Congress Pushes for Changes to Paulson Bailout Plan (Update2)

By Laura Litvan and James Rowley

HIGHLIGHTS

Sept. 24 (Bloomberg) --

• Congressional leaders are weighing new ways: to revise a $700 billion Wall Street rescue plan after it became clear that U.S. Treasury Secretary Henry Paulson's proposal faces resistance from both Democrats and Republicans.
• House and Senate Democratic leaders: huddled late yesterday to consider new strategies, including the possibility of approving only a $150 billion initial installment for the government to purchase troubled assets from financial firms. Senator Charles Schumer of New York, the No. 3 Senate Democratic leader, said Paulson wouldn't have time to use the full $700 billion before the Bush administration left office on Jan. 20.
• House Republican leaders: told Paulson that his proposal is facing resistance in their party and invited him to speak to all Republicans at a closed-door meeting this morning, said Michael Steel, a spokesman for House Republican leader John Boehner.
• Bloomberg/Los Angeles Times poll: found that by a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy.
• Senate Majority Leader Harry Reid: said after a weekly meeting of Democrats that Congress may need more time.``It's important that we get it right, not get it done fast''.

COMMENTS:

History in the Making: Watch, listen, and participate in a manner that you can even if it means sending; email, fax, letter, or telephone calls to your Senator or Representative describing what you think.
What is the Big Hurry?: For years the Federal Government was focused on free market deregulation now they want to buy out all the bad debt in the country. In the stroke of a pen transfer all the problems and fiscal burdens from what was some of the wealthiest corporate owners in the country to the United States taxpayer.
What's Wrong with this Picture: Hurry, Hurry, Hurry, if we don't do it quickly and the way Treasury is proposing something terrible will happen, " the world and the USA could see their economies begin to shrink". Please note, to date we have yet to recognize officially that US economy is in recession. Maybe it is time to revise and update some of the indicators which are suppose to guide Main Street and Wallstreet to be more reflective of current economic trends.
Status Quo: $700 billion plus dollars seems like a steep price to pay to preserve the status quo. We as a country don't have enough money to bail everyone out who has a problem loan.

Finally, who is accountable for all of this. Enron occurred and we seemed to learn very little. I suggest that we serious look at the meaning of accountability and regulations with some bite to protect society and the business world from an overly focus emphasis on blind profit.

Jim

Person Harry Reid

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Retail Sales in U.S. Unexpectedly Dropped in August (Update1)

Sept. 12 (Bloomberg) Retail Sales in U.S. Unexpectedly Dropped in August (Update1) By Timothy R. Homan

Highlights

• Retail Sales dropped in August: The 0.3 percent fall followed a 0.5 percent drop in July, the Commerce Department said today in Washington. Excluding automobiles, purchases were down 0.7 percent, the most this year.
• Producer Prices: fell 0.9 percent, more than forecast, in August. So-called core producer prices, which strip out fuel and food costs, rose 0.2 percent.
• Seamus Smyth Economist at Goldman Sachs Group Inc.: ``By July, essentially all the rebates had already been distributed, and so were no longer providing support to incomes.'' In a note to clients on Sept. 2. ``Combined with weak job growth and tight credit, consumers had no way to fund additional consumption.''
• Ford Motor Co.'s Chief Executive Officer Alan Mulally: said in a speech this week. ``I've never seen anything quite like it.'' ``Not only is the U.S. in a recession, but the rest of the world is slowing down,''
• Consumer spending: will stall from July to September, three months earlier than predicted last month, according to the median estimate of economists polled from Sept. 2 to Sept. 9. The slump will slow growth to less than half the prior quarter's pace.

Comments

White Christmas: While the Farmers Almanac is calling for a cold white Christmas, it doesn't look like we will have a green Christmas for retailers.

Deflation at the Wholesale Level: Yes, a .9 drop in the PPI August numbers appeared - - a nice start for what I believe will continue into the Winter of 2008.

Interest Rates: Look for World Wide interest rates (Including the US) to continue to sag lower due to falling International demand and De-Leveraging of International Banking & Institutional Finance Portfolios resulting in tighter credit constrains for business and consumers.

Housing Crisis: Near term look for more of the same; higher foreclosure numbers as banks learn how to process and liquidate properties quicker and prices to continue to erode. This is all part of the multi-year readjustment process.

Jim

U.S. Payrolls Fell 84,000; Jobless Rate Jumps to 6.1% (Update3)

Sept. 5 (Bloomberg) -- By Shobhana Chandra

Highlights

• Jobless Rate: jumped to 6.1 percent, from 5.7 percent the prior month raising the unemployment rate to a five- year high.
• Payrolls Fell: "by 84,000 in August, and revisions added another 58,000 to job losses for the prior two months."
• William Poole, former president of the Federal Reserve Bank of St. Louis: ``It certainly increases the probability that we really are in a recession,'' `It is a weak number, including the revisions.''
• Effects of the housing slump and the credit crisis: Can be seen in payrolls as builders fell 8,000 after decreasing 20,000. Financial firms trimmed payrolls by 3,000 for a second consecutive month.
• Today's Report: brings the total decline in payrolls so far this year to 605,000. The economy created 1.1 million jobs in 2007.

Comments

CRB Commodity Cash Index: is now trading below 500. Look for continued decline in a slow saw tooth price pattern. Why? Because global demand is dropping for goods reflecting falling demand for commodity products - - Big time. Similar to a canary in a mineshaft the commodity markets are foreshadowing troubled times ahead.

The Perfect Financial Storm is now coming Ashore
Resulting in:

* Rising unemployment.
* Falling real wages in the middle and working class sector of the economy.
* Continued Eroding Families net worth, creating downward pressure on consumer confidence.
* De-Leveraging of Banks and Large Financial Institutions resulting in tightening of domestic and International credit which will have a negative impact on consumer spending and business growth.
* Contracting profit margins along with rising bankruptcies.
* Elevated Deficient spending in Government and Private sectors will exacerbate recovery as Businesses and State, Local, and Federal Government begin to try and balance their books.

Deflation is the flip side of Inflation: Few people really understand it and what it means to their pocket book let alone the International Economy. But we will find out as this economic cycle continues to unfold.

Jim