GM Still Owes-thanks to Jerry Flint for pointing out the REAL FACTS

GM Still Owes Us
Jerry Flint, 04.21.10, 04:43 PM EDT
Forbes

Far be it for me to rain on anyone's parade, but don't be fooled: General Motors has not paid its debt back to taxpayers.

The company got $50 billion from our government, and $10 billion more from Canada. They have paid the U.S. back $7 billion plus interest, as I understand it, including the latest payment of nearly $5 billion. So they say they paid us back.

Not quite: That still leaves $43 billion.

GM can say they paid us back because of the $50 billion in total support, only $7 billion was counted as a loan and the rest was traded for equity in the company that emerged from bankruptcy. But that is really an accounting trick so that GM doesn't have to pay interest on that money.

What seems to have happened is that of the $50 billion given to GM, the company burned through some, and then paid back $7 billion from what they didn't spend.

We are supposed to get the remainder when GM sells stock.

Maybe we will, maybe we won't. If GM sold 1 billion shares at $25 each, that would be $25 billion, not enough to cover the whole debt. You never know, but I think the odds are against getting back all our money

Link to full article

Grandpa truly appreciates your article Mr. Flint! The financial news channels were simply too giddy yesterday to present the complete picture. Ed Whitacre should be sent to his room without dinner given his pep fest behavior yesterday and would someone please pull the plug on his commercials...enough already Ed! Yes Ed, you "still have more to do" like come up with another $43 billion plus interest!!

As the National President of Boy Scouts of America, your

Railroading and Salesmanship merit badges

have proven invaluable.

Sarah Palin Network-looks like a great fall season line up

Sarah Palin's fall season line up should have the entire family glued to the tube.

"Are You Smarter than a Half-Term Governor?

Greece Bailout Package: Greek toga party hosted by U.S. Quant Fund Futures Traders

The Quant Fund robot traders are lubing up the algorithmic formulas as it should prove to be an exciting overnight trading session of all index futures! As soon as the formulas are tweaked, the Quant Fund Robot Traders are throwing a Greek Toga Party complete with complimentary olive oil! The headlines prove that ouzo has been flowing for hours.

Welcome to Delta Tau Chis Toga Party Night!

Headlines:
April 12 (Bloomberg) -- European governments offered debt- plagued Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates in a bid to stem its fiscal crisis and restore confidence in the euro.

BusinessWeek
Treasuries Fall as Greece Aid Package Curbs Demand for Safety

New York Times
Europe Unifies to Assist Greece With Line of Aid
BRUSSELS — European leaders provided a long-awaited financial rescue line to Greece on Sunday, offering the country up to $40 billion in aid to meet its giant debt obligations.

Wall Street Journal
Asian Shares Rise, Boosted By Optimism On Greece
"Everyone knew that Greece would be sorted out one way or another," said David Halliday, Macquarie Equities associate director in Sydney. "The run we had from early March was partly due to those sovereign risk fears abating I think it's more the fact that we continue to see orderly and manageable rises internationally.... The rally this time is far more logical and fundamentally based."

MarketWatch
Euro Surges Vs Dollar, Yen As EU Agrees On Greece Help
The euro surged against the dollar and yen in early Asia Monday as a Sunday agreement by euro-zone finance ministers about a bail-out package for Greece surprised and propelled investors to buy the single unit.

Under the agreement, euro-zone nations will provide up to EUR30 billion for the country in the first year of any support programs. Greece would pay an interest rate of around 5% for a three-year loan program, well below the interest rate of more than 7% on Greek sovereign debt last week.

Retail Sales CNBC Cheerleader Style....and along comes along Jane Wells with a bucket of cold water

Oh it has been a great day for the CNBC financial news network cheerleader competition. The competition for top cheerleader honors was fierce all day. It appears the euphoria peaked during Power Lunch and Julia Boorstin was clearly in the gold medal round; that is until Jane Wells threw the cold bucket of water on Julia and Steve Liesman (Steve had a lock on the silver medal).

Time to go back in the box Julia

Jon Stewart and the 2010 census

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Jon Stewart with Liz Claman, Banks making their bets at the casino

Liz Claman sits down with Jon Stewart and Liz notes that the big banks continue to place bets at the casino. Jon also suggests that no one complete their census as this will yield more hiring by the Census Bureau.

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Liz Claman
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Dylan Ratigan and Michael Moore: "The gene pool of politicians has been so depleted..."

Moore calls Chris Dodd's bill "watered down" and doubted that it would be enough to change the system. Moore wondered why Democrats aren't taking a harder line against banks. "I don't understand. What part don't the Democrats get when they see the polls and the American people actually think less of Wall Street and the banks than they do of the members of Congress/ What prohibits President Obama and these Democrats to just go on TV and say 'That's it, you stole this money and we're coming after you. You're not going to do this to us again.'

If you have $1 million, you too will have the same access to lawmakers as the lobbyists.

Visit msnbc.com for breaking news, world news, and news about the economy

Inside the Health Care Executives Conference courtesy of Jon Stewart

Top 5 insurers profit of $12 billion which is not adequate so lets raise premiums up to 39%.

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Bloomberg and CNBC tied for the Financial News Category of the National Cheerleader Championship

Bloomberg and CNBC continue their quest to win the National Financial News Category of the National Cheerleader Championship. Bloomberg's recent entry:

By Lynn Thomasson and Rita Nazareth
March 13 (Bloomberg) -- The longest-ever gain in futures linked to the Standard & Poor’s 500 Index shows growing investor confidence in the U.S. economy.

“It’s a bullish indication,” said Stephen Lieber, chief investment officer of Alpine Woods Capital Investors LLC, which manages more than $7 billion in Purchase, New York. “There’s greater confidence in the equity market. Earnings have been relatively positive.”

Contracts to buy the S&P 500 in June 2010 have climbed for 11 days since Feb. 25, rallying 4.5 percent to 1,146.6. While futures on the U.S. equity benchmark usually track the index, they don’t move in lockstep as the S&P 500 retreated less than 0.1 percent yesterday following a drop in consumer confidence. Caterpillar Inc. helped lead the Dow Jones Industrial Average higher on signs of growing demand for machinery in China.

The S&P 500, which is near its highest level in 17 months, has risen 9 of the past 11 days. The index increased 1 percent this week as economic reports showed a rebound in consumer demand after retail sales unexpectedly rose last month and wholesale inventories fell in January.

Forecasts for the biggest two-year rebound in profits since 1994 also fueled the advance. Analysts’ estimates show income for S&P 500 companies may climb 26 percent this year and 20 percent in the next. More than 72 percent of firms in the equity index beat earnings projections for the fourth quarter, the second-highest percentage on record, according to data compiled by Bloomberg.

“People are looking to buy stocks,” said Mark Bronzo, an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “Risk appetite seems to be growing as people become more comfortable with the sustainability of the economic recovery.”

The 11-day gain in S&P 500 futures exceeds a 10-day advance in January 1987. During that period, the stock benchmark jumped 9.6 percent and rose 5.4 percent the following month. The futures contracts were created in 1982 and trade on CME Group Inc.’s Chicago Mercantile Exchange.

Grandpa:
1987...something else occured that same year after a similar bullish run in the equity market. Got it!

Potential causes for the decline include program trading,

overvaluation, illiquidity, and market psychology.

Additional tibits from 1987 (Bureau of Labor Statistics)
Quarterly Average Unemployment rates during 19987
6.6%   Quarter I
6.3%   Quarter II
6.0%   Quarter III
5.9%   Quarter V
14.1    Average unemployment duration (in weeks) for 1987
13.2% Percentage collecting unemployment 27 weeks and over
 
The S & P 500 closed at 235.91 on 10/13/1986 and 314.52 on 10/13/1987. The index moved up 33% in 12 months before the 1987 crash commenced on 10/14/1987.
 
The S & P 500 closed at 750.74 on 3/12/2009 and 1,149.99 on 3/12/2010. The index moved up 399.25 points or 53% in a one year period.
 
GRANDPA SAYS; "MORE TO FOLLOW" and hey Bloomberg, "break a leg".

Short sale and get a check for $1,500

Fox Business News (FBN) piece on Obama Administration's plan to pay the homeowner to proceed with a short sale. It's official, the journalism majors on this financial outlet will have a photo finish for last place with CNBC. 

Might Stuart Varney of FBN be related to:

 Spend your equity, owe more than house is worth and get paid $1,500 for your trouble. Meanwhile our grandchildren will be living in a tent! But hey, let's make sure the idiots up for election in November are better positioned for victory!! Let the next generation fend for themselves...

The Media and Wall Street posturing well for upcoming economic reports: Blame everything on snow

This week’s economic data has already been discounted in the equity market courtesy of a superbly orchestrated "lobotomy marketing blitz" between the media, government and Wall Street pundits during the past two weeks.

Weather conditions are the perfect deflection factor when the recent trend is not your friend. The U.S. government and Wall Street are extremely well versed in pandering to the citizens of this country as they know all too well that most people do not want to be bothered with the details so if the news is bad BUT it is due to weather, than this too shall change, no worry.

On 2/11/10, MarketWatch set the stage:
Headline: Big snow could fog up economic view, Payrolls likely to fall in February, rebound in March -- all because of storms.

The massive snow storms that blasted the East Coast this week could reverberate in the economic data for a couple of months, clouding any assessment of the health of the economy.

The snow itself disrupted economic activity in a major, but mostly temporary way. Tens of millions of people couldn't get to work, but most of what they were supposed to do will get done eventually.

Tens of millions of people couldn't get to the stores, but eventually they'll buy their gallon of milk, their new video game, and their spring clothing. They'll get around to seeing that movie, and they'll probably reschedule that business meeting.

Some spending increased because of the storms. More money was spent to remove snow, and to repair structures damaged by the ice and snow. Sales of snow shovels and parkas increased. Snow can be a stimulus.

On the other hand, some activity was lost forever. "The losses are real," said Mark Vitner, an economist for Wells Fargo Securities. People who were snowed in won't buy an extra lunch when they get back to work, and they won't park their car twice.

In the past, major storms that have hit during the survey week have had a major impact on employment, only to see a reversal the next month. Economist Joe LaVorgna of Deutsche Bank figures a snow storm in the survey week lowers payrolls by an average of 90,000 compared with the trend line.

For instance, payrolls fell by a seasonally adjusted 51,000 in March 1993 when the "storm of the century" lashed the Midwest and East during the survey week. Employment was strong before and after the storm. In February before the storm, payrolls had risen by 309,000; in April, payrolls rose by 250,000. The average workweek fell by 0.6% in March.

The 1993 storm also had an impact on seasonally adjusted retail sales, which sank 0.7% in March, only to rise 2.2% in April. Housing starts were also bruised by the 1993 storm, falling more than 10% in March and rising more than 16% in April.

This year's storms could have the same sort of impact on employment and retail sales. Before the storms, economists had been tentatively forecasting a modest gain in payrolls in February, in part because of ramped up hiring for temporary Census workers. Now, they'll sharply lower their estimates for payrolls and hours worked.

For March, a big rebound in payrolls could be expected, but the gain would mostly reflect people who made it to work in March after being snowed in during February, not new jobs created in March.

Grandpa’s take:
Tens of millions of people couldn’t get the store but eventually their gallon of milk, video game and their spring clothing! SAY WHAT!!! This is not Haiti or Chile! The weather was forecast well in advance of the initial flake. No one stocked up on food, beverages, warm clothing or snow removal equipment prior to the first couple of inches? What about the photos of the bare grocery store shelves?

Some activity was lost forever; the losses are real, people who were snowed in won’t buy an extra lunch when they back to work, and they won’t park their car twice. SAY WHAT!!! If our economic salvation is as simple as eating two lunches and parking cars more than once a day, why did we spend hundreds of billions bailing out Wall Street and “cash for clunkers”?

SAY WHAT!!! Comparing February 2010 to the 1993 “storm of the century” is ludicrous. 300 people lost their lives, $6 billion in damages, affected 26 U.S. states and impacted Cuba to Canada.

Before the storms, economists had been tentatively forecasting a modest gain in payrolls in part because of ramped up hiring for temporary Census workers. SAY WHAT!!! Do you really believe we are all that naive? An increase in jobs based on temporary Census workers is an indication of a firm economic foundation and sustainable growth?

FOR THE RECORD: since the week ending 1/9/2010, the average weekly initial jobless claims averaged 469,571. The continuing claims (excluding the emergency benefits separate category claims) averaged 4.6 million.

It would appear that there has been a tremendous amount of “fluff and stuff” in this country since January 2010.

Wear shades America!!

Diana Olick sets the record straight on existing home sales and the "snow factor"

Two reports, two sets of bad numbers from the housing market. Both new construction and existing homes sold pretty poorly in January, pushing months' supplies up and putting more downward pressure on prices.


But it was the snow I tell you!  All those record blizzards!!!

I heard that a few times this week, and it was included in the weekly report from the Mortgage Bankers about depressed mortgage applications, but the fact of the matter is, bad weather has nothing to do with the storm in housing right now.

Unfortunately, you need to suffer through a few seconds of Simon Hobbs before Diana Olick provides the recap. Suggestion: engage mute until you see Diana..

Jon Stewart and John Oliver on Government Unity

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Bipartisan Health Care Reform Summit 2010 - Government Unity
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Persona Non Grata at CNBC (Barry Ritholtz, The Big Picture)

Barry Ritholtz
I had lunch the other day with several other analysts, strategists, money managers and economists, all of whom shall remain nameless.

All make frequent media appearances.

The conversation drifted over to CNBC. The consensus is everyone at the table wants to do less of it.

The reasons given:
-Producers try to tailor the discussion (“Be more Bullish/Bearish”);
-Too time consuming;
-Law of diminishing returns — the benefits are less and less each appearance;
-Nuance has become a dirty word (“Pick a Letter to describe the economy”);
-Last minute cancellations when “better” names become available;
-Dumbing down of the discourse (One person called it “Foxification”)

I then mention that while I still do a ton of media, I have become Persona Non Grata at CNBC.

There was an issue with some really obnoxious blog comments (they were deleted); I started asking not to be booked with really dumb guests (I also requested no Octobox). I did do Fox a few times (But really, who cares about that? I do all media outlets on behalf of my firm).

With Dylan gone, I dont hear from Fast Money, and with Kudlow, I was told I was “too nuanced“– a phrase that is hardly ever used to describe me. I hadn’t done Squawk Box in years, and I know Joe Kernan ain’t no fan of blogs.

Such is life in the big city . . .

Home Mortgage Modifications (Dianna Olick)

5.6 million mortgages are delinquent and 1.7 million of the 5.6 million qualify for a mortgage modification workout. Of the total modifcations completed, only 2/3 of these modified mortgages are current.

In Cramer We Trust, Scott Brown Victory equals Market Rally (oops)

Tuesday, January 19th, Cramer boasted how the equity market would rally after a Scott Brown victory in Massachusetts. RESULT: Dow ended the week down 552 points since Brown’s victory. “Brown better win or else there’s no tomorrow for this rally”.

BIG OOPS JIM (as usual)

"Let's see how I can spin this..."

Ride This Cramer

Jon Stewart, "Kennedy legacy goes down to a naked guy who owns a truck"?

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Federal Reserve Hands over $46.1 Billion to Treasury

Federal Reserve Press Release: The Federal Reserve Board on Tuesday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $46.1 billion of their estimated 2009 net income of $52.1 billion to the U.S. Treasury. This represents a $14.4 billion increase over the 2008 results ($31.7 billion of $35.5 billion of net income). The increase was primarily due to increased earnings on securities holdings during 2009.

66 words comprise their opening paragraph. Of these, 5 are the usual Federal Reserve non-committal babble:
Preliminary
Unaudited
Indicating
Approximately
Estimated

Closing paragraph of the Press Release: The preliminary results include valuation adjustments through September 30 for loans and consolidated LLCs. The final results, which will be presented in the Reserve Banks' annual financial reports and the Board of Governors' Annual Report, will reflect valuation adjustments through December 31.

The Federal Reserve learned from their pals on Wall Street regarding valuation adjustments (courtesy of FASB and “mark to model” a.k.a. wink and a nod accounting for dummies). The most succinct definition of “valuation adjustments” is as follows:



The media is euphoric as evidenced in their headlines:
“U.S. Fed paid record $46.1 billion to Treasury”
“Fed says it paid $46.1 billion to U.S. Treasury”
“Record Profit for U.S. Central Bank”
“Fed makes record windfall off economic revival program, sends $46.1 billion to Treasury”
“Fed posts record earnings from fighting financial crisis”

Grandpa is a wet blanket on the media. Before the local media convinces everyone that all is good in the hood; a realistic evaluation recap is in order.

$2.2 trillion Federal Reserve Balance Sheet end of 2009 (approximate)
$46.1 billion preliminary, unaudited, indicating, approximately estimated profit to Treasury

Make cocoa, gather the kids for Grandpa’s math problem du jour.

$46.1 billion divided by $2.2 trillion equals 0.02 or 2%. WOW!!!

The Federal Reserve balloons their balance sheet to $2.2 trillion of “assets” (many according to Ben need to be kept secret) and yields we the taxpayer 2%.

What will Ben be capable of in 2010?

Cramer believes the Commercial Real Estate (CRE) catastrophe is bogus

Jim Cramer 11/17/09: “The case for true commercial real estate catastrophe, I think is totally bogus. If the industry were so near the precipice, then retail should have produced more failures than just Linen & Things and Circuit City, especially given the 10.2% unemployment rate and tight credit markets. There’d be more store space vacancies, too”.

Allow me to enlighten Jim on other store closings in 2009 (let’s not split hairs on the final counts as economic conditions remain fluid). This is NOT the all-inclusive list.

Blockbuster (up to 960 by the end of 2010)
Starbucks (up to 600 from the summer of 2008 through March 2009)
Rite Aid (117 in 2009, 200 in 2008)
Steve and Barry’s (252)
Jones Apparel (announced 225 from mid 2009 through 2010)
Foot Locker (117 announced for 2010)
Macy’s (11 in 2009 and just this week announced 5 more in 2010)

Let’s reflect on the larger picture using data released this past week:
Reuters (1/6/2010): Vacancies at U.S. strip malls hit an 18-year high in the fourth quarter and the vacancy rate for large regional malls reached the highest in at least 10 years, according to real estate research firm Reis Inc. Jim: might this alter your “there’d be more space vacancies too”.

Strip malls -- neighborhood and community shopping centers typically anchored by grocery or drug stores -- had a vacancy rate of 10.6 percent in the fourth quarter, surpassing the high set in 1991, Reis economist Ryan Severino said in a report released on Wednesday. The early 1990s is a period often referred to as the commercial real estate depression.

Reuters (1/7/10): The U.S. apartment vacancy rate rose to an almost 30-year high of 8 percent in the fourth quarter, and rents dropped in the biggest one-year slump in 2009, according to real estate research company Reis Inc.

Bloomberg (1/8/10): Office vacancies surged to a 15-year high in Q4 2009 and the rents fall the most on record. The vacancy rate stands at 17% from 14.5% a year ago. In case you do not have a calculator handy Jim this represents a 17% increase in the vacancy rate year over year.

Memo to Jim: vacancy rates escalating to decade plus highs coupled with reductions in rent (a.k.a. income) negatively impacts one’s CRE investment returns. I welcome an opportunity to forward a couple of reputable CRE investment models; if you are not sure how increased expenses and income reductions impact one’s cash-on-cash return. GRANDPA IS HERE TO HELP.

YEAH! FORD MOTOR BEAT ESTIMATES and CNBC is GIDDY

Could it be any better than to afford CNBC additional sweets for their daily sugar high? Ford Motor December 2009 sales were “better than expected”. If anyone has tuned in CNBC for a nanosecond, you have heard “better than expected” at least 12 times.

It is very important when assisting grandkids with their math to remind them that albeit numbers do not lie, the manner in which a number is presented and the basis of comparison many times presents a different picture.

Example: (Ford Motor December 2009 to December 2008 sales figures). Please note the individual numbers are accurate and are not lying (however);

Headline:
Ford Motor Sales up 32.8% to 184,655 units (and the crowd roars with pleasure)

Grandpa’s calculation:
Ford December 2008 sales were 134,114 however, there were 26 selling days in December 2008 versus 28 selling days in December 2009. Based on a daily sales run rate, at 28 selling days, December 2008 would have a monthly sales figure of roughly 149,772 units. Comparing this to December 2009, the increase would have been 23.3%. Still a noteworthy improvement.

Put another way, grandpa offers grandchild 1/3 of a cookie and a piece just shy of ¼ of a cookie. I believe I know which piece our grandkids would prefer. (For you analytical types out there, grandpa ate the remaining 5/12 of the cookie).

Wishing you many pleasant moments working on homework projects with your kids and grandkids.