December 2008

It wasn't a surprise the Fed cut interest rates today.   The surprise was in how they cut them and by how much.   They cut to 0%.   And they cut to 0.25%.   Confused?  I was too at first. We are used to cuts to nice, even numbers.   1/2 a percentage point (or 50 basis points) was expected.   We instead got more of a cut, at least 3/4th of a percentage point.    We say "at least" ... read more

Interesting story in today's New York Times about how many states' unemployment benefit funds are drying up and how the states may need - or have already asked for - help from the Federal government. One of the key passages from the article: Unemployment taxes are collected by states from employers, but the rate varies from state to state per employee. In good ... read more

Trust in Wall Street is already down given the 40% drop in the Dow, housing blowup, credit rating agency controversy and a number of other negative headlines in the past 12 months.    Now we can add old school fraud to the list. The revelation that 50 year veteran and (formerly) trusted asset advisor Bernie Madoff was engaged in one of the biggest Ponzi schemes in history shot through ... read more

Listening to UAW President Ron Gettelfinger's press conference regarding auto rescue bill failure...  It's what he is not saying that speaks volumes.   In continuing to hammer the concept that the wages of UAW workers are similar to those of the U.S.-based foreign manufacturers, he is saying nothing about the real problem: the legacy costs of pensions, benefits and health care. As the read more

Quick thoughts ahead of the show... The auto rescue plan failed in the Senate.  General Motors bonds are trading at 11-cents on the dollar, indicating a likely bankruptcy.    Congress will point fingers over who is to blame, but while that happens the bailout ball is in Michigan's court. Instead of arguing about why the bill didn't pass, Michigan should immediately cut all corporate ... read more

The economic headlines were grim this morning.  Initial jobless claims were up 573,000 while continuing claims rose to more than 4 million.  Sara Lee is the latest company to announce layoffs, joining other big names such as DuPont, Dow Chemical and many others announcing cuts just in the past week. Keep this in mind: the total number of claims just the week is more than the total number ... read more

The New York Times did an excellent story on the real story around UAW pay levels and the burden on the Detroit 3. The  number "$73 dollars an hour" has been bandied about as an average wage for UAW workers, which that union has denied, but the Times does a great job of working through the figures.    It shows the actual take-home pay levels aren't that ... read more

The government continues to remain either delusional or in denial about the situation in Detroit. Earlier today White House spokesman Joel Kaplan today laid out details about a possible automaker financial aid package.   It includes a short-term bridge loan that can be used for one of two options; the automakers become viable "now" or they go bankrupt.    The companies must also provide a ... read more

AIG continues to infect Wall Street balance sheets even after receiving billions in taxpayer money. From today's WSJ: American International Group (AIG) owes Wall Street's biggest firms about $10 billion for speculative trades that have soured, according to people familiar with the matter, underscoring the challenges the insurer faces as it seeks to recover under a U.S. government rescue ... read more

The watchword in housing is becoming "re-default." Today brings some worrisome new data from the Office of the Comptroller of the Currency.   A report indicates that the mortgage aid programs are not working as hoped.   More than half of the loans of homeowners who modified their mortgages under the Federal plan, either through reduced principal, lower rates or both, fell back into ... read more