Follow the bouncing Economy

Compiled by Eddie Griffin with Commentary

Thursday, November 13, 2008

REPORT:

WASHINGTON – Congressional Democrats are marshaling support for a rescue package to pump $25 billion in emergency loans to U.S. automakers in exchange for a government ownership stake in Detroit's car companies.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Sen. Carl Levin, D-Mich., are developing legislation that would let the auto industry tap into the $700 billion Wall Street rescue money, approved by Congress last month, to fund their business operations.

Treasury Secretary Henry Paulson said Wednesday that the auto sector was "critical" but that the financial industry rescue was not designed for car companies. "Any solution has got to be leading to long-term viability" for auto companies, Paulson said.

(Source: http://news.yahoo.com/s/ap/20081113/ap_on_go_co/auto_bailout)

OBSERVATION:

Too many hands are at the wheel on the bailout package, and the Treasury Secretary is swerving all over the road to economic recovery.

REPORT:

The Washington Post reports:

In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.
Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

(Source: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/12/AR2008111202846_pf.html)

OBSERVATION:

These are ripe circumstances to plunder the U. S. Treasury and leave the next President holding the bag with the hole in it.

REPORT:

Oil prices continued to slide, to near $55 a barrel Thursday before rebounding slightly, as bad economic news from the world's largest economies heightened fears that a global downturn will slash demand for crude.

By the afternoon in Europe, light, sweet crude for December delivery was up 44 cents to $56.60 a barrel, after falling to as low as $54.67, in electronic trading on the New York Mercantile Exchange.

(Source: http://news.yahoo.com/s/ap/20081113/ap_on_bi_ge/oil_prices)


OBSERVATION:

Remember all the campaign signs that said: DRILL HERE and DRILL NOW. Drilling new offsite oil wells would help lead us to economic recovery. At $55 a barrel, the exploration and drilling is not worth it.

EDDIE GRIFFIN ANALYSIS:

Drilling explorations will not factor into the immediate economic recovery. Therefore, offshore drilling and Alaskan explorations need to be tabled. We must examine the theory behind the assumptions and actions now being taken by the government.

The Ronald Reagan Trickle Down Theory is a top-down approach to expanding the economy. Even if the theory were valid, the U. S. economy must get up and back running as soon as possible. Trickle Down from the banks to the consumers was too slow. Those who suffered the greatest financial losses in the free fall of the market were looking to be first for recuperating equity value from the government’s $700 billion infusion.

What have we purchased so far with the $700 billion? Can anyone tell me, with certainty, since the report is late and overdue and there are no overseer occupying the Oversight position as required by the legislators, what have we gotten back for our taxpayer buck?

Do we own 80% of AIG? Why leave 20% privately own and we, taxpayers, have no voting power as to who constitutes the boards and executive payer. Are we, indeed, proposing more cash infusion into the company?

One day, Treasury Secretary Paulson was planning to buy up financial institutions’ “toxic assets”. Then he scraps that plan to move on to proposing to buy up bank stocks. I can hardly hold my breath for the next change in course. I’m getting dizzy trying to watch the bouncing ball.

Somebody doesn’t know what they are doing. (Mark that as the understatement of the year).

RECOMMENDATIONS:

Since some banks are hording their capital, they need not be given another dollar of taxpayer money. And, the same applies for banks that use their government cash infusion to re-inflate their stocks and pay dividends. Bonuses and excessive compensation for poor performance should not be tolerated. Heads should roll, and white collar criminals sent to prison.

The Auto Industry needs financial help to stave off bankruptcy. Should we or shouldn’t we? The Treasury Secretary says no.

When we bailed out Wall Street, we opened the floodgates every distressed industry in the nation, the auto industry included. But here is a key sector of our economic with the largest percentage of our skill workforce. Why should they go to flipping burgers?

The financial aid to be given the auto industry should be, as with other bailout client, an investment into their stocks and restructuring of our public-private relationship. Any aid should be conditional upon technological advancement that leads us to energy independence.

NEXT: The Housing Industry.