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Ivan Seeking said:
This is the first time I've heard Obama give this speech...do you have a previous link? His spending makes Bush look like a piker.
Ivan Seeking said:He has said this from the beginning - that we cannot continue on the current fiscal path indefinitely. Again this gets back to people not listening. The legitimate point of contention is how reduce the deficit. Obama is following a plan that seeks to reduce debt by maximizing GDP growth. A flat growth curve with no government spending could be more damaging than massive spending now aimed at ensuring long-term growth.
Anyone who thinks the Obama team is not well aware of the threat of inflation and excessive debt, is living with their head in the sand.
Also, China cannot allow us to fail - we are too big to fail! They need our purchasing power as much as we need their loans.
Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.turbo-1 said:They were manufactured in Brazil. If US companies and contractors are hoping for subsidies for "green power", it would be nice if the taxpayers that pay for the subsidies are also the ones being employed.
http://www.renewbl.com/2009/05/04/first-turbine-blades-delivered-to-eastport-in-maine.html
The point is that at some time (not too far from now) manufacturers will be looking for some sort of federal subsidies, and they should NOT be granted unless the manufacturing (not just assembly of foreign-made components) is done in the US.mheslep said:Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.
http://www.ge-energy.com/about/press/en/2007_press/102307.htm
Yes I understand your point.turbo-1 said:The point is that at some time (not too far from now) manufacturers will be looking for some sort of federal subsidies, and they should NOT be granted unless the manufacturing (not just assembly of foreign-made components) is done in the US.
mheslep said:Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.
http://www.ge-energy.com/about/press/en/2007_press/102307.htm
http://news.yahoo.com/s/ap/20090522/ap_on_go_co/us_congress_war_fundingWASHINGTON – The Senate is backing President Barack Obama's efforts to ramp up the war in Afghanistan, granting his request for $91.3 billion for military and diplomatic operations there and in Iraq.
The spending bill, approved on an 86-3 vote Thursday night, goes to congressional negotiators to work out a compromise with a similar measure the House passed. Lawmakers expected to present a bill for Obama's signature next month.
I thought the President's plan was to now roll all the war spending into the main budget bill so that the budget reflected all spending. This is a separate bill?B. Elliott said:Just ran across this on Yahoo News.
To cover both wars, Senate passes $91.3B bill
http://news.yahoo.com/s/ap/20090522/ap_on_go_co/us_congress_war_funding
I'm wondering that as well - it doesn't seem to be under the normal Defense Appropriations bill, so I expect it may be supplemental, especially since it's mid year.mheslep said:I thought the President's plan was to now roll all the war spending into the main budget bill so that the budget reflected all spending. This is a separate bill?
However, it would appear that rather than creating new jobs, the stimulus bill simply maintains current jobs. So what happens to those jobs once the money is spent?Describing the $787 billion stimulus package, President Obama evokes the 1950s construction of the interstate system, conjuring images of highways, bridges, and orange cones. "Throughout our history, there have been times when a generation of Americans seized the chance to remake the face of this nation," he said last month. "And that's what we're doing today: building a 21st-century infrastructure." [Read Grading Obama's Stimulus Gamble]
This stems from the law's main purpose: creating jobs quickly. It prioritizes projects that will be completed within three years. Major highway construction typically takes 13 years from start to finish, reports the Federal Highway Administration.
I imagine the Stimulus funding will be largely short term. A major restructuring of the economy seems necessary.So more than three quarters of the approved highway projects' funds will go to repaving and widening roads, while less than 6 percent will pay for new construction, according to the investigative nonprofit ProPublica. Other reports show that smaller, rural projects, like bridges, often receive funding priority over those that might get more traffic, largely because they can be launched more quickly.
But as projects are chosen, it's becoming clear that the program may amount to little more than an infrastructure face-lift. Owing to the need for speed and to institutional obstacles, most stimulus transportation projects are small and localized. "Here and there, people will notice things," says Robert Poole, director of transportation policy at the libertarian Reason Foundation. He cites repaired potholes and new streetlights. "But I don't think the country as a whole will say, 'Wow, transportation is so much better,' " Poole says.
That doesn't necessarily make the spending ineffective. One quarter of major urban roads, for example, are in poor condition and would benefit from repairs. But it does mean that few projects will have sweeping effects.
The statistics are troubling.. . . .
With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.
“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”
. . . .
Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.
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. . . .
From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.
During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.
Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.
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SAN FRANCISCO (MarketWatch) -- A bankruptcy filing by General Motors Corp., which approaches a key deadline with bondholders late Tuesday, may incur more relief than distress among stock investors, some analysts say.
"My feeling is that the market will welcome a bankruptcy filing by GM," said David Joy, chief market strategist at Minneapolis-based RiverSource Investments, which manages $128 billion.
The likelihood of a bankruptcy by the nation's largest automaker, buckling under unmanageable debt levels and sinking car sales, has increased in recent weeks.
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Now's a great time to be a bankruptcy lawyer.DETROIT — The decline of General Motors may be putting thousands of auto workers and managers out of work, but it will be putting a lot of lawyers to work.
How many lawyers will end up working on G.M.’s expected bankruptcy case still is not clear, but in legal circles, the joke is that there may not be enough experienced bankruptcy lawyers available to handle the filing.
In part, that is because so many top lawyers are already running up lots of billable hours working on the Chrysler bankruptcy case, while others have been hired by the government, which is financing the way through bankruptcy for Chrysler and, presumably, G.M.
It is not just lawyers who will be busy handling a G.M. bankruptcy filing, which would be perhaps the biggest and most-watched in legal history. Because of its size and scope, the bankruptcy would be the most complicated that any American company has gone through — more complex than those of Chrysler and Lehman Brothers, two other notable bankruptcy cases now making their way through the system.
The G.M. filing, which is expected to occur by June 1 as part of a restructuring orchestrated by the federal government, will generate so much economic activity — like hotel bookings, restaurant dining and expanded office rentals — that Detroit is hoping that the case will be filed in the local bankruptcy court.
That is unlikely, however, as bankruptcy cases are typically handled in New York or Delaware, where many business are incorporated and the bankruptcy courts have more experience handling complex filings.
For law firms, big bankruptcies can be very lucrative. Weil, Gotshal & Manges, the New York firm handling the Lehman case, recently sought approval for billings for $55 million for just three months’ work from the bankruptcy court in that case. Weil Gotshal is one of the firms that will represent G.M., almost certainly ensuring tens of millions more in fees to represent the automaker.
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Rising energy prices will slow economic recovery. All the more reason to invest in domestic energy sources, including non-petroleum and renewable sources, and more efficient transportation and other products.Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don't always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year.
The 12 member countries of the OPEC cartel voted in Vienna on Thursday to maintain output at current levels rather than increase supplies in order to bring some relief to consumers, particularly in the gas-guzzling West. The OPEC oil ministers, whose countries account for about 40% of the world's entire crude-oil supply, also renewed their commitment to stick to their agreed quotas, rather than ship extra oil, as they began doing last April when several members ignored their agreed output limits. OPEC leaders, many of whose economies are heavily dependent on oil exports, have struggled to stabilize prices at a level that suits their own economic needs amid falling demand and rising supplies. Prices had rocketed to a record level of $147 a barrel last July before plummeting to $30 just five months later and beginning a new climb. (See pictures of South Africa's oil-from-coal refinery.)
Oil analysts believe OPEC's decisions on Thursday could help push oil prices even higher; oil futures on the New York Mercantile Exchange have risen 36% in just two months, to about $63.46 a barrel on Thursday. And that appears to be on track to achieve targets set by OPEC leaders. Saudi Oil Minister Ali al-Naimi - OPEC's key power player - said Wednesday that oil prices ought to rise to between $75 and $80 a barrel by the end of the year. "Demand is picking up, especially in Asia," he told reporters puffing alongside him as he jogged through the streets of Vienna. "The price rise is a function of optimism that better things are coming in the future."
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I don't believe that is necessarily the case. The US government gets equity in the 'new' GM, UAW (autoworkers) get some, and the creditors get some.misgfool said:Why is the US government handing taxpayer funds to GM creditors?
Astronuc said:The creditors (investors) are the one's who loaned the money to GM - in good faith. Some creditors are ordinary people who invested for a reasonable return, and in some cases, the bonds represent their retirement.
Those same creditors/investors are the one's who will finance GM in the future, and perhaps buy GM products, so the the government can recover the taxpayers investment. If the plan fails, and people desert the new GM, the government will lose some of the money already invested.
While some might be motivated by greed, many other people simply want to save their money and loan it out at a reasonable interest rate so that they will have more money in future when they cannot work as hard. I heard of one bond holder who had pretty much invested his life savings in GM - that was his his retirement - and he stands to lose much of it.misgfool said:I understand that, but shouldn't there be a risk in investing? If GM becomes viable in the future, it will attract money since eventually greed will overcome fear.
Astronuc said:While some might be motivated by greed, many other people simply want to save their money and loan it out at a reasonable interest rate so that they will have more money in future when they cannot work as hard. I heard of one bond holder who had pretty much invested his life savings in GM - that was his his retirement - and he stands to lose much of it.
How does one define prudent? If the bonds were graded AAA or AA or whatever, that would be considered prudent. On the other hand, perhaps the ratings agencies didn't properly grade the bonds because they didn't perform due diligence.misgfool said:Is that fair towards those who have been more prudent in their investments?
misgfool said:Is that fair towards those who have been more prudent in their investments?
The bonds issued by Fannie and Freddie were widely thought to carry an implicit U.S. government guarantee. Even though there was no official guarantee, Washington's failure to come to the rescue could destroy confidence in government debt, and, by association, other financial paper as well.
Consider investors in Fannie and Freddie bonds. While the U.S. government never officially promised to bail them out, it did create a special agency, the Office of Federal Housing Enterprise Oversight, which was to assess their strength in an annual report. But this agency never even acknowledged there was a housing bubble. Government leaders gave no warnings. So can we really say that investors must suffer the full consequences of any losses? How can this be fair?
With General Motors about to follow Chrysler into bankruptcy, the nation’s ability to bounce back from the steep recession is being hobbled.
. . . .
Even now, in its diminished state — representing only 11.5 percent of America’s output, down from 20 percent in 1980 — manufacturing could have a bigger impact than its size suggests, because of its tendency to respond quickly.
“Back then, it supercharged the recovery,” said Mark Zandi, chief economist at Moody’s Economy.com, “and today it could have played a decisive role if G.M. and Chrysler had remained viable companies. Without their contribution, the economy simply can’t recover as quickly as it has in the past.”
Those two giants [GM & Chrysler] alone accounted for 10 percent of the upturn after the early 1980s recession, Mr. Zandi said, but this time they will be a drain on growth rather than a contributor to it.
. . . .
“No other industry is stepping up to the plate to replace the Big Three and their suppliers as engines of growth,” said Nigel Gault, chief domestic economist for I.H.S. Global Insight, “and without the kick they once provided — resuming production and recalling workers faster than others — the recovery will be slow in coming and muted at best.”
Chrysler’s decision to shut down its factories and G.M.’s move to idle most of its locations this summer will inevitably have a domino effect on the nation’s 4,000 suppliers, most likely undoing the fledgling improvement that forecasters see in slightly stronger retail sales and consumer confidence.
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The damage already done by the auto industry is sobering. Of the 5.7 million jobs lost since this recession began 18 months ago, 1.6 million were in manufacturing, and 289,000 of those were in motor vehicles, split almost evenly between the assemblers and their supplier networks.
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$90 billion in the hole - now down the drain!GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
GM shares fell as low as 27 cents in Monday morning trading, their lowest price in the company's 100-year history. The News Corp. unit that oversees the Dow Jones industrial average said GM will be kicked out of the index on June 8 and be replaced by Cisco Systems Inc. The index's rules prohibit it from including companies that have filed for bankruptcy.
Astronuc said:http://news.yahoo.com/s/ap/us_automakers
GM is the largest manufacturing failure in history and its impact I suspect is much different than the banks. The earlier bank failures ( e.g. Lehman) were larger only in the obligations on their books.Yahoo News said:GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
turbo-1 said:Tough times in Maine's industrial sector. Wausau Paper had shut down one if its paper machines in Jay last year, and yesterday, they shut down the remaining machine. The equipment is being prepared for long-term storage in the hopes that it can be sold eventually.
I am slightly suspicious of this decision. The company, VmWare, is a virtual operating system company that has been changing the nature of big server count data centers. That is, where there previously was ten hardware servers and ten Intel CPUs, now there's one or two servers hosting ten virtual servers. That is a big win for the user, but at some level it must be threatening Intel sales. Now Intel has much more control of the market.Astronuc said:Intel is moving ahead
Intel Buys a Software Company to Extend Chip Market
http://www.nytimes.com/2009/06/05/technology/companies/05chip.html
I listened to an interview with Intel's CEO a couple of months ago. He talked about a commitment to invest several $billion this year. So companies like Intel will maintain the economy and drive the recovery.
Rep Frank is not new to pulling the strings of the government funded business; he also intervened some months w/ Sec. Geitner to save a Mass. bank by redirecting some TARP funds.The latest self-appointed car czar is Massachusetts's own Barney Frank, who intervened this week to save a GM distribution center in Norton, Mass. The warehouse, which employs some 90 people, was slated for closure by the end of the year under GM's restructuring plan. But Mr. Frank put in a call to GM CEO Fritz Henderson and secured a new lease on life for the facility.
Mr. Frank's spokesman, Harry Gural, says the Congressman discussed, among other things, "the facility's value to GM." We'd have thought that would be something that GM might have considered when it decided to close the Norton center, but then a call from one of the most powerful Members of Congress can certainly cause a ward of the state to reconsider what qualifies as "value." A CEO who refuses the offer can soon find himself testifying under oath before Congress, or answering questions from the Government Accountability Office about his expense account. To that point, Mr. Henderson spent Wednesday with Chrysler President Jim Press being castigated by the Senate Commerce Committee for their plans to close 3,400 car dealerships. Every Senator wants dealerships closed in someone else's state.
As Mr. Gural put it, Mr. Frank was "just doing what any other Congressman would do" in looking out for the interests of his constituents. And that's the problem with industrial policy and government control of American business. In Washington, every Member of Congress now thinks he's a czar who can call ol' Fritz and tell him how to make cars.
That just seems plain wrong. I imagine one could make a case for coercion.mheslep said:We're getting some early anecdotal experience on just who is going to be running the car companies, despite administration claims to the contrary:
http://online.wsj.com/article/SB124416281882387463.html
Rep Frank is not new to pulling the strings of the government funded business; he also intervened some months w/ Sec. Geitner to save a Mass. bank by redirecting some TARP funds.
-This on top of the recent conversation the President had with the Mayor of Detroit to assure him that GM would not move its headquarters elsewhere in Michigan as GM had be discussing.
It somehow seems to me that most earmarks for things like transportation in specific districts violate the spirit of the intent of the authors of the Constitution. I wonder if they foresaw favoritism in the form of 'earmarks'.No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.