You see while the numbers assessing the economic, financial, and monetary crises continue to escalate; and the projected costs of the remedies/fixes skyrocket (now to THIRTEEN FIGURE DIGITS – as in TRILLIONS), there is still little reason to celebrate the reaching of the bottom(s), or the beginning of any turn-around(s)! The daily news revelations are horrific; and bad as things are, we are only being carefully spoon fed the negatives in bite sized parcels that we can absorb and cope with. I mean... would the public have (swallowed and) approved the $ 5 plus TRILLION in bailouts, take-outs, guarantees, restructurings, TARPs, and capital infusions that have been “invested” in saving Wall Street investments banks, and money center commercial and retail banking TO DATE with the knowledge that at least TWO MORE TRILLION will be needed in the coming weeks or months to keep “the plates spinning on the poles” until the next trip to Uncle $ugar’s trough? I don’t TH*NK so. Besides... it is not just the financial services segment(s) - it is the auto industry, the real estate sector, state and local governments, retailing, and employment in general. Things are tough all over. A TRILLION here, a TRILLION there, pretty soon you’re talking real (or unreal) money!
The country passed the Presidential mantle and an expanded majority of Congress to the Democrats because they campaigned on making “Change that we could count on...” Their message in these times of malaise and uncertainty during the pre-election and pre-swearing in transition was that of “we can do it, we have the solution, and we will take you there.” In the span of less than six months, it is amazing how the cheer-leading message of hope and optimism has morphed into the fear-leading message(s) of direness, expediency, and cost escalation. True, not all was their fault.
The current gospels of restorative salvation materialized last week in “the do or die” form of the 2009 Stimulus Bill. This was to be a core game plan to stem the negative tsunamis of unemployment, bankruptcies, corporate (and household) retrenchments, liquidations, foreclosures, and pretty much all backtracking in general. It will do none of these. I would like to go “bullet point by bullet point” as to why I feel this is the case, but I cannot. I diligently tried to download (and read) the full 1,071 page text of the FINAL “committee reconciled bill” that was passed last week by the House of Representatives and the Senate, but it was simply not available to me. Congressmen and Senators hadn’t seen or read it before they agreed to approve the almost TRILLION dollars in expenditures! “Change we can count on...” hardly! Bipartisan support for fixing a broken system.... hardly! A “be all and end all solution to our troubles”...hardly! Nothing new here in any format!
Friday saw 4 more takeover/shutdowns of US banks. This brings the February total to 7 - with two more Fridays to go. Regulators seized 6 banks in January - making THAT the highest monthly toll since 1993. A total of 25 banks were shuttered (and re-sold) in 2008. This matched the combined total for all of 2001-2007. Home foreclosures soared and bank profits continue to tumble. More than 250,000 foreclosures were filed in January. A 10th month foreclosures exceeded a quarter million! The Geithner plan for the remaining $350 BILLION of TARP money, plus an option to expand THAT by TWO TRILLION more, failed to appease the markets at home, or at the G-7.
This week both GM and Chrysler are going to submit detailed plans of how to fix their ailing industry. These should be a real dog and pony show – make that a hybrid and SUV show. Will they be able to justify more BILLIONS in loans, government guarantees, and concessions without shifting more of their manufacturing operations abroad, or extorting more union worker contract concessions here?
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at email@example.com.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.
Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.
This story was published on February 16, 2009.