General Motors Becomes A Bank

GMAC, the automobile financing arm of GM has been recognized as a 'bank holding company' by the Feds. This provides unlimited (well, AMPLE) access to federal funds to bankroll consumer loans to purchase GM vehicles. Per the Wall Street Journal:

The Federal Reserve's decision to make GMAC LLC a bank-holding company throws the unit a desperately needed lifeline, but further entangles the federal government in areas of the economy it once considered beyond its purview.

In a Christmas Eve decision, the Fed allowed GMAC, a finance company controlled by private-equity fund Cerberus Capital Management and General Motors Co., to qualify as a bank. As a federally regulated bank-holding company, GMAC potentially gets access to billions of dollars of Treasury funds dedicated to recapitalizing banks.

Santa has been busy this Christmas!

Recession Time As Swiss Watch Sales Plunge

Recession time has come to Swiss watch makers as sales exports plunge by 15%. Most worrisome, this indicates softness in the larger market for luxury goods which was supposed to be a bright spot this holiday season, per the Wall Street Journal.

Swiss watch exports fell 15% in November from a year earlier to 1.52 billion Swiss francs ($1.41 billion), a steep deterioration from the drop of around 5% posted for October. November is the watch industry's most important month of the year because of the run-up to Christmas.

Although a decline had been expected, the extent of the plunge surprised market watchers. Particularly worrying were the first signs of a weakness in Asian markets and the tailing off of demand for premium products, which had been thought to be less prone to cutbacks in spending, analysts said.

My mom used to call this a 'sparse Christmas.'

Inflation To The Rescue!

Back in 1933, "inflation" was touted by the new FDR administration as the cure to America's Depression woes.

Now with zero percent interest rates, Bernake has climbed on the inflation bandwagon.

This hilarious short MGM film from 1933 explains why the miracle of inflation is an economic panacea.

Economic Recovery For Dumies

Simple, eh?

Thanks to the Washington Post.

Santa Bail Out On The Way

Wall Street Journal reports Feds are going to bail out Santa.

Apparently Santa's difficulties in "producing product," as Mr. Paulson described it, originated in a poorly understood aspect of the jolly elf's current operations known as "Christmas list swaps," or CLIPS...

Several years ago, according to a participant who requested anonymity, some of Santa's elves were contacted by representatives from Bear Stearns and Lehman Brothers, who persuaded the elves of the benefits of an elaborate scheme of Christmas-list securitization.

As outlined to the elves, the idea worked like this. Brokers would break each item on the Christmas lists into separate pieces and repackage the requests as securities, using a formula known as a "benevolence diffusion algorithm." This would guarantee happiness for everybody in the world on Christmas morning. No one would lose...

Difficulties emerged when a CLIPS salesman from AIG called a senior elf to say that a large number of the Christmas list swaps had ended up in the hands of Russian billionaires with links to former Russian president Vladimir Putin. "These plutocrats don't even believe in me," Santa was heard to say as Mr. Paulson's sleigh rode out of sight...

There are reports that the Easter Bunny may be next on the bail out list.

Where's YOUR Bail Out?

On his blog, Robert Reich notes:

It wouldn't surprise me if many of these Americans were starting to look at the size of the bailouts of Wall Street and the bailout of the Big Three -- at the executives, well-paid professional employees, upscale creditors and shareholders, and even well-paid blue-collar workers, who are the major beneficiaries of this federal largesse -- and conclude that a fundamental principle of fairness is being violated.

These Americans aren't revolutionaries. To the contrary, they're deeply conservative. They've worked hard, but their hard work hasn't paid off. Some have tried to save, only to see their savings disappear. They're worried about the future and about their kids' futures. They never expected anything like this.

This is the angry soil in which populist backlashes can take root.

In a similar vein, the City Lakes Real Estate Blog notes:

Sadly, the expression, "you can run, but you can't hide" now describes the futility of trying to shield your wallet -- and your descendants' -- from a federal government bent on ever-more expensive and wrongheaded bailouts.

Futility leads to frustration which leads to rage. Citi may have to do more than just cancel its Holiday train display to calm the ire of the outraged citizenry.

Dec. 9 (Bloomberg) -- Citigroup Inc., (NYSE: C) the bank that’s eliminating 52,000 jobs after getting a $45 billion government bailout, canceled its sponsorship of a New York holiday toy-train exhibit visited by more than 125,000 people a year.

“The difficult decision to discontinue this sponsorship was part of Citi’s ongoing expense-reduction efforts,” Citigroup said in an e-mailed statement. Chief Executive Officer Vikram Pandit, 51, announced on Nov. 21 that he wants to cut costs by about $2 billion per quarter starting next year.

Aux armes, citoyens,
Formez vos bataillons,
Marchons, marchons !
Qu'un sang impur
Abreuve nos sillons !

iPhone Coming To WalMart. The End Of Cool?

A number of news sources report that WalMart (NYSE: WMT) has inked a deal to distribute iPhones, starting as soon as December 24.

To match WalMart's lowest-price brand positioning, those same reports speculate that iPhone will introduce at model starting at $99.00.

I assume this is the end of Mac's reputation as the super-cool tech accessory. Looks like a great opportunity for RIM to push those sexy new Blackberry touch models.

Uncle Sam's Club Bonus Points!

"More marketing, that's the answer!" So said my Uncle David when business at his auto glass company slowed down.

Now that the government has acquired major interests in many of our largest corporations, the time has come for Obama to create a new cabinet level post, the Secretary of Marketing. First order of the day will be the creation of a Taxpayer Bonus Point system, where citizens earn points good towards the purchase of any of the fine government manufactured products available from Uncle Sam's Club. Slogan: "From Autos To Condo's, Uncle Sam Has It All."

And the prices are insane!"