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March 2009 Archives

Here come the broadband user fees

The newly-spun off Time Warner Cable says it’ll introduce tiered pricing for internet users in several markets. That means the more YouTube videos you upload and Hulu TV shows you download, the more you’re gonna pay.

Continue reading Here come the broadband user fees

Keeping track of the bailouts

The TARP auditor Neil Barofsky testified before Congress today and gave some numbers that feel like hard punch to the gut. He said so far, the US has committed $2.98 trillion to saving financial companies and Detroit automakers.

Continue reading Keeping track of the bailouts

What are you driving?

Since the President’s looking for ways to encourage people to buy American cars, Politico took a gander at the White House parking lot. Only 5 out of 23 cars were American.

Continue reading What are you driving?

Location, location

The place to be right now, it seems, is good old Heartland, USA. Urban planning expert Joel Kotkin calls the middle of the country a “zone of sanity” in an article on newgeography. I found it by way of NPR’s Planet Money blog.

Continue reading Location, location

Happy Poor People

I’m continuing my series of posts prompted by the question, What’s on your mind? One subject that came up was rich vs poor. Robin said she wanted to hear more stories about happy poor people. Kari asks, what is poverty really in our country?

Continue reading Happy Poor People

Morning Reading

It’s not fun times at the Sun-Times. The newspaper filed for Chapter 11 this morning. That gives Chicago the dubious distinction of being the first U.S. city served by two bankrupt newspapers. Other stories and columns of interest:

Continue reading Morning Reading

Is Skype the next Google?

Tomorrow, Skype launches its new app for the Iphone, and in May, the Blackberry gets one. I don’t know if the mobile phone companies are worried, but I’m thinking they should be.

Continue reading Is Skype the next Google?

Yes, I'd like to report spending stupidity

Uncle Sam wants you to be on the lookout for waste, fraud and mismanagement of the stimulus package. The Government Accountability Office (GAO) is asking people to contact Fraudnet with allegations of abuse in Recovery Act spending. What I’m wondering is whether the President can call this hotline: “Hi. There are several governors who aren’t doing what I asked them to. Can you please help me?”

Continue reading Yes, I'd like to report spending stupidity

That didn't take long

This morning, the President told Chrysler it needed to reach a survival deal with the Italian carmaker Fiat. And then about 7 seconds later, Chrysler said the deal was done: “We are pleased that Chrysler, Fiat and Cerberus have reached agreement on a global alliance, supported by the U.S. Treasury.”

Continue reading That didn't take long

That's more like it...?

The President is playing hardball with GM and Chrysler. His auto task force has rejected the carmakers’ turnaround plans, forced out GM’s CEO, and warned of bankruptcy if Detroit doesn’t get its act together quickly. It sounds like progress, but does the administration really intend to follow through? And why isn’t Wall Street getting this kind of treatment?

Continue reading That's more like it...?

Morning Reading

The big story of the morning is the government’s response to Detroit’s carmakers. I’ll have something on that shortly. In the meantime, here are some of the other columns and stories that caught my attention:

Continue reading Morning Reading

Look at the pretty flowers

This week I was thinking — man, I spend a lot of time in front of screens. Then today, I see this on my computer screen: A new study says Americans spend more than 8 hours a day in front of screens. TV’s, computer monitors, cellphones, Blackberries, Ipods, portable DVD’s… Here are my seven warning signs that you’re spending too much time in front of a screen:

Continue reading Look at the pretty flowers

Let 'em in or keep 'em out?

There are few issues more sensitive than immigration, especially when millions of Americans are out of work. The Wall Street Journal points out that the US government has thrown up three new barriers to legal immigration.

Continue reading Let 'em in or keep 'em out?

Morning Reading

Stocks are down this morning, presumably because short-term investors are cashing in on the recent rally. At least one positive economic indicator out today — consumer spending was up for the second straight month. Here are a few things to tickle your intellect:

Continue reading Morning Reading

Debt is the devil

If there’s one thing I’ve learned in my financial life, it’s that I hate debt. I used to find debt annoying, you know, like getting a ticket for rolling through a stop sign or stepping on a piece of gum. But that wasn’t good enough.

Continue reading Debt is the devil

Too big to... succeed?

Today’s big story is Treasury Secretary Tim Geithner’s proposal to Congress for regulating the financial system. You can read summaries of his testimony from Reuters, Marketwatch and The Washington Post. I’d like to highlight a couple things Geithner said, and a couple things he didn’t say.

Continue reading Too big to... succeed?

Monopoly needs an update

Yeah, yeah, Monopoly is digital now, with debit cards and electronic banking. There are new tokens, like a flat-screen TV. There’s even a Here and Now, World Edition for the global economy. Still, if you go bankrupt, the game’s over. WHAT? Where’s my bailout?

Continue reading Monopoly needs an update

Morning Reading

In case you hadn’t noticed, we’re in a recession. The economy shriveled up in the fourth quarter, falling at an annual rate of 6.3 percent, according to GDP numbers out this morning. That’s on par with the recession of 1982, strictly numbers-wise. The drop in corporate profits set a record at $120 billion. Now, for some actual news:

Continue reading Morning Reading

Tackling the budget

The fight is on over the President’s $3.6 trillion dollar budget for next fiscal year. Today, Congressional Democrats unveiled budget blueprints that mostly jibe with what the President wants. But there will be differences, and the battle lines are being drawn.

Continue reading Tackling the budget

Doom and gloom earplugs

I’ve spent the last hour or so in an all-staff Marketplace editorial meeting. The topic for discussion was — are we striking the proper tone with our coverage of business and the economy?

Continue reading Doom and gloom earplugs

Pay up or your car won't start

Great story in the Wall Street Journal this morning about how used-car dealers are installing remote disabling devices inside vehicles. You get behind on your loan, and you won’t be driving anywhere.

Continue reading Pay up or your car won't start

Morning Reading

Stocks are up, home sales are up, factory orders are up — there’s a trifecta of maybe-I-can-get-out-of-bed news this morning. But let’s wait before changing out of our pajamas. It’s just a blip so far. Other stories of interest:

Continue reading Morning Reading

AIG exec resigns with a bang

If you’d like to “meet” one of the AIG executives caught up in the bonus firestorm, you should read this resignation letter obtained by the New York Times. Jake DeSantis, a VP in the financial products unit, sent the letter yesterday to AIG’s CEO Edward Liddy. The two have never met.

Continue reading AIG exec resigns with a bang

New powers for Tim and Ben?

At the congressional hearing on AIG today, Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke both called for their institutions to have more control over financial companies that aren’t banks. Bernanke testified that if the government had the proper authority last September, AIG could have been put into receivership and regulators could have unwound the company slowly and protected policyholders.

Continue reading New powers for Tim and Ben?

The Big Bad Web

Today, China’s Foreign ministry said it is not afraid of the Internet, even though Google says for some reason, people in China haven’t been able to access YouTube all day.

Continue reading The Big Bad Web

The financial WMD's

Last week, I asked What’s on your mind?, in hopes of finding out what’s perplexing you, what questions aren’t being answered, what issues aren’t being covered. So I’m starting to respond to the questions that came in. The first one comes from Larry, who asks, are credit default swaps still legal?

Continue reading The financial WMD's

Recession Rock

It’s time to rock out, people. There’s nothing like a good song to make the economic blues disappear, at least for a few minutes. And this downturn is bringing out the musical genius in some people.

Kai Ryssdal forwarded me a YouTube video featured in the Freakonomics blog. It’s called “Hey, Paul Krugman,” and it’s one catchy, relevant tune about the economist and New York Times columnist. Here’s the song:

Continue reading Recession Rock

Morning Reading

I’ve read in for the morning and picked out a few articles you might be interested in:

Continue reading Morning Reading

Geithner on Marketplace

Marketplace host Kai Ryssdal just taped an interview with Treasury Secretary Tim Geithner. The interview airs this evening, but I sat in on the taping and took some notes.

Continue reading Geithner on Marketplace

JPMorgan, you will feel the wrath

JPMorgan Chase, which got $25 billion in TARP money, is going ahead with plans to buy two luxury corporate jets and build a state of the art airplane hangar to house them, according to ABC News. A spokesman for the bank says no TARP money will be used to make payments on jets or hangars. Are you people that clueless? THAT IS NOT THE POINT.

Continue reading JPMorgan, you will feel the wrath

Nano, Nano

The Indian car company, Tata Motors, launched its super-cheap, no frills car in Mumbai today. The Nano goes for $2050, and while it sounds like a perfect time to sell a car that’s half the price of a Vespa, it actually winds up being bad timing. Plus, Tata made a mistake that typifies the kind of thinking that got us into this economic mess.

Continue reading Nano, Nano

The scuttlebutt on Geithner's plan

This morning, the Treasury unveiled its plan to buy toxic assets from banks through a public-private partnership. First of all, the assets are being called “legacy” assets, instead of toxic. Nice spin. But euphemisms aside, are we just spinning our wheels?

Continue reading The scuttlebutt on Geithner's plan

Gold - a long way to go?

Gold is still trading above $950 an ounce. Crazy high, right? But it could go a lot higher. Eddy Elfenbein over at Crossing Wall Street notes that over the past few decades, gold has badly trailed stocks.

Here’s a look at gold divided by the Wilshire 5000 Total Return Index.

gold.png

Up on the week; down on the day

Here are the numbers:

Today the Dow finished down 122 points, or 1.65%. The Nasdaq dropped 26 points, or 1.7%, and the S&P 500 lost 15 points or 1.98%.

For the week, the Dow rose 0.75%; the Nasdaq gained 1.8%; and the S&P 500 gained 1.58%.

Lewis weighs in on AIG "hysteria"

I’ve been waiting all week for this. Bloomberg’s Michael Lewis consolidates the ground already staked out by Andrew Ross Sorkin of the New York Times’ Dealbook, pointing out that not paying the AIG bonuses has a number of pitfalls.

a) the vast majority of the employees at AIG had as little as you or I to do with its quasi- criminal risk taking and catastrophic losses; b) that the most- valuable of those employees can easily find work at AIG’s competitors; and c) that if the government insists on punishing those valuable employees they will understandably leave, and leave behind a company even less viable than it is, and less likely to give the taxpayer back his money.

He goes on to make a point that we debated furiously at the Marketplace morning meeting today.

…if the government can arbitrarily break contracts made by firms in which it has taken a stake no one in his right mind will ever again make a contract with one of those firms. And so all of the banks in which the government has investment will be damaged.

Not that Lewis doesn’t think we should be angry about all this. But, he says, the anger has turned everything on its head.

…now that taxpayer money is on the line the story has changed: innocent taxpayers are now being exploited by horrible Wall Street financiers. The guy who defaulted on mortgages on his six spec houses in the Nevada desert has turned himself into the citizen enraged by the bonuses paid to the AIG employees trying to sort out the mess caused by his defaults.

And here’s the thing that makes my blood run really cold - the implication that the bailout of AIG wasn’t really necessary at all.

Goldman Sachs, which received about 8 percent of the pile, or $13 billion, has claimed publicly that the money was, to them, a matter of indifference, as Goldman had hedged itself against a possible collapse of AIG — by making bets against AIG.

Would someone please get that stable door?

Fed Chair Ben Bernanke called for banking supervisors to pay “close attention” to compensation practices as they examine the soundness of financial institutions.

The Associated Press reports Bernanke made a speech to “community” banks in Phoenix, Ariz. today.

Bernanke, who will appear before Congress on the AIG flap next week, didn’t mention any companies by name in his speech. He made a fresh pitch for an overhaul of banking regulations to prevent another financial crisis like the one gripping the U.S. and other countries worldwide. Regulatory gaps need to be closed, he said. Regulators must make sure financial companies have a sufficient capital cushion against potential losses. And Congress must enact legislation so that the failure of a huge financial institution can be handled in such a way to minimize fallout to the national economy — similar to how the Federal Deposit Insurance Corp. deals with bank failures. Such “too big to fail” companies must be subject to more rigorous supervision to prevent them from taking excessive risk, Bernanke said.

Best blog headline of the day

In my humble opinion at least:

One Man’s Counterparty Credit Risk Hedge Is Another Man’s Directional Bet

Equity Private over at Dealbreaker channels Tyler Cowen. Bess Levin and the Dealbreaker crew are making my day:

Lehman Brothers Holdings Inc. has negotiated the return of thousands of Lehman-logoed knickknacks that were mistakenly transferred to Barclays Plc through the sale of the bankrupt securities firm’s brokerage unit. Tote bags, umbrellas, stress balls, Tiffany paperweights and other items now stored in closets and warehouses from New York to Chicago will be returned to Lehman and sold to pay creditors, according to a court filing yesterday.

Cash guzzlers

The US auto industry is really sucking wind, if Steven Rattner, the Treasury’s auto adviser has it right. Bloomberg quotes him saying $21.6 billion may not be enough.

“It could be considerably higher, I won’t deny that,” Rattner said, when asked whether U.S. aid sought could rise to $30 billion or $40 billion. “What they’ve asked for depends on them achieving plans that are somewhat ambitious,” Rattner said. “Like all management teams they tend to take a reasonably, slightly perhaps, optimistic view of their business. So it could be more, I can’t rule that out.”

Do the AIG bonuses matter?

John Carney of Clusterstock thinks they do. He’s talking with Kai Ryssdal today on Marketplace. They’ll chat about AIG and some other things, but here’s a taste of what John thinks.

The bonus issue is not just a distraction or a side-issue. It’s part of the larger problem, a gaudy demonstration of what is wrong with our financial rescue attempts.

Bustin' out

Things are looking up for Blockbuster. Earlier this week, on the Marketplace Morning Report, we talked about how BBI is struggling with its debt load. The company reported earnings yesterday, and said it is working on a refinancing of a $350 million credit line. Standard & Poor’s LCD reports that JP Morgan Chase and two of the company’s other banks have agreed to a refinancing. But there’s still a way to go.

The new commitments represent “65% of the expected aggregate principle amount of the extended revolving credit facility,” Blockbuster said. The company on March 11 drew the remaining $60 million under the $350 million RC as a precaution against prevailing economic conditions and ongoing uncertainty in the credit markets … The $350 million revolver, as well as the $28 million stub of its tranche A term loan, are due to mature in September.

Negotiations continue

From the New York Blotter

Paddy Hirsch here. Scott is out today and I’m doing my best to fill his shoes. My regular gig is editing Marketplace’s New York Bureau, which means I pitch all the Wall Street and New York stories at our morning meeting. It’s coming right up, and here’s what I’ll be looking for fresh angles on:

That 90% Bonus Tax

The tax was born out of popular rage against the $165 billion in bonuses paid out by AIG. How will a tax like that affect other banks’ business and retention? AIG. Do they deserve to be scourged in the same way? Will this bill be diluted in the Senate?

Dollar bounces back

The greenback took a pounding this week, when the Fed announced the ballooning of its balance sheet. But today its back up again — what’s driving it, and what difference does it make to you and I?

Rain or shine, the ratings agencies always seem to score.

Ratings agencies may have helped get us into this mess were in, but they’ll reap some big rewards from the TALF. Every bond issue made under the scheme has to be rated by at least one ratings agency. And ratings mean money. Oh yes, and bonuses.

Turbotax

Congress’ passage of the Bonus Tax Bill has incited as much blogging rage as the AIG bonuses did. OK, maybe not quite as much, but there are still more than a few hot pistols discharging out there.

Henry Blodget on Clusterstock says it’s going to ding a lot of people who really don’t deserve to be dinged. He calls it the Populist Rage Tax:

If the “TARP bonus” bill the House passed today becomes law, any of the hundreds of thousands of people who work for Citigroup, Bank of America, AIG, and nine other major US corporations will have to fork over 90 cents of every bonus dollar that puts their household income over $250,000.

What's in a name?

Back in July we had a good old fashioned run on a bank here in California, complete with lines of panicky depositors around the block. The bank? IndyMac, which was dragged down by overexposure to dodgy mortgages, and was taken over by the FDIC. But today, the Mac is back, under the name OneWest Bank. Cost to the taxpayer FDIC? A cool $10.7 billion, according to The Los Angeles Times, which reports the new bank will do business the old way. Sort of.

The company hoped to double in size over the next five years by acquiring other banks and opening new branches. It plans to specialize in so-called jumbo loans, those tailored to the expensive Southern Calfornia market and exceeding the federal loan guarantee limits. Unlike the old IndyMac Bank, OneWest intends to hold most of its loans rather than selling them to other banks or investors.

What's on your mind?

I have the day off tomorrow, so I won’t be posting to the blog. But I have a very capable replacement - Marketplace Senior Editor Paddy Hirsch. Paddy’s the mastermind behind our Whiteboard Videos, which are invaluable in terms of explaining heinously complex things like write-downs, cramdowns and the uptick rule. While I’m away, I do have something for you to think about.

Continue reading What's on your mind?

Geithner takes responsibility

In an interview about to air on CNN, Treasury Secretary Tim Geithner admits he should’ve known about the AIG bonus problem sooner. “It’s my responsibility; I was in a position where I didn’t know about those sooner. I take full responsibility for that,” he said.

Continue reading Geithner takes responsibility

This is outrageous!

Today, Wal-Mart said it’s awarding $2 billion in extra compensation to about a million hourly workers in the US. Almost half the compensation is bonus money the workers earned because Wal-Mart sales increased. What an outrage! This is unacceptable! I want names! Wait, why am I yelling?

Continue reading This is outrageous!

Hating Duke should be a priority

I’ve been so consumed with AIG and things of that nature, I forgot to fill out my NCAA tournament bracket, and now it’s too late. Even President Obama took time to fill one out. You can actually watch him making his picks at the White House.

Continue reading Hating Duke should be a priority

I'd like to agree with me

With the death of another newspaper this week, we’ve talked more about the future of journalism. In furthering that discussion, I’d like to point out The Daily Me, an article by New York Times columnist Nicholas Kristof. His conclusion about online news consumption — we only see what we want to see.

Continue reading I'd like to agree with me

Retention dissension

You can read the AIG bonus contracts right here. Congressman Barney Frank posted them this afternoon. Let me warn you, the legalese is blinding. But I’ve looked through the documents and would like to highlight some things.

Continue reading Retention dissension

Hurricane AIG

As I’ve pointed out the last couple days, I worry that the whirling dervish of AIG’s bonuses might be diverting our attention from issues more critical to the economic recovery. So I’d like to veer your attention for a moment to an article written by Eliot Spitzer.

Continue reading Hurricane AIG

Geithner may not survive

To say Treasury Secretary Tim Geithner is on the hot seat would be an understatement. The chorus calling for him to lose his job is decidedly stronger this morning. The President is still showing him public support, but Obama also just hired Citigroup’s chief economist to come to the Treasury and help Geithner.

Continue reading Geithner may not survive

AIG -- The Movie

I can only stew about AIG so many hours of the day. At some point, I have to diffuse the frustration. Last night, I channeled it into my favorite new art form.

Continue reading AIG -- The Movie

AIG has to pay it back

Tonight, the Treasury said it will make AIG repay the government the $165 million in bonuses handed out last week. In a letter to Congressional leaders, Treasury Secretary Tim Geithner said the money will be deducted from AIG’s fourth bailout, which totals $30 billion. That’s nice, but it better not stop there.

Continue reading AIG has to pay it back

Out of the ashes of newspapers

It’s a sad day in Seattle. After 146 years, The Seattle Post-Intelligencer published its last newspaper this morning. The P-I is moving entirely to the web, but there’s no guarantee of success there. Plus, you can’t wrap fish in a keyboard and a monitor.

Continue reading Out of the ashes of newspapers

I, renter

I signed the lease on a new apartment yesterday, and let me tell you, it’s a good time to be apartment hunting. My fiancee and I got a great deal on a place in a relatively pricey neighborhood because the market has turned dramatically in favor of the renter.

Continue reading I, renter

Should we let the AIG bonuses go?

I’m struggling with how we should proceed on the AIG bonus payouts. How much time, energy and money should go into stopping bonuses retroactively when the effort could be spent fixing the problem that allowed this to happen?

Continue reading Should we let the AIG bonuses go?

Sirius XM stays relevant, for now

A month ago, I wrote about the future of satellite radio or more precisely, the potential lack of a future. Well, a lot has changed since then, so I thought it might be worth another look.

Continue reading Sirius XM stays relevant, for now

The forest for the trees

Who’s handling the economic crisis better — the US or Europe? Today, New York Times columnist Paul Krugman points out the stark differences in response. His conclusion is that by doing less, Europe is asking for more trouble.

Continue reading The forest for the trees

At the corner of uncertainty and anger

It feels like we’ve reached an important crossroads in the economic recovery. Many people are fed up with the bailouts of companies like AIG. The markets are confused by the government’s “plan.” The question now is: Is there a road that leads us past this intersection of uncertainty and anger?

Continue reading At the corner of uncertainty and anger

I didn't forget about Jim Cramer

I was definitely looking forward to watching Jon Stewart maul Jim Cramer on the Daily Show last night, but I got busy having a life, and I missed it. I just watched it now, and I have to say it was a more enlightening, thoughtful discussion that I had imagined it would be.

Continue reading I didn't forget about Jim Cramer

The drinks are on me

Uh, drink recipes, I mean. Our NY reporter Jeremy Hobson forwarded a great little item in the New Yorker titled “Cocktail Recipes for the Recession.” Among my favorites — the Broke and Tan and the Long Island Iced 401(k).

Continue reading The drinks are on me

NPR clears its doorstep

NPR has decided to cancel all of its newspaper subscriptions, except for the Wall Street Journal. Romenesko posted an internal NPR memo that says staffers have until today to appeal this decision: “This is a cost saving measure company wide.”

Continue reading NPR clears its doorstep

The honeymoon may be over

Other countries and more Americans are starting to question whether Team Obama is on the right path. European countries are sick of all the US stimulus spending. China has concerns too.

Continue reading The honeymoon may be over

Those brilliant Citigroup execs

Remember the big day Citigroup’s stock had on Tuesday? It climbed 38%, a whopping 40 cents. Well, that 40 cents helped four Citigroup executives make more than $2 million. How’s that? They bought the stock last week.

Continue reading Those brilliant Citigroup execs

I like doing my taxes

I hate going to the dentist and sitting in traffic and eating beef stroganoff, but I kinda like the challenge of figuring out my taxes. I’m thinking about that because our Public Insight Network has been asking people, how confusing are your taxes?

Continue reading I like doing my taxes

Madoff does not pass Go

Bernie Madoff is headed straight for jail after pleading guilty today to the mother of all Ponzi schemes. In revoking bail, the judge said of Madoff, “he has incentive to flee, he has the means to flee, and thus he presents the risk of flight.” Madoff apologized: “I cannot adequately express how sorry I am for what I have done. I am deeply sorry and ashamed.” No matter how sorry he is, when gets to prison, he won’t have a warm reception.

Continue reading Madoff does not pass Go

For the life of me

Life insurance companies have been at the back of the bailout line, but their number might get called soon. The Wall Street Journal reports today that a dozen life insurers “have pending applications for aid from the government’s $700 billion Troubled Asset Relief Program, and the industry is expecting an answer to its request for a bank-style bailout in the coming weeks.”

Continue reading For the life of me

Which booth at the job fair?

There’s an interesting debate going on at Michael Mandel’s Businessweek blog. In a column last week, Mandel said the government should pour tons of money into healthcare and education because those are the only sectors that are hiring.

Continue reading Which booth at the job fair?

Looting the taxpayer

In the latest iteration of the government’s plan to save the financial system, Treasury Secretary Tim Geithner says the government will give money to both banks and private investors. The money is an incentive for the banks to sell their toxic assets and an incentive for the investors to buy them. Apparently, we have to pay both sides to make a deal happen.

Continue reading Looting the taxpayer

A license to blog?

No matter how bad the economy gets, at least we have the freedom to complain about it. Some Italian lawmakers want to force bloggers to register with the government.

Continue reading A license to blog?

Stimulus for sale (UPDATED)

I read a story that says small cities in California are selling their federal stimulus funds to other cities in exchange for cash. The sellers are towns that aren’t ready to start digging and paving or don’t need to. The buyers have a list of transportation projects and a bunch of shiny new shovels. Well, now, LA County’s Transportation Authority is nixing this idea.

Continue reading Stimulus for sale (UPDATED)

Is the Dow irrelevant?

Wall Street’s having its best rally of the year today, and reports like this attribute it to Citigroup. The bank claims it was profitable the first two months of the year. Say what?? But Marketplace PM will dissect that assertion. I’m here to question whether Citi is really influencing the markets and whether the Dow has become a joke.

Continue reading Is the Dow irrelevant?

I scream, you scream

I love when rival companies go at each other. It reminds me that by god, capitalism is still practiced in this country. Ben and Jerry’s is taking to task a decision by Haagen-Dazs to shrink its 16 oz ice cream carton to 14 oz. Apparently, the economy’s gotten so bad, a pint isn’t a pint anymore.

Continue reading I scream, you scream

Jon Stewart, Take 2

The battle of the comedy networks rolls on. On the Daily Show last night, Jon Stewart continued his rant against CNBC. He said no one from CNBC has agreed to come on the show, but Jim Cramer wrote an article claiming Stewart took his comments about Bear Stearns out of context. Mistake.

Continue reading Jon Stewart, Take 2

The battle over patents

Tomorrow, the Senate Judiciary committee holds a hearing on patent reform. The weeds are tall on this one. If you’re not a lawyer, and I’m not, the reading will cross your eyeballs. But it’s a big issue for many, many companies and for the economy.

Continue reading The battle over patents

By the bank sword

Is it that easy to say “let them fail?” Republican Senators Richard Shelby and John McCain said it yesterday on national TV. But saying it and doing it are two very different things.

Continue reading By the bank sword

We don't want your stinkin' money

An angry backlash is brewing at the country’s smaller, healthier banks. At least two banks, Minnesota’s TCF and Louisiana’s Iberiabank, have decided to give back the money they received from TARP. I suspect more banks will follow. They are unhappy about three things.

Continue reading We don't want your stinkin' money

A little housekeeping

Just wanted to let you know that I’ve started a blog roll, which you can find on the Scratch Pad page. It’s a list of some places around the web that I like to read and that you might enjoy as well. Also, my latest After the Bell podcast is available.

Continue reading A little housekeeping

Thinking small (business)

One of the biggest complaints people have about our bailout-stricken economy is — where’s the love for the entrepreneur? In one survey of voters last fall, more than 70% said entrepreneurship the health of the economy depends on the success of entrepreneurs.

Continue reading Thinking small (business)

The difference a year makes

One year ago this week, Marketplace was reporting on The Middle East at Work. I was in Cairo with one crew. Some of my colleagues were in Dubai. At that time, Dubai was a kind of Disneyland for white collar immigrants and a jobs machine for foreign construction workers. Not anymore.

Continue reading The difference a year makes

I can't see the transparency

A few weeks ago, Treasury Secretary Tim Geithner unveiled the Financial Stability plan, the next phase of government intervention into the financial system. Geithner announced the launch of a new website, FinancialStability.gov. Here’s what Geithner said about this website:

Continue reading I can't see the transparency

Economic Poetry Slam!

Alright, it’s time to channel your inner poet. I thought we’d try a little poetry slam about the economy. A couple things prompted this idea. Yesterday, our foreign editor John Buckley sent me the Wordsworth poem “Daffodils” in a cheer-up effort I suppose, since the news has been so crappy this week. Then, I overheard host Tess Vigeland doing a run-through of Marketplace before the show, and she accidentally pronounced the word economics like acheonomics. That was spontaneous poetry if I’ve ever heard it.

Continue reading Economic Poetry Slam!

Take that, CNBC!

I just got a chance to watch Jon Stewart’s rant against CNBC from last night. It’s an instant classic. Stewart was supposed to have CNBC analyst Rick Santelli on the show, but Rick cancelled. Santelli, of course, had a famous rant a couple weeks ago about the government’s bailout for homeowners. Channeling Santelli, Stewart shouts, “Yeah, man, Wall Street is mad as hell and they’re not gonna take it anymore! Unless by it you mean $2 trillion in their own bailout money.”

Continue reading Take that, CNBC!

The truth Hertz

GM finally acknowledged today in its annual report that its survival is in “substantial doubt.” GM said it could be forced to file for bankruptcy under various scenarios. I suppose if unicorns start buying cars, GM won’t have to file, but I’m glad to see a more rational expectation from the company. Still, the knock-on effects of a GM bankruptcy are many. Let’s start with the rental car companies.

Continue reading The truth Hertz

Is GE next?

There’s a lot of buzz about General Electric this morning. And none of it’s good. GE’s stock is down 26% over the past four days and 59% for the year. GE is the only company in top 25 of the S and P 500 with a stock price in the single digits. Bloomberg says investors are treating GE like it’s a company on the verge of failing. The concern, of course, is GE’s finance arm.

Continue reading Is GE next?

Wow, somebody doesn't like Geithner

Yesterday, I mentioned a book coming out next week called “House of Cards.” It’s about the collapse of Bear Stearns. Another excerpt was published today, and holy mackerel is it nasty. It’s a brutal attack on our current Treasury Secretary Tim Geithner by Bear Stearns CEO Jimmy Cayne. A friend of mine who used to work on Wall Street says it captures the old-school Street mentality perfectly: “It’s a knife fight.”

Continue reading Wow, somebody doesn't like Geithner

Hey, I just made a movie

I did, just now, sitting at my desk. I wrote the script, cast it and directed it. And you can make one too at the site xtranormal.com. Their motto is: If you can type, you can make movies. And I can type, so I made one. It’s called “Twits and Tweets.” Hope you enjoy it. Note: Xtranormal is still trying to figure out capacity. If the movie doesn’t play, you might have to check back in a few minutes.

AIG makes me angry too

The more I read and think about AIG, the closer I get to having a conniption. Even Bernanke said it yesterday: nothing makes him angrier than the way AIG has been run. He admitted this insurance company was operating like a hedge fund. So, as Barry Ritholtz asks this morning, why are the taxpayers making good on hedge fund trades gone bad?

Continue reading AIG makes me angry too

Drive 'em into the ground

The latest car sales numbers just came in, and they truly are bad enough to make a grown man cry. GM and Ford sales fell by half in February. At the current rate of sales, Detroit is doomed. That leaves two choices: bankruptcy or nationalization. Or both.

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Dracula, the insurance company

I felt like I was watching a bad horror movie this morning as Fed Chairman Ben Bernanke testified before Congress. Bernanke said the government was trying to “defang” AIG, so it wouldn’t be such a risk to the financial system. But he said AIG was not a “zombie” institution. So, just to be clear. AIG is not a zombie, but it is a vampire, and its thirst for more taxpayer money seemingly cannot be quenched.

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Greed and blindness

There’s an ugly, human thread that runs through all of the collapses and fraud on Wall Street. Two items I read this morning point it out clearly. The first is a excerpt from William Cohan’s forthcoming book, House of Cards — A Tale of Hubris and Wretched Excess on Wall Street. It goes inside the collapse of Bear Stearns.

Continue reading Greed and blindness

Tell me something good

Man, the bad economic news just beats you down doesn’t it? Today was especially dispiriting because… well, you know what? I’m declaring safe harbor from bad news in this blog entry!
So, if you have anything to good to share, by all means, please do so. Actually, I tooled around the web and discovered a whole movement of people trying to focus on positive economic news.

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Economists, defend thyselves!

I remember vividly my first day taking a class on Soviet politics in college. The class began in August, 1991. The Soviet Union was collapsing before our eyes. By the end of the semester, it would be gone. That first day, my professor walked into the room carrying a copy of the $60 textbook on Soviet politics I had just purchased. Then, he promptly threw it in the trash can and said, “we won’t be needing that anymore.”

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Burning down the house

Q: What happens to money when you throw it into a fire? A: The same thing that happens when you give it to AIG. Today’s 4th bailout of the insurance company is the most frightening sign yet of how out-of-control the financial system has become. Last quarter, AIG lost more money than any company has ever lost in three months — $27.9 million an hour. That means every six and a half seconds, AIG is losing the equivalent of the median household income in the US.

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America's loss is world's gain?

A new research paper suggests immigrants are leaving the US to return to their home countries — mainly because of the job market rather than restrictive immigration policies. The Kauffman Foundation funded the research, and you can download the report here. One of the researchers also has an article in today’s Businessweek. He argues that “we may not need all these workers during the deepening recession. But we will need them to help us recover from it.”

Continue reading America's loss is world's gain?

Even Buffett's getting walloped

This morning, the Dow is trading below 7,000 for the first time since October 28, 1997. It’s just got to be the bottom, right? I wouldn’t bet on it. But anyone’s who put money into the stock market is in the exact same punctured raft. And yes, I’m including that sage of stock-picking, Warren Buffett.

Continue reading Even Buffett's getting walloped


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