TGIF

So The Ostrich cuts rates in Europe ... about six months too late. That means Europe's recovery will be slower. And then one of their big mouths says a "pause" now, so Europe's base lending rate will be 2.5%, well over other nations' base rates. That was disappointing. And the EU is still interferes with nations' bank recapitalization efforts. While people everywhere look for errors, mistakes and reforms, Europe obviously need to reform the EU and the ECB. I suggest copying the US institutions. Of course, they won't do that, even though the US model has worked well for over 200 years, far longer than any other democratic republic.

The damage down by the autumn panic is unfolding now. No bad news should be a surprise.

But we know that huge, positive cash flow benefits are flowing into the public now: lower oil prices, low interest rates on home equity loans, and now mortgage refinancing cash flow. The profit margin on bank loans is colossal now. More jawboning is necessary to make them lend aggressively. JPM seems to get the picture, announcing more lending programs. Other banks need to follow.

A dangerous game of chicken is occurring in DC. Congress seems to be unwilling to aid the auto makers even though huge numbers of jobs are at stake. And some in Congress seems unwilling to give Hank the Tank the second tranche of the TARP. Maybe they want maximum pain to occur just before Obama takes over. That's possible, as desire for power is the #1 focus of politicians.

Auto Industry

I favor a very large, debtor-in-possession financing for the auto industry. Bankruptcy is needed to break all those contracts that have been suffocating the industry for decades. But the technology and manufacturing base is very important and needs to be saved from liquidation.

Actions

Doing nothing. I want to know what Congress will do. Their delay in passing the Paulson plan caused the late September - October panic, in my opinion.

Word of the Day

"Cadge" - verb [$10]; a Mencken word; the 'a' is short as in 'cat'.
Cadge means 1. (transitive) get or seek by begging; 2. (intransitive) beg.
Sentence: The spectacle of the CEOs and the UAW boss of the auto industry cadging for loans from politicians was quite greasy, as they have operated grossly inefficient operations for dacades. One need only look at the "jobs bank" where people are well paid for not working.