Concern about TARP and Citigroup repayment

There is growing evidence that our country is on a path of having to take a 'fall' because of what is going on with the way money is being managed.

The inspector general who oversees TARP estimates the total cost of Wall Street bailouts could eventually reach $23.7 trillion. And I thought we were only talking hundreds of billions. And look at the fact that the $200B savings that Geithner pointed out is going to be spent versus saving to apply toward this huge liability.

Then today I found out that Citigroup who is repaying $25B of their TARP loan is going to get a giant tax break of $38B. Companies are allowed to offset their losses against their gains, but in this situation, the government sale of 34% stake in Citi and Citi's share sales qualify as a change in ownership. What is totally disheartening is that the news reported the repayment and excluded what the 'government intentionally set up' that requires the IRS to allow it. This may be legal but is totally unethical. Wouldn't you repay your debts if you were going to receive an even bigger monetary gift by doing so? This kind of behavior crosses all lines of political parties. It doesn't matter who is in office. Money always affects the leaders' judgment by forcing action that always keeps it first versus looking out for the welfare and common good of the people. Yet at this time in our history, we have gotten the better of ourselves, because we have weakened our ability to maneuver due to the mountainous debt. Debt buries at all levels when it gets unmanageable. It appears to me that handwriting is on the wall and it is not in the distant future.

One final comment, I saw Time chose Bernanke as the person of the year. I can only laugh since as you know I think he should be replaced by allowing the banks to lead the way in telling the government what to do through intimidation of the financial system collapsing. I keep remembering what Thomas Jefferson said about the banks being too powerful. I would rather this system fail and we start over than imprison each of us, our children, our grandchildren, our great grandchildren, and future offspring indefinitely.

Respecting the Bear, CIT, Government Saving

The bear hasn't gone into hibernation yet as seen with the daily emotional up and down of the markets, along with the unstable foundation with home sales and jobs. Investors are being externally driven which implies there is no solid foundation within themselves that says their investments are sound and to hang in there through the rough waters that are indefinite.

Cit filed for bankruptcy Sunday, the largest company who provides loans to small and medium companies. The question is will the funding continue. It is critical now since the big banks are not lending to this part of the sector that provides the most job opportunities.

The 500 largest non-financial companies are conserving more cash than in the last 40 years, to cover daily business costs since the credit markets stopped lending in 2008. This is a positive move and an example for the rest of us to consider. The federal government needs to learn about 'saving' energy. Their actions reflect the opposite, spending freely while their words say we have to 'cut the deficit.' This collective conflict does not allow for innovation, responsible behavior, or long-term planning for the highest good. Good business means having a goal, defining what resources are required and a plan showing how to get there. The implementation of the plan and the ability to be flexible when the unseen affects the plan are keys to success. The government is trying to micro-manage every area like healthcare, the financial sector and so on. Until it learns how to manage in a business-like manner, the primrose path beckons.

China and the Long Term View

I decided to write the next blog when the market went up, and today was a big uptick.  It is surprising the Citi is being credit for this, along with the intention of reinstating the uptick rule when shorting stocks.  I think today's gain is still the bear working, since these fluctuations are normal.  

My main focus for this blog is China.  Several recent significant events have occurred:

*  Ms. Clinton's visit to China did not include any discussion of 'human rights.'  The focus was on money.

*  The Dalai Lama  has publicly said how his people have been through 'hell on earth' under Chinese rule.

*  China's military said that our Navy 'broke the law' when they circled our ship with theirs.

China has a surplus of cash as we continue to dig a deeper hole of debt.  They are becoming stronger financially through our actions of borrowing. I am concerned that we may be 'naive' in thinking that China will continue to act as in the past since we have been the major buyer of their products.  With both Congress and the President being of the same party, I am concerned there is no one standing back and looking beyond the immediate to see the potential of what lies on the horizon as a result of our indiscriminate spending.  Yes, the Republicans are speaking, yet I think they are basically ineffective in  promoting a conservative agenda.  When I look at the other major players (countries), they are all weakened from lower oil prices, their debt, and the continue fallout of the banks from bad loans.

Housing values are expected to continue to fall for the rest of this year, knocking another 20% or more.   This will keep the current bank challenge in the forefront.  We will reach the 'law of diminishing returns' and then the question is 'what's next?'

Destiny?

Interesting that the DOW is getting ready to touch 7000.  Citi bank will have to be nationalized. The government doesn't want to call it that, but if it is going to buy 40% of the shares, then what would you call it?  Words are especially powerful now, and if the government shows any sign of changing direction with the banking sector, it will be the leader in pulling the DOW down to levels we haven't experienced in this lifetime.

I saw an interesting statistic.  100 years ago, 90% of the workers were self-employed.  Today, 90% work for a company or organization.  Imagine the ramifications of this kind of change, and 100 years is really a short period of time.

I have been traveling since February 12, visiting my children and their families.  I'm currently in Portland.  In experiencing this city almost yearly, this is the first time I have been here with no rain except this morning.  The norm is rain daily.  

If you are curious about the title, I selected it to emphasize my belief that what we are experiencing with the world is cyclical in nature, as we are individually, and also part of the great pattern set in place, beyond our limited thinking, to help all of us evolve.

What is the Federal Government Debt Limit?

The dow has now risen above the 8,000 mark which is my measurement stick.  Below that is very disconcerting, as I have mentioned in my previous blogs.  Just naming Obama's  Treasury Secretary to replace Paulson and rescuing Citi, the biggest bank in the U.S.  has allowed a huge rebound in the market that is amazing at best because there is no substance to these two, only a psychological 'feeling good.'

I was going to write about the 'moral decay' in this country, but decided that the time isn't right.  Keep in mind that we as a country have exceeded the 200 year measurement time when governments collapse.  So we are climbing against what is historically normal.  

Today, on CNN, I heard where 18 U.S. soldiers have died because of faulty electrical wiring when they were showering.  The company is RBK, and the consensus is that their contract is in the multli-billions and too big to cancel.  If I was a mother of one of these lost soldiers due to this ineptness of a corporation, I would let no road go unturned in getting justice.  This is part of our moral decay when we let what the government decide 'too big' to fail, like Citi this past week-end.  

When you look at the big picture, we are at least $7,500,000,000,000 in additional debt due to the 'rescue' that our fed. and president think we have to do.  I am furious that we would burden our kids and grandkids and beyond given that our own behavior created it.  After talking to a friend today about what is the limit of the United States in going into debt, he said it depends on our capability of paying the interest on these trillions.  So I am now monitoring what we are paying on the national debt in interest and how fast it grows.