The ongoing financial turmoil and financial discussion thread

[Flame Of Liberty]

CBO shows that the President is seeing that $1 trillion and raising it again and again, as far as the eye can see. In only two months, since the last CBO budget review in January, Democrats have passed laws that increase spending by $134 billion in the last six months of this fiscal year alone, and $1.2 trillion over the next 10 years. And that's all before his 2010 budget proposals.

As a share of GDP, CBO says this means spending will hit an astounding 28.5% in fiscal 2009, which ends this September, and still be at 25.5% next year, staying at close to 23% to 24% of the economy for the next decade. As CBO dryly notes, this is "above the average of 20.7 percent over the past 40 years." Even CBO's estimate is conservative because it assumes that most of the spending in the stimulus bill will be temporary, though Democrats are already planning to make much of it a permanent part of the budget baseline.

One unstated but clearly implicit goal of his budget is to put in place spending programs that make ever-more Americans dependent on government and that will require a permanently higher level of taxation to finance. All of this is being done in the name of addressing income inequality.


http://online.wsj.com/article/SB123776518094909023.html



IMO this is a very important point but it gets lost in the debate. What we witness today is not a knee-jerk one-time "stimulus" package. The plan is not throw the money at the problem, hope it fixes itself so we can go back to fiscal sanity. The "reasonable crowd" with blinders on may lead you to believe that, but this kind of blind faith is so short-sighted it's not even remotely funny.

Today we witness a drastic change in how American economy is going to be "administered." Everything points out that the government running amok like a monkey in a banana factory is going to be a norm. Huge public spending, deficits, living on debt, you name it, will be permanent.

This huge shift is far more frightening that one-time "solutions" would ever be, no matter how ill-advised they are.

Remember how we were told by the "reasonable crowd" that we don't need to worry, Obama's a centrist? Yeah he is proving that allright...

[Azure]

Article about lending money, and the problems that come along with it.

http://business.timesonline.co.uk/to...enComment=true

But its best customers just might be unenthusiastic about adding significantly to their holdings. Wen already owns trillions in Treasury bills that are depreciating in value. Besides, China’s mounting needs for infrastructure and an improved safety net will sop up funds once used to buy American securities. Japan, another large customer, is now running a current-account deficit, and so it won’t have as many dollars to recycle. Nor will Middle East buyers, no longer receiving a flood of dollars from $140-a-barrel oil. Little wonder that Larry Lindsey, former economic adviser to President George W Bush, says he “cannot figure out what combination of foreign buyers is going to acquire . . . [the] debt” that Obama’s plans will generate.



Which leaves Americans and the Fed as customers. Even if they save more, domestic consumers can’t absorb all the Treasury bonds that will be on offer. And if the Fed keeps buying, it will pour fuel on the inflationary fires.
I have never before doubted the resilience of the American economy – its ability to survive inevitable downturns after periods of excess, and to weather the burdens heaped on it by politicians. Obama, however, has me shaken, perhaps because I am not stirred by his rhetoric.



Fortunately, even some liberal Democrats are suffering from “bailout fatigue”. More important, Bernanke has so far shown a sure touch in managing monetary policy, and might head off a bout of inflation by shrinking the money supply when the economy is no longer too cold, has not yet gotten too hot, and is in just the right condition for such a move. If so, Goldilocks might just have a new life.

[Azure]

Article about the 'toxic assets' the Feds want to buy.

Geithner announced a plan Monday that would use $75 billion to $100 billion in taxpayer dollars from the initial Wall Street bailout, plus money from private investors, to generate $500 billion to buy up the assets from troubled banks. That amount could increase to $1 trillion over time. Those are mainly mortgage-backed securities whose value has cratered, but they remain on bank balance sheets and are blocking further lending.

The administration is facing resistance from the potential buyers and sellers in the new program, as well as criticism from the left that the proposal is a rehash of old Bush Administration ideas. Geithner deflected criticism that his proposal didn't go far enough. "We are the United States of America. We are not Sweden. We have a very complicated financial system," he said.

A lot was riding on Geithner’s announcement – both the fiscal health of the nation’s crippled banking system, but also Geithner’s own reputation. He’s been battered by a series of missteps that have left some Republicans calling for his resignation, even as President Barack Obama is standing solidly behind him.

Obama gave Geithner a vote of confidence again in remarks Monday, praising the new bailout plan as “one more critical element in our recovery. But we've still got a long way to go, and we've got a lot of work to do. But I'm very confident that, with the team that we've got assembled, we're going to be able to make it happen.”

Geithner’s plan won an early and important endorsement from The Financial Services Roundtable, a trade group for the nation’s largest financial institutions. The group said the plan will help fix a value on the damaged securities, give flexibility to potential buyers and provide enough government-backed financing to make the plan work.

“Combined with other on-going efforts, the plan will help strengthen the economy,” the Roundtable said in a statement immediately after Geithner’s announcement.

Wall Street also signaled it support, with the Dow up nearly 300 points as of 11 a.m. Monday.

http://www.politico.com/news/stories/0309/20361.html

Interesting that whoever wrote the article still thinks the Dow Jones is a good indicator of how the economy is doing.

[Peanut]

Originally Posted by fotze

Great news for PC employees, any here?

Me.

Originally Posted by fotze

Because all options and grants vest instantly, also sometimes retention bonuses are paid.

I... didn't hear anything about options and grants vesting instantly? I also don't know about the retention bonuses since they announced it will mean job losses for both organizations. But the instant vest thing would be nice if that pans out.

[Azure]

Article about Congress 'hypocrisy.'

March 23 (Bloomberg) -- The U.S. Senate last month passed a measure limiting “luxury” spending for corporate travel by recipients of federal bailout funds. Two weeks later, about two dozen senators of both parties left town for political meetings on the Florida coast.

http://www.bloomberg.com/apps/news?p...efer=worldwide

[valo403]

Originally Posted by fotze

Because all options and grants vest instantly, also sometimes retention bonuses are paid.

Are you sure about that? I'd think that the structure of the deal would dictate such matters. Not an area of expertise for me, just seems odd that there would be an instant vesting.

[I-Hate-Hulse]

Originally Posted by valo403

Are you sure about that? I'd think that the structure of the deal would dictate such matters. Not an area of expertise for me, just seems odd that there would be an instant vesting.

Most option programs have "change of control" clauses that automatically vest all options on close of a merger. It's all company specific, but I'd be surprised if PC didn't.

[valo403]

Originally Posted by I-Hate-Hulse

Most option programs have "change of control" clauses that automatically vest all options on close of a merger. It's all company specific, but I'd be surprised if PC didn't.

Right, that makes sense. I was just thrown off by the idea that it was going to happen automatically without regard for specific provisions.

Thanks

[Peanut]

Originally Posted by I-Hate-Hulse

Most option programs have "change of control" clauses that automatically vest all options on close of a merger. It's all company specific, but I'd be surprised if PC didn't.

There is no "change of control" since it's a merger.

[RougeUnderoos]

The Arriva tower(s) just north of the Saddledome have stopped construction. They aren't really even out of the ground on the second one but the site is has been seriously lacking in humans for a week or so. I don't know the story, but it's not a good sign.

Is anything else stalled?

[Azure]

In case nobody noticed....the stock market making some big comebacks lately.

Bank of America Corp. and Citigroup Inc. both soared at least 19 percent as the U.S. Treasury said it will finance as much as $1 trillion in purchases of distressed assets. Exxon Mobil Corp. and Chevron Corp. jumped more than 6.7 percent after oil rose to an almost four-month high. The Standard & Poor’s 500 Index extended its rebound from a 12-year closing low on March 9 to 22 percent as all 10 of its main industry groups advanced.

http://www.bloomberg.com/apps/news?p...efer=worldwide

Oil back up to $54....closing at $53/bbl. Good news for Alberta.

HOUSTON (AP) - Oil prices topped $54 a barrel Monday, getting a boost from stock investors who seemed hopeful a new plan to resolve the nation's banking crisis would spur economic growth. Better-than-expected housing news helped too.

http://www.breitbart.com/article.php...show_article=1

About the Dow Jones....

NEW YORK (AP) -- Wall Street got the news it wanted on the economy's biggest problems -- banks and housing -- and celebrated by hurtling the Dow Jones industrials up nearly 500 points.

Investors added rocket fuel Monday to a two-week-old advance, cheering the government's plan to help banks remove bad assets from their books and also welcoming a report showing a surprising increase in home sales. Major stock indicators surged about 7 percent, including the Dow, which had its biggest percentage gain since October.

http://finance.yahoo.com/news/Stocks...-14721874.html

IMF being pessimistic.

GENEVA, March 23 (Reuters) - The world is in a dire economic crisis, but no recovery is possible until the financial sector is cleaned up, the head of the International Monetary Fund said on Monday.


The crisis will push millions into poverty and unemployment, risking social unrest and even war, and urgent action is required, IMF Managing Director Dominique Strauss-Kahn said.

http://www.reuters.com/article/bonds...31921620090323

You know, Krugman not looking very smart right now. But then again, this is the economy we're talking about. Could change again tomorrow.

Hopefully oil keeps rising. Back to $80/bbl.

[I-Hate-Hulse]

Originally Posted by Peanut

There is no "change of control" since it's a merger.

Acquisitions by other companies (getting 40% of the new company, PC definately got "bought") and mergers typically fall square into the definition of a "change in control". Dig out your option agreement and read the fine print to see if they're going to vest - I suspect they will.

[Frequitude]

Must...stop...reading...CBC reader comments...on...Suncor/Petro Canada.

I'm about to punch my monitor.

[Peanut]

Originally Posted by I-Hate-Hulse

Acquisitions by other companies (getting 40% of the new company, PC definately got "bought") and mergers typically fall square into the definition of a "change in control". Dig out your option agreement and read the fine print to see if they're going to vest - I suspect they will.

Well, that's the word right now - no "change of control". Trust me, people are definitely asking the question about options vesting.

We'll see if that changes at some point I guess.

[Azure]

Why Krugman may be wrong.....or is wrong, or is just a grumpy old pessimist.

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

[Frequitude]

[macker]

Originally Posted by Frequitude

S&P 500 is up 23% from it's recent lows. Bull = +20% : Next stop 900???

[Frequitude]

Originally Posted by macker

S&P 500 is up 23% from it's recent lows. Bull = +20% : Next stop 900???

I see many "bull" runs in that grey line way down there...

[Azure]

Originally Posted by macker

S&P 500 is up 23% from it's recent lows. Bull = +20% : Next stop 900???

S&P has been moving like crazy the past few months....up or down. We really have no idea what it will do tomorrow or the day after.

[macker]

Originally Posted by Azure

S&P has been moving like crazy the past few months....up or down. We really have no idea what it will do tomorrow or the day after.

We have no idea where it is going but we have an idea where it has just been and that is 23% off of it's low. If you want to see where it is likely going look at the technicals and they will tell you it is likely 900 even though technicals haven't been as reliable lately....I would use memorial day as a timeline to get there....after that all bets are off.... Might not sell in May this year....