AIG Bonuses
Stocks were up most of the day, but ended even. As did bonds. In fact, bonds have been going sideways for the past month.
The Dollar went sideways too, and oil and gasoline went up slightly.
Gold fell $8 today.
In the news today…..
AIG Bonuses – that’s the big news today. AIG is paying its executives $165M in bonuses yesterday, and no one appears to be able to do anything about it, but:
- President Obama was outraged, and told Geithner to do everything “legal” to stop the bonuses. The President’s rhetoric was just that – rhetoric – as he knew the legal implications before he made his statement.
- Guess what Geithner can do??? Nothing – it’s legal.
- AIG is 86% owned by the US Government – so why can’t we do anything about it??
- CONGRESS failed to put any conditions on its TARP money bill it passed so long ago. Do you remember the first PANIC bill that no one had time to even think about, let alone read?? Well, there were no conditions on the money being lent out. The real culprit is CONGRESS again. (Remember to throw all the bums out at the next election – independent of party.)
- AIG reported the $90B of the TARP money it received went to banks to pay off those BAD insurance policies that AIG wrote. They went to Goldman Sachs and 3 banks outside of the US. Say goodbye to your tax dollars. Those $90B are GONE.
FED Chairman, Bernanke, stated again last night that the US economy will stabilize this year, and grow next year PROVIDING the banking system gets the credit system going. That’s a big proviso given the lack of progress so far.
Factory Output was down 1.4%, and this is not good for the future of the economy. US factories are currently at 67.4% capacity – a low number not reached since 1948.
Wells Fargo Bank chairman blames TARP for its retroactive conditions that is holding back his bank’s ability to get outside private capital. If you remember, Wells Fargo was strong armed into taking TARP money, so you didn’t know who really needed it. Well I think we know some of the culprits who really needed it, and Wells Fargo wasn’t one of them. Wells Fargo missed an opportunity and has slashed its dividend to conserve capital. This is a great example of unintended consequences of US Government actions. There will be many more. The world isn’t perfect, and it’s important to think ahead of things that can happen when the government makes politically pleasing choices.
Here are the last numbers for the past 2 days (first delta is today/second delta was yesterday):
Dow Jones 30 Industrial – 7217 (down 7 points)
10 Year Treasury Bond – 2.95% (down 0.07%)
Euro – $1.2964
Gold – $922 (down $8)
Oil – $47.35 (up $1.10)
Gasoline – $1.37 (up $0.01)
