On Wednesday, February 10, Federal Reserve Chairman Ben Bernanke expressed confidence that every cent of the Federal Reserve’s exposure to insurance giant AIG would be repaid. Regarding a combined $116 billion dollars that the Fed provided in emergency loans to shore up AIG and back the purchase of Bear Stearns — an amount that totals about one-fifth of the Fed’s entire balance sheet, Bernanke said that the Fed “expects these exposures to decline gradually over time. The [Federal Reserve] Board continues to anticipate that the Federal Reserve will ultimately incur no loss on these loans as well.”
There are further signs that Barrack Obama’s jobless “recovery” is, in fact, no recovery at all. The latest indication of the fundamental unsoundness of the American economy is found in statistics from the Commerce Department. According to that department, the sale of new homes plummeted in January to the lowest rate recorded in fifty years. As The Washington Post reports:
More than a year has elapsed since the U.S. economy went into a tailspin with the panic that shook the world’s financial markets in the fall of 2008. Two presidential administrations have attempted to solve the crisis by political means, using taxpayer dollars to bail out certain corporations deemed too large or too critical to be allowed to fail.
Sam Dillon of the New York Times reports that the depletion of federal stimulus money will result in schools approaching "a funding cliff." Dillon claims that the federal stimulus has managed to stave off drastic cuts at public schools in most parts of the nation thus far, but that the period of sustenance will soon end.
The Obama administration is considering asking Congress to impose higher taxes on banks as a way of cutting the deficit. Proposals that have been mentioned but rejected include a tax on financial trades and a special tax on bonuses paid to bank executives. Proposals now being actively considered by the administration include taxes based upon the size of a financial institution, a tax on the riskiness of the financial institution's loans, or a tax on the bank's profits.
Last summer, a federal judge ruled that the Federal Reserve must disclose the identities of firms that received any portions of the over-$2 trillion in bailout money back in 2008. This week, the Fed is preparing to go to court to protect its secrets.
The Associated Press has conducted an economic analysis to determine the effect of the first 10 months of federal stimulus spending to build roads and highways on creating jobs in the construction industry. This analysis was conducted by five different economists at five different universities.
GMAC Financial Services, the former financial arm of General Motors, is set to receive yet more federal bailout funds as the year draws to a close. According to a Reuters report, GMAC will get roughly $3.5 billion in additional federal government money to help cover losses on the mortgage market. Mortgage-related assets, considered the key to GMAC’s return to profitability, comprise roughly a third of GMAC’s total $178 billion balance sheet.
Little noticed (so far) by the American public, a Christmas Eve announcement by the Obama administration to expand the amount of bailout monies available to ailing mortgage giants Fannie Mae and Freddie Mac is already stirring controversy among Capitol Hill lawmakers sick of fueling the bailout gravy train at the expense of an increasingly restive voter base.
Transportation Secretary Ray LaHood announced on December 21 that beginning this spring the federal government is going to impose hefty fines on airlines that keep passengers stranded on the tarmac without food, water, or letting them get off the plane. LaHood called this “President Obama's Passenger Bill of Rights.”