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Former Czech Prime Minister and European Union President Topolanek called the U.S. economic stimulus plan "a road to Hell." He claims the Fed, Treasury and Administration of repeating the mistakes of the 1930s that sent the United States into the Great Depression.
Also attacked were the stimulus bill’s supposedly "protectionist" policies.
Now, as much as we may criticize our government’s plans, I’m a little defensive when we get flak from an E.U. president. Especially one that just lost a no-confidence vote and was removed from power in his own country. You know what they say about people in glass houses.
Topolanek no longer speaks for his own country. And apparently, he doesn’t speak for the E.U., either. European leaders were out in force trying to minimize the damage their Union president’s comments may have caused.
Topolanek no longer speaks for his own country. And apparently, he doesn’t speak for the E.U., either. European leaders were out in force trying to minimize the damage their Union president’s comments may have caused.
*****Final GDP numbers from Q4 2008 are in, and they’re essentially in line with the preliminary estimates. That’s being taken as good news in the stock market, index futures rallied on the news.
The economy shrank at a 6.3% annualized rate. The preliminary number was 6.2%. Economists are expecting Q1 2009 GDP to be in the range minus 5% to 6%. That’s something of an improvement and should be bad news as long as we can see the economy is not getting worse.
*****Unemployment is getting worse. But that should be expected. The unemployment rate is at 8.1%. Current expectations are that it will top out above 10%. I don’t advocate doing so, but it could be argued that the worst of the job losses has already occurred.
*****Unemployment is getting worse. But that should be expected. The unemployment rate is at 8.1%. Current expectations are that it will top out above 10%. I don’t advocate doing so, but it could be argued that the worst of the job losses has already occurred.
In fact, there are scattered signs that the economy is improving. Homebuilders are starting to build more new homes and existing home sales have picked up. Of course, the total numbers are still dismal, but you gotta start somewhere.
Retail sales have been improving. And yesterday’s Durable Goods report showed a surprise jump in sales for big-ticket items. The number doesn’t appear to be skewed by any airplane orders.
Perhaps most encouraging of all is the inventories number. Inventories for "long-lasting factory goods" fell 0.9% in February and 1.1% in January. Now, I haven’t found a good explanation for what exactly "long-lasting factory goods" are. But Bloomberg reports that the recent drop brought the inventory-to-sales ratio down for the first time in seven months.
That means factories may have to start making more stuff soon. As David Resler, chief economist at Nomura Securities International Inc., says "Inventories are getting low enough in some sectors that stocks might need to be replenished…It’s encouraging news that the economy may be starting to turn around a bit."
I’d like to know, in specific economic terms, exactly how much "a bit" is. But it’s enough to get the stock market moving higher, so that’s a good start …
*****Also, Treasury Secretary Geithner and the Obama administration are unveiling their plans to overhaul the regulatory process for the financial market. That may sound like a purely administrative task, but it’s a critical detail for improving investor confidence in the financial markets.
Right now, many investors won’t put money into a system that see as flawed and corrupt, bargains be damned. Assurances in the form of new regulations are desperately needed for investors to feel confident that their investments are safe from fraud.
Some may not like Congress’ move to tax AIG bonuses at a 90% rate. But remember – they are reacting to people’s outrage at the very culture of greed at firms like AIG. One officer at AIG just resigned and blasted the CEO for promising bonuses and then calling them "distasteful." What’s distasteful to Americans is the idea that an employee of a company driven to the point of bankruptcy and saved by taxpayer dollars is not only ungrateful to simply have a job, but is bitter because he doesn’t get a $1 million bonus, too. THAT’S distasteful. And probably a few other things as well.
In fact, I think Americans want to go as step further. I think we want to see many of the culprits face prosecution. And I’d include former Treasury Secretary and Goldman CEO Henry Paulson in investigations. His backroom dealings to make sure AIG was bailed out so it could make good on the $12 billion it owed Goldman is very suspicious. Why was the current CEO of Goldman-Sachs present at those meetings anyway?
*****Yesterday, I asked if any Daily Profit readers had bought Hovnanian (NYSE:HOV) or Graham Corp. (AMEX:GHM) on my recent recommendation.
*****Finally, the most recent recommendation from Top Stock Insights, which came out in Monday’s issue, is up around 5%. And there’s plenty more to come for this company with $3 billion in cash, zero debt and sales that are actually beating analysts’ expectations. Click HERE for more details.