An economic tune
Merle Hazard, a country singer who seems to specialize in economics, sings a little ditty about whether the current recession will veer toward inflation or deflation.
“Will we be Zimbabwe or will we be Japan?” he asks.
(hat tip to Edmond money manager Nick Massey)
Don Mecoy
Business Writer
Recession: It’s what’s for dinner
With consumers crunched by this long recession, certain types of dining are gaining favor while others are suffering. Fast Company notes that people are buying peanut butter and jelly (someone in my family probably eats a PBJ samwich at least once a day), easy-to-prepare dishes (I’m thinking ramen noodles — they got me through college and I still like them), and coffee.
On the downside are restaurants (except for the “fast casual” sector — think Subway), organic food (just a way to save a few bucks) and movie theater concessions.
From Fast Company:
Upscale restaurants and gourmet labels may be hurting these days, but mega-manufacturers with a variety of brands (like Kraft and Nestle), along with club stores like Costco, are benefiting from the recession as at-home dining is on the rise.
(hat tip to MKOKC)
Don Mecoy
Business Writer
2001 AIG commercial
When you look up “irony” on the Internet, this is what should appear.
Don Mecoy
Business Writer
Keith Geary interview
I introduce Keith Geary as a smart guy in this interview, and I stand behind that. Geary, CEO of Capital West Securities in Oklahoma City, discusses some investing ideas, including his belief that stock prices may have bottomed out.
By the way, this was the second interview of Geary. The first, taped just before this one, was plagued by technical difficulties. (In fact, some of the problems continued — you might want to turn down the volume before starting this presentation) In addition to being intelligent, Geary is a good sport. He walked right back in the studio for take two.
Don Mecoy
Business Writer
FDIC collected no premiums from 1996 to 2006
The Boston Globe reports that the FDIC, which recently boosted banks’ fees to replenish its fund that insures our deposits, collected no premiums from most banks from 1996 to 2006. Because bank failures had become rare, the FDIC with Congressional approval suspended the collection of insurance premiums paid by many banks.
But a recent spate of bank failures, especially large ones such as Washington Mutual and IndyMac, have seriously depleted the insurance fund. No Oklahoma banks have failed in recent years.
Roger Beverage, president of the Oklahoma Bankers Association, reacted with anger to the new FDIC assessment of 20 basis points (0.20 percent) of every dollar of deposits.
“To say the least, this is outrageous,” Beverage said. “Our member banks have played by the rules, done things appropriately, made a profit, served their communities, and stood by while the Wall Street gang has gotten away with murder. They’ve stood by patiently, in an effort to be supportive of their regulators and their government while their reputations have been trashed by the media and the general public has increasingly lost confidence in their profession. They’ve been painted with the ‘bad guy’ brush, and now they get to pay for the sins of the clowns that took the banking system in the United States to the edge of the abyss? I mean, this is crazy.”
“As long as we’re on a spending spree in Congress and ‘bailing’ everyone else out, how about bailing out the good guys, the Oklahoma banks and the banks around the country that did it right, were honorable, played by the rules and stuck to their mission of trying to help their customers and their communities? Why are these guys the ones that are being punished and being painted as the bad guys? This is just incredible. I don’t know what we’re going to do yet, but we have to do something.”
Here’s a “60 Minutes” report on the FDIC’s closing of a Chicago-area bank, which includes an interview with FDIC Chair Sheila Bair.
Don Mecoy
Business Writer
Here’s some outrage we can believe in
Kenneth Lewis, Bank of America chairman, CEO and president.
This, I think, is exactly the kind of action that many Americans have been asking for as the government spends ever-more of our tax dollars to prop up flailing U.S. corporations. It may be a cheap political stunt, but it reflects the anger that is simmering among taxpayers.
This letter to Kenneth D. Lewis, chairman, chief executive officer and president of Bank of America Corp is signed by New York Attorney Gen. Andrew Cuomo and Barney Frank, chairman of the U.S. House Financial Services Committee:
Dear Mr. Lewis:
We write to demand on behalf of taxpayers that Bank of America immediately disclose individual bonus data for all individuals at Merrill Lynch and Bank of America who received 2008 bonus awards of $1 million or more.
We believe that as a matter of transparency and disclosure, taxpayers have a right to know where their tax dollars go once received by TARP recipients. Accordingly, all TARP recipient institutions should disclose individualized executive bonus information to taxpayers.
As you know, late last year Merrill Lynch moved up its planned date to allocate bonuses and then richly rewarded many of its executives. Merill Lynch did this knowing full well that they were going to suffer huge losses for the fourth quarter and the year. At the time of the bonus awards, Merrill was in the process of being acquired by Bank of America, a TARP recipient. Moreover, Merrill Lynch also knew at the time that they had received a credit line of billions of dollars in TARP funds.
As a result of Merrill’s huge losses, taxpayers were forced to help Bank of America acquire Merrill by providing billions of additional TARP funds as well as insurance against losses from Merrill’s toxic portfolio. In short, the combined Bank of America-Merrill Lynch entity received $45 billion in taxpayer funds as well as $188 milllion in taxpayer-funded insurance.
Despite this massive infusion of taxpayer money, Merrill Lynch paid out bonuses totaling approximately $3.6 billion and Bank of America distributed a pool of more than $3.3 billion.
Taxpayers who are footing the bill obviously demand accountability and want to know who received these funds and why.
Our mutual goal is to stabilize and enhance our country’s financial institutions and system. The taxpayers of this country have given mightily to that cause. They deserve to know where their money is going and how it is being spent. Furthermore, we all agree that trust and confidence in our financial system must be restored. Transparency and disclosure are the building blocks of that trust and confidence.
Your refusal to reveal compensation information fuels distrust and cynicism at a most sensitive time.
Very truly yours,
Andrew Cuomo
Attorney General of State of New York
Barney Frank
Chairman, House Financial Service Committee, U.S. House of Representatives
cc: Bank of America Board of Directors
Don Mecoy
Business Writer
Oracle of Omaha on CNBC today
Warren Buffet made a lengthy apperance on CNBC today and discussed a wide range of topics on things economic and market-related. He said the American economy has “fallen off a cliff.” However, Buffett offered a fair dose of optimism as well.
Among his takes:
–The economy “can’t turn around on a dime” and a turnaround “won’t happen fast.”
–Five years from now, the economy will be running fine. The strength of the American system will pull it through, just as it has many times in the past.
–Democrats and Republicans should work together and not try to take advantage of the economic situation to achieve partisan goals.
–Inflation has the “potential” to be worse than the 1970s.
–Most banks are in “pretty good shape” and can “earn their way out” of the current problems given the low cost of funds. Banks, however, “need to get back to banking.”
–Extremely important that the government make clear depositors won’t lose their money if banks fail. Obama needs to make a “clear statement” in support of the banking system.
Don Mecoy
Business Writer
Pundits gone wrong
Jon Stewart’s recent rant on CNBC has been making the rounds, and it’s a hoot. But Esquire.com wonders why it took so long for someone to note that, when it comes to economic punditry, the emperor has been prancing around buck naked for some time now.
So Equire posts its top five moments in economic punditry gone wrong.
My favorite, Fox pundit Bill O’Reilly versus Nobel Prize economist Paul Krugman:
Don Mecoy
Business Writer
More proof of global nature of recession
The latest proof that the recession has reached just about everywhere: abandoned luxury cars at the Dubai airport. The Times Online recently reported that expatriate workers are parking their cars at the airport and boarding planes to escape their debts and the area’s fading fortunes.
Many Westerners invested in Dubai’s skyrocketing real estate market, buying and reselling homes before building was even complete. But, as the recession took effect, property and financial companies made thousands of workers redundant and banks tightened lending. Construction companies have delayed or cancelled projects and tourism is slowing.
There are increasing signs that the foreigners who once flocked to Dubai are leaving. “There is no way of tracking actual numbers, but the anecdotal evidence is overwhelming. Dubai is emptying out,” said a Western diplomat.
However, The National makes the situation sound less dire.
Don Mecoy
Business Writer
Crisis of credit videos
Graphic designer Jonathan Jarvis has produced a clever and compelling explanation of the current credit crisis. It’s worth the several minutes it takes to view. Unfortunately, it’s so popular it has crashed his site, where a HD version of this appears (I’m told). Here are the YouTube versions:
PART 1
PART2
(via The Consumerist)
Don Mecoy
Business Writer
