Media Appearance: CNBC’s Fast Money (1/14/09)
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Tonite I will be on Fast Money with Dylan Ratigan on CNBC at 5:30pm discussing with the crew on the problems with the TARP and what should be done to fix it.
My 5 suggestions:
1 No Strategic Plan: The purpose and objectives of the TARP need to be clearly stated. What is it? No one seems to know! Avoiding financial armageddon? Rescuing homeowners? Recapitalizing banks? Without stated objectives, its difficult to evaluate whether it is achieving those goals.
2. Perform Triage: Evaluative which banks should be saved and which should be put down. If we want to strengthen the financial sector, then we cannot merely throw trillions down a sink hole. Help those that can be strengthened, and have orderly liquidations of those that cannot.
3. Invest Taxpayer Monies Wisely: Why did Warren Buffett get so much of a better deal than Uncle Sam? Treasury and the Fed lack the expertise to negotiate these investments. Set up a matching investments with the private sector. Let those with the expertise make the deals (on arms-length, substantial investments), with the the US matching at 20X on the same terms.
4. Evaluate Progress: Set milestones for achieving goals — every month, quarter, year. Have clear metrics that let us determine if we are moving towards our objectives. This has been notably missing from the TARP.
5. Avoid Moral Hazard: Stop rewarding bad managers, executives and companies. TARP recipients should have anyone associated with the collapse fired; C-level execs and board members tossed. Why are these firms paying taxpayer monies out as dividends to the shareholders? Where are the clawbacks of bonuses? Those responsible for the mess should not profit from it.
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UPDATE Here is the Video:
Nice tie!
http://www.cnbc.com/id/28657313
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January 14th, 2009 at 4:08 pm
can’t say I disagree with any of these especially number 1.
January 14th, 2009 at 4:25 pm
Nice list.
We also need transparency.
January 14th, 2009 at 4:29 pm
None of these things apply, this is a slush fund for the Sec Treasury, there are no other rules.
Congress gets a gentlemen’s agreement, and a fingers-crossed one at that.
A reverse-veto required to stop the second installment, why am I not surprised at anything anymore? I am gonna be so jaded after all this, not that I was a true-believer before…
January 14th, 2009 at 4:32 pm
At the time most of this stuff was done, the govt was basically playing high-speed dodge-ball to prevent a total meltdown of the system. Which could have happened within 24 hours if several of the steps taken had not happened.
Yup, things definitely need to be tightened up now, since things aren’t actually exploding any more.
But i think you gotta cut some slack for what Bernanke, Paulson and Geithner did. They didn’t have a whole lot of time to refine strategy.
January 14th, 2009 at 4:44 pm
Things need to be tightened up..thats the part that will take generations. There will always be an excuse for not meeting goals or unwinding the US Gov from these banks. They are not giving up this much control for a while.
January 14th, 2009 at 4:48 pm
@XBrit: Don’t you think that as so-called “experts”, they could have at least seen it coming at all? Shouldn’t we expect more from these people since anyone with an ounce of common sense saw this coming?
January 14th, 2009 at 4:56 pm
re suggestion #3. Buffett got a better deal because he invests money. The govt has never invested a dime. They took taxpayer money and rewarded bad managers in order to keep failing business from closing. This was necessary because no sane person would invest their own money in these companies. If government actually had its own money at risk they would then begin to invest it like Buffett. This is just another example of a political decisi0n (good or bad) not equaling a good investment decision.
January 14th, 2009 at 4:57 pm
“Stop rewarding bad managers, executives and companies”
I wish.
That seems to be the whole raison d’etre for the TARP.
January 14th, 2009 at 5:01 pm
Barry, you are a hopeless idealist.
January 14th, 2009 at 5:04 pm
Perform triage:
Yeah, let’s start by “putting down” that sick puppy they call Citigroup.
January 14th, 2009 at 5:05 pm
Mike @ 5:01
Bloggers can dream.
January 14th, 2009 at 5:18 pm
Your points imply that the TARP money is for something other than a handout to friends of the Fed/Treasury/gov’t.
January 14th, 2009 at 5:20 pm
Nice!
Barry, think you need to host your own 1/2 hour segment once each week on CNBC, Bloomberg, somewhere. It would be “Straight from the Street” and would’nt have a hidden agenda behind the comments.
Heeeeerrrrrrrrrrrrres Barry!
January 14th, 2009 at 5:22 pm
BR,
Maybe you’ll also get to quickly talk about this Jobs news after hours. Apparently all the money in the world didn’t allow him to know two weeks ago that his health issues were such that he’d have to step away for a while, or maybe for good. Maybe he needs better doctors?
I have to ask, what’s the difference between them coming out with statement after statement about how is health is fine just to then announce this and a bank saying that capital positions were strong when they new damn well they weren’t. This seems even more important here b/c I can’t think of many other CEO’s that mean more to the stock than Jobs.
Apple could have the best numbers in the world right now and it wouldn’t matter that stock is dead tom.
I own no AAPL but I’d be a little upset I think if I did.
January 14th, 2009 at 5:25 pm
Boy, they really got an Apple Fanboy there on Fast Money. He has all the slogans down pat. Maybe there’s a view screen in his house. It’s easy to grow faster than others when you have a small market share.
Without Jobs to get consumers to pay too much, Apple is toast.
Sorry your appearance got upstaged by Jobs.
January 14th, 2009 at 5:27 pm
After Hours news is horrific…may pre-empt Barry on Fast Money
1) Steve Jobs
2) BAC needing more capital
3) Motorola warning
Plus Nortel BK…can’t say I didn’t warn you.
January 14th, 2009 at 5:29 pm
@ Ben:
Stock price notwithstanding, I think this is a good time to think about Steve Jobs and everything he has achieved and created. Without him we would be stuck with IBM dominance, maybe Dell and without innovations at Apple we would have a faceless bland inefficient Wintel monopoly. Thanks Steve, and best wishes.
January 14th, 2009 at 5:36 pm
Are those 5 just for TARP or everything done in Buch’s presidency, including Iraq? Those mostly apply to the last 8 years. This is just the latest verse. He still has 6 days, I am not counting him out yet.
January 14th, 2009 at 5:36 pm
BofA is insolvent like most of the other big banks out there. Needs more aid? Who’s next? WFC?
January 14th, 2009 at 5:38 pm
Excuse me, JPM Chase probably next in line and THEN WFC. Sorry about the mistake. Time to nationalize now.
January 14th, 2009 at 5:45 pm
Very bad also…based on futures market will gap down below my critical support of 842 on S&P…breaking support on a gapdown is dangerous.
January 14th, 2009 at 5:46 pm
I tuned in… excellent reminder how IndyMac’s takeover went fairly smoothly and brought in PRIVATE financing.
Let’s hope this tactic will be implemented if any big banks fail in 2009, and won’t soak up another 350 Billion.
January 14th, 2009 at 5:50 pm
I liked Dylan Radigan better when he hosted the Bloomberg morning show. Now all he does is interrupt and yell at guests.
I second the suggestion above – Barry, you need to get a weekly show somewhere. A show where discussion is favored over arguing.
January 14th, 2009 at 5:52 pm
I would wish for transparency too, but I am afraid that most of our financial system is so seriously FUBARed, and if we don’t cover up the damage, the economy will be heading towards Great Depression level as people realize these banks are shams. Are there any good banks left?
Good segment Barry.
Matching government funds and terms is an interesting idea. I think it would do much to assuage the anger of how TARP funds are spent and prevent the government getting the shaft or playing favorites.
January 14th, 2009 at 5:57 pm
Mannwich Says:
January 14th, 2009 at 5:36 pm
BofA is insolvent like most of the other big banks out there. Needs more aid? Who’s next? WFC?
Rely: WFC, just as you say, from Bloomberg:
“Wells Fargo dipped $1.31 to $23.07 after Atlantic Equities said the biggest U.S. bank by stock-market value may need to raise $10 billion and cut its dividend after the acquisition of Wachovia Corp.”
One zombie bank plus another zombie equals a completely dead bank…but don’t worry–Buffett owns a goodly piece of the WFC pie. He’ll figure out a way to get his boys on the hill to save him, like he did w/ Goldman Sachs.
January 14th, 2009 at 5:59 pm
Steve Barry,
Off topic I know, but a quick question for you. You have commented many times on this blog about the total credit to GDP ratio. You recently mentioned that as of 9/30/2008 total credit was $51.8 trillion versus an annualized GDP of $14.42 trillion. Could you elaborate on how you obtained $51.8 trillion for total credit? I know that our national debt is about $10.6 trillion.
Thanks in advance.
January 14th, 2009 at 6:00 pm
@Curmudgeon: Yes, after all, we can’t have our Big Daddy plutocrats like Warren failing or anything like that. This country would fall apart at the seems.
January 14th, 2009 at 6:14 pm
I admire the moral resolve of the new government. I just think it makes for a tough trading environment.
Haven’t heard from AT today – he may be sitting it out and that might just be the smart thing to do right here.
January 14th, 2009 at 6:20 pm
Big Tony:
Excuse my butting in, but:
http://money.cnn.com/2009/01/13/news/economy/treasury_budget_deficit_Dec08/index.htm
U.S. deficit soars to $485.2 billion
The budget gap in first three months of the fiscal year surpasses the level recorded for all of ’08.
National debt not 10.6 any longer…pardon me for this note if this information was considered intrusive..
January 14th, 2009 at 6:30 pm
Leftback as much as I want the new government to succeed, I really hate this whole Treasury Secretary not paying taxes and hiring illegals, but that is OK deal. I was hoping the new administration may be different. I am already questioning that.
January 14th, 2009 at 6:36 pm
Bruce in Tn,
Thanks for the link, and you are not being intrusive.
I have found a link that Steve Barry provided that shows the $51.8 trillion dollar number from the federal reserve website:
http://www.federalreserve.gov/releases/z1/Current/accessible/l1.htm#footnote1
I am now trying to understand exactly what that $51.8 trillion number “means” and how it was derived. It is obviously different than our national debt of $10.6+ trillion dollars. If anyone else can elaborate on this, please do….
January 14th, 2009 at 7:07 pm
@ Concerned: I agree. No arguments from me.
The problem here may well be the lack of viable alternatives. We are sort of stuck with Geithner for a year or two, if only because he was there when these many-headed monsters were created. To bring someone in completely cold from the outside would be extremely difficult and potentially destabilizing – at a time when at least some of the credit markets are beginning to function again.
This has been a tough week for TWINE investors (The World Is Not Ending), but at some point we will look back and remark on how marginal (2-5%) changes in a variety of economic parameters translated into enormous (10-20%) downside movements in asset prices during this turbulent period. Bear in mind that small improvements on the back side of this (depr/rec-ession) will probably trigger equally large upside excursions.
January 14th, 2009 at 7:07 pm
Let the games begin!
http://www.reuters.com/article/ousiv/idUSTRE50D7DY20090114
January 14th, 2009 at 7:11 pm
leftback,
I don’t disagree with what you say about Jobs, I’m a Mac user myself but that doesn’t mean he can’t do anything wrong.
January 14th, 2009 at 7:15 pm
Jobs is an asshole. He mislead people with his statements. No penalty of course because he probably already has the death penalty. But still. WS is very corrupt.
January 14th, 2009 at 7:27 pm
Someone needs to propose a bailout for us poor slobs who’s 401ks were hammered as a result of malfeasance by incompetence, crooks and speculators. A little cash infusion to each 401k participant would drive some buying and lift a whole lotta boats.
January 14th, 2009 at 7:36 pm
@Big Tony: you found the link…I understand it to be total credit in the economy…the 10 Trillion National debt, plus consumer debt (mortgages are a huge chunk) and corporate debt. The link has a whole list of sub classes of debt…I don’t have time to parse it all.
As for Jobs, there was deception. He told Joe Nocera a few months ago in a “private” conversation, that he had a health problem, but that it wasn’t cancer and he was not dying. His letter last week said he was searching for the reason for his weight loss and just found it. These statement are contradictory to me. Plus he said a few appearances ago, his weight loss was due to the flu. I’m sure Jobs told his PR department that any health news was personal and he would control it…nobody would dare defy him in Apple. This is how corporations run. You can spin anything, if you can pass the “red-face test”…that and sugarcoat any news going up the chain of command.
January 14th, 2009 at 7:44 pm
@ JB: Caveat emptor, old pal. Just because someone says something it doesn’t mean you should believe it.
@ Dr C: Most of the slobs here took extraordinary steps to take control and make sure we were not hammered in the 401K area. I made about $3000 in mine between July 2007 and December 2008 – not a lot but I’ll take it – thanks mainly to reading Barry, Mish and Gary Shilling and an understanding of the utility of the Treasury bond during deflation. But I am all too aware of what has happened to everyone around me and have enough sympathy to keep my mouth shut tight.
I am parking most of my 401K right now in corporate bond funds (for the income and modest risk) and in high yield (for the higher income, higher risk) because of the intrinsic lower volatility. If conditions improve I make >8-15% but if hell continues to stay frozen over I still make 8-15%. If we go to hell in a handbasket and credit worsens then we are all f***ed anyway.
I retain small pieces of stock funds here and there because I can’t get rid of them easily. At some point I am moving more of my remaining cash into TIPS as we proceed down the primrose path towards currency debasement. In between times I am trading my personal account, going in and out of reflationary vehicles (commodity stocks) – it ain’t easy right now, but it’s the best defence against inflation when it inevitably comes calling again.
Good luck negotiating the swamp and take charge of your own destiny.
January 14th, 2009 at 7:57 pm
Steve Barry,
Thanks for the input. I have been combing through the link from the Federal Reserve, but it is just too unmanageable for me right now.
This link may be worthwhile for anyone interested in debt relative to GDP. I think another poster posted this 1-2 weeks ago, but I don’t remember who…
http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&CFID=46900191&CFTOKEN=72778978&category=SpecialReport&newsletterid=1432&menugroup=Home
January 14th, 2009 at 8:16 pm
DrC,
Never seen you post on here but I gotta say your statement is about as bad as it gets. Your 401k is down so you need a cash infusion, give me a break. Every single 401k has a safe bond option, I’ve looked at so many Q-plans for clients and never once have I found one without a safe bond fund no matter if the company is big or small, you could have moved, end of story.
Look, I’m not happy you lost money, I do feel bad for you, but you could have changed things if you wanted to. If you couldn’t figure it out on your own you should have looked for someone to help you. A little personal responsibility on all levels in this country could do wonders.
If you were just kidding I’m sorry, this kind of statement annoys the hell out of me.
January 14th, 2009 at 8:16 pm
Japanese exports are over. I published this on the previous thread, but I thought folks here might find it interesting. And I saw the Kla-Tencor news a couple of days ago, and tech looks washed up too.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aqG4.7PVAchM&refer=japan
Japan Machine Orders Fall by Record on Export Slump
…What would you call it if your economy shrinks by 12 per cent and your interest rates are already zero?
Game over comes to mind..
January 14th, 2009 at 8:35 pm
Lefty:
I know how things are over here in the colonies..what do you hear from the mother country?
The things I read make me think it will be even worse in Europe…
January 14th, 2009 at 8:39 pm
lb: Which bond funds are you in? I was doing decently with just cd’s for anything I didn’t want to risk in the IRA’s, but the rates are ridiculous after the brokers get their cut. But, I don’t conpletely trust Bill Gross either. At some point someone will drive a stake through his heart.
BTW, If anyone just wants to park cash safely outside a retirement account, you can get 3.25% in an online savings account or lock in 3.75 for a year at GMAC Bank. They did have CD’s over 4% a month ago, but Uncle Ben doesn’t want anyone saving. There’s also a bank called Dollar Savings Direct that has online savings accounts paying 4%. All FDIC insured so it should be as good as treasuries without the rate risk. Not flashy, but it’s better than -40% and will do for now. Besides, with deflation, 0% is actually a positive return. Check bankrate.com for rates.
I put my a little of my wife’s 403b in a TIP fund back in the spring when there was some inflation and it lost 15-20% after BB got through with it. I suppose I should buy here some more as some sage opined that they are currently pricing in 0% inflation for the next decade and we know that ain’t gonna happen.
jmborchers:
While I’m no fan of Jobs and he and his disciples can be annoying, I don’t wish him ill personally. I think the competition and jibes has made MS try harder without really threatening it. Worldwide, Apple only has something like a 4% market share.
January 14th, 2009 at 8:43 pm
The guy who used to be Fake Steve Jobs just bitch slapped CNBC’s own Jim Goldman right on their own airwaves…basically told him he was a shill who got punked by Apple. Priceless.
January 14th, 2009 at 8:44 pm
I have got my mind right…I have…I am accustomed to drops in business of 5%..that seems like a lot…but 50%..that doesn’t seem like a real number…almost like a trillion…and this is big D…not Detroit, who already lost daily newspaper delivery…
http://www.dallasnews.com/sharedcontent/dws/bus/stories/011409dnbusshoppingcenters.439b882.html
Dallas-Fort Worth retail leasing fell 50% in 2008
Yes, the D train Lefty…
January 14th, 2009 at 8:52 pm
Mike in Nola,
Not to but in but Calvert Income is found in a lot of Q-plans, if you are looking for a low risk bond fund it’s worth taking a look at. I could give you a lot more via e-mail if you’d like.
January 14th, 2009 at 8:53 pm
also if you want to spread it out, Vanguard Total Bond Index is also found in lots of q plans, will be lower cost than the Calvert I mentioned and has performed better over the years.
January 14th, 2009 at 8:59 pm
When I hear stuff like this, I remember why I have -200% equity allocation. Market will get creamed tomorrow.
http://news.yahoo.com/s/nm/20090115/bs_nm/us_jpmorgan_1
January 14th, 2009 at 9:04 pm
@Jobs
(Almost) no one wishes Jobs ill. But facts are facts: He was diagnosed with pancreatic cancer — an almost sure death sentence. I know that, you know that, everyone knows that. And despite the grave nature of the situation, Apple has been blowing smoke up people’s butts for a year-plus now. Are there no honest people left in corporate America? I suspect, and so they/we deserve what is coming to us.
January 14th, 2009 at 9:07 pm
@SB: Perhaps, but here’s my translation of Dimon:
“We need more bailout money too and lots of it…..fast.”
January 14th, 2009 at 9:13 pm
I can’t wait to watch the replay later. I missed it earlier because I was out doing my bit to support the economy. We bought an 09 Sonata in Powder Pearl White. Sweet. Got a GREAT deal. Who knew?
January 14th, 2009 at 9:26 pm
caught your segment on Fast Money and appreciate a rational critique of the TARP approach to repairing financial system. Perhaps you could regularly inform readers of your blog on how to most effectively reach and influence elected and appointed officials so that future government interventions are more effective in creating genuine and much needed change rather that perpetually applying larger band aids.
January 14th, 2009 at 10:01 pm
BR,
Nice job on rapid fire Fast Money. “Too big too succeed.. impossible risk management” well put.
http://www.cnbc.com/id/15840232?video=998474994
January 14th, 2009 at 10:32 pm
Steve Barry: What show was the fake Steve Jobs on? He wrote some great stuff.
January 14th, 2009 at 10:36 pm
jmborchers @ 7:15
Didn’t you post recently (maybe a month ago) that the PPT wouldn’t let AAPL get below $90…?
What are they going to do now?
January 14th, 2009 at 10:44 pm
Big Tony @ 7:57
I posted that link a week (or so) ago. Following is a key statistic:
“The composition of the debt is $25 trillion in Corporate debt…, $14 trillion in Household debt, and $13 trillion of Government debt … and the GDP is $14.4 trillion”
That $13T in government debt (at the Federal level) is going to get A LOT bigger over the next two years, whereas household debt is certainly going to decline, and corporate debt somewhat also.
Not to worry. An inflation rate of 6% for 10 years will wipe out a lot of that debt.
January 14th, 2009 at 11:21 pm
@Mike:
Fake Steve was on the 8 PM CNBC Reports…a must see
January 14th, 2009 at 11:28 pm
Found the Fake Steve Jobs video here. Pretty funny.
http://www.cnbc.com/id/15840232?video=998814558&play=1
Another video was interesting. Usual panel format:
http://www.cnbc.com/id/15840232?video=998821003&play=1
Jim Goldman is really a piece of work. “Jobs’ absence will allow Dell and HP (and presumably MS) to narrow the gap.” From that you would never guess who owns only 4% of the world desktop/laptop market and who owns almost all the rest. And who has almost none of the server market. Amazing what the fanboys will swallow.
January 15th, 2009 at 3:19 am
Big Guy;
That was a horrible format in which to express views. Interruptions are one thing, sometimes appropriate if the subject strays way way off his remit and the anchor needs to get him steered back on track, but that was a disjointed constant stream of shouting and “the guys” constantly restating your opinions in another way. I would have had a tough time keeping my patience. To your everlasting credit, you displayed no signs of ire or impatience with that circus. Congratulations on remaining impassive and focused. I would like to personally wring Ratingers’ neck. WHAT an arrogant unpleasant SOB, I can’t stand his style, approach, voice, volume, sense of humor….and a lot more besides.
As others have said, and a view with which I wholeheartedly concur, you need your own weekly show.
January 15th, 2009 at 5:40 am
savoy bank nyc FDIC still has 12 month cd at 4% 9 month 3.35 money market 3.56
January 15th, 2009 at 7:49 am
Harold: Thanks, but AFAICT, they have little facility for doing business online.
Barry, I agree with bogwad, you did the best you could under bad conditions. You need a spot on Charlie Rose or some other show where you get to express your views in a thoughtful manner. Happened to catch part of the outgoing Walmart CEO on their last night and it was suprisingly interesting.
Can’t your publisher get you spots on some of the pop shows on places like CNN or Fox?
January 15th, 2009 at 8:31 am
nola, the only branch right now is in NYC. i went straight in and opened a 12 month in 5-10 minutes
January 15th, 2009 at 9:00 am
Barry….watched the segment & gotta tell ya it was like watching a group of monkeys imitating an observers gestures. All they did was repeat your points, in a slightly differt manner. The show is just a frenetic shouting match, bunch of people sounding like they had 40 cups of Red Bull just before they went on. Someday one of their collective blood vessels is gonna pop.
January 15th, 2009 at 9:28 am
CNBC misspelled your name beside the video. Sloppy.
“Intrigued? So were were! Check out our entire conversation with Ritzholtz.”
January 15th, 2009 at 9:49 am
Translations:
“Evaluative which banks should be saved and which should be put down.” – Have the government pick winners and losers, something they’ve shown great skill at.
“Invest Taxpayer Monies Wisely” – Have the government waste FUTURE taxpayer’s monies less wastefully.
“Set milestones for achieving goals — every month, quarter, year.” – With all the great business minds on Capitol Hill, let’s move to a command and control economy. C’mon comrades, every country needs a 5 year plan.
“Stop rewarding bad managers, executives and companies” – Start rewarding private citizens who made idiotic decisions, couldn’t live within their means, or have no sense of personal responsibility. Write down the principal on their mortgages, F the people who lived within their means.
Here’s a novel idea: Don’t spend any of the remaining $350B.
January 15th, 2009 at 10:11 am
The Economy is Not a Machine
http://tcsdaily.com/article.aspx?id=011309A
A principle that seems to be lost by the MSM, our politicians, and many commenters on this blog:
“Profit motive is a good thing when it operates in an environment where bad bets are punished with losses and good investments are rewarded. Only government can distort that healthy profit-and-loss system, giving people incentives to make bad decisions. It is in such an environment that greed becomes dangerous.”
January 15th, 2009 at 10:52 am
harold: rates are pretty low here in Houston. Tops is about 2.75% for a 1 year. Capitol One is only a little over 2%. The other big boys are under 2. I’m sure some of it is that Houston has been sheltered by the oil industry. That is quickly ending.
Just think, if BB hadn’t screwed with lending on bad assets, interest rates, and treasuries, it would be pretty easy for banks to get deposits to shore up their balance sheets from the “capital on the sidelines” we keep hearing about.
January 15th, 2009 at 3:07 pm
Why would you agree to go on a show where you’re doing more listening than talking. It wouldn’t be quite so bad if these guys had anything to say but they don’t, just a bunch of loud mouthed assholes. They should be relegated to football shows where they’ll feel right at home. Forget ‘em.