Economic Recovery

...Recovering this economy is expensive. ..

Who is doing this 'recovering'? Where?

Goldman Sachs, JPMorgan Chase, Bank of America, Citibank - they should be able to pay bonuses this year.

Meanwhile - Treasury cancels plans to hire cartoonist
http://news.yahoo.com/s/ap/us_treasury_cartoonist

They needed a senator to question the merit of the idea?

Afterall - there is Dilbert!

Wow. I didn't realize they were doing so well. Sachs and Chase stocks look like where they should be, if you chop out that big 05-08 bubble. If anyone had asked me if I'd invest in those companies six months ago, I'd have laughed in their faces.

. . .
The company spent the last week appealing unsuccessfully to Washington regulators for more financial help while scrambling to try to raise as much as $3 billion from investors. Still, ratings agencies slashed its debt and its stock was in a virtual free fall. If CIT does not reach a deal by Monday morning, it plans to file for Chapter 11 protection as soon as Monday afternoon, people briefed on the situation said.

Under the terms of the proposal, CIT would receive $3 billion from some of its main bondholders. The money is meant to give the company several weeks to set up an exchange of bondholders’ debt for equity, alleviating some of the pressure from billions of dollars in obligations.

CIT’s board approved the proposal at a meeting Sunday evening.

The plan was formed after days of round-the-clock negotiations between CIT, its financial and legal advisers and a group of large bondholders. Jeffrey Peek, CIT’s chief executive and the architect of the 101-year-old company’s aggressive yet ill-timed push into subprime mortgages and student loans, was actively involved in the financing talks, according to people briefed on the matter.
. . . .
It is also uncertain how much — if any — of the $2.33 billion in taxpayer money that CIT received late last year will be recouped.

If the plan does not succeed, CIT, with $75 billion in assets, could be the biggest failure of a financial institution since the collapse of Lehman Brothers last fall. Since then, federal regulators have been pumping billions of dollars into numerous banks across the country to prop them up and create some stability in the nation’s financial system.
. . . .

Under the terms of the deal, CIT would receive $3 billion from some of its main bondholders, though at an initial rate of about 10.5 percent. The money, arranged by Barclays Capital, is meant to give the company several weeks to set up an exchange of bondholders' debt for equity, alleviating some of the pressure from billions of dollars in obligations.

Meanwhile - CIT to Avert Bankruptcy With $3 Billion Loan
http://dealbook.blogs.nytimes.com/20...rt-bankruptcy/

The DJIA just broke 9000.

10:14 AM ET Jul 23, 2009
SAN FRANCISCO (MarketWatch) -- Ford Motor Co. shares jumped 8% Thursday after the automaker said it swung to a surprise second-quarter profit on the back of a lighter debt load, market-share gains and vastly improved cash flow.

And what's this? A profitable auto maker?

Who's been buying Fords?

Ford, AT&T and EBay all look better than expected. Throw in some good home resales data and an apparently encouraging weekly jobs figure and the corks are popping all over Wall Street.

It could be a jobless recovery
http://marketplace.publicradio.org/d...less_recovery/

Warren E. Buffett showed again why he is known as one of the world's best investors, thanks in part to another prominent investor, Goldman Sachs.

Mr. Buffett's stake in Goldman is now worth $9.1 billion, or about $4.1 billion more than what he paid 10 months ago, according to an analysis by Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.

According to Mr. Wilson's calculations, Mr. Buffett would realize an annualized return of about 111 percent if he sold his Goldman stake, which is held by his conglomerate, Berkshire Hathaway.

In comparison, the federal government received a 23 percent annualized return for its Goldman investment, the bank said after it agreed on Wednesday to pay $1.1 billion to settle warrants the Treasury Department received after injecting $10 billion into the bank in November.

. . . .
Goldman turned to Mr. Buffett in September, seeking a cash injection. In return, Mr. Buffett negotiated what was considered even then to be very favorable terms.

Berkshire Hathaway received perpetual preferred shares in Goldman, which pay a 10 percent annual dividend, or $500 million a year. Berkshire Hathaway also received warrants to buy $5 billion in common stock at a strike price of $115 a share, which could be used at any time within five years of the initial investment.
. . . .

New homes sales surged in June to their highest rate this year, according to Commerce Department data released Monday, another sign that the housing market could be starting to stabilize even as prices continue to stumble.

Sales rose 11 percent over the previous month to an annualized rate of 384,000. That was far better than analysts were expecting and the largest monthly gain in nine years...

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

I wonder how the Reps will try to put a negative spin on that one!

[Being that this is a physics forum, I should have said spin-down.]

I think its great, and expect most will agree. But if the Dems think this is really that positive, then why not cancel the ~$700Billion left outstanding on the stimulus? Can we agree in the future, again if this is indeed a recovery, that the criticism of the stimulus - (mainly that it takes too long to get it out there) was valid and lets not resort to fiscal stimulus any more.

Sure, let's undermine the plan that is working.

Then you can complain about jobs.

What's your rationale that 'the plan' is working? And is the economy still lousy or not? Which is it?

Edit: When is fair to complain about 9.5% unemployment and jobs?

The plan was designed to address the housing market as well as jobs and future growth. Of course the intial reaction was to prevent the global economy from collapsing, which it did by stabilizing the credit markets.

Clearly the economy is improving, and we expect to see it expand next quarter. It is even being announced on many fronts that the recession is over.

Please do! The Republicans obviously left things a bigger disaster than was realized. Once the stimulus money is rolling out in bulk, the job situation should begin to improve.

Of course the Reps would have loved nothing more than to see the money being spent hurriedly and frivolously.

Ok, if you grant that the 'clearly the economy is improving', and that the stimulus largely hasn't been executed yet, then you agree it can not take credit for improving the economy? Only the TARP/bank bailouts could logically claim that, or other self correction in the economy.