle Mile of auto dealerships, we did yesterday and three of 10 are now empty lots,  including Jaguar…

thehomer

Breakdown on the stake taken by Treasury via CNN Money:

Under the agreement announced Monday to buy the senior preferred equity, GMAC must be in compliance with parts of the law Congress passed to bail out Wall Street.

GMAC will issue warrants to Treasury in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase that will pay a 9% dividend if exercised.

-snip-

The loan of up to $1 billion will be exchangeable at any time, at Treasury’s option, into the GMAC equity interests being acquired by GM in the rights offering. The loan will be secured and will have other terms and conditions. The ultimate level of funding under this facility will be dependent upon the level of current investor participation in the rights offering at GMAC.

December 29, 2008. Tags: , , , , , , , , , , , , , , , , , . Big 3, Economy, Labor Department, TARP, Unemployment Statistics, Wall St. 3 comments.

Update: Big 3 loan reached…Dubyah to speak LIVE 9:00am EST….

Video of Dubyah announcement now up here

Update 3: 10:19am EST: Breakdown coming out on Big 3 loans:  GM to receive 4 billion on  12/29, another 5.45 b on 1/16/09…Chrysler to receive up to 4 b on Dec 29th (don’t get me started they should’ve gotten nada, they are privately owned by Cerberus who refused to put up any more cash..at least Kokomo will have work, they better reopen those plants..)..Ford had said they were okay pending no further market deterioration in sales…

GM to hold presser in 44 mins, CNBC to cover it LIVE

UPDATE 2: 10:03am EST:  CNBC reports that an additional 4 billion in loans is expected to come from TARP tranche Deux in February, contingent upon 2nd tranche approval by Congress…so total is 13.4 billion immediately, additional 4 billion from TARP part Deux under PEBO (which will give PEBO the opening to change the requirements :0))

UPDATE: 8:52am EST: The loan is a done deal. 13.4 Billion from TARP…

  • Govt will have power to block large transactions,
  • govt gets warrants ahead of all stakeholders
  • new agreements with stakeholders, dealers, suppliers required by March 31st
  • work rules and wages must be competitive by December 31, 2009…
  • positive net present value by March 31, 2009, must reduce debt by 2/3

This can be modified by PEBO when he gets in…..

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December 19, 2008. Tags: , , , , , , , , , , , , , , , . Big 3, Economy, Entertainment, Fantasy, Film, Foreclosures, Housing, Labor Department, Popular Culture, TARP, Unemployment Statistics, Wall St. 1 comment.

Market Wrap Up: Dow closes down 200+…Big 3 loan stalled at WH…

As the closing bell rings the DOW is down 222 to 8603; NAS down 27 to 1552 and S&P down 19 to 885.

wall-street21

The NAS was down all say on downgrade of chip makers and Intel in particular got hammered when their price target was downgraded below $12..

DOW turned down after Standard & Poor’s decided to re-affirm GEs AAA rating, but simultaneously downgraded their credit outlook from stable to negative…Ironically, S&P rang the closing bell on the Nasdaq today…

…Sprinzen’s report reaffirmed GE’s present rating, but pointed to earnings pressure and the need for funding at GE Capital that forced management to revise its earnings guidance. S&P generated its own projections, Sprinzen said, and “it’s clear that this is going to be a pretty severe credit cycle.”..

You know what Franck Eggelhoffer would say don;t you? ‘Party pooper Standard and Pooor’s’…where were these jokers since 2003??

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December 18, 2008. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Big 3, Cabinet, Economy, Finance, Foreclosures, Housing, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. Comments off.

Monday Morning Market Roundup: FED begins 2 day meeting on rates…next stop, Less Than Zero??..Jamie Dimon on 2009 and Housing…WH on Big 3…

Markets opened mixed, have all turned negative.  DOW down 77 to 8552; NAS down 33 to 1507 and S&P down 11 to 870, the 10 yr is at 2.54% WOW!!

As the Federal Reserve begins a two day meeting expected to culminate in a rate cut of 50 bp tomorrow, consider recent comments by various former Fed Governors alluding to our ability to operate in an effective negative interest rate environment. Once they go to zero some think they are out of bullets. Less Than Zero…sooner or later we will pay the piper in inflation…

From the WSJ:

…The market expects the Fed to cut its key lending rate to 0.50%. But, more important, investors want to know whether there “are more aggressive quantitative moves soon to come, or are they further down the road,” said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.

The Fed is scheduled to meet Monday and Tuesday, with its interest-rate decision coming Tuesday at 2:15 p.m. EST.

Aware that its scope to cut interest rates is limited, the Fed already has tiptoed into the arena of quantitative easing, essentially printing money and using the cash to fund lending…

The EU nations are already making noises about ceasing interest rate cuts, remember their mandate is solely to manage against inflation. Our FED does full employment AND inflation, and frankly I have always found that to be a conflict, since economists feel full employment leads to …yes inflation…

On the auto bailout news,  the White House is behaving rather strangely, floating various rumors. Fox reports Bush says, no bailout deal anytime soon, which would IMHO be deadly for the markets. Then we had a report on CNBC saying the bailout could be as high as 40 billion, which is more than double the amount that failed in the Senate. No one knows where it is coming from. We only have 15 billion left in TARP tranche one. A Treasury/Fed combo loan/guarantee program was the assumption the talking heads are making.

Perhaps the reason the WH is playing coy is b/c they are trying to get Congress to be more amenable to accessing TARP tranche deux (I don’t think POTUS’ trip to Afghanistahn would preclude Paulson from putting a package together) ..I don’t know but I do know if they don’t come out with a definitive plan very soon, the markets will begin to respond negatively…

Via Fox:  The administration, following the legislative defeat, said it was considering several options, including using money from the $700 billion financial bailout fund to provide loans to the carmakers. Bush reiterated Monday that tapping the financial bailout fund remains an option. ..

Via CNBC: U.S. President George W. Bush said on Monday an announcement on a auto industry rescue was not imminent, leaving the industry’s fate clouded in uncertainty for a little longer..”We’re not quite ready to announce that yet,” Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan.

Updated POTUS report: 11:25am EST: GOOD NEWS! Phil LeBeau on the Auto Beat reports POTUS said on AirForce One:

“This will not be a long process because of the economic, the fragility of the auto industry”

The US Dollar is continuing to drop, and no one can agree where it is headed next, I say Rick Santelli has it right and it has topped, we shall see:

The dollar fell to an eight-week low against the euro and dropped versus the yen on speculation the Federal Reserve will cut interest rates and the U.S. will bail out General Motors Corp. and Chrysler LLC.

The greenback approached a 13-year low against the Japanese currency after U.S. President George W. Bush said yesterday he may use funds meant to shore up banks to keep the automakers out of bankruptcy. The Fed is forecast by economists to cut its benchmark rate tomorrow.

“There is dollar weakness in anticipation of this week’s meeting, where it’s widely expected that the Fed will cut the benchmark rate,” said Lee Hardman, a London-based foreign- exchange strategist at Bank of Tokyo-Mitsubishi…..

Anywho, markets expect 50 bp and for the first time I can recall the markets don’t really seem to care what the FED does.  Sentiment is just that negative.

You wouldn’t know that based on the parade of talking heads who seem to be tasked with ‘talking up’ 2009. I will stick with what Jamie Dimon (JPM Chase CEO) told Erin Burnett on December 11th. Remember, only Jamie got it right on the housing meltdown. One of the comments he made was that he expects housing values to drop another 20%-OUCH!:

Video here and here and here

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December 15, 2008. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Big 3, Cabinet, CITI, Economy, FDIC, Finance, Foreclosures, Housing, Labor Department, Obama Administration, Politics, Popular Culture, Simon Pegg, TARP, Unemployment Statistics, Wall St. 3 comments.

Sen. Chris Dodd (D-CT) on the bridge loan, the actions of Senate GOP and the TARP tranche part two..

74177862AW013_Meet_The_Pres

UPDATE: Video now up from CSPAN here

Senator Chris Dodd (D-CT),  Banking, Housing & Urban Affairs Committee Chairman,  just gave an excellent press conference covering the negotiations over the bridge loan and the moves made by all the key stakeholders as well as the ‘political maneuvering by a group GOP Senators in a time of financial crisis’.

During Q/A he articulated the Democratic leadership’s position on drawdown of Tarp tranche Deux and needing to have foreclosure mitigation and consumer lending before any such move is made…

Dodd revealed that after he and all the parties had gone as far as having agreed to put the language in calling for ‘bankruptcy on March 31st if no concessions made by all stakeholders to be viable’, the Shelby contingent was still adding further conditions on labor including NEGOTIATING WORK RULES..

YES! Like they were OSHA, Shelby and his Southern GOP Senate crew was trying to lower American work standards and abrogate the entire purpose of the union.  Dodd calls them the core group that was ‘determined to get to a bankruptcy outcome’..it was a union bust based on Dodd’s description and he outlines the many concessions labor made last night..

It’s wonderful to see Dodd on his game and playing it straight, this is the course on which he belongs. Of course he is echoing many things I said in my ‘Big 3 bill fails’ post and update this morning, so how could I fail to concur? HA! It is nice to be on the side of my party leadership for a change…it is a sad state of affairs that this has to be an issue, hundreds of billions to AIG no concessions on salary or yachting or hunting in Europe there, but no advance on 14 billion already allocated for our manufacturers…..

Up momentarily on CSPAN here

December 12, 2008. Tags: , , , , , , , , , , , , , , , , , , , , , , . Big 3, Cabinet, Economy, Finance, Foreclosures, Housing, Labor Department, Obama Administration, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. 1 comment.

Update: GM announces N American plant closures for 1st Qtr…Paulson Blinks: Treasury Ready to Assist Big 3..

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December 12, 2008. Tags: , , , , , , , , , , , , , , , , , , , , , , . Big 3, Cabinet, Economy, Finance, Foreclosures, Housing, Labor Department, Obama Administration, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. Comments off.

BILL FAILS, ‘DEAD FOR YEAR’: Dems look to TARP

The Detroit News has it up. WH has responded:

…The White House said it was evaluating its options in light of the breakdown.

“It’s disappointing that Congress failed to act tonight,” a White House statement said. “We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable.”..

Tomorrow will be wild and crazy in the markets .. I am getting up bright and early to watch the global markets react and see the futures which I think should lead to a down open, anyone with sense sees this is a frakin disaster, why I thought a simple majority of Congress Critters could reason their way out of a wet paper bag I don’t know, I never learn….

11:20 pm EST:  After REIDS disgraceful self serving speech and thank you, in which he didnt even apologize for his failure, finally a voice of reason:

FINALLY, Barbara Boxer D-CA stands up and says no change was here tonight, the American people will see who stood with the middle class and who didn’t tonight..in this crisis with the holiday we shouldve voted yes, unless Henry Paulson does the right thing… I am going to work as hard as I can to get the Treasury Secty to take action with these 3 million jobs that are on the line..we know Hank Paulson can save these jobs..if he can save all those jobs in the white collar industry certainly he can save some in the blue collar industry…. everyone knows I have had problems with Detroit, they didnt listen to us with fuel efficiency, but to lose our manufacturing base without even a helping hand to try and save it tonight is shocking, in closing I have a heavy heart right now, I have 200,000 workers in my state second only to Detroit that depend on thriving auto industry, I have a message Change is coming…people here for right reason to fight for middle class..(winding off now)

HERE WE GO: Everyone is waiting in the well….straggling votes coming in..it makes me all nervy how the Senate doesnt have the count on the screen and we have to wait…DeMint votes no, wonder if he sees rioters out in the hall, frakin maroon CORKER votes AYE, Good for him!.. Corker votes no..Bond votes Aye. Reid of NV NO? WTF? HUH????they are laughing on the floor WTH? REID VOTED NO!!??!!!!!

YEAS 52

NAYS 35

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December 11, 2008. Tags: , , , , , , , , , , , , , , , , , , , , , , , . Big 3, Doo Wop, Economy, Finance, Foreclosures, Housing, Labor Department, Music, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. 2 comments.

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