Thursday, September 24, 2009

Good Times Never Seemed So Good

Was Neil Diamond anticipating the 2008/2009 recession when he wrote Sweet Caroline?

"Where it began, I can't begin to know when
But then I know it's growing strong
Oh, wasn't the spring, whooo
And spring became the summer
Who'd believe you'd come along

Oh, sweet Caroline
Good times never seem so good (so GOOD! so GOOD! so GOOD!)
I've been inclined to believe it never would"

Indeed, things are so good right now (sarcasm alert!) that people are having to sell their grave plots to raise money. I can't emphasize how not good that is. All I can do is picture John Stewart on The Daily Show pleading with the camera in an exasperated, sarcastic tone: "Yes Ethel - the economy has recovered and things are improving rapidly - that's why you need to sell your final resting place to pay the bills!" From the WSJ aritcle:

"As if the recession hasn't ruined enough people's plans in this life, it now seems to be disrupting the hereafter as well. Cemeteries and funeral-property Web sites report a burgeoning marketplace for the sale of burial plots by individuals, many of which have been in families for years. As times get tough, they are now being liquidated to make ends meet."

Which leads us into this terrific cartoon which Barry Ritholtz published on his blog yesterday:

While I'm at it, let me hit a few other quick ones: TARP inspector general Neil Barofsky tells the "look - we made a 17% return on the TARP funds" crowd to screw their heads on straight, and that it's highly likely that a large chunk of the TARP funds will never be repaid.

You may have seen the story from Monday about the banks lending money to the FDIC to prop up the rapidly vanishing insurance fund. For anyone who doesn't understand how absolutely preposterous this is, ponder the following: if your insurance company asked you for a loan so that they'd be able to cover the claims they will have coming up, what would you say? That's a rhetorical question. Other options include a special assessment on the banks, which is exactly what is needed. Of course, the banks don't like that idea:

"Bankers worry that a special assessment of $5 billion to $10 billion over the next six months would crimp their profits and could push a handful of banks into deeper financial trouble or even receivership. And any new borrowing from the Treasury would be construed as a taxpayer bailout that could open the industry to a political reaction, resulting in a wave of restrictions like fresh limits on executive pay. Any populist furor could be avoided, the thinking goes, if the government borrows instead from the banks."

Of course, we know that the banks can borrow at near zero rates from the Fed anyway, so it's just an absurd shell game to make it LOOK like the banks are lending money to the FDIC - which is an absolutely ludicrous concept in it's own right. Sadly, such shell games frequently CAN succeed in quelling "populist furor" - because the populist doesn't understand. Fortunately, cooler heads have prevailed (SARCASM ALERT!), and the latest discussion is for the banks to pre-pay future fees to the FDIC in order to sure up the reserves. Pull those fees forward - that will fix everything!


1 comment:

StB said...

Even better, the government is looking to borrow money from money market funds. It seems like an end around to issuing new transparable debt.