Monday, February 16, 2009

Notes: Everybody wants to rule the world

Monday's notes: what's happening in the markets and the world.

1. Bill Fleckenstein - "Treasury's strategy: 'what elephant?'".

Fleck is muy skeptical of the government's plan to take over the banking sector's bad assets. As he sees it, "the real sticking point continues to be discovering the prices at which these various assets can be sold", a point the Treasury seems unwilling to acknowledge.

He also calls attention to the Fed's role in pumping up the credit/real-estate bubble that led us to this inevitable bust and its aftermath.

Fleckenstein feels that public attention should be centered on this fact, and that a serious discussion about the Federal Reserve's role in our monetary system should take place, so that our country might put itself and its future on a sounder footing. (H/T: Bear Mountain Bull).

2. Obama nominates Geithner, Summers to head auto team.

So when I looked at Google News this morning and saw Timothy Geithner's head hovering next to a headline about Detroit's troubled auto industry, I had to ask myself, "why is the Treasury Secretary now involved in reorganizing the car industry?".

Bloomberg had the reminder note:

"After Congress failed to approve a bailout for the automakers, former President George W. Bush’s administration authorized loans Dec. 19. That effectively made the Treasury secretary the car czar, with responsibility for making sure the companies meet deadlines and authority to revoke the loans.

Geithner will remain Obama’s official “designee” to oversee the restructuring. The Treasury secretary will have authority to recall the aid if the automakers fail to show they have a plan by March 31 to become profitable."

The one thing about this that really makes me laugh more than anything is the idea of Congress and the US government judging a bankrupt industry's (or any industry's) "business plan" and overseeing spending limits. Mm-hmm, they should be really good at that...

3. Hugo Chavez for life? - CSMonitor.

"With a clear popular victory Sunday in his bid to end term limits, Venezuelan President Hugo Chávez has injected new vigor into his controversial "21st-century socialism" movement and secured his role at a time when the economy is starting to falter.

His win has roused consternation among his critics, who accuse him of single-handedly focusing on maintaining power, and dashed the hopes of a political opposition that had gained ground in recent elections and were beginning to focus beyond 2013, when Mr. Chávez would have had to step down had he lost the referendum. "

Well done, Venezuela. The country has just legitimized (through the blessed democratic process) a potential path to lifelong dictatorship for Chavez.

And the best part is that further down in the article, we see the old canard about the wonders of democracy representing "the people's will". Tell that to his rivals.

4. Bill Clinton: I should have better regulated derivatives - CNN.

Thoughts on this one?

5. Trichet cautions against laying the ground for future crises.

"European Central Bank President Jean- Claude Trichet said policy makers must ensure that their response to the global recession doesn’t lay the ground for future crises.

“It is of the utmost importance that policy makers do not merely focus on short-term solutions and instead adopt a longer- term perspective, with the objective of ensuring a sustained recovery,” Trichet said in a speech at the European Parliament in Brussels today. “We also need to make sure that our decisions today do not lay the ground for similar disorder in the future.”"

See the video clip attached in this Bloomberg story.