So that's, what, $3T in new debt?

[solarbird]

Good morning.

So. We've got about US$1T in the stimulus package, we've got another US$1T or so in TARP II (that's today's newly-announced banking system bailout), we've got a couple of hundred billion from TARP I charged against this new year (which is part of the $500B in "private" equity that's part of TARP II, meaning "not so much with the private equity"), $800B in other-operations deficit (counting the wars, which haven't been being counted) - that's US$3 TRILLION in new treasuries to auction. Or just to print.

The 10-year Treasury poked over 3% yesterday, by the way. The yield is down sharply today as the market slumps substantially this morning - Y HLO THER 7-HNDLE DOWZ - but the trend has been up.

Treasury Secretary Geithner thinks there's scads of money sitting on the sidelines "that wants to come in." I'm not convinced of that at all. There's some, no doubt, but it only wants to come in if it can find a safer place to hide than T-bills and cash - which is what he's trying to set up with TARP II, of course, at your and my expense. Martin Wolf at the Financial Times thinks we're really in trouble because there's still no political willingness to admit that these banks are insolvent, and that the underlying assets are worthless. Brad Setzer at the Council on Foreign Relations, who tends to be more sympathetic than do I, thinks that the government's goals of accountability and refusal to nationalise failed banks is in hopeless opposition, and wishes they'd just nationalise, as does Dr. Roubini at RGE Monitor, who further notes that the Anglo-Saxon regulation model has failed. Mish just calls the whole thing insane, noting indirectly - as does Global Guerrillas in more explicit terms - that we are in a state of regulatory capture, where those supposedly being regulated are in charge of the regulation. This has not changed with the Obama administration.

Meanwhile, Karl thinks Mr. Geithner should resign over the market manipulation that forced the Bear Stearns merger. Yes, he was directly involved.

Mish talks about deflationary pressures on salaries, here, and analyses the stimulus package's spending-over-time here.

Japanese newspapers are reporting that Russia may be about to default on sovereign debt again. That'd be about a US$400B hit. Russia is denying the Nikkei report, however. India saw looting at 600 stores last weekend as Subhiksha Trading Services failed to pay bills to its security services. Former Financial Times and now Minister Ed Balls (there's a name to regret, ne?) reportedly says it's going to be worse than the Depression when he thinks people aren't going to talk to the press. Brad talks about protectionism, and whether talking about protectionism of others is in fact protectionism itself. You may laugh, but of such things, trade wars are made. CATO says "let's not do that, it'd be bad, hmmkay?"

GM's cutting another 10,000 jobs. Wholesaler inventories (as opposed to factory and retail) fell dramatically in December.

Cramer of Mad Money - who is so completely wrong so regularly that he's become a running joke, and yet, still has a show - freaks out about Meredith Whitney and her accurate descriptions of reality, nicknaming her "Jason" and saying she's going to take out all but about two banks with her commentary. Lulz.

BTW, I don't know how reliable this source is, but Stimulus Watch is trying to track funding requests for the stimulus by states, counties, and cities. These are "shovel-ready" requests from governments, not actual fundings.

That's it for now. Good luck, and I hope you had a good weekend and enjoy a good week.

Comments

[firni.livejournal.com]

Does Canada have the same banking problem? If not, why not?

[solarbird]

Not nearly as badly, because while they did have a real estate bubble, lending standards were not allowed to disintegrate nearly to the degree the US banking system did, so you had dramatically less systematic fraud and looting.

They're still going to take a big hit, though, just because everybody is. It helps that also, they've been running at current-accounts surplus rather than massive-deficit, so have a lot more breathing room on that front. Per-capita debt at all levels is much lower, and all that. (The Bush administration and GOP congress really, really drove the US into a pit, fiscally. The Democratic Congress in 2007-2008, of course, refused to stand up to the profligacy of the Bush administration and Republicans in Congress either, of course, and didn't help fix things. And now they're all going insane, with the Republcians trying to pretend they care a whit about spending and budgets when they have proven so very thoroughly that they don't. It's all posturing and bullshit and really quite disgusting. And the Democrats trying to pull off a "this year is special" dance as they finish the job. Hopefully it'll work!)

[firni.livejournal.com]

You ought to see RvL (or maybe you shouldn't). Jim is blaming this on the Clinton Administration.

rofl

I'm using the McCain bobblehead icon because he has two things in common with Jim: old and crazy.

[solarbird]

That's the standard partisan line of the GOP; all the problems now are due to the Clinton administration; same for the 2001-2002 recession; the good economic times in the Clinton administration were due to the G. H. W. Bush administration before him. The balanced and surplus budgets of the Clinton era were entirely due to Newt Gingrich and had nothing whatsoever to do with That Sex-Crazed Socialist, Mr. Clinton. Nothing is ever the GOP's fault to the GOP partisan. It's brainless, but predictable.

[epawtows.livejournal.com]

Hey, one of my Dad's regular lines is that there is no such thing as a dishonest republican politician; none of them has ever told a lie, exaggerated, or made a campaign promise they would not have absolutely kept if not for a democrat. He's completely serious.

Blah.

[llachglin.livejournal.com]

Well, the roots of this go back to Reagan at least, and Clinton signed the Republican deregulation bill that was one of the big pieces in things getting this bad. It's not entirely insane to put *some* of the blame on Clinton, even if much more of it falls on the Bushes and the Gipper. But ultimately it's less about Republicans vs. Democrats and more about free market fundamentalism vs. actual empirical economic reality.

When Ralph Nader was saying both parties were the same, he was focusing on this stuff (and ignoring the other huge areas where that comment was and is completely wrong). Is there really that much difference between Henry Paulsen and Tim Geithner? Not really, unfortunately. There's a bit more of a difference Greenspan and Bernancke, but still not enough. The open question is whether Obama lets Geithner, Summers, and co. lead him, or whether he takes an independent course and does what's right for the country. My guess is that he's leaning on them for now but when their failed ideas continue to fail, he'll finally do the right thing. Hopefully we have an economy left by the time that happens.

[kathrynt.livejournal.com]

One of the best running jokes in Arrested Development was when Cramer upgraded the Bluth Company stock to "don't buy." All the Bluth clan ran around screaming with excitement that they were doing so well.

[meesto.livejournal.com]

There is a striking document making the rounds - it is an OCR scanned thing judging by the way it reads, but don't let that put you off having a look at it. It is a bit of commentary from Martin Armstrong that seems to have been written in the last few months.

http://www.jsmineset.com/wp-content/uploads/2009/02/martin-armstrong.pdf

I think Armstrong's observations are worth entertaining, though I have yet to find any additional sources to his references of what really happened on Black Friday. Is this because history has been so well rewritten or something else? What hits home for me is the comments about what is being done today is not what will fix things. At all.

[llachglin.livejournal.com]

Did you see the recent CNBC appearance with Roubini and Nassim Taleb? Calculated Risk had the video on his blog, and I tell you the complete failure of the mainstream financial press to get what's happening and to own their own responsibility is appalling. The network talking heads were focusing on investment opportunities and single metrics to follow to identify the bottom of the market. Both guests kept telling them essentially "You don't get it. We can't go back to how things were. Things will get worse and we're in cash for the foreseeable future, and the new normal will require massive systemic change." It was like the Far Side cartoon with "what you say" vs. "what cats hear." My apologies to cats.

I think nationalization is inevitable, but that it will only happen after every other option is tried or at least seriously considered. Right now, Larry Summers and Tim Geithner are trying to save their friends on Wall Street and the tattered remnants of the old order, but that will fail and they'll eventually have to do the right thing. I just hope Obama catches the clue earlier rather than later and orders them to do the right thing. There's no way we get out of this until all the bank debt is brought out into the open and we have effective regulations for future banking. I don't see how that happens piecemeal without at least temporary takeovers of banking.

[solarbird]

No, I didn't; I can say that it's nicknamed CNBS for a reason, tho'. I don't personally know anyone who takes it seriously anymore.