More Bailout News

I had meant to turn my attention to my take on President-elect Obama's cabinet picks today, but that will have to wait. In addition to today's "Realized Losses" post, I have a few more bail-out comments.

The Detroit Three have upped the ante. Now, they want $34 billion, not $25 billion. As with the TARP, each mounting request grows.

Yesterday, it was reported that vehicle sales in the US hit a 26-year low. Given population growth since 1982, that is sobering. This morning, one of the talking heads on Bubblevision actually blamed Congress for the weak sales, arguing that would-be buyers stayed out of the market in November, fearing one or more US automakers would file bankruptcy. His point was that if Congress had bailed out the auto industry at their first request, sales would have jumped.

Balderdash.

Toyota isn't asking for a handout, and its year-over-year sales decline in November was worse than Ford's. Do you suppose that perhaps consumers are scared to buy a big-ticket item because they're facing the worst economic downturn since the Great Depression? Or that none but the most stellar credits can obtain financing? To paraphrase George Stephanopolous, it's the fundamentals, stupid.

The GAO has added its concerns over the TARP to those of the oversight panel appointed to review the bail-out (wait - wasn't that the GAO's job to begin with?). Specific criticisms included lack of a plan to ensure the TARP meets its goals. Heck, other than the rather fuzzy goal of "increasing lending," I'm not sure the TARP actually has any goals. The GAO also found that Treasury needs to roughly quadruple the staff assigned to adminstering the fail-out. Oh goody, more government spending on bureaucrats' salaries.

The TARP was intended to improve banks' access to capital, among other things. Well, it's having quite the opposite effect. China's sovereign wealth fund, the China Investment Corp., is done with investing in US financials. Having already lost $6 billion on investments in Morgan Stanley and Blackstone Group, the CIC's chairman said, "The policies of the developed nations on these institutions are not clear. Until they are clear, I don't dare to invest in them."

Gee, thanks, Hank. Your waffling has inspired the same confidence among the Chinese as it has here at home.

One other tidbit on Bubblevision this morning came from a guy on the floor of the Exchange, who was commenting on this morning's numbers. Among them was the fact that US productivity grew more than expected in the third quarter. But he failed to point out that it grew at its slowest pace thus far this year, in spite of much leaner payrolls. Why? Because output is leaner still.

But his most outrageous comment was that the better-than-expected result "demonstrates that companies are being proactive and getting out in front of this crisis."

Ahem. This was a third-quarter number, and we've been in recession since last December - a recession that some of us predicted many months earlier. If that's "getting out in front of it," I'm all the more glad I'm short those companies.