The Arizona Sentinel

February 10, 2009

Sec of Treasury, First Time at Bat.

Filed under: My Posts — thearizonasentinel @ 7:21 pm

The Arizona Sentinel

This morning Treasury Sec Geitner laid out his rescue plan. In my view the economy will not react favorable to his plan as presented.  Let me point out the 4 points of the plan.

First ; They are gong to create a web site that will allow for the public to see where the dollars are going. for full disclosure.  Banks will have to go thru a massive internal stress test, balance sheet review, to determine if they are viable and qualified for the influx of taxpayer, borrowed, funds to be used for lending to small business, credit worthy borrowers and so on. With a emphasis on private capital.  My suspicion is that they the Sec of Treasury, will provide guarantees, to those private investors.

Second : They are going to form Public Private Partnerships.  The problem here is that no one knows how toprice these bad loans or toxic assets as they are referred to . The sub prime,no doc,stated loans or liar loans must be tended to. The justice department has a lot of work todo,. These millions of bad loans and the 19 million unoccupied homes must be tended to by getting rid of them. Period.  This particular part of the Geitner plan is fails to do this. All he is attempting to do is soften or slow down the eventually bottom.  He is attempting to address the problems that these loans have caused economies around the world.  My suspicion is that the Treasury will provide guarantees for those private dollars used to buy up these toxic assets . No way I would go near any of these overvalued assets.  They are dead weight on the economy.

Third: Expanding the working relationship with the Federal Reserve and the FDIC. Providing up to a trillion dollars , of borrowed money, “From WHO?”.  To go into the secondary market to buy asset backed consumer and small business scrutinized loans. Which is where most of the congestion is in the system.  ,,, These loans should be made by private capital,,,, CD,s Savings , etc or from SBA loans.

Forth :  He is proposing a relief plan for the housing and mortgage foreclosure problem.  BAD<BAD plan,. Meddling with the principal of these toxic loans by forbearance or forgiving amounts would lower the confidence of Americans even further than it is today.  There is no way the government can price these notes, there is no market for them,no one wants to buy them.  They must go thru the auction process or simply be destroyed.

As I have written before , just like in the 80’s when farmers were told to borrow to buy more land than they needed , which resulted in foreclosures and the corporate farms took over.  These mortgages will have to go thru the auction process.  Wall Street today poo pooed the plan. The market dropped 300 points since the speech. Reality has set in. The Federal Government is frantic over what is coming. The affect world wide by American fraud has put all Americans at risk.

Bottom line , they are going to ultimately cut,slash and burn. Until these 19 million unocupied homes are dealt with, the economy will continue to decline. They will ultimately force the banks  to absorb those assets thru the tax code. If that makes the banks insolvent , so be it. And move on.

Last night President Obama , indicated that Sec Geitner’s plan would hit it out of the park.  Not quite , he hit the ball , but its slowly rolling back toward the pitcher.




GM sets the Example for Governments

Filed under: My Posts — thearizonasentinel @ 6:37 pm
The Arizona Sentinel

Today’s announcement by General Motors sets the example for the U.S. Government , Every State , and Every County and Every City, Town and Township. And here is how I got there. General Motors Vice Chairman, Bob Lutz, announced he would be retiring at the end of 2009. Bob Lutz was the savior of Gem’s unit design,. However, like a good soldier, he recognizes that his salary would be saved if he resigns. General Motors making further economic moves, announced it would be reducing its white collar jobs from 73,000 to 63,000 or 14% of its white collar work force. General Motors recognizing that if it is going to remain a institution it must make drastic and dramatic cuts in its operation.

So Arizona , Phoenix, Navajo County and all governments around the country,. Make a note,. If your going to remain a institution, you better pay attention. Because Taxpayers have had it up to our inseams. If General Motors can cut 14% plus out of their budgets,. There is no reason , you can’t cut 30-50% out of yours. This country, is on the tip of a pinnacle. The current 10.7 trillion debt, plus the bush screw up add other 10 plus Trillion dollars in guarantees, then add this 1.3 trillion dollars of more borrowed money from china. We are tipping the scale the wrong direction.

Currently the numbers of Americans opposed to this additional debt are at 54-58 % depending on which poll you look at.

The bottom line here is , the business’s , corporations of America , pay attention to the General Motors example. We’ve a long way to go and no time to get there. The adjustment or correction we are facing is going to hurt. However, we will come out of this. I know , I’ve been through two of these. One of the issues that the auto industry will eventually come to is that they to will be reducing the retail pricing of their units,and closing of dealerships there are to many. The UAW will have to get out of the way. Example,.. I have several friends in the home construction business here and in Oklahoma. One of those recently told me that on a particular high end home recently completed but not sold , is going thru the foreclosure process. The appraisal one year ago on this particular unit was 50% higher than the one just completed. In other words, this unit has lost one half 1/2 of its value. Reality has set in .

While I’m mentioning appraisers.. I can tell you that one factor in our mess , goes directly to the appraisers,… I know first hand, that they would call the mortgage broker, or the title company and ask for the numbers on the contract,.. Go do a drive by and collect a check. At every step in the housing industry , there was fraud , and incompetence. But that is gonna get fixed.

My hats off to Rick Wagner and Bob Lutz at GM. When I heard the news this morning, I tipped my hat to them. There are 19,000 workers being laid off everyday in America. Americans are going to have to recognize that they are not to good to make beds, clean urinals, clean houses, flip burgers, and so on. Tough Love is in order here,. Illegal aliens will have to be removed from all states. Americans are going either wake up or find them selves checking dumpsters for food. Our education system has failed America,.. The Fed Education Department is a failure and must be terminated. Education must be returned to the states,.. The policy of tenor must be terminated. America’s taxpayers have been forced to throw billions of dollars to a failed system. And the result , the cost of a higher education is out of reach for millions of qualified  American students. Until that problem is fixed, millions of H1B visas will be issued to foreign workers, with the math and science skills and that American kids do not possess. Our kids sitting around playing videos games, wont cut it.

The UAW will concede or GM will be forced to leave the country to survive.  







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