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S&T Bancorp, Inc. Q4 2008 Earnings Call Transcript
The size of the stimulus package is roughly a trillion dollars on top of a 1.2 trillion dollar deficit, as it was official through the end of calendar 2008. From a keen economic perspective it’s not the size of the deficit itself that matters. It’s the size of the increase of the deficit that impacts whether or not it spurs economic activity. And in fact there are those that believe that it was FDR’s alphabet soup approach, programs in the Great Depression that got us out of the depression. In fact that was not the case. It was really World War II that got us out of the depression. And spending in order to fund our war effort took the deficit up to 129% of GDP in World War II.
In order for us to get to that level of spending we would need to look at not a one trillion dollar increase in deficit but at ten trillion dollar increase in deficit. From my perspective that is mind blowing. I don’t think we need or want to get to that level and think we will ultimately come out of this thing with substantially more modest spending issues.
This is your mind on trillion dollar stimulus.
This is your mind on ten trillion dollar stimulus.
Any questions?
Q1 GDP Tracking: Movin' on Up
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From BofA:
Since our update last week, *1Q GDP tracking is up two-tenths to 2.1% q/q
saar*. [Apr 19th estimate]
emphasis added
From Goldman:
We left ou...
4 hours ago
5 comments:
Stag,
I've been contemplating the TARP as seen through the eyes of an underwater homedebtor. It must look like a giant giveaway. Well, that's obvious, it is a giant giveaway.
Seriously though, how would you like to be bearing the burden of a crushing house debt while bankers get your tax money via a bailout? I think many are going to be seriously angry. Vindictive even. The wall street 2008 year end bonuses could be the tipping point.
The option ARM bomb is still ticking too. And how many option holders are paying the absolute minimum payment at this point? I'm guessing close to 100%. It makes no sense to increase the cost of your option in the face of the biggest housing bust in history. The banks got the money, let them have the house too.
This Xmas season could have a LOT of jingle mail. Perhaps the carols will have a different bent this year too. Tis the season:
jingle mail, jingle mail, jingle mail hooray, oh what fun it is to run from your mortgage debt today. Keys in envelops ring, giving bankers fright, what fun it is hear keys ring and make your burden light!
Then again, retail sales could have another record year...um..
mab,
The wall street 2008 year end bonuses could be the tipping point.
My tipping point is seeing Scott Trade's black helicopter flying around in their commercials. Yeah, like I want MY money "fueling" their CEO's hobby.
Here's the funny part though.
Scottrade may not have real helicopter, but its customers have real trust.
http://www.accessmylibrary.com/coms2/summary_0286-31365086_ITM
Scottrade doesn't own a helicopter, and Riney doesn't fly them. His scenes were shot in a hangar in front of a green screen. A graphic artist spliced his scenes with background shots filmed separately.
They just pretend to take OUR money to spend on CEO hobbies. Whew! It was just an illusion of prosperity!
Perhaps the government is using this same green screen technology. Perhaps Ben Bernanke is pretending to drop money from fleets of helicopters instead of actually doing it. People therefore assumed they'd need to go buy more cheap Chinese junk, stocks, and real estate before their neighbors did. Genius!
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
I think we just had another credible threat. They pretended to do a "bad bank" bailout and then conveniently got really confused about how to actually implement it.
"Bad bank" may be put on hold: report
http://www.reuters.com/article/ousiv/idUSTRE50T5TN20090130
WASHINGTON (Reuters) - Policy-makers have yet to reach a consensus on how a U.S. government-run bad bank would work and the idea may not move forward, CNBC television reported on Friday, citing unnamed sources.
It's not on hold. It's in a holding pattern. Wink, wink. Nudge, nudge.
The Fed: Airlift Pumping and Dumping Prosperity Out of Helicopters Since 2000
Airlift Pump
http://en.wikipedia.org/wiki/Airlift_pump
Typically, the compressed air is pumped down a pipe into a well and bubbles into another larger diameter pipe.
Bubbles for the win!
Stag,
I'm quite familiar with airlift pumps! And I'm not talking about new Nike sneakers either.
I've spent the past two and a half decades in the heavy construction industry. I've actually manufactured my own airlift pumps numerous times to excavate in the corners of cofferdams and around newly driven pilings inside said cofferdams.
Just so you know, airlifts work really well. The airlifting industry has taken a serious beating though. There are very few of us airlifters left. It wasn't outsourcing or automation that got us. It was the environmentalists. They claimed that all those suspended solids wreaked havoc on the waterways. I have argued on behalf of airlifters that rainfall actually causes infinitely more turbidity. Despite my convincing arguments, the art of airlifting is "still" heavily frowned upon.
http://en.wikipedia.org/wiki/Coffer_dam
As for Bernanke printing, so far it looks like all the fed & gov't shenanigans have been funded through legitimate debt offerings. The new mortgage purchases ($600 billion planned) by the fed are a concern. The NY fed said they wouldn't be sterilized IIRC.
Anyway you look at it, printing is a mistake. I don't see how you can be the world's reserve currency if you are going to just paper over financial foolishness.
Printing would end the money franchise. I don't think they do it.
Stag,
Here's the link from the NY Fed.
http://www.newyorkfed.org/markets/mbs_faq.html
How will purchases under the agency MBS program be financed?
Purchases will be financed through the creation of additional bank reserves.
Initially I thought "creation of additional bank reserves" indicated printing. It's vague, but the more I thought about it the more I CONvinced myself they wouldn't print. Printing would be an international disaster and would cause more problems than it would solve.
I'm not sure how the FDR devaluation affected foreigners holding dollars, but I recall reading that they were made whole. It was a rip off here, but I guess it could be argued that it was just a big internal tax as the world was still on the gold standard. In any event, we were not the reserve currency in 1934. If we intend on remaining the gold standard of fiat currencies, I don't think we print anymore than we normally do - 6%/year as best I can tell.
Did you ever hear the one about the great moderation?
mab,
Anyway you look at it, printing is a mistake.
Here's one way we can prove it.
If printing a trillion dollars is a good thing in bad times, then why don't we print it during good times? Think how much better the good times would have been!
Come to think of it, we did print it. That would explain our multi-trillion dollar national debt. Nevermind.
Did you ever hear the one about the great moderation?
The End of the Great Moderation
http://news.goldseek.com/DailyReckoning/1211569500.php
We would like to set the record straight. We are neither gloomy nor pessimistic.
History has shown that I've been too optimistic.
People who know us well say that we are often cheerful and fairly pleasant company. Even in adversity, we manage to keep a sense of humor.
I'd like to think I try.
In fact, friends say we smile when bad things happen, provided, of course, they happen to someone else.
Absolutely. Here's an example.
Picture Lehman Brothers paying Alan Greenspan $250,000 to speak about interest rates, the Fed and the U.S. economy.
http://www.huffingtonpost.com/2006/02/09/want-alan-greenspan-to-co_n_15350.html
On Tuesday night, Lehman Brothers paid Greenspan $250,000 to meet with 15 of its most important clients in Lehman's executive dining room in New York. Lehman paid $100,000 over Greenspan's standard speaking fee of $150,000 for the privilege of being the first Wall Street firm to book the legendary Fed chairman, according to an individual familiar with the situation.
Now picture my facial expression when I found out that my taxpayer money would NOT bail Lehman Brothers out. I never intended to pay Greenspan to speak when I could hear him for free.
Feel free to also picture my facial expression when I read the following.
President Bush gave us laughs but not much else
http://www.gjsentinel.com/news/content/news/opinion/stories/2009/01/15/011609_7A_Henrietta_column.html
Second, Greenspan did it.
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