Full Text: Governor Ted Strickland – Ohio State of the State Speech, January 26, 2010
Believing in Ohio:
Gov. Ted Strickland’s 2010 State of the State Address
January 26, 2010
(Source: Office of the Governor, State of Ohio)
Speaker Budish, President Harris and Chief Justice Moyer. President Harris and Chief Justice Moyer will both be retiring at the end of this year. This is their last State of the State as public officials and I want to thank them for their service to Ohio. Leader Batchelder and Leader Cafaro, Lt. Governor Fisher, statewide elected officials, members of the Cabinet, and a special word of thanks to Director Terry Collins who is retiring after 33 years of service to the Department of Rehabilitation and Correction, members of the General Assembly and the Supreme Court, distinguished guests, First Lady Frances Strickland, and my fellow Ohioans…
I believe in Ohio.
Morning Clips – 1/11/2010
- New York wants less salt in food – New York Times
- Now N. Korea wants peace treaty to keep talking - New York Times
- Blagojevich says ‘I’m blacker than Barack Obama … ‘ – Chicago Tribune
- Illinois’ unpaid bills reach $5 billion – Chicago Tribune
- Flare up of violence in Tijuana – L.A. Times
- A complaint in China could land you in a ‘black jail’ – L.A. Times
- AP Analysis: Stimulus has had no effect on employment – Associated Press (via The Plain Dealer)
- Heineken bids for FEMSA – MarketWatch
- Goldman Sachs Execs May be Forced to Give to Charity – CNBC
- China now world’s largest auto market – Bloomberg
Sen. Harry Reid
- Reid Apologizes for ‘Negro’ remarks – New York Times
- Op-Ed – Sandy Banks: It’s Not Reid Who Should Apologize – L.A. Times
- Dems launch offensive to save Reid – Politico
- GOP claim Lott-Reid Double Standard – Politico
Daily Graphic: 10 Years of Bank Failures
UPDATED: Includes the seven banks seized by the FDIC over the holiday weekend. Since the FDIC began publishing the failed bank list in 2000, 74% of the banks on the list were placed there during this recession.
Transcript: Joe Biden on ABC’s This Week with George Stephanopolous – July 5
Filed under: Economy, Foreign Policy, National Security, Politics
(Source: ABC News)
ABC’S “THIS WEEK WITH GEORGE STEPHANOPOULOS”
STEPHANOPOULOS: Major milestone this week here in Iraq with the American troops pulling out of the cities. And I wonder if you can put the broader American mission in context. Are we in the process of securing victory or cutting our losses to come home?
BIDEN: Securing victory. Look, the president and I laid out a plan in the campaign which was twofold. One, withdraw our troops from Iraq in a rational timetable consistent with what the Iraqis want. And the same time, leave behind a stable and secure country.
And one of the reasons I’m here, George, is to push the last end of that, which is the need for political settlement on some important issues between Arabs and Kurds and among the confessional groups. And I think we’re well on our way.
Madoff Gets 150 Years – News Roundup
Madoff Sentencing Emotional Affair – Swindler Gets Max
- Madoff Sentenced to 150 Years – CNBC
- “I don’t ask for any forgiveness” – Bloomberg
- Madoff victims scavenge for food, aluminum cans – Bloomberg
- Some victims applaud, others cry – CNN
- Madoff gets 150 years for huge Ponzi Scheme – New York Times
- Bernie Madoff to rot in jail – NY Post
Daily Graphic: FDIC Bank Seizures This Year at 45 Nearly Double Those Seized in Recession’s First Year
Five more banks were seized by the Federal Deposit Insurance Corp. over the weekend in Georgia, Minnesota and California. During the first year of the current recession – 2008 – 25 FDIC insured banks failed. Little more than halfway through 2009 this year’s total is 45.
Full Text: Fed Statement – FOMC June 24
Release Date: June 24, 2009
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Daily Graphic: Oil Well On Way to Climbing Back to $100
Go check out this story at the Financial Times … energy market may conspire to stop recovery …
Text: Geithner Testimony to Senate Appropriations Committee – Treasury’s Priorities & Financial System Update
(Source: U.S. Dept. of the Treasury)
Chairman Durbin, Ranking Member Collins, members of the Subcommittee, I appreciate the opportunity to testify before you for the first time as Treasury Secretary on the President’s Fiscal Year 2010 Budget request for the Department of the Treasury.
While we see some initial signs of economic improvement and the financial system is beginning to heal, our country faces very substantial economic and financial challenges.
President Obama and his Administration are working to meet these challenges by getting Americans back to work and getting our economy to grow again; by restoring fiscal discipline to ensure a sustained recovery, and by making the long-neglected investments in health care, energy and education needed to enhance America’s global competitiveness and produce more balanced, sustainable growth over the long-term.
Treasury’s Key Priorities
To achieve these goals, we are repairing and reforming our financial system so that it works for, not against, a recovery that serves all Americans.
To restore growth and meet our fiscal goals, we are redesigning and bolstering enforcement of our tax code so that it is both fairer and more efficient.
To advance our interests globally, we are working with other nations to promote economic recovery and financial repair, and to ensure more open markets for U.S. business.
Is An Unsettled Bond Market Telling Us Something About Prospects for Recovery?
A story out on the Associated Press wire today is the best explanation of all of the hullabaloo you hear from bond traders regarding big government programs and bailouts meant to stimulate the economy.
Most days for lunch I retire to the conference room and switch the TV on to CNBC. During those segments when they go octobox and have eight people on at once discussing the generalia of the larger economy it always seems like it’s the bond guys and the commodoties gals who are fretting while the stock traders are pumping out the positives.
AP makes it a bit more clear:
To understand how this is all connected, you have to think like a bond trader. Inflation is their enemy because it means the purchasing power of the dollars they receive when bonds eventually are paid off will be diminished. The only question is by how much.
Yields on 10-year Treasury notes, a benchmark for home mortgages and other consumers loans, jumped from 2.5 percent in March around the time of the Fed announcement to as high as 3.7 percent in recent days as signs that efforts to stabilize the financial system and economy were starting to pay off. And 30-year mortgage rates jumped more than a quarter-point this week to 5.29 percent, the highest level since December, Freddie Mac reported.
“If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity,” said economist Ed Yardeni, who runs his own investment firm. “Even worse, they could abort any necessary recovery in home sales and prices.”
Must Read: Wall Streeters Call for Reform & Say Federal Efforts to Combat Financial Crisis Inch Wide, Mile Deep
America and the world have found out the hard way how Wall Street’s fast and loose ways hurt regular folks more than the fatcats with Gulf Stream jets and golden parachutes. It’s heartening to see at least two creatures of The Street find religion and evangelize the good news of reform.
Sandy B. Lewis and William D. Cohan do just that in an op-ed piece headlined, The Economy is Still at the Brink, in Saturday’s New York Times. It’s a shame that the editors at the Times decided to run their important message in Saturday’s edition rather than Monday morning when it might have attracted more attention from the likes of CNBC or the day’s cable news cycle. Cast against the constant stream of “Everything’s Fine,” from the Obama Administration to the likes of Jim Cramer, Lewis and Cohan’s message is succinct and important to the long run of the U.S. economy.
In short, the pair are telling us that the structural issues with American high finance are still there, Bush and Obama Administration efforts to staunch the bleeding are merely fingers in Wall Street’s dike, the current system is too heavily weighted in favor of ‘insiders’ and a program of real reform is needed to restore full confidence and ensure a system that works for all levels of the economy.
Here are some take aways from their piece:
- If nearly everyone agreed six months ago that our banking system was a sham, why is every government program or action directed at preserving the old order? Lewis and Cohan say to start with compensating executives well for moving the ball, but create a system where their net worth is tied to their failures as well.
- The writers wonder why so many federal resources are going to propping up those at the top of the financial pyramid – the big banks and insurers – when recovery will come only when the bottom of the pyramid gets more confident.
- Rather than talk of the “imminent return” of the “good times” President Barack Obama should be messaging America with “living within our means.”
- For the “long term health of the market” shareholders and other investors in the big banks need to feel the “market’s wrath.” No more rescues for the banks that created the mess.
- More market discipline and fewer government bailouts – where will the federal government draw the line?
- Fewer academics should be advising the president and he should make room for more folks saavy in trading and markets – not to have the fox guard the henhouse, but to design incentives that will work to revive the capital markets.
- More transparency in the entire system – from providing the same real-time market information to citizens that’s available to Goldman Sachs or Morgan Stanley – to replacing the marketing exercise known as financialstability.gov with real information.
- Go after the bigwigs who brought this pox upon us – either through truth commissions or the same way the FBI prosecutes the mafia.
There’s a lot more detail in what Cohan and Lewis wrote – go check it out.
Goldman Sachs Oil Forecast – $90 by 2010
Just a few days after OPEC projected oil at $90 per barrel in the first quarter of 2010, Goldman Sachs today is saying essentially the same thing:
Goldman Sachs Group Inc. raised its forecast for U.S. benchmark oil by 31 percent to $85 a barrel for the end of 2009 and predicted further gains next year as demand recovers and supplies shrink.
“As the financial crisis eases, an energy shortage lies ahead,” Goldman analysts Jeffrey Currie in London and David Greely in New York said in a report e-mailed today. The bank set a 12-month price target of $90 a barrel for West Texas Intermediate crude, up from $70, and introduced a forecast of $95 for the end of 2010.
Read the Rest of the Story at Bloomberg
Look Out, Congress Has Its Back Up Over Auto Dealers …
Personally, I believe the president when he says he never wanted to be in the car business. I fully expect that the White House will unwind taxpayers from stakes in car companies long before we are completely and safely out of Uncle Sam’s positions in banks and other financial services companies.
Congress on the other hand, these guys scare me.
The great strength of Congress is that local and regional representations may be made concerning public policy. That parochial nature of the legislature is also its greatest weakness. There are some big picture things that we need members of Congress to quash their urges to consider merely on the merits of “How does this affect my district?”
Today the Senate Commerce Committee will hold hearings on U.S. auto dealers affected by right-sizing efforts underway by Chrysler and GM. Autodealers will claim something terrible has happened and Senators – especially those whose campaigns are partially funded by fat cat car salesmen – will wring their hands and agree.
If the politics stops here with a show of indignation and gnashing of teeth, we’ll be O.K. If the show gets a run in the House, then the trouble starts. Members of the House, with their ultra-parochial world view could end up with legislation attempting to reverse dealership closings by the automakers, or worse yet, extending dealers some sort of bailout. The bailouts need to remain at the macro level of the economy. All we need is 435 bailout plans for this and for that.
Reuters reports ahead of today’s hearing what the national organization representing car dealers will say:
General Motors Corp and Chrysler LLC, both bankrupt, will try on Wednesday to ease congressional concern, and in some cases anger, over their plans to slash more than 2,400 dealerships.
Members of the Senate Commerce Committee plan to grill GM Chief Executive Fritz Henderson and Chrysler President Jim Press about the lone aspect of restructuring that has triggered a broad response from Congress since dealers are nationwide.
“Rapid dealer reductions increase unemployment, threaten communities and decrease state and local tax revenue without any material corresponding decrease in an automaker’s costs,” said John McEleney, chairman of the National Automobile Dealers Association who sells vehicles made by GM, Toyota Motor Corp and Hyundai Motor Co in Iowa.
We can’t dispute what McEleney says about the economic impact of auto dealers. I’ve heard reported that the average employment of a new car dealership is around 50 to 60. The point behind the pain being felt by anyone connected with the U.S. auto industry today – from boardrooms to union halls – is that the whole system was bloated. Everyone is taking a hit. If the industry is to regain any semblance of health, everyone needs to take a hit.
Here’s hoping Congress doesn’t try to micromanage the U.S. government’s temporary investment in the auto industry. We elected the president to be the executive and too many competing interests pushing for setting aside the hard choices for interest groups will just water down the whole enterprise. What Congress should be doing is oversight. The auto dealers shouldn’t be on the Hill today, the Administration and the top management of GM should be on the Hill today explaining what this all looks like in six, twelve and 24 months.
Full Text: Fed Chairman Ben Bernanke, Testimony to Congress, June 3 – Economic Outlook
(Source: Board of Governors of the Federal Reserve)
Current economic and financial conditions and the federal budget
Before the Committee on the Budget, U.S. House of Representatives, Washington, D.C.
June 3, 2009
Chairman Spratt, Ranking Member Ryan, and other members of the Committee, I am pleased to have this opportunity to offer my views on current economic and financial conditions and on issues pertaining to the federal budget.
Economic Developments and Outlook
The U.S. economy has contracted sharply since last fall, with real gross domestic product (GDP) having dropped at an average annual rate of about 6 percent during the fourth quarter of 2008 and the first quarter of this year. Among the enormous costs of the downturn is the loss of nearly 6 million jobs since the beginning of 2008. The most recent information on the labor market–the number of new and continuing claims for unemployment insurance through late May–suggests that sizable job losses and further increases in unemployment are likely over the next few months.
OPEC Leader: Oil back to $80-90 bbl by early 2010
This isn’t surprising. OPEC producers scaled back production some time ago in the face of a supply glut brought on by the worldwide recession. OPEC’ers are basically saying, we don’t produce more until we make up for the ridiculously cheap prices over the last year or so.
From Reuters:
Oil prices could reach $80-$90 a barrel by early next year, but OPEC will not increase its output until a huge amount of over-supply has been absorbed, the group’s Secretary General said on Tuesday.
OPEC officials have been nudging up their price aspirations since Saudi Arabia’s oil minister said last week an oil price of around $75 could be achieved later this year and would not undermine a tentative global economic recovery.
“The price will go to $80-$90 maybe at the beginning of 2010,” OPEC’s Abdullah al-Badri told the Reuters Global Energy Summit.
Daily Graphic: GM Stock First Day on the Pink Sheets – GMGMQ Chart
Additional 1,000 GM Dealers to Get Axe During Bankruptcy
From McClatchy:
For the first time, Henderson said the new GM will accept 4,100 dealer contracts out of 6,000, leaving 2,100 in the old company. GM had sent letters earlier this month to 1,100 dealers, saying their contracts would be ended by late next year.
Henderson said the new GM would sign “deferred termination agreements” with most of the dealers targeted for closure, giving them up to 17 months’ notice, to ease their hardship.
The plan will allow “thousands of dealerships to survive, while providing for an orderly wind-down of those dealerships not being retained,” Henderson said. “The alternative to the exercise of sound business judgment is that the Company would liquidate — and all dealerships would cease to be GM dealerships.”
Full Text: Timothy Geithner Speech at Peking University, May 31
(Source: U.S. Dept. of the Treasury)
It is a pleasure to be back in China and to join you here today at this great university.
I first came to China, and to Peking University, in the summer of 1981 as a college student studying Mandarin. I was here with a small group of graduate and undergraduate students from across the United States. I returned the next summer to Beijing Normal University.
We studied reasonably hard, and had the privilege of working with many talented professors, some of whom are here today. As we explored this city and traveled through Eastern China, we had the chance not just to understand more about your history and your aspirations, but also to begin to see the United States through your eyes.
Full Text: White House Fact Sheet on Government’s 60% Stake in GM and Bankruptcy Plan
The Obama Administration released the following fact sheet at 10 p.m. Sunday night regarding the path forward for GM and the government as 60% owner.
Click for White House Fact Sheet on GM Bankruptcy, Government's Role
U.S. Govt Will Pony Up Another $30 Billion for a Smaller GM
It’s being reported that GM’s bankruptcy filing will occur Monday morning at 8 o’clock. MarketWatch says tonight that the feds will support the company with $30 billion through a 60 to 90 day bankruptcy period.
What I found most interesting in tonight’s story at MarketWatch was this:
As a result of this restructuring, GM will lower its break-even point to sales of 10 million cars per year. Before the restructuring, GM needed to sell about 16 million car sales a year to turn a profit.
The way I read that, GM is either downsizing by about half or cutting its costs by about that much. When you hear all the millions and billions roiling around this story, you sometimes lose the scale of things. Ten million cars per year to break even versus 16 million is a number I understand.
Of course, GM is downsizing and cutting costs. But that number brings it home — GM, for the time being will be a smaller footprint on the trail of the U.S. economy. What’s to become of that old saw, “As GM goes, so goes the nation?”
