主题：04/17/2009 Market View -- 宁子

Economic data about as you would expect.

The week was a mix of data both worse and better. On balance, however, it was better despite the disappointment in retail sales that kicked off the week. As noted at the time, retail sales are not really a leading indicator. The next session we saw New York PMI pull up in its dive, up to -14.65 from -38.2. Still not great but improving.

Housing starts were hardly great with a 10.8% drop. With housing THE main problem in this economic slowdown, however, it is not reasonable to expect it to lead the way out. That never happens. The bubbling sector is not the leading recovery sector. If you are looking at housing alone you will miss the recovery.

Then there was Philly Fed. It was better at -24.4 when -38 was expected (-35 prior) and that was also an attempt at slowing the dive. It was not as good as hoped, however, as the Fed raised expectations with a specific reference to Philly in its Beige book report.

Friday saw Michigan sentiment rise to 61.9 from 57.3, topping expectations. Good to see though sentiment means little once you are in a recession.

In sum the data was all over the map but the key reports were better. A bit better. Don't want to blow this out of proportion. The 'stimulus' program the Administration has sold to Congress (though not to the American people, and indeed Congress did not even read the bill isn't that in violation of their oath?) is the type that historically leads to slow recoveries, the old hockey stick turn as opposed to the 'V' turn such as that seen in 2003 when the economy went from negative GDP growth to 7.4% GDP growth in less than three quarters. We have opted for the 'Great Depression' recovery plan that attempts social engineering as a method of recovery, and as history has shown, this lengthens the recovery period considerably as money is diverted from the private sector and entrepreneurs to the inefficient government bureaucracy.

Six regional banks shed their government yoke.

Six regional banks forced to take TARP funds have repaid the money and cast off the federal yoke. One can picture their CEO's, similar to Captain Kirk in the Star Trek episode 'Gamesters of Triskelion,' yanking off the 'collar of obedience' as the money was transferred. It was only a mere $467.3M, a pittance when considering the hundreds of billions forced upon, er I mean lent to, all banks including the large financial institutions.

That raises the question when those larger institutions, the ones already talking about returning the money (e.g. GS, WFC, BAC) are going to do so. More than that, it raises the question will they BE ABLE to do so. Why is that? Well, the feds have not been clear at all as to whether they would allow the banks to get out from under the federal thumb. Barney Frank and his henchmen want to control the banks. Treasury Secretary Timmy Geithner wants the shot at replacing some bank CEO's just to show who is boss, unconstitutional or not.

More than that, however, is the money and control. One of the 'six' that returned the funds said that the feds made a 60% return on the money in the short period of the loan. That kind of revenue is hard for the feds to turn down. No, that is a misstatement. That kind of revenue is something the feds have never had and will NEVER let go. Mark these words: it will be a tremendous battle for GS et al to give the money back AND regain the parts of their companies the federal government owns via warrants, etc. This is the kind of cash cow that the Treasury and gluttonous Congress won't voluntarily give up.

When the lick log comes and say GS tenders $10B in cash in exchange for the feds' partial ownership, what are the odds the Treasury reneges? What if the banks protest? Treasury or the President will remove their CEO's. Geithner said he was ready to do just that and it is no stretch to think he won't do it if the financial institutions complain. Will that be enough to raise the cry of unconstitutionality among the mute republican senators including those from the great state of Texas who, when contacted, have 'no position' on this issue? I wonder. Just goes to show that the desire for funds and control outweighs any consideration of principles in that place called Capitol Hill.

For now we say 'bravo' to those banks that returned their funds and were able to get out from under the thumb of the feds. We should all call our senators and say bravo and remind them that when the large financial institutions pay back their funds that they should also be allowed to shake off the federal ownership as well. AFTER ALL, when Chrysler paid off its government bailout there were no strings attached. These banks that were forced in a back room Paulson arm twisting session that we hear was worse than the 'torture' we gave known terrorists pledged to destroy the US, to take these funds when they did not want them should be able to repay them and be free and clear of government intervention.