Friday, January 16, 2009

Totally Unplugged

Several news outlets reporting Circuit City is liquidating all assets: 35,000 more jobs lost as the company goes under.

It will not be the last major retailer to fold over the next several months.

[UPDATE] The deal for a buyer fell through. No takers on its assets, today was the deadline for a buyer and that deadline will pass without one, according to the story. Practical upshot, end of the company and 35k jobs down the drain.

[UPDATE 2] Although this was expected, the psychological impact of this is devastating. Bear Stearns didn't have a real impact on your Dad or brother or girlfriend. But everyone's shopped at Circuit City before. Anyone can go to the mall and see the big holes in the storefronts. Anyone can see Main Street is in serious trouble. And everyone is wondering "is my company next?"

There's going to be a lot more retail liquidations over the next few months, and the resulting empty storefronts and commercial real estate crash are going to really test the boundaries of a working depression.

I honestly don't see anything at this point that's going to prevent a 20-25% real unemployment rate by next year. A lot of people are going to be out of work and will not be able to get jobs, period.

Pardon Our Dust

So when does Bush drop his bombshell pardons? He has roughly 100 hours left before he's not President anymore. BooMan is betting late today in grand Bush Administration Friday Night News Dump style, since Monday is a bank holiday for MLK, others say Monday would make sense as Obama's inauguration would act as a perfect news dump.

After Eric Holder's statements yesterday at his hearing and the GOP offering no more than token resistance, the incoming AG is making a lot of Bushies nervous as a nitro delivery guy in a trampoline factory.
President-elect Barack Obama's nominee for attorney general said unequivocally Thursday that waterboarding is torture, and he vowed to initiate an extensive and immediate "damage assessment" to fix fundamental problems within the Justice Department that he said were caused by the Bush administration.

Eric Holder told the Senate Judiciary Committee during a marathon hearing that the incoming Obama administration is making major course corrections on the interrogations of terror suspects and many other issues that will represent a significant break from the current policies and programs.

Early on he was asked whether waterboarding, a technique that makes a prisoner believe he is in danger of drowning, constitutes torture and is illegal.

"If you look at the history of the use of that technique, " Holder replied, "we prosecuted our own soldiers for using it in Vietnam. ... Waterboarding is torture."
And while I absolutely applaud Holder's statements, I'm more convinced than ever that the pressure on Bush to issue blanket pardons some time in the next couple of days is going to be immense. He will be convinced there's enough risk of investigation and prosecution by Holder that he has to do it now. Bush really, really wants America to like him and to remember him fondly, but the fact that an overwhelming majority of Americans are glad as hell to see him go only means he has much less to lose if he does it.

I'd put it at 80% he does it. It would be higher, except it's a tacit admission of a mistake, which Bush has always been loathe to do. Still...a last-second pardon like this would explain why Holder's getting a free pass.

We'll know very soon.

Cutting The TARP Free

The Senate vote to release the second half of the TARP fund went along party lines, with Democrats securing a 52-42 vote in favor of supplying Obama with $350 billion.
Obama praised lawmakers for their quick response to the crisis and thanked senators for helping him score an important victory in the first test of his administration's ability to forge consensus. The Senate voted 52 to 42 to defeat a resolution that would have blocked the second installment of the $700 billion financial rescue program, guaranteeing that the money will flow to the Treasury soon after Obama takes office Tuesday.

The House may vote on a similar measure next week, but its defeat in the Senate makes that effort largely symbolic.

Obama acknowledged that it "wasn't an easy vote" for many senators "because of the frustration so many of us share" over how the Bush administration managed the first half of the rescue fund, known as the Troubled Asset Relief Program, or TARP.

"Restoring the economy requires that we maintain the flow of credit to families and businesses," Obama said in a statement. "So I'm gratified that a majority of the U.S. Senate, both Democrats and Republicans, voted today to give me the authority to implement the rest of the financial rescue plan in a new and responsible way."

With news of a $825 billion financial stimulus package in the House ready to go, Obama may be able to sign a number of bills and executive orders into law within the first few weeks of his term and hit the ground running.

But will it be enough? I have strong doubts. The best Obama will be able to do is soften the blow for some Americans over the next 18-24 months. He may indeed choose to start with the effective nationalization of Citigroup and Bank of America and other large financials. With the TARP money freed up now, Treasury can move on this option and can move quickly. The fact is Citigroup is on its last legs, and is planning to split the company into a good bank and a bad holding company: a prime target for nationalization. BoA has snapped up another $20 billion from TARP 2 already. More banks will follow.

And six weeks from now when the TARP funds are gone and banks are still in trouble...then what?


Related Posts with Thumbnails