Let's see.... 10.2% unemployment. Check. Millions more unable to afford health care and afraid they will either lose their homes or their jobs. Check. Many worried Americans trying to pay off their credit cards, stop buying unnecessary shit, and actually save some money. Oh. No. Sound the alarm : WASHINGTON -Consumers borrowed less for a record eighth straight month in September amid rising unemployment and tight credit conditions. Economists worry the declines in borrowing will drag on the fledgling recovery. The Federal Reserve said Friday that borrowing fell at an annual rate of $14.8 billion in September. That's the biggest decline since July and was larger than the $10 billion drop economists expected. Americans are borrowing less as they try to repair cracked nest eggs and replenish rainy day funds in a dismal jobs market. Many are finding it hard to get credit as banks, hit by the worst financial crisis in decades, have tightened lending standards. Borrowing by c...

From Politics Daily : The Treasury Department's purchase of nearly $46 billion of Fannie Mae's preferred stock made U.S. taxpayers major owners of the government-sponsored enterprise. This investment so far has not been very profitable for the taxpayer --- Fannie Mae lost just under $40 billion in the first six months of this year. The government has already spent $91 billion propping up Fannie Mae and Freddie Mac. Not to worry, however, because the Treasury Department North (aka Goldman Sachs) has got its hand out again: As if $22 billion in bonuses were not enough, Goldman Sachs would now like to obtain another $1 billion in tax benefits from the federal government. As with the $12.9 billion that Goldman Sachs received from the U.S. Government via payments made to the American International Group, Goldman Sachs would obtain an indirect federal benefit by using tax credits the government provided to Fannie Mae to offset its own profits and thus its federal tax payments. As the...

[Couldn't resist, because the star-studded flop about World War Two's Arnhem operation, A Bridge Too Far should have been titled An Hour Too Long .] Yep: the government sure is spending that stimulus money to beef up the crumbling bridges of America: From AP : In making the case that the recovery program was not just economically sound but also good policy, [VP Joe] Biden noted that transportation money was replacing unsafe bridges. "It is worthwhile to take some of those 5,000 bridges out there that are ready to collapse, follow what happened in the upper Midwest, and fix them," he said. But most states are spending stimulus money on bridges that are already in good shape, another AP analysis found. Of the 2,476 bridges scheduled to receive stimulus money so far, nearly half have passed inspections with high marks, according to federal data. Those 1,123 sound bridges received such high inspection ratings that they normally would not qualify for federal bridge money...

I said earlier that I would examine this paragraph by Dana Garrett in the light of the success of Cash for Clunkers: Great news all around, right? But, reader, if you hear a note of weeping in the national celebration of this program's success, it's those economic conservatives who, for entirely doctrinaire reasons, simply cannot admit they were wrong. A government stimulus program worked—in fact, it exceeded expectations—and that must be denied at all costs. You see, if they admit that a government stimulus program worked here, then they'll have to admit that such programs might work in other aspects of the economy as well. Too bad for them. Reality is rarely kind to dogmatists. A couple caveats first: 1) I would dispute Dana's assertion that economic conservatives reject the idea of government stimulus. The whole argument over the stimulus package found the GOPers arguing for stimulus in the form of tax cuts or payroll tax holidays, which everyone from Peter Orzag ...

Dana Garrett is currently trumpeting the supposed 23% return the US government received on its bail-out investment in Goldmann Sachs: Boo hoo for you conservative Republicans and Libertarians. Instead of the dire consequences you predicted, the bailout is already starting to work for both the companies it helped and the taxpayers. Goldman Sachs is ALREADY giving us a 23% return on our tax dollars. We are ALREADY making a good return on the bailout--just like what happened in Sweden. This is GREAT NEWS! Because, you see, it means we now have a funding mechanism for Health Care reform: we just keep sending bail-out money to America's mega-banks. It will work like this. First (h/t ABC ) we spend $23.7 Trillion on the Troubled Asset Relief Program: "The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a new report obtained Monday by ABC News on the gover...

... or, how spending $1.2 Trillion didn't quite have the result that the government was looking for : NEW YORK (June 6) - The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market. But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation. That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk . Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford. Which kind of makes you wonder--where'd all the money go, anyway? Since the Federal Reserve is still immune to audit,...

Yeah, who'da thunk it? Faced with imminent new regulations controlling their interest rates and pretty despicable practices, credit card companies are jacking in every single dollar they can prior to the new regs going into force: It appears that credit card issuers are insisting upon exercising their right to abuse their customers in the name of higher profits. A survey of recent activities by the top eight credit card issuers reveals that since the Federal Reserve announced rule changes designed to curb unfair credit card industry practices last December, the companies have implemented even more onerous practices, raised interest rates more aggressively and increased the number of fees that they can impose on their customers. The Center For Responsible Lending (CRL) released its findings on Monday and according to the report, Citigroup (C), Bank of America (BAC), J.P. Morgan Chase (JPM), Capital One (COF), HSBC (HBC), Discover (DFS), American Express (AXP) and Well Fargo (WFC) ha...

I'd guess that hedge-fund manager Cliff Asness, whose fund is going to court against the Obama administration Chrysler deal that offers his investors roughly a thirty-cents-on-the-dollar payback while privileging the UAW stake in the decomposing automobile manufacturer is not an incredibly popular person these days. After all, our own President has joined in the demonization of virtually everone involved in the American financial system... But give it to Asness, he's not a wimp. And in an open letter about the situation he's fighting back. Some snippets : "Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing." "The President screaming that the hedge funds are looking for an unjustified ta...

While our friend Tommywonk is excited at the prospect of stakeholder capitalism at Chrysler, with the UAW ending up with 55% of the company and $10 billion to guarantee its healthcare fund, the situation is more complicated that this in terms of the consequences: And for those who object to government and unions having a say in how the company is managed, it's worth pointing out that the feds stepped in when Chrysler had nowhere else to turn for capital. One of his own commenters (Edmund Dohnert) noted: Chrysler has been losing market share for years and will probably continue to do. Their marriage with Daimler Benz turned out to be a fiasco, and I don't see why Fiat and the other 'stake holders' will fare any better in some reorganized Chrysler. And even without our current depression, the US has for years had far more auto production capacity in relation to any realistic projection of demand . Quite simply, we have an industrial bas capable of producing far more car...

... it's really worth reading Bill Bonner at Fleet Street Invest today: Even Henry Kaufman, writing in today’s Financial Times, says that the Fed’s "libertarian dogma" prevented it from controlling the banks properly. But the Fed is hardly a libertarian organization. It’s a banking cartel. As a cartel, it looks out for its member banks - and doesn’t hesitate to use state power to do so. There is nothing libertarian about it... and no dogma associated with it - except as Greenspan’s eyewash - that is even vaguely libertarian. The Fed colluded with member banks to fix interest rates. In so doing, it helped create the biggest bubble in credit the world had ever seen. It was a terrible thing for the average fellow - who was lured deep into debt by rising house prices and cheap credit. But it was a great thing for the members of the Federal Reserve cartel. Profits in the financial sector - notably, the big Wall Street investment banks - soared. But bankers are vulnerable to to...

... even though nobody seems to be listening. Two examples: one, David Axelrod's comments regarding the Tea Party tax protests on Face the Nation , where one line has been highlighted and another one--the big lie--completely overlooked. Here's the complete transcript of the relevant portion of the broadcast: SMITH: What do you make of this spreading and very public disaffection with not only the government, but especially the Obama administration, the TEA parties this week? You even have the governor of Texas even using the word secession? Should Texas be allowed to secede? AXELROD: Well, I don’t think that really warrants a serious response. I don’t think most Texans were all that enthused by the governor’s suggestion. SMITH: But what about the first part of the question? (CROSSTALK) AXELROD: I think any time that you have severe economic conditions, there is always an element of disaffection that can mutate into something that’s unhealthy. SMITH: Is this unhealthy? AXELROD:...

... comes from Al Jazeera coverage of the G20 summit: The US has so far spent, lent or guaranteed $12.8 trillion - almost as much as the value of everything produced in the country in 2008. Only needs the word printed added to the list to make it perfect.

I particularly like this piece from the Port Huron (MI) Times Herald by City Councilman and local Libertarian chair Mark Byrne not so much because I agree with every jot and tittle, but because he demonstrates that there are different strategies available to deal with the Great Meltdown. Moreover, he also demonstrates that many Libertarians are thinking analytically about economic issues and realistic questions of taxation, rather than being slavishly limited in their viewpoints by ideological blinders: Libertarians predicted the housing bubble bursting and the mortgage crisis. We advocated preventing this by these proposals: Stop letting Fannie Mae and Freddie Mac make more loans to less-credit-worthy customers each year. Stop artificially making money cheap to borrow with low federal rates that encouraged borrowing for risky investments. A 21st-century tax system is needed now. We must switch from income, payroll and property taxes paid by the products produced here to a tax that tax...

One is from Scrappleface . One is real . "The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said." ... (2009-03-22) — With the debate over AIG executive bonuses nearly bringing official Washington to a standstill in the past three weeks, the Obama administration today expanded its plan to control Wall Street executive pay, adding provisions to limit compensation for star performers in the National Football League (NFL), National Basketball Association (NBA) and Major League Baseball (MLB).

The WNJ only lays out who is receiving what, and--not too amazing--fails to attempt any analysis. So le't help them out, to find out the big winners in the stimulus lottery. Here are the eleven largest recipients US Army Corps of Engineers: $18,965,000 DelDot: $7,030,000 Delaware State University: $3,617,250 University of Delaware: $3,071,250 Delaware River Basin Commission: $2,600,000 State of Delaware (agency unspecified): $2,250,000 Jobs for Delaware Graduates: $1,353,000 New Castle County: $898,000 Delaware State Police: $600,000 Coastal Hydraulics Laboratory: $500,000 Delaware Aerospace Foundation: $500,000 Several notes: 1) The US Army Corps of Engineers and DelDot being the two largest recipients on the list is hardly surprising, as these are the types of infrastructure projects touted by the administration and Keynesian economists. 2) The combined largess provided to the two state universities makes higher education the second-largest beneficiary from the stimulu...

From Disloyal Opposition : The Federal Reserve says, "to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months." The Wall Street Journal sums that move up nicely: "With rates near zero, the Fed is now essentially printing money to increase the supply of credit in the economy." Now where's my Econ 101 textbook? I want to see what happens to the value of any given good when you suddenly flood the market with a new supply ...

I don't think we're going into the Second Great Depression, but I know that times are tough for a lot of my fellow citizens, and a lot of them are really scared we'll end up in the crapper. But even if this is the prelude to a Second Great Crash, it's sort of a three-D technicolor crash, with the same happy plastic people on the TV advertisements offering much the same crap that nobody wants or can afford any more. And the story the other night on NBC News about tent cities springing up across the nation was somehow viscerally less convincing because it was in digitally enhanced color rather than the sepia tones of the faded old photos of the Hoovervilles. I don't say that to be insensitive, but I have come to realize the most people think that history before, say, the 1960s, occurred in black-and-white. And we've also cheapened the written word, primarily because any yo-yo like me can access the internet and achieve an audience. So it is important, from time...

.... the greed of the wealthy is cited as having caused the Great Meltdown, and the best that the Obama administration can come up with is subsidizing the risks of hedge-fund investors to underwrite the recovery (while continuing to demonize them publicly for making too much money): From WaPo : The government is seeking to resuscitate the nation's crippled financial system by forging an alliance with the very outfits that most benefited from the bonanza preceding the collapse of the credit markets: hedge funds and private-equity firms. The initiative to revive the consumer lending business, outlined by officials this week, offers these wealthy investors a new chance to make sizable profits -- but, thanks to the government, without the risk of massive losses. The idea is to entice them to put their huge cash piles to work to stimulate the financial system. They would be invited to buy up recently issued, highly rated securities. These securities finance consumer lending, such as cr...